Kurt Hanson's blog

Proliferation Treatise (aka Counting the Devices)

One reason that listening hours per week per capita to Internet radio are increasing (according to both the annual Arbitron-Edison "Infinite Dial" study and easy math you can do with monthly Triton Digital press releases) and listening hours per week per capita to AM/FM radio seem to be declining (if you're an Arbitron subscriber, check Persons Using Radio (PUR) trends in your market) has got to be due to a number that is sneaking up on us: How many devices do we own that pick up each medium?

Let's do a quick count. I think the answer will be enlightening (or alarming, depending on which side of the fence you feel you're on nowadays):

Regarding the number AM/FM radios I own, even though I'm atypical in that I have lots of emotional connections to the Chicago stations I used to work at, and have friends that still work for various stations in town, my personal count is down:

I spent decades waking up to a clock radio with AM/FM, but my last Sony model went into storage about four years ago as I started using the alarm feature on my smartphone instead.

Like many of you, I used to have a great big stereo system (amplifier, AM/FM receiver, tape deck, CD player, and giant speakers), but that went away in pieces over the last decade as I ripped my CDs onto my iMac and replaced my TV sound system with a soundbar.

I used to have an FM Walkman of one type or another for running, but now, since I use the Nike Plus app on my smartphone for measuring my speed and distance, of course it makes sense to use the same device for accompanying music.

My parents have an AM/FM radio in their kitchen, atop the refrigerator, but I never picked up that habit.

Again, I'm atypical that, as a Chicagoan, I have "cut the cord" on car ownership thanks to an improved CTA (and apps that tell me when buses and trains are due), Uber (better and cheaper than taxis), and Zipcars (car rental by the hour), so no more AM/FM in the car in the garage since there's no more car.

I used to have a compact stereo system in my study, but its one-CD capacity seemed so old-school that it's in "temporary" storage somewhere, replaced by a speaker dock for my iPad.

Total household count: Down in the past decade from six or seven to either one (if I can find my missing iPod Nano, which has FM) or none.

Meanwhile, let's do the count of the number of devices in my household on which I can access Internet radio:

  • Current iPhone 4S
  • Older iPhone (used as alarm clock, etc.)
  • iPad (especially when paired with speaker dock)
  • Apple TV (attached to older TV)
  • PlayStation 3
  • New LG Smart TV (my big splurge of the season) 
  • Decrepit (but still plugged-in) HP Windows 7 PC
  • Seldom-used (due to hideously bad user interface) Dell Windows 8 touchscreen PC
  • Regularly-used iMac
  • Seldom-used laptop (as I transition to becoming a full-time tablet user)
  • Squeezebox Radio (purchased in 2011 but seldom used, as I prefer the iPad in the speaker dock).

So that's generously a 10:1 ratio in favor of Internet radios (of one form or another) over AM/FM radios.

As I said, I'm sure I'm atypical...but feel free try it yourself! And then try it with your parents, your siblings, your friends, and/or your in-laws.

I'll bet the general conclusion will be the same: More active Internet radios than AM/FM radios.

There are fads, and there are trends. (According to the marketing consultants Jack Trout & Al Ries, you want to avoid getting caught up in the former and take the latter seriously.)

This one is a trend.

Windy City Weather

When I was a kid who loved listening to radio stations like WOKY and WRIT (where a teenage Bob Pittman was a DJ for a while), and later WCFL and WLS, and even later WDAI and WLUP, I was listening to my favorite stations primarily for the music, but they also served lots of other functions in my life — they were my primary sources of weather forecasts, traffic reports, sports scores, and lots more too.

Someday, it's possible that pureplay, Internet-only, music-oriented webcasters like Pandora, Slacker, and AccuRadio may add local service elements like newscasts, weather, sports, traffic, and maybe community events and/or concert calendars. The insertion of such elements is absolutely possible today using current technology. (Operationally, it might require the addition of one employee per market to record fresh audio elements that could be inserted into listeners' streams as appropriate, although I imagine that traffic would need to be sourced from a third-party service.)

But would this make sense in the context of consumers’ needs in 2014? I'm not so sure.

Let's think about weather: In, let's say, 1980, my alternatives were (A) checking the weather forecast in the morning paper, (B) remembering the weather forecast from the previous evening's 10pm TV newscast, (C) calling WE6-1212 for a prerecorded National Weather Service forecast (updated hourly), brought to me by Wisconsin Telephone, or (D) hearing weather forecasts interjected regularly (including full forecasts as part of the top-of-the-hour newscast) on my favorite music radio station.

Of those four approaches, (B) and (D) were my primary approaches and served my needs in the vast majority of cases. TV gave me my overview for the coming day, and radio gave me reminders and updates on a regular basis.

