Radio Needs Jeff Bezos

[TheBigA]

Or someone like him.

Why Jeff? Because he has proven he knows how to compete in the digital world. He figured out how to monetize digital. That's something radio is struggling with. Why is that important? Because that's where radio's audience is going...like it or not.

Pandora thinks it knows how to monetize digital. But they don't own their own content. They're just a temporary server for people looking for free music. That's not really monetizing digital. Until they actually create something, they're just a reseller.

What really changed the game for Bezos was the Kindle. Until the Kindle, Amazon was Pandora. Radio needs a Kindle. Of course, they have one. It's called a Radio. But radio companies don't make or sell radios. Amazon sells Kindles. That's why radio needs a Jeff Bezos. Not for programming. Jeff will let The Post people run the paper. They need a visionary who knows how to get people to buy things. It's a business problem that radio business people have yet to understand. Bob Pittman comes close, but he's stuck with $20 billion of baggage. Hard to innovate with that much dead weight around your neck. Jeff doesn't have that problem.

Here's how TheStreet views it:

http://www.thestreet.com/story/11999695/1/theres-no-better-owner-for-a-newspaper-than-jeff-bezos.html?kval=dontmiss

Once again, it's not a content problem. Radio has lots of people with great ideas for content. The problem is monetizing it. How do you do that? Building a web site won't do it. Social media won't do it. Placing your content on someone else's site won't do it. Sooner or later, your advertisers will want to cut out the middle man. Bezos revived the mail order business. He made it cool to order something and wait for it to arrive by mail. If he can get people to pay for that, he can get people to buy newspapers and listen to radio.

 

[Goat Rodeo Cowboy]

The first part of your post left me scratching my head. Maybe you know a lot about Amazon. I know very little. But only recently ordered merchandise that came through the Amazon chain. And now I am doing business with an Amazon subsidiary.

I guess I would be quite surprised if you can demonstrate to me that the Kindle generates a significant amount of revenue for Amazon... as the Kindle.

But down at the end of your post, you focus on the part of Amazon that I see. (Maybe I only see the part of the iceberg that is above water.)

Amazon does not appear to make money off what they OWN, what the PRODUCE. They seem to make money by being "the logistics chain" for uncounted numbers of people who do own something. I needed a peculiar computer-style power cable.... but it needed to have a right-angle plug down on the female end... and it needed to be a "left handed right angle" plug. I bought it on Amazon... but I am not sure who I bought it from. I really don't know who owned the merchandise the day I said "Sold! Ship it!". I'm doing business on a page of the Amazon site, I'm trusting a billing function at Amazon with my credit card, I suspect the "left handed right angle" entrepreneur had an Amazon warehouse storing his inventory. (Would I have been doing business with a different entrepreneur if I needed a "right handed plug"? Amazon employees no doubt put the cable in the box, but I have no concept the Amazon ever owned the cable. I would not be surprised to learn that Amazon has a finance department that was willing to loan the "left handed right angle plug" entrepreneur the capital to buy his supply of cables, and probably was instrumental in shipping the cables from a factory somewhere in Asia to get them to the Amazon owned warehouse where the entrepreneur could store them.

But I have no concept that Amazon every owned the cable I bought!

When you look at all the steps where Amazon may have carved out a small percentage from each of these stair-stepped transactions as a fee, a service charge, a handling charge.

It looks like Amazon set up a subsidiary withing the last two years as an adjunct to another subsidiary set up maybe 8 years ago, that is revolutionizing the audio book business... which we used to call "books on tape". So if you go to Audible.com or to iTunes and buy and audio-book which Amazon has never owned, how many business steps are there from author to "Kindle print version" to voice-over guy back to Audible to download audio version for Kindle or PC or Smartphone to care out a small amount of revenue.... but NEVER "OWN" the book?

 

[TheBigA]

I guess I would be quite surprised if you can demonstrate to me that the Kindle generates a significant amount of revenue for Amazon... as the Kindle.

It's not that the Kindle itself generates revenue, but that the Kindle is the core of their platform, and Kindle owners then buy lots of books (from Amazon) to read on it. It's their iPod. It's cheaper than the iPad. As a stock watcher, the release of the Kindle is what has propelled the rise of their stock price. Two years ago, the story was the Kindle wasn't selling. Turns out the story was wrong. The stock doubled. Bingo. When was the last time a broadcasting stock doubled? I mean in the positive direction.

But I see what you mean. My third sentence may have implied that Amazon owns its own content. It doesn't. But the fact that Pandora gives up half of its revenues for the music it distributes is what's killing it. They need a product they own. They need a cash cow, and music isn't going to be it. They need something else. Bezos has created multiple revenue streams. That's what radio needs to survive.

 

[Goat Rodeo Cowboy]

Bezos has created multiple revenue streams. That's what radio needs to survive.

