JacoBlog - Jacobs Media's Blog

"Online Is The New Primetime"

Today's posting title is a quote from Gian Fulgoni, chairman of comScore, and it cleverly sums up how the Internet now exceeds television during the daytime hours.  In fact, a recent New York Times article actually asked the question, "What is primetime?"  That's because 6,000,000 May sweeps viewers have disappeared since last year.

The culprit?  The Control-Variety-Choice architecture of TiVos/DVRs and the Internet, especially due to the growth of network television sites that offer shows like The Office and Lost whenever you want to see it.

We saw this in our Tech Poll IV in a new question that revealed that four of every ten Rockers now have a TiVo or DVR.  The implications of this are obvious if you're in the TV business.  But what if you're in radio?

At what point will "morning drive" not hold its traditional lead over all other dayparts (aside from PPM)?  When will radio have a podcasting model that makes it convenient for fans of morning shows to be able to easily time-shift their listening?  (And keep in mind that if a PPM respondent listens to a podcast within 7 days of its original airdate, it "counts" in the ratings.)

Last week, we blogged about Hulu, and how radio has some of the same time-shifting potential.  As we noted, NPR understands the model only too well.  They average 12 million downloads a month and that's more than 200 million total downloads since they started their podcast program in August 2005.  And of course, that doesn't cover other public broadcasting networks and producers, or the many local public stations that provide podcasts of their content.  The graphic below shows the most downloaded podcasts on iTunes.  Look how public radio dominates:

And the sponsorship dollars keep rolling in.  Another finding from the Tech Poll is that two-thirds of those who have downloaded a podcast are very or somewhat willing to sit through a commercial as the price of admission.

Maybe instead of calling it time-shifting, we ought to start thinking of it as "dollar-shifting."

CVC TV

If you haven't checked out Hulu.com, take some time over a weekend or a slow evening.  But you'd better prepare to spend a couple of hours watching some interesting television - or perhaps, better referred to as video.  A product of NBC Universal and News Corporation, Hulu is the next wave of video streaming, and the selection is pretty cool.  It may not upend YouTube, but unlike that network - loaded with home videos shot by consumers - Hulu is actual television shows, from right now to the past.  The commercials are unobtrusive, and the variety is steadily increasing.

We talked about the whole Control-Variety-Choice model during "The Bedroom Project," and that's exactly what Hulu is about.  The television networks are buying in, despite the growing pains of revenue generation.  Even though "old media" is struggling to find a revenue model that's very effective, these forays into on-demand online content are signs that the media world is changing rapidly. 

Where does radio fit into this model?  We are woefully out of the CVC race, save for podcasting - the one area where our content can be accessed - and sponsored.

This year's Tech Poll has some encouraging data in that regard.  iPod ownership is now closing in on the 60% mark, and podcast downloading has doubled every year since '06.  Whether you agree that iPods are good or bad for radio, there's no denying that they've replaced the Walkman in the portability race.  And now that three-fourths of Alternative fans own one, how can broadcasters take advantage of this phenomenon?

NPR is well on the way to figuring it out.  Their podcasts stats - downloads and sponsorships - are downright impressive.  While public radio may have more available content than the average music station, the basic model is proof that radio can play in the CVC sandbox. 

Response to Jim Boyle's comments in RBR

In a recent issue of Radio Business Report (www.rbr.com), CL King financial analyst, Jim Boyle, offered his prescription for what Radio can do to jumpstart its business.  Here are Boyle's comments:

"Can a different revenue stream start and sustain a radio rebound? Yes, by monetizing the P-1 listener. Radio groups fetch about 2%-3% of revenue from internet initiatives, but that hasn't stopped 2007 from being a down revenue year. So what else is out there? We would strongly recommend that radio look to the second of its two constituencies. Not just its advertisers, its audience! Radio's most loyal, engaged listeners are dubbed P-1 listeners. We believe radio should sell small local content and branded items to its biggest fans. Consumers have become highly trained by eBay, iTunes, Amazon and others to frequently purchase impulse or planned items via the ease of well-established micro-payments. There will be many failed attempts by Radio to monetize listeners, but potentially some large successes. Most people forget that the cable network that allowed cable to garner non-subscription revenue from the subscriber, Home Shopping Channel, started as a Florida radio show.

We also believe radio station personnel and younger employees are more likely to come up with successes than the corporate or top executives. We bet you that no P-1 would ask, what is the cost-per-point of a daily e-mail of the best jokes (on-air and off-air) of the Morning Zoo DJs? Or what is the cost-per-thousand of a station logo baseball cap? Or what is the AQH rating of a mobile flash alert of the latest club event? Radio should establish a second revenue stream or resign itself to being the 'new Newspapers.' A second consumer-fee revenue stream would bolster the industry and excite investors and it could even make radio a creative and fun business again, in our opinion."

First, it's noteworthy that a financial analyst has even offered possible solutions to what's ailing Radio.  For the most part, these guys crunch numbers, talk to a lot of people, and provide their best guesses about a sector's financial health.  But that was then.

Nowadays, everyone has an opinion.  And perhaps that's healthy.  Because if Radio is going to find a solution set that truly addresses its deepening problems, maybe it will come from an unlikely source.  This is why Boyle's "outside/in" thoughts caused me to truly consider his thinking.

First, the P1 aspect of his solution.  These are indeed the people who are loyal, engaged, and emotional about Radio stations.  We need them - badly.  But for the most part, Radio continues to look past them, trolling for diarykeepers and possible PPM cooperators.

Yet, it's the P1s who are still showing up for events and even for meaningless, unentertaining advertiser promotions.  They still call the request lines, and they are habituated by our morning shows.  And the incredibly great news is that the majority of them are locked and loaded in Radio station databases.  We have simple (and free) access to them - in many cases, by the thousands.  The question - as Boyle asks - is how do we best utilize and mobilize them to Radio's advantage?

Most stations choose to bombard them with weekly emails about events and advertiser specials, rather than learning from them, nurturing them, and stimulating them to become evangelists.  The data that we've collected at Jacobs Media, after nearly a decade of web polling, suggests that approximately 75% of all database members are P1s.  You don't need a telemarketing company to find your fans - they're in your email club.  Yet, most programmers cannot tell you the true gender and age makeup of their databases, much less their sexual or political orientation, despite the fact this is essentially "free research" during a time when research budgets are dwindling.  Boyle is correct when he proffers that most stations totally under-utilize these all-important fans.

And beyond that, the P1 potential to provide us with "answers" through Listeners Advisory Panels is untapped by most stations.  Most consumer product companies rely heavily on their biggest fans to help guide their quality control, while providing new ideas for the future.  Rarely does Radio turn to these core listeners for advice, confirmation, and guidance.

Add to that the concept that Radio could be interviewing its database members to learn about their buying habits.  Imagine surveying these core listeners to find out which ones are planning on buying/leasing a new car in '08.  Or the fans who will be getting married.  Or buying a home.  These ready customers can be aggregated, and should become part of a station's advertising strategy, because Radio can provide hot prospects to its advertisers - for a price, of course.

In the sales cubicles, how much longer is radio going to put up with account reps who don't get it and never will?  At Jacobs, we are continually asked to "sell" formats and stations with great histories, legacies, and ratings to local sales staffs that are unenthused, undermotivated, and often just clueless.  Stations that have decades of history, brand name personalities/celebrities, and consistent successes are being severely undersold by account reps who are uncommitted, unknowledgeable, and ineffective.

Is that radical to look to Radio's legions of P1s in station databases who may be in professional cul-de-sacs of their own, toiling away at meaningless jobs?

These are people who love your station, and passionately tell others they should be listening.  You don't have to teach them who's on the morning show, persuade them about your format's value, or hype that spring concert the station does every year.  They know it all - chapter and verse.  And they would be much happier selling advertising on behalf of your station than the copiers, used cars, and window sash treatments they're stuck pitching now.

This could also be a way of bringing some youth to Radio as well.  I won't even go into the wisdom's of Boyle's comments about injecting younger people's opinions into Radio, as this is something that Jacobs Media has championed ad nauseum over the years.  As formats have narrowed into the 25-54 "sweet spot" (or "black hole"), America's youth have continued to drift away from Radio, and toward more attractive, welcoming media options that offer more control, variety, and choice.  We saw enough of this in "The Bedroom Project" we conducted last year for Arbitron, so Boyle's observations about how Radio might harness new ideas from younger employees instantly elicited our nods of agreement.

We know only too well there are thousands (well, maybe that number has diminished in the past few months) of dedicated radio professionals, dying inside about what is happening to our products and content.  Many are simply untapped by the companies they work for, as Radio's leaders believe that the rank-and-file simply do not have the answers, and are best suited to simply carrying out "the plan."  If the solutions aren't at the top, perhaps there are successes and innovations waiting to be heard on the ground, closer to listeners, and consumers in general.

So, thanks Jim Boyle, and RBR, for swimming upstream and shaking the tree.  That may be the way out of this mess.

What People Are About - Top 10 Trends For '07

Jacobs Media's Keith Cunningham talks about the biggest entertainment trends of 2007, and what they might mean for '08.

In a televised special last year, Saturday Night Live's Lorne Michaels said, “If you’re not about what people are thinking about that week, then I think you don’t have any relevance.”  Our friends at Nielsen recently released their year-end look at the top trends in the U.S., I thought I’d highlight a few to illustrate what Americans were about last year, while giving us clues to ’08 trends.  And not surprisingly, Nielsen’s findings back much of what we’ve seen in the annual Jacobs Media Tech Surveys:

VIDEO GAMES: Gamers continue to supply some incredible TSP (time-spent-playing). World of Warcraft, the most popular online game, has a mind blowing average TSP of nearly 17 hours per-week. (That’s a TSL that radio stations would kill for.) And retail darlings like Halo and Madden still look more than addictive with about 7 hours of TSP per-week, on average.

If this isn’t a reminder of the incredible pressure Radio is under to create unique and compelling content, I don’t know what is. As we all know, it’s not just TV, the Internet, or digital music that’s cutting into Radio’s usage time. Video games, in many cases, are earning more weekly attention from their consumers than Radio.

And in the interest of combating the war for usage time, you have to ask whether voicetracking and “re-expressing” assets (i.e., gutting the hallways) are really Radio’s solution to creating more compelling content so that usage time and cost-per-point will increase. Electronic Arts, Activision, and other gaming companies aren’t cutting back on content creation. Research and “programming” development are the fuel that drives their business.

ONLINE: Google and Yahoo! have a wide lead in the number of unique visitors per-month, with about 110 million each. How’s that for reach? And if you run radio stations in Austin, San Francisco, Portland or Seattle, and you’re not blogging or giving listeners the opportunity to post online or participate with programming, think again. Those cities lead the pack with adults who read or participate with blogs. While the numbers aren’t astronomical – around 15% - is there any reason to think they won’t increase quarterly in most markets around the country? This small little stat is merely the tip of a much larger “customization” iceberg. “Power to the people” is not just a cliché; it should be Radio’s mantra for the foreseeable future.

MOVIES/TV: It’s no surprise that Spider-Man 3 and Shrek were the biggest movies of the year, and that American Idol and the Super Bowl topped TV trends, but did you know that Lost and Heroes were the top “time-shifted” primetime shows? Not unlike Radio’s revenue pressures, TV execs are under the gun, as time-shifting means eyeballs on TV advertisements will continue to diminish.

Time-shifting is here to stay and it represents a severe revenue problem that’s only going to become more poignant for television. We saw this up close and personal in our trend finding – Control, Variety, Choice – in “The Bedroom Project.” Is product placement and downloadable content the solution? Some think so. Interestingly enough, American Idol, Fast Cars & Superstars, and Extreme Makeover Home Edition top Nielsen’s list for Television Product Placement Occurrences.

MUSIC: The most interesting finding for music stations is that with little airplay (aside from Radio Disney, of course), High School Musical 2 topped the Top 10 albums list. Think about that for a minute and let it sink in. And remember that Gen Y drives those sales, a demo Radio has all but abandoned.

Those who think there isn’t money in Gen Y are clearly not paying close-enough attention or willing to make the commitment to go after these dollars. All of us at Jacobs Media are still waiting for, and willing to help a company develop programming strategies for Gen Y. The younger demos are literally Radio’s future, and yet PPM’s 6+ ratings are thought to be too fringe to be useful. A medium that used to appeal to everyone is limiting its own potential.

There is some good news for Rock, however, as Daughtry and Linkin Park come in at #2 and #3 on Nielsen’s list. And The Eagles and Nickelback had themselves a great year as well, ranking 6th and 8th, respectively.

If you’re a marketer, programmer, in sales, or an on-air talent or producer, Nielsen’s findings should be of interest to you. It’s like having the keys to the “House of Mass Appeal.” There’s a lot more data included in the full report – click here if you’d like to download a copy. Kudos to Nielsen for making it publicly available.

If you like this type of stuff and want to know more about what your audience is up to in 2008, we hope you’ll join us for Jacobs Media Tech Survey IV. It will uncover some important, new, actionable data for 2008. If you haven’t already RSVP’d, contact Lisa Riker at lisariker@jacobsmedia.com.

Calling All Satellites

Much has already been written about these new satellite radio ratings numbers released by Arbitron from the Spring '07 survey.  Some are questioning the accuracy of the data, suggesting that listening levels are understated, given the challenging task of recording channel numbers from XM and/or Sirius stations, and other methodological aspects.  I will leave this discussion to the ratings research mavens to haggle over, but the thrust of these numbers and their implications are obvious.

As we have been pointing out over the past couple of years, satellite radio is an issue for commercial radio operators, but there are other more encompassing threats that challenge traditional listening habits.  Mobile phones, iPods, and the notion of CVC - control, variety, choice - are issues that broadcasters will grapple with moving forward.

In fact, our most recent Tech Poll, conducted earlier this year, suggested that satellite radio's growth is stalling out, and this may be accentuated by this long waiting period that XM and Sirius are enduring as the merger question is being decided.  Clearly, the union of the two services, and subsequent pricing adjustments and packaging could make satellite radio a larger factor in 2008 and beyond.  But for now, XM and Sirius emerge as niche players, and satellite radio is rapidly becoming a medium that had potential but is not having the promised impact.

Consider that Howard Stern's reported cume audience is in the 1.2 million range.  In a good book at WXRK, WYSP, and WBCN, he easily topped those numbers.  Clearly, he is now broadcasting on a much smaller stage, which is one of the reasons why you just don't hear people say "Did you hear what Howard said this morning?"

It is also of note that many of the big names that XM and Sirius threw millions of dollars at are delivering at the levels of Des Moines FM stations - or lower.  Again, even if these ratings are 25% lower than "reality," satellite radio's chieftains have to be calculating the ROI on stars like Martha Stewart, Oprah, and other big name celebrities.  While terrestrial broadcasters may not be spending enough to attract and nurture household names, satellite radio's "drunken sailor" spending has to be questioned at some point. In XM's recent release of its third quarter financials, losses have widened from nearly $84 million to more than $145 million.  Can you imagine a commercial broadcaster having to continue to explain this level of failure to company shareholders?

As I suggested in an Inside Radio piece, the ratings results of the hundreds of satellite radio channels could serve as a template or primer for traditional broadcasters, seeking compelling programming for HD2 channels.  While it's true that the "Long Tail" effect of listeners seeking cool, niche programming is more definitely in play in these ratings, it's also a fact that the more mass appeal channels attract the most listeners.  Maybe Paul Drew and Bill Drake are somewhere laughing at this "revelation," because playing the hits has always attracted the most listeners - in whatever medium you choose.  Perhaps satellite radio's niche channels bring in a wide diverse audience of interested subscribers, but how can executives rationalize these incredible expenses in order to grow new signups?

A CVC Lesson

Jacobs Media's Ralph Cipolla talks about the potential writers strike & CVC:

A work stoppage looms, one that will impact nearly everyone in the mainstream of contemporary American society.  No, it's not the UAW - they've struck a deal with GM, and are now well into finalizing discussions with Chrysler.  I'm referring to the Screenwriters Guild; the brethren of New York and Hollywood-based men and women who pen the scripts for TV and film.

These are the people behind the one-liners used by Jon Stewart and Jay Leno, the scripts for every prime-time sitcom and drama series, and all those big-screen productions in the pipeline (note: Reality shows like Survivor, Big Brother, and Dancing With The Stars are not bound by the existing screenwriters contract - I guess all those bachelorettes really are that witty).  That epic Paramount Studios re-make of Star Trek slated for 2009 release?  It looks like the Enterprise will sit in dry-dock if this dispute doesn't get settled soon.

So, what are the issues?  There is really just one, and it's another conspicuous case of an old business model trying to catch up with new media reality.  The writers want their share of digital residual royalty revenue generated from the sales of DVDs, their cut of on-line downloads, payment for free on-line streaming of TV shows from network websites, and even compensation for product placement in films (I guess someone gets paid to write - "Camera angle changes, music swells as we see James Bond call M on his Nokia N81 cell phone.")

If you write the script for a TV show, for example, Grey's Anatomy, you get paid when that episode airs, and paid again when it is shown as a repeat.  You then receive another check when that show becomes part of a full-season DVD boxed-set, and paid yet again when every writer's new-media-age-dream comes true - the show becomes available for download on iTunes.