Today, if I want to know the weather forecast, I swipe to the second screen of apps on my smartphone, touch the Yahoo! Weather app (proving, incidentally, that Yahoo! still has a role in my life!), and within a few seconds, thanks to well-designed graphics, I've absorbed a very detailed forecast, complete with hour-by-hour projections through midnight and a five-day forecast thereafter.

I actually absorb more useful information in a few seconds on Yahoo!'s newly-designed app than I would absorb watching a TV weatherman’s five-minute segment. And, thanks to the magic of multitasking, I can do this WHILE I'm listening to a radio app (or my music collection, or during a phone call, or whatever).

So, do I think it would add value to Pandora if they stopped the music at random times of their choosing to push a 20-second forecast onto me? On the whole, I think probably not. Perhaps occasionally I'd find it valuable, but I believe 90% of the time it would be a needless, unappreciated interruption.

Technically, this will get even easier for webcasters to theoretically do in the future as text-to-voice functionality gets better.

However, as a response to consumer need, I think it's an idea whose time has come and gone.

Internet Radio Fairness Act would spur innovation

The following first appeared as a Billboard.biz Guest Post I wrote as founder/CEO of AccuRadio and a member of the Small Webcaster Alliance. It appeared on Tuesday, the eve of yesterday's subcommittee hearing.

As an Internet radio broadcaster and member of the Small Webcaster Alliance, I've been involved in the issue of copyright royalty rates for Internet radio for many years. And I've seen vividly that the current royalty rate system threatens to strangle the life out of an industry that is providing both choices for consumers and opportunities for musicians.

Both in 2002 and again in 2009, after the U.S. Copyright Office published rate-setting rulings that would have bankrupted all or most Internet radio providers, Congress had to intervene and ask record labels to negotiate a more-workable rate with webcasters.

The resulting rates are still wildly higher than those paid by other forms of digital radio (i.e., satellite radio and cable radio) and have been barely survivable for most webcasters - with many forced to exit the business entirely. Meanwhile, other companies who could spur innovation in Internet radio remain on the sidelines due to concerns over unsustainable royalty rates.

The problem with the current "willing buyer/willing seller" Internet radio standard for rate-setting is that while it is intended to lead to a market-based rate, the fact that the large record labels negotiate as a group means that a true market rate has never actually been determined.

The result has been a nightmare for our industry ever since. Copyright Office decisions have forced webcasters - the ones that were able to remain in business - to pay unreasonably high royalty rates, hindering innovation and growth.

Last year, for example, Pandora paid more than 50% of its revenue in royalty payments and as a result, as seen in their SEC filings, the company has yet to make a profit. And if the leading firm in an industry has trouble breaking even, you may reasonably (and correctly) assume that most other webcasters are struggling even more. (Note that if my Small Webcaster colleagues and I had to pay royalties at the rates determined by the Copyright Royalty Board, most of us would have to pay more than 100% of our revenues in royalties!)

That's why we support the Internet Radio Fairness Act (IRFA). It doesn't set or change royalty rates for Internet radio - it simply modernizes the rate-setting structure in a way that will help create a more viable digital music business for everyone.

To do so, the IRFA would move webcasting to the more-traditional "801(b)" rate-setting standard, which balances the interests of the copyright owners, the copyright users, and the general public. It has been used successfully for decades in most rate-setting determinations, including for other forms of digital radio like satellite radio, cable radio, and even by record labels in cases where they are the copyright users.

The "801(b)" standard is a set of four criteria that Congress typically tells the Copyright Office to use in determining a royalty rate: (1) Maximize the availability of creative works to the public. (2) Insure a fair return for copyright owners and a fair income for copyright users. (3) Reflect relative roles of capital investment, cost, and risk. (4) Minimize the disruptive impact on the industries involved.

The current confusing mix of royalty-rate setting standards for digital radio is result of piecemeal legislation enacted as each new technology was invented. The result is a system significantly out-of-sync with the realities of the 21st century marketplace. It substantially hinders the growth of Internet radio businesses and platforms - and thus hurts consumers, musicians, and innovators.

For the music industry particularly, I believe that a thriving Internet radio industry could be a godsend. Webcasters like Pandora, AccuRadio, and others are already giving significant and valuable amounts of airplay to dozens of genres of music (ranging from bluegrass to EDM), hundreds of independent record labels, and tens of thousands of artists that otherwise would be unable to use the power of radio exposure to build their fan bases.

Passage of the Internet Radio Fairness Act will foster innovation in the industry. It will create jobs, benefit artists by giving them more opportunities to be paid for their work, and benefit consumers by giving them more listening choices.

It's a piece of legislation that every innovator in the music industry should support.

You can see this Guest Post in Billboard.biz here:

http://www.billboard.biz/bbbiz/industry/digital-and-mobile/internet-radi...

New Idea: "Artist Support Button"

Speaking on a panel at the Future of Music Summit in Washington D.C. earlier this week, I was surprised at the ambivalence (at best!) of musicians towards Internet radio and the opportunities it offers them to build their fan bases and advance their careers.

