RAIN 9/15: Internet — adversary or ally — a hot topic at Radio Show

Michael Schmitt
September 15, 2011 - 12:00am

Over 10 minutes of the hour-long Leadership Breakfast session at the NAB/RAB Radio Show today was devoted to issues related to Internet radio. All four group heads characterized streaming as an important part of their future.

CBS Radio President/CEO Dan Mason (pictured third from the left) explained that they see their NTR (non-traditional revenues) and digital efforts as "the lift" that comes on top whatever cyclical ups and downs there are in ad revenues due to issues of the economy.
 
Leadership Breakfast session at NAB/RAB Radio ShowModerator Lew Paper (a partner at Dickstein Shapiro, LLP) asked, "Internet radio seems to have a lot of usage nowadays. Do you see it as important part of your future?"
 
Mason replied, "Is Pandora's business model good? Yes. But soon every operator in this room will have the opportunity to do the same kind of thing."
 
He elaborated, "Is it everything we do? No, but it's part of what we do." CBS Radio owns Last.fm and has incorporated personalizable radio features into its new Radio.com website and mobile apps.
 
When asked a different question, Cumulus Chairman/President/CEO Lew Dickey (pictured second from the left) instead asked to go back to the Internet radio issue. "On the Internet, there are no barriers to entry," he said.
 
"Pandora, iHeartRadio and Last.fm are great niche products. You'll see a lot of companies come in and do that." Using MySpace as an example, he observed that "'first in' doesn't always win." Dickey noted that he didn't believe that Internet radio was a "natural monopoly" in the way a social network migt be, leaving room for multiple players.
 
Returning to the topic a few minutes later, Paper asked Hubbard Radio President/CEO Bruce Reese (pictured on the far right) about streaming specifically.
 
"I think it is an expectation audiences have, and there may well be revenue opportunties," Reese answered. He pointed out that one of the basic challenges for firms like Pandora is the absence of scale: "Your expenses go up at exactly the same rate as your audience size."
 
Nonetheless, he predicted that a lot of people -- not just CBS and Clear Channel -- would be experimenting with personalizable radio soon.
 
Entercom President/CEO David Field (pictured on the far left) expressed the opinion that "Radio is thriving -- we just need a better narrative."
 
On the subject of HD Radio, CBS Radio's Mason said that he had intially been enthusiastic about the oppotunity for improved FM sound quality -- then had moved on a stage of being enthused about multichannel opportunities -- but has "graduated" from that stage and now believes the key opportunity is to offer visuals in the car dashboard to accompany audio content -- i.e., a photo accompanying a new story.
 
Reese and Mason have both been keynote speakers at past RAIN Summits.  Field's Vice President of Digital Strategy and Enterprise Platforms, Tim Murphy, won Triton Digital's "RAIN Maker" award at RAIN Summit Chicago earlier this week.
Paul Maloney
September 15, 2011 - 12:00am

While radio group heads speaking at this morning's Leadership Breakfast seemed to have a more "forward" approach to the inevitable expansion of radio to include newer techologies, the respective heads of the two industry groups hosting The Radio Show took a somewhat more defensive posture discussing Internet and satellite radio. Especially Radio Advertising Bureau President and CEO Jeff Haley.

Both Haley (pictured at right) and National Association of Broadcasters President and CEO Gordon Smith seemed to limit their view of Internet-delivered audio as a sort of upstart competition, and not at all an opportunity for broadcasters to embrace. In his opening remarks yesterday afternoon, Haley RAB's Jeff Haleyreferred to "niche players who after ten years have barely scratched 20 million subscribers." And he saved his best shot for Pandora in particular (though never naming them).

Pandora, the leading Internet radio pureplay (and whose founder, Tim Westergren, delivered the keynote address at our RAIN Summit Chicago right there at the Hyatt on Tuesday), went public earlier this year and recently issued its first earnings report. In it, the company reported a higher-than-anticipated second-quarter revenue of $67 million on 1.8 billion hours of listening, which Pandora boasted represents a 3.6% share of all U.S. radio listening. What's more, Pandora has lately made news (as Westergren acknowledged in his speech Tuesday) as a legitimate competitor to traditional radio advertisers.

Haley said, "Lately there have been players out there touting duplicative 'listener hours' in an apples to oranges comparison for our unduplicated long standing cume metrics. At a claim of just 3% of our reach, it may not be worthy of mention,NAB's Gordon Smith but if we're talking about audience size, let's be fair and measure apples to apples. If you wanted to compare 'listener hours,' say 1.8 billion 'listener hours' for 2nd quarter...that claim includes duplicate reach across your user base, so it might be more fairly compared to our 'broadcast hours' against the base of people who use radio. Or, live, 24/7 radio across 10,766 commercial stations x the 12 weeks of a quarter x the U.S. population of 12+. Do that math and you get 6.1 trillion listener hours for broadcast radio. 6.1 trillion - yes, that's absurd."

Smith, in his opening remarks, acknowledged the difference of opinion on the issue of whether radio should be streaming -- and took no stand to endorse it, saying, "I don't know the right answer, but as someone who does not come from the broadcast business, I can tell you what I observe: that local, regional and national advertising for over-the-air signals still provides the strongest source of revenue for stations."

While Smith (pictured above-left) did acknowlede that "it's undeniable that radio must find a way to expand reception of its main over-the-air signal," he cautioned, "any expansion into the digital sphere cannot be at the expense of our core business." While Smith held strong in his support of technologies like HD Radio and "FM in cellphones," he seemed to view other technologies simply as an us-vs.-them proposition ("to continue radio's rightful place as king of the dashboard and help compete with new features, such as satellite and Internet audio").

Read Jeff Haley's prepared remarks here, and Gordon Smith's prepared remarks here.

RAIN Analysis   While Haley's overall point may be valid, the RAB's math does not seem correct:  Assuming there are about 250 million Americans age 12+ listening to radio about 12 hours per week each, times 13 weeks, that works out to a total U.S. radio listening per quarter of about 40 billion listener-hours. In other words, as near as we can tell, the "6.1 trillion" number referenced in the speech is about 15,000% (i.e., 150 times) too high.  

(On the other hand, if he meant to talk about the potential number of hours possible if every American listened to radio 24/7, it was 10 times too high; or, if it was supposed to reflect every American listening to all 11,000 U.S. radio station simultaneously, then it was 1,000 times too low.) -- KH

 

Michael Schmitt
September 15, 2011 - 12:00am

Livio Radio Internet Radio Car Kit

AccuRadio has annouced a new partnership with Internet radio technology firm Livio Radio, which will enable AccuRadio listeners to access a sampling of AccuRadio channels in the car, via Livio's Bluetooth Internet Radio Car Kit (which was announced yesterday, RAIN coverage here).

"It's exciting to be working with them and getting AccuRadio into the car with the Kit," Livio Radio founder and CEO Jake Sigal said.
 
AccuRadio is run by the same folks that bring you RAIN each day.
Michael Schmitt
September 15, 2011 - 12:00am

Part one:

Part two: