CC Version of Radio's Future

[SirRoxalot]

First of all, David, you'll need to provide some source for your contention that "Pandora alone would be #1 in each of the major markets". Here are the latest Triton Digital numbers:

http://www.kurthanson.com/news/pandora-%22-largest-adult-18-49-radio-network-us%22-march

XM/Sirius, Slacker & the rest have considerably few listeners than Pandora, and a LOT fewer listeners than all radio stations combined.

As far as FM requiring earphones, I'd guess that 90% of the people that listen to streaming music on their phone either listen through earbuds, or drop their phone into a docking device of some kind. Either one could easily provide an antenna. Get outside of the canyons of NYC, and into the rest of the country, and FM listening would work very nicely. If PPM can't adapt to that, that's PPMs weakness, not radios.

Corporate radio would love to give up towers, transmitters, licenses, and the costs of compliance. The real question is "What do listeners want"? Many would opt for free FM over streaming. Studies from 2011 show that about 1/3rd of cell phone listeners have smart phones, and less than half of them use their phones for music. That doesn't break out the streamers from the people who store music on their phones.

 

[TheBigA]

Label negotiating is great for large companies, but it will be very difficult for smaller ones.

That's OK. No one is asking the small companies to do anything. There is no federal mandate, and deals like this make it less likely one will happen. That's why the RIAA is pissed. The labels get their money, and Congress gets to do nothing.

 

[TheBigA]

Corporate radio would love to give up towers, transmitters, licenses, and the costs of compliance.

I have no reason to believe this is true. Cumulus just spent $2 billion dollars to buy Citadel. Personally I think they're nuts. Two thirds of the properties they bought are absolute wastes. But now that they're in debt, they won't be getting out any time soon. Same with Clear Channel, Cox, Entercom, and all the others. They're all lifers and will own their towers until they're worth nothing at all. But they need a growth area, and streaming is growing. So that's the future.

 

[TomT]

My business partner & I have long discussions about this. He's been in programming & sales in a major market for 20 years, I've been on the engineering side.

What has happened is the sales suits are all in control. They've never done anything but sell. They have no experience or understanding about the rest of the business. Blow up a paper bag, hand it to them to sell & they'll bring back a $20.

The C's (except for CBS, Inc.) all paid too much for too many stations, especially in the smaller markets. The sales suits in charge don't know how to handle an environment where they have to constantly troll for sales from retail advertisers, rather than have three hour lunches with their agency counterparts for big $$.

So it's no surprise that they are constantly looking for the next bright and shiny idea to pitch for those big dollars. Forty years ago the word was "plastics," now it's "digital."

 

[TheBigA]

What has happened is the sales suits are all in control.

You had a long discussion, and THIS is what you conclude? Wow. The sales suits have ALWAYS Been in control. Since the 1920s.

What does any of this have to do with this deal CC made with Big Machine? If you think digital is motivated only by sales, and that listeners are not involved in any of this, then you're missing the point.

 

[davideduardo]

First of all, David, you'll need to provide some source for your contention that "Pandora alone would be #1 in each of the major markets".

It has been widely reported in the Taylor report, as well as other trades from Inside Radio to Radio Ink that the Pandora data shows that they would have aggregate shares in all the major rated markets that meet or exceed the levels of the #1 station.

If you look at markets like NY, Chicago and LA where #1 is in the 5 share range, what this means is that Pandora has around a 5 share... add in iHeart, Slacker, XM / Sirius and you probably have a low double digit share of listening already going to just those major players.

Add in secondary ones, like Batanga, and then add in the streams of terrestrial radio... which are not added to the terrestrial signal's numbers... and you already have a significant percentage of listening going to new media.

Radio today has the power to move into digital with a strong position and strong brands on the new platforms. If radio clings to just the transmitters and towers, they will eventually be faced with going into digital when all the good positions are taken and where the dominant brands have been established.

XM/Sirius, Slacker & the rest have considerably few listeners than Pandora, and a LOT fewer listeners than all radio stations combined.

I said that Pandora is at levels that would make it beat or compete with the #1 terrestrial station in each market, not that Pandora has listening greater than all stations combined. My statement: "Pandora... would be #1 in each of the major markets."

