Why Radio Principles Won't Work Online In 1999, when I raised $18 million and went into the Internet radio business with RadioCentral, the industry gave me a lot of grief. Ultimately I failed, which vindicated the naysayers. Few believed radio's distribution system would change, and most did not agree with the innovative things we were offering, like a "Buy" button associated with the music and commercials. Yet we amassed the second-largest worldwide online streaming audience at the time -- which was still less than a single New York FM -- and it was our success (in terms of streaming and distribution costs) that put the nails in our coffin.
Looking back, I see the flaws in my business model. I was trying to use radio principles in a new medium. It never works. My friend and colleague Walter Sabo of HitViews recently pointed out to me that, historically, when new mediums have been invented, the stars from old mediums rarely become stars on the new ones. Vaudeville stars tried the new medium of radio, but most failed. Radio made its own stars. Silent film stars rarely made it to the talkies, which bred their own stars.
So why would doing radio the way we have in the past work with new mediums, new methods of distribution, and the two-way, interactive conversations possible online? The old ways won't work, yet we as an industry keep using radio-like techniques to target online users who want things presented in a new, Internet- and mobile-focused way. Radio usage on a cellphone will be different than radio usage online, which is different from radio listening in a car or on a home radio. When Internet "experts" say radio cannot and will not succeed online in its present form, this may be a clue as to why.
--- NOTE: I normally would not have included the entire story here, but merely provided some highlights linking back to the author's site. BUT, I couldn't find the article on his website -- only in the email newsletter.
Broadcasters need to remember that it's all about trying to engage the audience, not piss them off. It doesn't matter which media you're in, all offer the ability to connect to the audience, but is the message we're delivering to that audience one that attracts or repels?
Does the programming and advertising pull them in or push them away? Does it build bridges or burn them?
Are you bold enough, brave enough, (do you believe enough) to turn down an advertiser's spot because it sucks? Because it won't help you build an audience nor them build their business?
Advertisers seek unified web radio Different platforms, metrics and sales teams are slowing online radio's growth. Horizon Media VP Lauren Russo says advertisers are also less interested in streaming alone, and seek more integrated opportunities. Others believe radio may be "paralyzed" figuring out the delivery system, instead of making it profitable
Let's run this through the Agency translator and see what we get...
Agencies seek commodity priced and packaged web radio Different platforms, metrics and sales teams are making us think too hard. Horizon Media VP Lauren Russo says advertisers are also asking about things we haven't taken the time to understand or learn how to use, so we're going to use a buzzword in order to distract them while we further avoid evolving the way we do business. Others believe radio may be "concerned" in figuring out how to use new media to deliver results for clients, instead of churning out generic and commodity-based packages that agencies can use to play against each station by saying "your price is too high."
It's time to celebrate if you're rooting for further commoditization of traditional Radio and the Internet. TargetSpot (arguably one of the most impressive automated Radio/Web sales tools on the market) just got bigger.
TargetSpot buys rival Ronning Lipset Radio and results in forming the largest online radio ad network. TargetSpot brings together CBS Radio, Entercom, AOL Radio, Yahoo, and more than 1,000 other online stations comprised of more than 50 radio groups and web properties. The TargetSpot CEO (Doug Perlson) says combing the sales and technology structures positions them for the "strongest monetization possible."
He says "monetization" -- I say "commoditization." Toe-MAY-tow. Toe-MAH-tow.
What would you call an online system that requires no actual understanding or comprehension of marketing or radio advertising or web strategy in order for you to be able to produce and place advertising spots and web banners? Just because you can get a great price on a set of scalpels at The Dollar Store doesn't make you a brain surgeon.
TargetSpot (and other systems like it) allow the amatuers to pose as professionals. It puts Buyers in charge of strategy and execution. I don't care how good a negotiator might be, I don't want them writing my radio spots or designing my display ads.
Point. Click. Crap. You think terrestrial Radio sounds like shit NOW? It's not going to get any better when ALL the spots sounds the way a posting on eBay reads. This is the level of "expertise" that will be needed to plan and execute media advertising.
