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Siriusly, Read the Fine Print

Some big news out of the satellite radio camp this week.

First, in the middle of the recession and at a time when subscribership is on a downward trajectory, Sirius XM is raising prices to accommodate music royalties.  At the end of July, the monthly fee gets jacked up $1.98 to pay for the performance royalty tax.  At a time when our Tech Poll shows that satisfaction with Sirius XM is going down, and the propensity to continue subscribing is also headed south, passing along this burden to consumers cannot be perceived as a positive.

Then there's their new iPhone app.  Finally, after months of development, Sirius XM channels can be accessed on iPhones.  This comes at a particularly propitious time as the new $99 iPhone hits the market.  Along with the new 3G S, how many more millions if iPhones will be in circulation throughout the rest of 2009? 

But, of course, it's not that simple.  If you're a Sirius XM Premium Online customer, the app is free.  But to upgrade to that status, it's an additional $2.99 on top of what these subscribers are already paying for satellite radio.

With me, so far?  But that's not all because even after absorbing the additional $3, the app still doesn't deliver what you really want from Sirius XM on your iPhone - MLB and NFL play--by-play, NASCAR, and some guy named Howard Stern.  You can already read the "reviews" on iTunes from many less-than-thrilled subscribers.

So, the good news is that Sirius XM finally got its brand and a lot of its content on a different (hotter, cooler, etc.) platform.  The bad news is that it will cost subscribers even more than they're already paying in a business proposition that has become steadily shakier.  And for all that, the King of All Media apparently doesn't include the iPhone in his slogan.

Pass.

Satellite Sunset

I'm sure this has happened to you.  You're at a gathering with non-radio people, and inevitably the conversation turns to what you do for a living.  And how many times have you been asked, "Isn't satellite radio killing you guys?"  Or "How is AM/FM radio doing now that satellite radio has become so popular?"

Perception versus reality.  Sirius and XM did such a great job in the early years, while broadcast radio sat around (or ran their commercials), that the buzz they generated continues to resonate to this day.

The problem is that the bloom has been off the rose for a long time now.  And the most recent release of Sirius XM's first quarter results shows that they're shedding subscribers - this time, by 400,000 or about 2%. 

The company blames poor auto sales, and while they're cutting costs, it doesn't change the fact that satellite radio has been leap-frogged by other technologies, and no longer is the "got to have" gadget.

We have been tracking this for years in our Tech Polls, where subscribership has been flat, but there are other signs of trouble.  In last year's survey, we discovered the ugly truth that if satellite radio came with the vehicle that you purchased or leased, your commitment to continuing to pay was not very strong.

This year, we're tracking Sirius XM's subscriber satisfaction, which has been steadily decreasing since we began our surveys. 

 

Based on current subscribers to Sirius XM

And the commitment to subscribe continues to be troublesome.  This year, only half of Sirius XM customers say they "absolutely" will keep paying through the end of the year.  Not a good sign.

Based on current subscribers to Sirius XM

Does this mean that satellite radio is over?  No, because they still have some impressive content, major personalities, and they have always thought big.  They have some options because of their assets, but with technology moving at such a rapid pace, and given this economy, there are lots of other new media threats of more importance to terrestrial broadcasters.

So, the next time you're at that backyard barbeque, graduation party, or baseball outing, and someone asks you whether Sirius XM will replace broadcast radio, you've got some fresh statistical ammunition.

Choices, Choices

You're Major League Baseball.  You have a great product that has huge interest around the country, not to mention around the globe.  You're trying to get your games on as many platforms as possible, while building revenue along the way.  Sure, you're on satellite radio.  But with all the troubles they have, and the lack of mobility (for the most part) with this medium, how do you address the growing mobile device business that provides true portability?  (The portable transistor radio, by the way, wasn't so bad.)

So, you create an iPhone app.  And you charge $9.99 for it, a small one-time price to pay for every streaming ball game from the Yankees to the Mariners.  Even for folks who don't like to purchase apps, this is a pretty attractive deal in order to receive every game all season long.  And it's not just the broadcasts - there are stats, interactive features, instant video highlights, and all the things that a baseball fan could want, in addition to choosing from the home team or the away team's announcer team.

You've made your choice.  Yes, you cut a sweet deal with satellite radio, but you know all too well that with the meteoric growth of the iPhone ("There's an app for that"), you'd better get mobile and get cool in one fell swoop.

You're a fan.  You have a strong interest in following your team (as well as others that compete in their division).  So, you do the math.  $12 a month for satellite radio - forever.  Or you buy an iPhone for $200 (or a Touch if you're stuck with T-Mobile or something), and for an additional $10, you're good to go.  You can take the device with you wherever you may roam all summer long.