Writing for TV or film is the gift that keeps on giving, but apparently not enough.  The last work-stoppage came in 1988 and lasted 5 months.  This was a time when no one had email, the internet was known only to upper academia and the military (and Al Gore), the consumer DVD player was still on the drawing board, and the idea of downloading video to a handheld device was the kind of fantasy pipe-dream found in, well... Star Trek.  A writer saw residual payments when his TV show went into re-runs, or her movie was released for VHS rental.  It's a bit more complex this time around.  The producers now contend that things are changing so fast, they don't even know how money is going to be made and what kind of numbers we'll be talking about.  So, Patric Verrone, president of Writers Guild West calls their bluff - "Our basic mantra is this - if they get paid, we get paid."

That was 19 years ago, and this issue has galvanized the writers' union.  The Guild contends that the old deal doesn't begin to account for the until recently unimaginable cash-generating schemes common to this on-demand, multi-platform, video iPod age.  Even the word "age" is outdated in this context, for all this will change, even before the "ink" is dry on a new deal between the writers and producers.

There's no new lesson here, just reinforcement of the conclusion central to the Jacobs Media / Arbitron "Bedroom Project" - it's all about C-V-C.  Consumers want, and the market will be driven by, Content - Variety - Choice.  These components are essential to any entertainment medium and delivery environment.  The writers may not have anticipated this in 1988, but they now want a new deal that maximizes the value of their content, as the variety of entertainment options competing for TV time and theater dollars widens, and consumers have an ever-growing degree of usage choice.  Just as these writers realize that it's no longer a small-screen/big-screen market, radio is coming to grips with the fact that it's no longer just an AM or FM or Walkman world.

Perhaps you need to negotiate a new deal with yourself, and make C-V-C a non-negotiable item.

P.S. How close are the two sides as the deadline looms?  Hint: the producers claim that this era of digital choice has cut into their bottom line, so get ready for more Desperate Housewives repeats, more amateur singing, more dancing with Jerry Springer, and bigger weight-loss contests in prime-time... or maybe you can just download that movie you missed at the theatre.  Or listen to the radio more.

CVC - Whoah! - Part 2

In yesterday's blog, we previewed a new TiVo/Rhapsody service that puts 4,000,000+ songs in the hands of the consumer.  As we saw in the Arbitron/Jacobs Media "Bedroom Project," CVC - or control-variety-choice - are major attributes that separate desirable media devices and technologies from the rest of the pack.

The other innovation that is worth your attention is from - of all companies - Ford.  You may have already seen ads for their new Sync service, where they've teamed up with Microsoft to bring the Internet (streaming radio and just about everything else) into cars.

The implications of this technology are enormous.  Aside from radio needing to be a part of this technology by providing a solid, streaming product, many Ford owners in the future will be able to access just about anything from their web-connected smart phones and PDAs.  Additionally, Mp3 players come alive in Sync.  The driver can use voice commands ("Play artist Coldplay" or "Play track 'Who Let The Dogs Out'") and the system does the rest.

If this all works as promised, Sync could put enormous pressure on both satellite and broadcast radio, not to mention HD Radio.  As has been the case during the tech revolution, consumers increasingly are being forced to choose how they wish to best spend their gadget dollars.

These are great examples of technology CVC applications, and they're coming soon - to homes and cars.

CVC - Whoah! - Part 1

In "The Bedroom Project," we identified CVC - or control-variety-choice as major attributes that separate desirable media devices and technologies (iPods, for example) from those that lack many of these same qualities.  Radio - as it exists for most consumers today - often fails the CVC test.

And as we also saw in "Bedroom," music is rapidly becoming a commodity.  Consumers have many different ways to control and arrange music.  Thus, for younger people, in particular, listening to it on the radio has become tertiary to their overall entertainment experience.

And as technology marches on, radio's ability to remain dominant will be seriously threatened.  A case in point is a new offering from TiVo.  They are pitching a free 30-day trial where TiVo owners can tie into Rhapsody to control 4,000,000+ songs in any way they want to hear them.  It's like having an iPod at home that is virtually loaded with a massive library, all accessible with a TiVo remote.  As we saw in "Bedroom," radio is already under siege in homes, and these types of CVC advances will only make the situation more challenging.

Yes, not many people actually have a TiVo, but the technology behind this new offer is what you should be considering as we move forward. 

Tomorrow:  another new CVC innovation - for your car.