No one WANTS to talk to a Radio salesperson, but the truth is that the GOOD ones know what they're doing. They've been educated in advertising strategy and marketing techniques that are proven to work in their chosen media. I don't like doctors, but you can be damn sure that if I need an operation I rather have to deal with some complete DICK who happens to be the best at what he does than perform the surgery myself.
Eric Ronning and Andy Lipset of RLR will become co-presidents of TargetSpot, which also absorbs the entire RLR sales team. Lipset says their firm and TargetSpot have been "complimentary leaders and innovators" in the online ad space, and believes they're now poised for "explosive growth."
According to this morning's Inside Radio, BMI's revenues topped $901 million last year and $224 million of it came from Radio. Their total revenues were only up 7% last year -- but a whopping 25% of their overall revenue came from the industry that helps push their vapid product on millions of listeners who could have otherwise avoided hearing their mediocre music.
AND, the Labels think Radio should pay MORE! The Labels are pushing Congress to undo Radio's exemption from a performance-based royalty that could add from $2 to $7 billion in new fees to their bottom line.
Radio is the delivery vehicle for the Label's product. It introduces (and pushes) their product on listeners who might not have otherwise been exposed to their product. The Labels do not pay for the time spent airing their product (hell, it's against the LAW to charge them!)
This seems an awful lot like charging truck drivers for delivering the Label's music CDs to stores. "Yes, we know that we need you to deliver our CDs to the store, but we want you to pay US a $1 for every CD you deliver."
Hell, at least the truck drivers are allowed to charge the Labels for toting their crap from city to city...
The BusinessWeek article "Radio Royalty Wars Heat Up Again" is good, but the reader comments are more interesting. Opinions are all over the place and many of them aren't based on any seeming logical explanation. One guy says to make Terrestrial Radio pay the additional royalties for streaming, but then goes on to berate Radio for adding more commercials per hour.
Um... exactly HOW do you think Radio is going to pay for those additional royalties?? If the RIAA wants to come back and double-dip on fees (I think a few of the commenters seem to think Radio is agetting a 'free ride' -- they're not.) Radio already pays royalty and licensing fees. These hearings have come about because the recording industry feels they should get additional fees if the station is streaming (the exact same broadcast!) over the internet.
I think one solution that these hearings need to consider is allowing Radio to charge the recording industry to play their music. I know in the past this has been outlawed by Payola rulings, but if the RIAA wants Radio to pay them for featuring their product, then Radio ought to have the same chance to profit from the recording industry. I think Payola laws were originally instituted to make sure the public had a fair chance to hear music from record labels that didn't have deep enough pockets to bribe a disc jockey to play their records. This was back when only a few radio stations were on the air and there were really no other ways to learn about new artists. With a plethora of other stations now on the air, the advent of internet radio, satellite radio, iTunes, indie music sites like GarageBand.com, and a myriad of ways to share music peer-to-peer -- the old reasons for outlawing Payola would seem to have gone the way of the dinosaur.
Grocery stores leverage shelf space and display location to receive better rates and discounts from their supliers -- why can't Radio be allowed to do the same?
Here's a tutorial on the basics of zombies. I recommend all people involved with traditional Radio (or any traditional media slow to adapt the integration of new media) treat this content as required viewing...
Gaaawd -- they make it so easy for me to make fun of them...
Radio goes on offense The industry's rallying cry becomes "Radio Heard Here" as the NAB, RAB and the HD Digital Radio Alliance unveil a multidimensional campaign. The effort comes as the industry is facing a number of challenges, but NAB chief David Rehr believes adversity creates opportunity. He tells Inside Radio "It forces people to do something." The multiplatform, multimillion dollar campaign for "Radio Heard Here" will include more than $200 million in donated airtime on stations starting this Spring. Other components will begin sooner, such as $2 million worth of outdoor and online advertising. A viral campaign will also target younger demos, featuring video shorts posted on sites like YouTube and MySpace.
This directly speaks to my theory of positioning terrestrial broadcasters as "Websites with Radio Stations" instead of "Radio Stations with Websites." $200 million in FREE radio ads combined with who knows how much ad spending on YouTube, MySpace, and assorted other websites and outdoor billboards.
"Radio Heard Here" -- Yeah. We believe Radio works SO well that we stand behind our product as the vehicle to broadcast this message. ...Sort of...
According to this morning's InsideRadio, the HD Radio Alliance has shifted its message focus...
"Armed with research showing 77% consumer awareness, the HD Digital Radio Alliance is moving into the next stage of its marketing effort focusing on selling receivers. Starting today the alliance launches a 13-week advertising campaign on more than 700 stations, featuring the tagline: 'It's Time To Upgrade.'"
A couple comments... 1. Seems like the pitch's message is more targeted to the last of the Broadcasting hold-outs who have had the good sense to avoid the million+ dollar investment to 'upgrade' their signal in order to reach an all but non-existant HD audience.
2. With a "time to upgrade" message like that, the Alliance should be more concerned with the radio audience actually listening to them -- and upgrading to a technology that offers more choice, customization, and access. Like WiFi Radio. 3. ...And if Radio is going to point their finger and suggest that listeners upgrade -- I would argue that that audience should rise up, point right back and say "You go first." The dictionary defines "upgrade" as "an increase or improvement" and Radio listenership, revenue, and content quality has been doing anything but that in the last few years.
Yes, HD Radio Alliance -- it IS time to upgrade -- but I'd suggest that you look to your own industry and improve performance and quality from within before asking the most active portion of your audience to shell out a couple hundred bucks in order to hear the high-definition demise of your media.
...The more they stay the same. Check out this quote I stumbled across. Please note that it is 70 years old!
"Never before the advent of radio did advertising have such a golden opportunity to make an ass out of itself. Never before could advertising be so insistent and so unmannerly and so affront its audience." ~William J. Cameron, Director of Public Relations, Ford Motor Company, 1938.
Apparently the number one advertiser on Radio in 2007 was Radio itself -- or rather its lamest evisioned evolution... HD Radio.
The HD Digital Radio Alliance spent $250 MILLION dollars in radio dollars last year pimping the Edsel of airwave evolution. The investment netted them a little over 1,451,00 ad units.
And let me check... Yep. HD Radio is still inferior when compared to the choice (and cost) of Web Radio.
Seth Godin just linked to an article he wrote almost seven years ago about the state of mass media and their monopolistic control of content and distribution. You probably wouldn't be interested in reading it.
After all, the article is really long (almost 4,500 words), it's pretty insulting to the businesses that created the foundation of our media culture, and like I said -- it's seven years old.
Godin cites the three main catalysts for creating the existing media monoply: 1. The FCC limited the number of TV and radio stations in every market, allowing three networks to dominate TV and the record companies to dominate radio. 2. Copyright ensures that we can charge a lot for a book or a record... way more than it costs to make it. 3. The limited number of physical distribution outlets (record stores, movie theatres) guarantees that distributors with clout get more shelf space.
Controlling the media was based on: • Scarce creators, under long term contracts • Scarce retail outlets, able to be controlled with marketing muscle • Scarce spectrum (few radio stations, few TV stations) • Copyright laws (and a lack of technology) that limited theft of services • Limited power of the creators to compete without a large media company as partner
Seth lists the single-step process for becoming successful and profitable in TODAY'S new media world: 1. Establish a direct and positive relationship with the end user. It sounds easy. It's not. It's scary. It's likely to wreck your business before it saves it. Doesn't matter. The truth is: businesses that don't aggressively pursue this tactic will disappear.
Friend of ZombieRadio, Don The Idea Guy has blogged on suggestions to improve on the new Amazon digital book reader "Kindle."
DTIG provides a long list of opinions on where Kindle missed the boat, and even includes a line about them being so far off-base, that they've have entered HD Radio territory.