As far as FM requiring earphones, I'd guess that 90% of the people that listen to streaming music on their phone either listen through earbuds, or drop their phone into a docking device of some kind. Either one could easily provide an antenna. Get outside of the canyons of NYC, and into the rest of the country, and FM listening would work very nicely. If PPM can't adapt to that, that's PPMs weakness, not radios.

The only way for a PPM to pick up earbud or earphone listening is by putting a passthrough plug into the device, and then plugging the earbuds into that. The passthrough has its own connection to the PPM. Looking objectively at this, the vast majority of people will not do such a complicated thing, and that listening will be lost.

This is a "rearranging the deck chairs on the Titanic" kind of thing... sort of like HD Radio has been.

Corporate radio would love to give up towers, transmitters, licenses, and the costs of compliance.

No they wouldn't. Probably 90% of revenue comes from the towers and transmitters today, even more in some formats and markets. Nobody will give up the towers and transmitters until they are no longer profitable.

But it is really clear that the listeners prefer customized entertainment, programming on demand, etc., and they want one device that combines all their audio, video and communications requirements.

Consumers have moved or are moving into a world where they are in command... a true pull model. Radio is based on a non-customizable push model, and that is growing out of favor.

The real question is "What do listeners want"? Many would opt for free FM over streaming. Studies from 2011 show that about 1/3rd of cell phone listeners have smart phones, and less than half of them use their phones for music. That doesn't break out the streamers from the people who store music on their phones.

Do some more searches. Smart phones are approaching 45% of all phones now, and, more important, Internet dashboards are appearing in dozens and dozens of cars to the point that CD players are being dropped by some manufacturers.

If you consider that five years ago there was a low single digit usage of smart phones and now it is approaching half the market, you must consider that consumers are moving to a new model. Radio can adapt to it, or lose share. Today, radio has enormous reach and can use that power to keep their content popular across new platforms. If radio waits, it will be left behind.

If we see an astounding and unstoppable growth rate of new media as a delivery method, and don't move our most vigorous efforts to capitalizing on both our current reach and the future potential of new media to give new dimensions to our existing content, then radio is going to be dead.

 

[TheBigA]

But it is really clear that the listeners prefer customized entertainment, programming on demand, etc., and they want one device that combines all their audio, video and communications requirements.

And this is really at the heart of the issue. The consumer electronics industry, imho, has really been the culprit here because they have completely left OTA radio out of all of their devices. The obvious one is the FM chip in phones. But when was the last time some cool new device included a radio? You have to go back over 25 years to the boom box and the FM Walkman. An entire generation of consumers have grown up not knowing the excitement of a small transistor radio in their pocket. That device has been replaced by the cell phone. The ONLY new approach to radio in the last ten years was HD, and we all know what a failure that was. You can argue all day about content, content, content. But if consumers can't receive your content, it doesn't matter.

 

[Groove1670]

Hint: were it ranked against terrestrial radio, Pandora alone would be #1 in each of the major markets. Add in XM / Sirius, Slacker, iHeart, et. al. and you have something that is approaching the dimensions of radio. And growing, while radio stagnates or shrinks.

In a nutshell, phone companies want people to use bandwidth (FM won't), radio needs cell to survive. CES could care less about FM, the government might step and mandate to keep FEMA workers working (someone has to inspect CAP systems, and fine for non compliance.)

So let me ask this question? As a station owner or manager, what would you suggest to save radio.

Is CC Version of Radio's Future moving us in the right direction, or is it a thinning of the herd.

The only way for a PPM to pick up earbud or earphone listening is by putting a passthrough plug into the device, and then plugging the earbuds into that. The passthrough has its own connection to the PPM.

The computer geeks might come up with some kind of app assigned to PPM participants?

Research, stats, surveys, etc. isn't working and failure is on the horizon for the industry (so the pundits say).

The same tried and true is not working. Other than "digital integration" (my term) which radio is fighting and I don't know why.

What are some solutions. Please no comments such as sell now, community involvement...etc. List out of the box solutions.

 

[TheBigA]

So let me ask this question? As a station owner or manager, what would you suggest to save radio.