Once in awhile I go sit in some quiet place and just think. What other revenue sources are available to radio? Which of them just flow naturally? I'm sure a lot of people go through that same process.

When FM started getting a toe-hold, it looked like an additional source of revenue to compliment the A.M. revenue. But broadcasters dealing in retail soon realized if the F.M. was generating revenue, it was hard to demonstrate that it wasn't just cannibalizing some of the existing A.M. revenue.

Then came the sub-carrier craze and Muzak was going to be a significant profit center. For a few... it was for awhile... and then technology moved on.

Now we have the Internet. Surely we are all smart enough to figure out extra revenue from our market using the Internet. I guess some genius could mess with Internet at his/her local radio station and with the right set of smarts become the next Bezos. But what you and I are discussing, I think, is how can radio develop other revenue sources at the local market level... something that your closest friend with a radio station two states over could also do.

We have seen local, small stations that made a side business out of a "shopper newspaper" but there are some smart Shopper owners who don't give up their territory their "franchise" easily. And once again... you run your Shopper and wonder if you are actually creating new revenue, or cannibalizing some of the broadcast revenue.

Some broadcasters promote and print Local Sports Calendars, but that can hardly ever develop into something persistent and abundant as Amazons picking up a shipping charge here, a storage charge there, etc.

I read the Jerry del Colliano concepts for awhile. Radio people, not necessarily the station, were going to march to great wealth with Podcasting. So how is that working out? So you own the station in Salina, KS or Burley, ID or Gila Bend, AZ... can you ever facilitate enough podcasts to make any money off fees and commissions? (not just your announcers.... every lawyer or realtor or pastor in town could be the host of a podcast!) And would that work in Savannah or Harrisburg, PA or Cleveland?

There has to be opportunities we are overlooking. And someday when someone figures it out and plunges forward... some us will sit here and say: "Duh! Why didn't I think of that?"

Your're the Man, BigA. Show us how it can be done. ;D

 

[TheBigA]

Your're the Man, BigA. Show us how it can be done. ;D

That's funny...but that's why I say radio needs Jeff Bezos. He could see the forest through the trees.

I'll be watching what he does at The Post. I'm hoping his ideas can be adapted to radio.

 

[TheBigA]

Here's what the New York Times thinks:

http://www.nytimes.com/2013/08/07/business/bezos-brings-promise-of-innovation-to-washington-post.html?pagewanted=1&_r=0&hp

They seem to get it.

And from the Washington Post itself:

http://www.washingtonpost.com/politics/bezos-could-use-amazon-model-of-customer-targeting-to-reboot-newspaper-industry/2013/08/06/e98904f0-fed2-11e2-9711-3708310f6f4d_story.html

Here's what I know: Advertisers think traditional media is ineffective. They feel traditional media is wasteful and inefficient and doesn't target customers well. Bezos understands all that. His mere presence at a traditional media outlet gives advertisers the chance to reconsider traditional media. That alone was worth $250 million.

 

[SaltyDog]

I'm certainly an admirer of Bezos and a heavy user of Amazon. I am blown away by how quickly, flawlessly and cheaply things get out their door and in my door.

I love the idea that he bought The Post and will enjoy watching his experiments. I don't have any predictions about his success at The Post but I predict that he will ruffle a lot of feathers there. Remember, one of his bedrock core values at Amazon is frugality. He's the guy who famously makes desks out wooden doors to reinforce that point. Journalists love their traditions and seem intolerant of anyone who would mess with them.

Donald Graham might have some ideas about what needs to be done and didn't want to be the guy to do them. His employees adore him and he basks in the glow of their love. Jeff Bezos is well-known to be impervious to criticism.

The Washington Post is a national publication and so he will not necessarily focus on the local Washington market. He might, but he won't have to.

The question about how radio grows revenue and how it grows local revenue might not be anywhere near the same answer. It might be that radio needs to focus on a national platform which is where it appears headed.

Washington Post is a national brand and radio brands are multi and scattered. Maybe radio needs a handful of national brands. We cringe at the thought, but maybe efforts like NASH-FM and IHeartRadio might be the right direction after all.

 

[TheBigA]

Donald Graham might have some ideas about what needs to be done and didn't want to be the guy to do them. His employees adore him and he basks in the glow of their love. Jeff Bezos is well-known to be impervious to criticism.

That's a good point. Quite often, longtime family owners often lose their objectivity, and are unable to make the hard decisions.

It might be that radio needs to focus on a national platform which is where it appears headed.

I think that's what most of the major owners are doing, mainly because the national accounts are the only ones with budgets big enough to pay radio's spot price. Local advertisers feel they can reach people cheaper via direct mail. There will always be a percentage of local sales, but the local sales market has been hurt by the nationalizing of retail.

 

[FredLeonard]

Jeff Bezos does not need radio.

The Washington Post creates content. Bezos bought content. Radio is an obsolete distribution system. Bezo needs content and he has better ways to distribute it.

 

[TheBigA]

Jeff Bezos does not need radio.

I agree. That's why I worded the thread this way.

 

[TheBigA]

Bezos bought content. Radio is an obsolete distribution system.

The system itself isn't obsolete, but the limitations make it less flexible than other systems. To some, that might make it obsolete.

Having said that, I'm surprised the larger radio or media companies haven't spent more money creating their own music. Perhaps that would happen if there becomes an OTA performance royalty. But it seems to me what would differentiate one radio company from another would be exclusive music. When RCA owned a record label, they occasionally used their co-owned media outlet, NBC, to promote certain artists and records. Certainly CBS did a lot of synergy between Columbia Records and CBS-TV. The companies that currently own major labels are not allowed to own broadcasting stations because they're foreign.

 

[SaltyDog]

Having said that, I'm surprised the larger radio or media companies haven't spent more money creating their own music.

I've never thought of them creating music but I've thought many times that if they could somehow own rights to key music libraries, they would own content instead of just being a distribution pipeline. I'm not saying its practical or even possible but having content exclusivity is a big deal. Music doesn't lend itself to that.

Whenever people in radio try to dismiss Internet audio entertainment as "not radio", I think that if they ever win that argument, they really lose. If radio is really just a bunch of FCC licenses and transmitters, then the longterm downward revenue trajectory is irreversible. I still think radio is audio entertainment which is why I maintain I still love radio. If it's just terrestrial radio, my enthusiasm fades. It's okay, but the Internet breaks down geographic barriers. I love IHeartRadio and TuneIn for that reason. Traditional radio, on a non-traditional distribution system.

Radio has to somehow get a distribution system that is superior and with significant barriers to entry, or it has to get into the content ownership business. It can't grow as a distribution system that doesn't allow for innovation because of inherent technical limitations or government regulations.

Washington Post has a national brand and it is resilient. Just think if its major assets were merely printing presses, trucks and warehouses. Bezos would never have purchased it.

ESPN Radio has a strong brand and is distributed among various channels. Few local radio stations have strong brands. There are some of course, but not that many relative to the huge number of stations. Those that do should have a big advantage over the rest.

 

[TheBigA]

I've never thought of them creating music but I've thought many times that if they could somehow own rights to key music libraries, they would own content instead of just being a distribution pipeline.

It's a pretty easy business to get into. Just buy existing copyrights. No recording costs. The songs are already hits. Lots of great libraries have changed hands in the last year. For less money than it costs to buy a major market radio station.

 

[FredLeonard]

Bezos bought content. Radio is an obsolete distribution system.

The system itself isn't obsolete, but the limitations make it less flexible than other systems. To some, that might make it obsolete.

Having said that, I'm surprised the larger radio or media companies haven't spent more money creating their own music. Perhaps that would happen if there becomes an OTA performance royalty. But it seems to me what would differentiate one radio company from another would be exclusive music. When RCA owned a record label, they occasionally used their co-owned media outlet, NBC, to promote certain artists and records. Certainly CBS did a lot of synergy between Columbia Records and CBS-TV. The companies that currently own major labels are not allowed to own broadcasting stations because they're foreign.

Jess Bezos bought a news brand and a news organization (which produces content). Along with it he got some obsolete technology )printing presses and related equipment). Radio produces almost no content, at least not commercial radio. The industry has spent the last couple of decades using automation, voice tracking and syndication to get out of the content business. It has a few personalities left but they go home at night; they are not an inherent part of radio. Most today don't even come from radio. All radio has is rusty towers.

The Washington Post as a news organization performs an essential function. They collect and disseminate current information. Newspapers are the sources of radio news. Radio takes newspaper content off the wire (or newspaper website) or from hand-outs, gets some sound and reads it on the air. With no newspapers, radio news dries up.

Bezos someday will sell the printing plant for scrap and stop killing trees. The news content of the Washington Post will continue on Kindles.

Music will continue on Pandora. Rusty towers will also go for scrap.

 

[TheBigA]

Radio produces almost no content, at least not commercial radio. The industry has spent the last couple of decades using automation, voice tracking and syndication to get out of the content business.

It depends. The business is deeper than radio stations. Clear Channel owns Premiere, which is strictly a content creation company. It has no towers or transmitters. Cumulus bought the ABC Radio Network, which is strictly content creation. There are about a dozen similar content creation companies. Some of them have news staffs that do original reporting. These have made local content creation obsolete. Just as the Washington Post's national focus has replaced a lot of local reporting of national stories. The voice-tracking and syndication are all part of the same business, and owned by a lot of the same companies.

 

[Goat Rodeo Cowboy]

Jess Bezos bought a news brand and a news organization (which produces content).