What's that about those not learning from history being doomed to repeat it? (Yeah -- I'm talking to you, too Zune 2.0)
In a brilliant act of confronting Apple with its own words (and then making them eat those words) a YouTube user with the screen name "KeeptheiPhoneFree" created a video mashup of all the third-party iPhone software that was effectively rendered useless when Apple released the firmware update 1.1.1.
The real act of brilliance was in using the audio from Apple's groundbreaking "Think Different" campaign. Listen to the narrator (who I think is Richard Dreyfuss) call out Apple's salute to "the crazy ones, the misfits, the rebels, the troublemakers. The round pegs in the square holes. The ones who see things differently." According to Apple's script they have no respect for the status quo -- yet that's just what Apple is trying to maintain by fighting the iPhone hack that allows for greater user ability by these self same "Crazy Ones."
So, according to Apple it is okay to Think Different -- just don't think TOO different from them.
RADIO NOWHERE : Bruce Springsteen --- I was trying to find my way home But all I heard was a drone Bouncing off a satellite Crushing the last lone American night
(Chorus:) This is Radio Nowhere Is there anybody alive out there This is Radio Nowhere Is there anybody alive out there
I was sitting around a dead dial Just another lost number in a file Dancing down a dark hole (some say it’s “Been in some kind of dark cove”) Just a-searching for a world with some soul
The entire iPod product line is receiving a major overhaul, but Radio is not part of their remodeling plan. InsideRadio argues that it is because Apple is in the music download business, but one of the new features is in partnership with Starbucks that allows iPod users to locate and purchase any song they heard played in a Starbucks location via wireless access to a special WiFi version of iTunes. Seems like this could have been executed through a partnership with terrestrial broadcasters had the interest been there. But it wasn't.
Since the new iPod has WiFi access and a built-in Safari browser, perhaps we'll see the same sort of hear-it/buy-it feature connected to Webcasters and Radio stations who are streaming their programming.
Perhaps. But I wouldn't hold my breath waiting for someone from Radio to approach iTunes in order to get this concept in motion -- because according to InsideRadio Steve Jobs is just "in the business of selling music as well as listening devices."
I'd say he's in the "Kicking Radio's Ass" business.
I saw a link in this week's edition of MP3.com's newsletter for an interview with KT Tunstall and thought I'd enjoy the audio interview while reviewing email working on blog entries this morning. Little did I know it would BECOME a blog entry.
I'm reading an email newsletter from a company and website named for the most common audio format known in today's market -- MP3.com -- the interview has to be in audio, right? Well, if it WAS I'd be writing about something else this morning. The interview is entirely in TEXT.
From the style in which it's written, you can tell it must have been transcribed from a phone call -- why the hell didn't they post the AUDIO? It doesn't have to be "great" audio, gang. It just has to be audio. Everyone knows she didn't stop by your studio and record a master tape for a quick promotional conversation, but even the the most mediocre quality recording from Skype would have been more welcome than scrolling seven pages of tiny text.
I can absolutely understand including a transcript of the interview along with the audio recording -- but when your name IS audio, you might want to consider making your product audio as well.
Shame on you, MP3.com -- you're one of the companies that is supposed to "get it."
Another example of why the future success of artists, authors, musicians (and all other creatives) no longer lies in the hands of major art galleries, gigantic publishing houses, or big record labels...
Radio's Future Appears to be in the Hands of BestBuy Employees
What? People are having a hard time understanding and justifying the purchase of a HD radio? Gosh. Didn't see THAT coming...
--- From InsideRadio: Inside the store - Trying to buy an HD Radio can be tough. The HD Radio rollout is quickly moving from the transmitter site to the retail outlet and consumers are being asked to lay out a lot of money to buy a new receiver. Inside Radio recently paid a visit to a number of New York area stores to see what kind of experience listeners' face. Read about our experience - in today's Inside Radio.