Before I answer, let's define terms. What do you mean by "radio?" Do you simply mean towers and transmitters? Or do you mean aural transmission of content? Because if you mean the former, a lot of it is in the hands of the FCC and Congress. If it's the latter, I'd suggest what you're seeing is the natural progression of radio. The public loves radio. They prove it every day.

 

[davideduardo]

The computer geeks might come up with some kind of app assigned to PPM participants?

Research, stats, surveys, etc. isn't working and failure is on the horizon for the industry (so the pundits say).

At some point, the smart phone will be the base for all measurements for all entertainment media. At present, there are severe engineering issues, but when all delivery originates in the cellphone, it will become quite a bit easier.

The problem at the moment is that, due to AFTRA contractual rules, most radio station content delivered via streams can not be combined in ratings with the on-air service's ratings.

Ratings are working much better than ever. The real issues involve data users who require more and more granularity which increases costs in an era when many people do not want to be part of surveys.

 

[Groove1670]

Before I answer, let's define terms. What do you mean by "radio?" Do you simply mean towers and transmitters?

An old fashioned station with an assigned frequency of 96.3 MHZ with an effective radiated power of 3400 watts as authorized by the Federal Communications Commission, Washington D.C. ;D

 

[KeithE4]

Before I answer, let's define terms. What do you mean by "radio?" Do you simply mean towers and transmitters? Or do you mean aural transmission of content? Because if you mean the former, a lot of it is in the hands of the FCC and Congress. If it's the latter, I'd suggest what you're seeing is the natural progression of radio. The public loves radio. They prove it every day.

The latter. Just like a thin piece of paper that is removed from a box and used to blow ones nose is called a "Kleenex," regardless if the brand name is Kleenex, Puffs, Scotties, or Wal-Mart.

The name "radio" has become generic for "aural broadcasting" of all kinds, IMHO. It may be prefixed with "AM," "FM," "Shortwave," "Satellite," or "Internet," but the transmission of audio content to the listener is still "radio."

 

[davideduardo]

Before I answer, let's define terms. What do you mean by "radio?" Do you simply mean towers and transmitters?

An old fashioned station with an assigned frequency of 96.3 MHZ with an effective radiated power of 3400 watts as authorized by the Federal Communications Commission, Washington D.C. ;D

But that is not the way consumers, in their majority, think. As KeithE very precisely wrote, listeners consider radio to be most forms of aural broadcasting, irrespective of the delivery system.

Or, as I would say in this post-McLuhan era, the medium is not the message. When the media consisted of print (newspapers and magazines) and broadcast (radio and TV), the idea that the medium itself influenced the message had great validity due to the limited number of media and the paucity of voices in the local market. Today, the message is in the content, and the medium is a utility.

Radio has to decide if it wants to be a utility or a content provider... the medium or the message.

 

[TheBigA]

Before I answer, let's define terms. What do you mean by "radio?" Do you simply mean towers and transmitters?

An old fashioned station with an assigned frequency of 96.3 MHZ with an effective radiated power of 3400 watts as authorized by the Federal Communications Commission, Washington D.C. ;D

The major radio companies are merely licensees of those assigned frequencies. They don't own them. It's up to the owners to be concerned about the fact that the public is looking to other devices for content. And I've long complained that the FCC doesn't care about radio. They're too busy selling spectrum to the telecom companies and fining stations for indecency. Broadcasting companies are tired of the fines, tired of being told what they can air and not air, tired of the government threatending license renewals, and tired of the ownership regulations. Between the government and the consumer electronics industry, the deck is stacked against companies that want to reach the public. So as I said earlier, the future of radio is putting your content on every manner of transmission, on every device, and on every platform. Get started now because it appears that the owners of the spectrum are content with status quo.

 

[TomT]

If you can't make money providing the content--what is the point?

That's the trap Pandora is in. That's the problem now trying to stream conventional radio--and even making enough to cover the costs.

Now, if you are a means of distribution--like the cell phone providers, or Charlie Ergen ( dish network) and can find a way to get content for free or next to nothing--you don't care so long as the consumer pays you for these distribution channels.

Of course, Charlie is now about to kill the goose to see where those golden eggs come from by eliminating commercials from the network shows he distributes.

BTW--the "owners" of the spectrum are, well, is, the government. For those folks who see black helicopters everywhere, consider what happens when everything comes through broadband--internet--connections. Provided by just a few big companies. The internet can be controlled, at least for the masses--look at China, look at Iran.