An excellent topic, which I am observing with much enjoyment and anticipation.

May I offer an observation. In our conversations we all select "words" from time to time which have different meaning to different folks.

In this conversation... the word "content" may need a discussion all it's own. Even in other threads, the words "radio" and "content" are used or implied... and the theme that arrives in our mailboxes is that radio will do better if it creates better content. And we all nod our heads and mutter something like... boy, you got that right!.

Does the organization that Bezos just bought produce/create content.... or is it a better descriptions to say the newpaper gathers, harvests, winnows, sifts, grades and packages content that other people have produced/created. If a senator makes a speech in congress and it gets reported... did the Washington post actually create/produce the spoken words, or did they send field workers "into the tomato patch?" to pick, harvest, wash, package and ship the tomatoes. Mr. Bezos will not create speeches by a senator, or comments by the president of even a jury verdict regarding Whitey Bolger. But his organization will decide "in the heat of battle" which tomatoes in which field to pick, and which tomatoes to leave in the field to rot and become organic fertilizer for next season's crop. (By the way, we currently have a copy of congressmen who seem to be experts on how to thrive on organic fertilizer content. ;D :

Maybe radio will be well served when some new faces show up for duty with an improved, current day value system, of recognizing what crop laying in what field is the product listeners want. Radio won't produce it or create it... radio will gather, pick, grade, wash, package and ship it.

In all fairness to the logic BigA has expressed, sometimes the mechanism that "packs fruit" realizes the farmers of a given generation have last their vision and the produce merchants actually get into the business of farming... just to demonstrate to the "farming industry" what is possible, what is necessary.

FULL DISCLOSURE: Spent my pre-teen years living on a truck farm where we create/produced content: sweet corn, bell peppers, melons, tomatoes, and one year some castor beans. I had the GOOD FORTUNE of leaving home the year before Dad decided that cucumbers for the pickle plant would be a good crop. My younger brother... who remained on the farm.... still gives me hell over deserting him on that one! :

 

[FredLeonard]

GRC: With all due respect, your discussion of creating content reflects radio's passive approach to news gathering. Radio broadcasts little that isn't handed to it. Wire stories (generated by newspapers). Staged events and press conferences. Photo/sound ops. Press releases (with a flack made available to provide "sound"). Public meetings. If this were the way the Post, the Times and other leading newspapers operated, Tricky Dick would have served two full terms. Note: Even after the wire was picking up Watergate stories from the Post, radio pretty much stuck with Tricky's I-am-not-crook denials. Radio has a pro-authority bias because it can't bring itself to bite the hands that feed it.

I have both the AP and Reuters wires on my phone. What do I need with radio?

 

[TheBigA]

Bezos someday will sell the printing plant for scrap and stop killing trees. The news content of the Washington Post will continue on Kindles.

Perhaps, but keep in mind that the core of Amazon is one very obsolete business: The Postal System. Amazon made mail order cool. But at its base, it's still mail order. Free shipping doesn't change the fact that you buy something, and wait for it to be delivered. That's the modern day version of the Montgomery Ward catalogue from 150 years ago. Same with Ebay. The core business is obsolete, but the image is cool. That's what Bezos did. Made something obsolete cool. That's what the printing press needs.

 

[TheBigA]

If this were the way the Post, the Times and other leading newspapers operated, Tricky Dick would have served two full terms.

You have an idealized view of how The Post works. I sat next to Post reporters at press conferences, so I know there are a lot of them who attend staged events. Heck, the White House Press Room is a staged event. Just about everything in the city is a staged event, and the Post is there for all of it. Sure they have a small group of enterprise reporters who dig below the surface, in the way the 60 Minutes team does. But the majority of content in the paper and on the web site is fairly mundane reportage as popularized in the book "The Boys On The Bus."

 

[Goat Rodeo Cowboy]

GRC: With all due respect, your discussion of creating content reflects radio's passive approach to news gathering.

When I wrote the message earlier this morning, I had a vision in mind that is different that what your experiences cause you to envision.

The one era in my resume where it says Journalist was working for a broadcaster who in the 1960s and 1970s was to small market radio in that era what Bezos is in this era. We did not applroach news gathering passively..... we beat the dickens out of it!!! When our previous news director showed up in a neighboring county for the divorce trial of one of our largest advertising customers... he was told to go home. This is NOT news. Report this trial and I will cancel my adveritisng.

We lived without his money for six or eight years. I joined that staff shortly after the advertiser and the station owner agreed to "make piece". I did get evicted from an event the following year by that advertiser (who was also a public official). What I reported that day about being thrown out of a meeting by the mayor of the city was not what could be called "passive journalism".

Even though I define broadcasting of program content (even music) a matter of gathering, harvesting, packaging and shipping rather than a matter of creation.... I do see what the broadcaster does, or should do, as an aggressive, industrious activity.