HD Radio advocates agree - retail is the weakest link so far. HD Radio Alliance CEO Peter Ferrara tells Inside Radio they're doing an "amazing amount" in terms of creating consumer awareness, and improving quality. But Ferrara says the retail world is still getting "up to speed with the technology and benefits". High staff turnover at stores isn't helping. ibiquity CEO Bob Struble says there's an online HD Radio University in which sales staff can learn the ins-and-outs of the technology. ---
A couple things from ZombieRadio... Ferrara says the retail world is still getting "up to speed with the technology and benefits" -- ummm. Yeah. Gonna be working awhile on that "benefits" part. A whole fleet of NASCAR racers couldn't get THAT one up to speed!
"Bob Struble says there's an online HD Radio University in which sales staff can learn the ins-and-outs of the technology. " Have fun with that one... how ya gonna get the RADIO LISTENERS to get enroll?
...And exactly what flavor of Kool-Aid will you be serving?
Are :30s destroying radio's pricing power? One CEO says yes. Cox Radio's Bob Neil says it is teaching buyers they can get the same ratings point and pay 75% of a :60 second rate. Making matters worse he says it's allowed advertisers to take their savings and reinvest it - in other media.
DUH. Yes, this article is from the 8/2 edition -- but, so what? Is it LESS obvious this week than it was last week than it was how ever many years ago radio geniuses start dividing their inventory into smaller sections and offering it up for a fraction of the price?
Think of it this way guys -- you can sell a whole pie for $20 or you can divide it into slices and sell them for less. BUT, it will take you longer to sell the slices because instead of selling one thing you'll be selling many things. And everyone else in town is selling the same slices of pie for less than your slice of the pie.
If one station would get ballsy enough to say "buy the whole pie or get lost" someone would buy the pie. They would. Simply because it would be the single differentiating factor between all those other guys hawking slices of pie.
And ironically, that means YOU (Radio) would be getting the biggest slice of the media budget pie.
Just put these two prehistoric prats in a cage and let them duke it out, will ya? Here are the latest whinings...
Headline #1: Study says radio airplay actually drives down record sales. University of Texas at Dallas Professor Stan Liebowitz says radio airplay can hurt music sales by as much as 20%. He finds the more time listeners spend tuned into the dial - the less likely they are to buy pre-recorded music. Liebowitz's study comes at a time when record labels have started pushing to nix radios' royalties' exemptions.
ZOMBIE RADIO SAYS: If the reporter had bothered to ask a Radio PD they would have said their RATINGS have been suffering because of the CRAP the Labels have been pushing to play on the air. They beg for additional spins but cry when the audience is so sick of their tune that they don't want to own it? DUH. ZR also feels that even if Radio didn't play their music -- no one would want to own it anyway. With the exception of 2 or 3 artists -- show me any talent being promoted by a major label that the public can get excited about.
Headline #2: Here's why the record industry is after radio's wallet. Their sales drop yet again. According to Nielsen SoundScan album sales dropped 15% in the first half this year. In short - the record industry has definitely seen better days. The good news for labels is that the sale of digital tracks increased 49% compared to last year.
ZOMBIE RADIO SAYS: So, is this profit drop being blamed on Radio too? That's right -- it's Radio's fault you and your product sucks. Bitch about the 15% drop in album sales and completely ignore the fact your sale of downloads INCREASED 49%!!!
Boo-Hoo-Hoo... I can't dig for coal anymore because all these gold nuggets are getting in my way.
Yeah, baaaybeee! Finally, someone in the industry tells Arbitron to take a hike.
XM drops Arbitron An XM spokesman tells Inside Radio they had a "good relationship." But "XM is a highly specialized media vehicle [and] Arbitron's methodology didn't adequately reflect that."
If only we could get EVERY broadcaster to do the same. Either fix the system or abandon it. Arbitron is not accurate. The company is a freaking radio rates terrorist, lowering the value of the industry's effectiveness as a whole and randomly raising up some stations and allowing others to crash to the ground -- and then completely reversing the ratings in the subsequent book.
Focusing
primarily on terrestrial radio broadcasting, ZombieRadio.com is
dedicated to pointing out the mindless and brain-dead actions of the
mainstream media industry in general.
Don't
get too comfortable satellite, television, cable, and internet -- we
all know from seeing zombie movies that the contagion spreads quickly.