After all, if you're a bluegrass artist in St. Louis or a cabaret singer in San Diego or a folk-rock act in Boston, which form of radio is going to offer the most opportunities to you -- AM/FM radio, satellite radio, or Internet radio? Obviously, I think, the latter. AM/FM and satellite radio will almost certainly give you no airplay at this point in your career (or, actually, for those first two genres, ever), whereas if Pandora includes your CD into their Music Genome Project, you'll get airplay when their listeners are listening to a station based on an artist whose music has similar characteristics to your music, AccuRadio would be happy to give you airplay on our various region-specific and genre-specific channels, and if Bill Goldsmith at Radio Paradise likes your work he might give you a great backsell after he plays your work.

But I believe there are opportunities for Internet radio to give even MORE support to developing artists than we do today (or than AM/FM or satellite radio ever will).

For example, it might benefit all parties involved if airplay for music from developing acts could be geo-targeted to the regions in which those acts are operating: If there's a bluegrass band like, say, Henhouse Prowlers that only tours in the Midwest, perhaps Internet radio stations should focus airplay of their tracks to listeners in the Midwest. (For East Coast listeners, that same slot in the hour could be given to a bluegrass brand that tours up and down the East Coast. And so forth; you get the principle.)

However, here's my idea of the day:

How about offering an "Artist Support Button" on our media players? As I envision it, this might be a 100x100-pixel button that resides near our "Play," "Pause," and "Skip" buttons or adjacent to the artist name in the "Now playing" section of our media player. (This could of course vary by webcaster.) Based on the desires of the artist being played at the moment, it could say either "Visit my website" or "Like me on Facebook" or "Catch me on tour" or "Buy this CD" or "Join my e-mail list" or "Tip the artist" and would link to the appropriate destination (And I'm envisioning that the button could be changed regularly -- e.g., "Catch me on tour" only when the artist is actually on tour.)

At the Future of Music Summit, musician Ben Weinman of the Dillinger Escape Plan said that the average fan of his band spends $100/year (including spending on concert tickets, CDs, vinyl, commemorative t-shirts for each song (!), house concerts, etc.). If we could help bands like his add new fans, the revenue potential for them could HUGE -- and it would be a win/win for everyone.

What do you think? (Have I got the germ of a good idea here?)

Ad insertion isn't easy

If you're a webcaster struggling with issues involving ad insertion, you can be comforted by the fact that at least you're not alone -- the multi-billion dollar corporation NBC (owned by the multi-multi-billion corporation Comcast) is having issues too.

Just as my grandmother had what she called "her shows" (e.g., the noontime soap opera "The Edge of Night"), I have my shows too. In my case, they're primarily the Thursday-night comedies on NBC (e.g., "30 Rock," "Parks and Recreation," and "The Office").

And because I'm trying to be cutting-edge, I'm trying to "cut the cord" in terms of paying for monthly cable TV service by trying to watch these shows on my iPad via NBC.com.

However, at least for me personally, NBC is doing a very poor job of ad sales and/or insertion. Basically, the only spots they're delivering to me are promos -- either for "The Voice," which is a show currently being ridiculed on "30 Rock" (so probably "30 Rock" fans are not ideal prospects for it) or "Chicago Fire," which they're currently telling me is "Debuting October 8th!" even though we're now into almost mid-November.

So, take comfort: You may not be doing it perfectly, but given your relative corporate resources, you're not doing THAT badly.

The perfect thing?

After dinner last night (at Bandera on N. Michigan Ave., by the way, which is a sister brand of Houston's, at which I've probably eaten 200+ times in my lifetime and had a near-perfect meal every time, which is the subject of another column entirely), I had the opportunity to stop by an Apple Store and take a look at the new iPad mini.

My two-word review: It's amazing.

To expand on that review slightly: It's like holding in your hand the most perfect electronic device ever. It's almost unbelievably compact and lightweight, yet because the screen takes up a bigger percentage of the surface area than ever before, it seems fully functional as a full-sized tablet. (And, of course, thanks to the Internet, the content available on it is almost all of the world's information and entertainment, but that's true on other devices too.)

Not to belabor a point, but it is just astonishingly thin and lightweight and gorgeous.

As a person who grew up watching the high-tech "futuristic" devices used on "Star Trek: The Original Series" and "The Man from U.N.C.L.E.," I'm amazed that such a futuristic device has come to exist in my lifetime -- and at a price that is, on an inflation-adjusted basis, about the same price as a mere reel-to-reel tape deck or cotton-candy machine.

Now, of course, I'm pretty sure that in 2017 we'll look back at the iPad mini 1.0 and laugh at its clunkiness ("What, no holographic display? Lame!"), but at this point in history, it's really something.

If you get a chance, go take a look at one yourself and see if you agree.

Syndicate content