A Hobby Or A Business

There have been lots of discussion in the trades about Jeff Smulyan's recent comments about streaming and digital initiatives at the BIA/Kelsey conference last month.  In essence, Jeff threw up the caution flag about broadcasters pursuing technologies that are "very cool" but are unlikely to show a profit.

And that has led to back-and-forths in the trades about streaming and the challenge of hammering out a business model that works.  The apparent debate is whether digital is a hobby or a business. 

One of the traditional beauties of the terrestrial radio model is that you can you turn on a transmitter, erect a tower, and the cost of acquisition for listeners becomes essentially free.  With streaming, it's pay as you grow. 

As old media companies confront digital strategies, their costs, and the difficulty of building effective business models, we keep coming back to the same old debates.  Should radio broadcasters essentially stick to their knitting, and play a "wait and see" game with digital platforms?  Or should they dive in and pursue new technologies with the knowledge that they all may not produce gobs of revenue?  

Jeff Smulyan is one smart guy and a great broadcaster.  Everyone who has worked for him will tell you that he's runs a company that you want to work for and it's hard not to feel good about Emmis' recent move to take the company private. 

But the fact that we're still debating digital rather than going after the opportunity with commitment and a solid strategy is disturbing.  Emmis Interactive is a case in point, marketing its services to help broadcasters build their digital footprints.  

The fact is that radio broadcasters need to be where listeners are - or risk losing them.  Whether it's expensive, whether there are risks involved, and whether it requires investment in personnel and dollars. 

How far behind would newspapers be had they not pursued web editions?  Can you imagine if our own industry trades insisted on still printing and faxing their papers rather than having made the adjustment to digital?  We'd have stopped reading them by now.

There is no debate about what consumers are doing.  They're online, they have DVRs, they control their music with iPods, they connect with friends and family on Facebook, they love their smartphones, and they're discovering Pandora.  These aren't opinions.  They are facts. 

The longer we sit around debating if we're going to pursue a technology based on whether it neatly fits into our financial model, the farther away radio moves away from consumers.  And as that gap widens, radio becomes less relevant to their media and entertainment lives.  It's not about whether anyone is making money with streaming.  It is about syncing up your content with listener habits, and then finding a way to monetize it.

And instead of viewing new platforms as expensive obligations that are "hobbies," radio companies might benefit by looking at them as opportunities that can make listeners happy, that can take their brands to new and exciting platforms, and that can create new revenue streams.  At a time when many broadcasters are finally confronting the reality that spotloads have spun out of control, the promise of new avails, new sponsorship opportunities, and new partnership possibilities should be embraced - and not feared.

Of course it's not easy.  Introducing and marketing new technologies is challenging, especially for a legacy medium that is used to simple, ratings-based transactional business.  The fact is, Emmis stations have come around and are streaming - even if the revenue model is challenging and may not generate mega margins by 2011.  That's because like it or not, that is where the audience is moving.

At Jacobs Media, we are walking the walk, and the creation of our jacAPPS division and its subsequent success proves that with research, foresight, and vision, digital can be profitable - and it can expand brands.  Believe me when I tell you that app development is far from a hobby inside our company.

Yet, there are still many voices out there urging broadcasters to "wait and see." Or simply hoping that the Internet will somehow go away.

Let's stop debating.

Dave Kennedy summed it up at BIA/Kelsey - "Let's just start doing it." 

Comments

[Chris Crowley]

Great points, all, Fred. Plus, if you read one of the headlines today in All Access the point is really driven home - NPR's Vivian Schiller: Net Will Replace Broadcast In 5-10 Years. Let's face it, the digital world is where everything is moving; take a"wait and see" approach at your own peril.

[Fred]

Thanks, Chris, and your new company - Entercom - is moving the ball down the digital field