RAIN 9/25: What do digital media planners think of radio's online efforts?

Paul Maloney
September 25, 2012 - 1:20pm

At last week's RAB NAB Radio Show in Dallas, Larry Rosin and Edison Research showed video interviews they'd conducted with media buyers, planners, and executives about broadcast radio's (and webcasters') digital initiatives.

At least it's good to know where you stand, right?

Edison asked these professionals about the role that radio can play in a multi-media ad buy, how they perceive the level of digital expertise of the radio reps they encounter, specifically about radio streams and web sites, about Pandora in particular, and about the data stations can give back to clients that advertise on digital channel.

The interview subjects are pretty bluntly honest with their opinions, and that's a good thing. And, they're not 100% negative. But they do give broadcasters a really clear view of how they need to learn and execute if they hope to maintain dominance in new media.

"The buyers of today are looking for the mass and response that radio elicits, but they are equally looking for measurability, personalization, efficiency and trackability," Rosin wrote. "Radio has to continue on a parallel path of innovation to provide these items to advertisers or simply watch its portion of the total advertising pie continue to slowly diminish."

At RAIN Summit Dallas last week, Michael Theodore of the IAB moderated a wonderful panel dicussion ("Identifying Opportunities for Advertisers in Internet Radio") with digital media buyers, specifically about radio and webcasting. We'll feature highlights of that discussion in RAIN soon (and, we've put audio of the panel on SoundCloud -- see the right-hand margin of RAIN).

View the Edison interviews here.

Paul Maloney
September 25, 2012 - 1:20pm

Music label advocacy organization musicFIRST is publicizing commentary from BTIG analyst Richard Greenfield, who says he knows why Pandora is struggling with royalties: they don't run enough commercials.

In the commentary piece, called "Congress Should Be Working to Raise Royalty Rates on Pandora, Not Lower Them," Greenfield suggests that if Pandora had a robust-enough business model that would allow them to operate more "the way terrestrial radio does" -- that is, by playing significantly more ads (and thus, presumably, growing revenue), it'd have no trouble with royalties. The percentage of revenue Pandora pays in royalties would decrease because ad revenue would grow.

His take is that Pandora, in order to capture more listening from other sources, "chooses to not generate as much advertising revenue per streamed hour as it could to enhance the user experience." He accuses Pandora of "effectively asking the government to intervene... because it knows its business model only works while running limited advertising."

Greenfield doesn't mention that broadcast radio does not pay a sound recording royalty for its on-air content, nor does he mention that satellite radio's royalty rate is based on the 801(b) standard, while webcasters' is based on "willing buyer willing seller" (explanation here).

It should be noted that the terms of Pandora's current royalty deal require it to pay the greater of a per-performance rate (that is, a flat fee for each song, multiplied by the number of listeners) or 25% of total revenues (see "Pureplay Webcasters" here). In other words, Pandora can't pay less than 25% of their revenue, even if they ran nothing but ads. Under the current deal, it is impossible for Pandora to reduce the percentage of revenue it pays in royalties to that which satellite pays (8%).

The percentage of revenue floor is not part of the statutory rate (which would currently require Pandora to pay $0.0021 "per-performance"). Based on Pandora's August Webcast Metrics audience rating (here), to play 16 songs (about an hour of music) to its 1.282 million average listeners, would cost a bit over $43-thousand.

Read Greenfield's commentary here (free membership necessary).

Michael Schmitt
September 25, 2012 - 1:20pm

Boeing adding Wi-Fi to 747, 777 planesMinus services that offer offline caching, usually airplanes are off-limits to Internet radio. That's gradually changing as more airlines and airplane manufacturers add in-flight Wi-Fi options.

Boeing has actually already begun outfitting its 747 and 777 planes to provide in-flight Wi-Fi, cellular connections (!) and even live TV by 2013. The company's 787 Dreamliner already has such equipment. The Verge has more coverage here.

Meanwhile, JetBlue has announced plans to roll-out in-flight Wi-Fi in Q1 2013. That service will even be free for "basic email and browsing." Boy Genius Report has more info here.

Michael Schmitt
September 25, 2012 - 1:20pm

Logitech UE Smart RadioBack in August, Logitech released a new line of Internet radio-friendly audio devices, from Bluetooth boomboxes to the UE Smart Radio: a tabletop Wi-Fi radio that succeeds the earlier Squeezebox Radio (more RAIN coverage here).

The UE Smart Radio is definitely a step up over the Squeezebox Radio, says CNet in a new review of the device. "But that doesn't necessarily mean it's the right compact music system for your home." Sure, the UE Smart Radio offers Spotify, Pandora, MOG, Slacker, TuneIn, Last.fm and more. And its "great sound," compact size and rechargeable battery "make it an attractive compact music system, but you may be better off with a Bluetooth speaker."

CNet explains that with the UE Smart Radio, you're "reliant on Logitech to add support for new streaming-music services, rather than simply using the app already on your phone." Plus most Bluetooth speakers are cheaper than the UE Smart Radio's $180 price tag.

That said, if your life doesn't revolve around a smartphone, "it's a well-designed product and a decent value." Find CNet's full review here.