Of course, on satellite radio, you get all those cool music channels.  But on your iPhone, you get AOL Radio, Pandora, thousands of commercial stations, streaming channels, and the "cool factor" that comes with this device.

You're a radio broadcaster.  The whole world is moving mobile.  There are now 3 billion mobile devices out there - more than the number of TVs, radios, and computers on this planet.  It's an industry that is looking pretty recession-proof.  Consumers replace their phones every 18 months, many carry more than one, and more and more, they are inseparable.  (Most teens sleep with their phones.)

You're streaming, and you're watching those statistics grow, but for the most part, this activity is limited to "tethered listening" on a desktop or laptop.  You know you need to start thinking mobile, and every time you open the trades or USA Today, there's another big brand launching their iPhone app.  You watch those iPhone commercials on TV, and you very much want to be on that hot-looking desktop.

You want your listeners to be able to take you anywhere - just how radio was when you were growing up, listening on your Walkman.  But you've seen the Jacobs Tech Polls, the Arbitron/Edison "Infinite Dial" studies, and you've watched the "Bedroom Project" videos.  You know that radio is losing its portability.

Apple may have cut you out of the iPod, the device that eroded radio's mobility, but they're letting you have presence on the iPhone.  And It can be done, and for very little money.  There are some attractive aggregated apps out there that any broadcaster can become a part of.  If you've got a great brand, these can be good places to be, as long as consumers will go through the scrolling effort to find you.  Of course, along the way, they may run into many other stations they enjoy, too.

There are also "stationalized apps" - what we're doing here at Jacobs - that will put your station right on the iPhone desktop.  Beachfront property where your next door neighbors are Google, YouTube, Facebook, and Pandora.

Major League Baseball knows what it's doing.  Just keep your eye on the ball.

Convergence 2009

As mentioned in an earlier blog, I attended Radio Ink's tech conference a couple of weeks back.  The strong turnout was one of the most impressive aspects of the event.  At a time when companies discourage convention attendance for any number of reasons, a big meeting room was jammed for two full days.  It is a tribute to Eric Rhoads and his staff, and to everyone who found a way to get to San Jose for this conference.  Obviously, there are many radio professionals who are still searching for answers, trying to learn how to integrate technology into this industry of ours.

As enlightening as some of the panels were, however, I couldn't help but wonder how radio is going to turn that next big corner and truly reinvent itself.  As we watch venerable media outlets like The New York Times struggle, as hundreds of magazines fold, and as Sirius XM flirts with bankruptcy only to be bailed out at the Eleventh Hour, radio is still groping for answers.

It was noteworthy that many of the smartest professionals in our industry are groping around, and trying to unlock the monetization key.  While it is clear to just about everyone that streaming, access on mobile and Internet devices, and texting are all mandatory at this juncture, how to get it all paid for continues to be the mystery of mysteries.  Panelist after panelist circled around the issue, but there are painfully few war stories that broadcasters can simply take home and plug in to their markets.  

Maybe part of radio's "answer" is to get back to where we once belonged.  It was interesting to me that amid all the gadgets and technologies, several of Convergence's luminaries talked about the importance of being local and making a difference to listeners and communities.  Both Guy Kawasaki and Craigslist's Craig Newmark talked about this value, especially as it pertains to customer service.   

And it was also interesting to me that both of these Silicon Valley geniuses have their terrestrial radio favorites.  For Guy, he couldn't stop talking about Classic Rock K-Fox and morning guy, Greg Kihn.  And for Craig, he went out of his way to laud radio podcasts, and mention NPR's "On the Media" - a show he said he'd pay to listen to.  These are hi-tech mavens who could occupy their time with a myriad of new content offerings, but in each case, they love aspects of broadcast radio.  And Gordon Borrell reminded us, once again, of the power of radio's cume to drive thousands of consumers to any number of websites.  

So, I left Convergence with mixed feelings.  On the one hand, too many smart people recognize radio's promise, but in the process, warn against losing that local, community identity.

Local towns and cities are especially hurting these days, and it's hard for us not to notice those among us who are out of work, restaurants and local businesses that are closing, and factories that are shuttered.  There's never been a better time for radio to turn its focus to the communities and towns that supported us all these years.  

It may be a case of doing well by doing good.

Green Light

While Sirius XM was being bailed out by Liberty Media yesterday, another key announcement was overshadowed by the news.  The NAB's negotiation with SoundExchange for more than reasonable royalties on radio's Internet streams is an open invitation to broadcasters.  Consumers aren't about paying for satellite radio.  But they want to simply receive audio entertainment on a wide array of devices and gadgets - from computers to phones.

This new deal paves the way for radio to transcend towers and transmitters, and get serious about providing its content in new places, from desktops to laptops to iPhones.  Radio has been struggling in the "location department" for several years now, but can now effectively compete in offices, cars, and while consumers are on the go with mobile devices.

But there's a catch.  Radio needs to step up the quality and reliability of its streams.  Too often an afterthought, we have seen up-close-and-personal what happens when stations produce inferior streams.  We have now launched more than 30 iPhone apps (with more than that number currently in production).  Sadly, we receive many complaints from users who are subjected to unreliable and poor quality streaming services.

It would be unthinkable for a terrestrial station to produce a signal that is inconsistent and poorly processed, but somehow when it comes to streaming, too many broadcasters haven't gotten the message.  The Internet has democratized streamers.  Everyone has the potential to be the equivalent of a 50,000 watts/clear channel online, whether it's a station owned by a big company, one run by a mom & pop outfit, or even streaming-only enterprises.  But when broadcasters fail to step up by providing quality streams, they do themselves a major disservice - and they drive the digital audience elsewhere. 

Don't buy iPhone apps or promote streams that will simply discourage users from coming back.  There are too many great choices on the Internet, and too little time for disappointment.  The NAB/SoundExchange deal is an important step that makes streaming for local radio affordable.  But that assumes that radio companies will get the message, and do the basics that can make them competitive in the digital arena.

Statement Of The Obvious

Jay sums up what we've been hearing in focus group after focus group for nearly ten years...

Has Mark Ramsey Missed The Point?

Mark's a good friend and a great observer of the media landscape.  But in this morning's blog, he disparages the individualized radio station iPhone application, and instead, lauds RadioShiftTouch, an app that he says can get any station anywhere - for $9.99.  So, you can get thousands of radio stations - terrestrial, streaming, etc. on your iPhone...

Versus your station - for free - on your iPhone, alongside Pandora, YouTube, Google Maps, and AOL Radio.

As Mark points out, "The iPhone is not about you, it's about your audience and what they want."

Precisely.  And our nationwide Tech Polls continue to show that your audience wants to stream your station on their computers and handheld mobile devices.  Yes, some of your more adventurous listeners might want to seek out that Ska station from Ireland, or a station they grew up with back in Omaha.  But by and large, they want to be able to - simply - find your station on computers and phones, and listen whenever and wherever they want.

Big aggregator sites that offer thousands of stations aren't about the listener - they're about making lots of money by combining many, many stations together.  The tyranny of choice is one of the reasons why satellite radio is failing.  While subscribers have a couple of hundred stations available to them, the fact is that most people just tune in a handful.  Similarly, that's the way most of us watch cable or satellite TV.  We find our handful of favorites, and that's where we gravitate. The fact that there are hundreds of available stations is irrelevant to most people.

But even if you believe there's value to being a part of a Wal-Mart "big box" site, there are cheaper ways to be there, such as FlyCast (free) versus having to pay $10 for RadioShiftTouch.  Most iPhone owners aren't crazy about paying for most apps to begin with, and this one's more expensive than most.

So an app that contains hundreds or thousands or an infinite number of streaming stations for $10 isn't really a service to most consumers.  In fact, it's confusing and relatively expensive.  A real service to your listeners is making it easy to receive your station on popular handheld devices.

I frequently agree with Mark about most things digital and media.  But not this time.
And by the way, why wouldn't stations want both - their own individual icons on iPhones and being a part of aggregated sites?

Full disclosure - we are selling individualized iPhone apps, they are selling fast, they are working wonderfully, they are positively reviewed by consumers, and we couldn't be happier to be able to bring this service to an industry that could use a little good news.

Recession-Era Radio

It is fascinating that as the recession deepens, and media outlets big and small recalibrate their losses, radio continues to look good - in certain metrics.  New national Arbitron data indicates that while TSL has dropped, overall listenership in the U.S. has jumped from 232 to 234 million this year to last.  That's not a bad story overall, when you consider that "flat is the new up."

And why shouldn't the radio story get even better?  As consumers reassess everything, there is increasing evidence that media and entertainment expenditures are under intense scrutiny.  This is especially true for media that people pay for.  We're all going through it, asking ourselves the ever-present question: What do we really need and what would be best left for better times?

Comcast is experiencing this right now as customers are calling the company looking for relief from high cable bills.  They have developed more inexpensive cable bundles that limit channel access, while lowering monthly outlays.  You have to believe that Sirius XM operators are taking similar calls from nervous subscribers.

A recent study from Nielsen Mobile indicates that more and more consumers are questioning why they have a cell phone and a landline.  And many of them are in the 35-54 age range, not struggling college graduates or twentysomethings. 

This is more evidence of the importance of our annual Tech Polls, the fifth of which is planned for February.  As the recession alters media habits and expenditures, it will be even more important for radio to seize available opportunities.  How are consumer habits changing?  Are we possibly looking at lowered numbers for satellite radio and even iPod purchases in 2009?  