 

[Groove1670]

I've thought about this performance agreement from a different perspective (all speculation... or course):

#1: If you are trying to work out a resolution to the performance argument, why not negotiate with a single entity in the pie. It will be difficult for any government mandate to be put into place if you are making the effort to solve this issue, and your competition will continue to pay 50% (estimated) of their revenue.

#2: You can keep your stream (product) commercial free for awhile, take market share from your competition, and at the same time work out details with others (labels). Since you have a handful of majors now, you might be able to get your rate down to a low % of revenue.


#3 Will broadcast (FM/AM) rates (rules) be the same as pure play rates? What will Sound Exchange say about this. Will they be willing to do away with per performance rates and go with a rate based on revenue.

Just sayin'

 

[TheBigA]

#1: If you are trying to work out a resolution to the performance argument, why not negotiate with a single entity in the pie.

That's what they've been trying to do for ten years, using the RIAA and the NAB. The NAB offered a plan to the RIAA a year or so ago, and a bunch of small stations within the NAB objected. So radio isn't 100% united on how to deal with this issue. The RIAA wants to do a blanket deal, but it's using the same metrics as digital, which is unacceptable. So there is no single entity that is acceptable to everyone.

#3 Will broadcast (FM/AM) rates (rules) be the same as pure play rates? What will Sound Exchange say about this. Will they be willing to do away with per performance rates and go with a rate based on revenue.

What SoundExchange has said is the rates are set by the Copyright Royalty Board, not them. The last time the rates were set, it took an act of Congress to allow music users to negotiate directly with SoundExchange. Those who negotiated got a discount, but it was still as much as 50% of revenue. That won't work for OTA radio.

There were hearings in Congress on this subject this past week. You can do your own search and read what they concluded. But everyone knows the digital rates are too high. That needs to be fixed. But nothing is happening because of the logjam. So companies are taking matters into their own hands.

 

[Groove1670]

The question is how long will Pandora wait before they demand action and or relief?

 

[TheBigA]

The question is how long will Pandora wait before they demand action and or relief?

As I said, do a search on the Congressional hearings. The demanded relief this past week.

 

[SirRoxalot]

There is a fundamental difference between on-line and OTA radio. Most on-line music services are on-demand. You ask for a song, and they've got it, you get it. It's like walking into an old-fashioned record store and being able to take a platter into the audition booth for your own consumption. The difference is that in this case you can also take your recorder into the audition booth and make a copy if you want to dump it to your personal collection.

OTA radio is not on-demand. It's curated content. If a station plays the song you want to hear, they'll get to it at some point. Well programmed stations will also deliver other songs you like, and other content of value to you. It provides companionship to people who are otherwise occupied, or not in the mood to interact. If you want to record a particular song, you may have to record for a long period of time, and that music is likely to butt directly up against other content. You're likely to discover music you like that you haven't heard before, or heard in a long time. On well-programmed stations, that music will be set up and delivered in a manner that makes unfamiliar music more palatable.

OTA radio does a much better job of introducing new content than Internet music services. Yes, Internet music services have EVERYTHING. That's the blessing and the curse. There's a lot of flotsam bobbing out there, and having someone sort out the really worthy from the mere curiosities is a service that many people appreciate. Critics aren't going out of business. People value the input of experts. BigA will argue with this, but good radio people ARE experts at selecting and presenting programming content. That's why radio still reaches 93% of the population.

Whether you want to call on-line music services "radio" can be parsed in a lot of different ways. Is content delivered wirelessly? Then technically it's radio - like satellite radio. Cellular? Technically radio. But, when we discuss "radio", are we talking about the technical means of delivery, or the difference between broadcast delivery and interactive programming selection?

Artists and publishers have recognized that on-line music services have replaced the music store in the delivery of content. Radio hasn't changed, the way that listeners obtain private use of music has. Should there be a difference in rates between on-demand and broadcast services? I believe that there should. On-line interactive services are like the music store that lets you audition that record - and hands you a bunch more records "that you might like". You can easily record them and dump them into other portable devices that don't require a constant connection - like an MP3 player. It's a very different service than OTA radio or other broadcast services.