Meanwhile, a free medium that offers so much entertainment and information may be perfectly cast for recessionary times.  Radio could actually glean even larger audiences in the next year or so, especially if it more effectively makes its case to consumers - and advertisers. 

There is a marketing campaign here.  After all these years of satellite radio redefining our industry, isn't it time for radio to step up and aggressively take pride in what it does best, while pointing out radio's inherent assets?  Is it "Radio Heard Here" or is it "Free Radio NOW?"

Arrested for Buying Advertising While Blind

Lately, there's been a lot of focus on Detroit, and how Ford, GM, and Chrysler will pull out of this mess.  There are a lot of factors in play, from the quality of their cars to union wages.  But for those of us who live in and around the Motor City, there's also a sense that the marketing efforts from the Detroit 3 have been uniformly abysmal.  

A case in point is the incessant  promotion of satellite radio.  Our Tech Polls - and now just about every media and technology pundit in America - continue to tell us that Sirius XM isn't the "X factor" that will sell new cars and trucks.  Yet, you continue to see satellite radio touted in commercial after commercial.

We know these ads could be much more effective if they promoted the ability to plug one's iPod into the vehicle’s sound system.  For so many consumers, that's a key selling point. 

So why should we be surprised by the results of a study from Prosper Technologies that suggests that a new media allocation model is long overdue in the automotive industry?  Surveying more than 17,000 consumers, they conclude that there's a "disproportionate allocation of spending on TV versus other media." 

Yes, the advertising mavens tend to spend about 40% of their automotive budgets on TV, and yet, which medium does the Prosper model suggest is more effective?  

RADIO.

As James Geoghegan, President of Media Head, points out, "These findings are nothing short of a complete re-think of media planning."  Well, I guess so.  And yet, radio takes a distant back seat to television in automotive media advertising.  And it's looking more and more like the Internet could be the big winner in 2009.  So what's the problem?

Some of radio's CEOs have submitted that it's all about perception.  While many would take exception to that claim, in this case, they may be right.  As the Prosper model shows, "the amount of radio consumed, its influence to purchase, combined with lower costs makes it a stronger media option, which according to consumers is under-utilized."  

Sadly, radio is making a lot of negative headlines these days.  Ongoing layoffs, the firing of popular personalities, and other events continue to put the medium in a bad light.  And yet, the intrinsic value of radio - which was always overlooked even in good times - remains as an incredibly effective way to sell just about anything.

Even Impalas. 

The Cheapest Common Denominator

Today's guest blog is from our own Bill Jacobs, who provides reasons for us to listen to terrestrial radio.  Why, you ask?  Because it's free!

You don’t need me to tell you that we’re living in a very unique time, one that none of us could have ever imagined.  With the exception of gasoline (which is definitely nice to see), prices are high or rising and so is unemployment.  Concurrent with that is the reality that consumers are spending less on nearly everything – auto industry sales are plunging, and the Christmas retail season is looking scary.  Satellite radio's woes are well documented, and an industry where subscribership has historically held up well - satellite television - Dish Network is experiencing declines.  

All of these subscriber-based services cost money.  Yet, terrestrial radio does not, and that remains one of its key selling points during this unprecedented economic tsunami.  Few things in life (that are any good) are free.  Douglas Gomery, the emeritus professor of journalism at the University of Maryland, notes that in rough economic times, two winners -- at least should be television and good old terrestrial radio.  For the same reason that low-cost providers such as Wal-Mart (the lowest prices) and McDonald's (dollar menu items) appear to be weathering the economic storms, it stands to reason that, “TV and radio will both do well during a deep recession," according to Gomery.  He goes on to state that “A poor economy is not likely to be kind to satellite radio services XM and Sirius – even as merged.”

In recent months, radio stations have faced tremendous cutbacks in all areas, but the expectation of viable entertainment every time a consumer punches up a station hasn’t waned.  That, coupled with the fact that radio is arguably the best free media proposition, means that broadcasters must maintain a level of quality and consistency, even in difficult economic times.  And while staying positive is a challenge, it's a must.

Should radio stations go on a full blown on-air campaign touting the fact that we're free?  That’s a station-by-station call but certainly there’s a lot to be said for pointing out this very fact:

“WHO says the best things in life are free?  WE DO – Rock 102, always on, always rockin’, and always free.”

As consumers continue to cut back on many entertainment options, it is crucial to remind listeners they get the most bang for their buck from radio:

• "Cost of a new iPod?  $299”

• “Cost of four tickets to a Lions game?  $200 and unending aggravation.”

• “Cost of going to a movie with the entire family?  $50.

• “Cost of listening to Rock 102?  Not a dime, though if you’re inclined to send us some money, we’ll gladly take it.”

How's that for a little free advice?