05/09

Yes, Pandora is “Radio”

It’s a question vexing many broadcasters, especially those charged with leading the radio industry:

Is Pandora “radio” or is it something else?

I’m going to put that to rest right now.

Yes, Pandora is “radio.”  And you are “Pandora.”  Get used to it.

That is not to say Pandora is identical to “radio.”  Whether or not the two are the same is irrelevant to users, advertisers, and broadcasters alike.  You don’t have to be the same as radio to be “radio.”

You simply have to be used by similar people and similar advertisers for similar purposes.

At issue is how we define “radio.”  And any broadcaster who defines “radio” according to century-old rules in a digital age is a fool.  Not only because they would make an incorrect conclusion about Pandora but because they limit their own prospects by diminishing their own horizon in an era of unparalleled opportunity.

Weak Argument #1: “Pandora isn’t radio because it isn’t local”

Pandora is personal which is better than local.  There is no advantage to local per se unless you create value to the consumer based on your proximity to them.  Radio tends to use the term “local” to define their mailing address rather than their value proposition.  If being nearby were the ultimate advantage than syndicated programming and Lady Gaga would not need to exist. “Local” is what you do, not where you are - just ask AOL.

Weak Argument #2: “Pandora can’t save your life in a crisis.”

True.  But I would hate to think the value proposition for the entire radio industry is being reduced to one which affects 1 percent of the audience 1 percent of the time.  Are we really nothing more than an elaborate and expensive Emergency Broadcast System that features “ten in a row”?    Being the emergency medium of last resort is a powerful advantage, but it’s not what separates “radio” from “non-radio.”  In fact, I could almost argue that “emergency information is a feature, not a brand.”

Weak Argument #3: “Pandora is a feature, not a brand.”

That is, any broadcaster can create the capacity for their consumers to personalize content streams.  While Clear Channel is rumored to be creating just this capability, it’s telling that almost no broadcaster has done this to date. What do you call a feature that is never featured? And why does radio need a competitor with 80+ million registered users before recognizing that this notion has value?

Meanwhile, the truth is that a personalized Internet radio experience can be both a feature and a standalone brand at the same time.  For example, the ability to download movies is certainly a feature on Amazon, but that doesn’t keep Netflix from owning the category and winning the lion’s share of that market.

Weak Argument #4: “Internet radio reception is spotty and drops a lot.”

It can if you’re motoring around town via 3G.  But it won’t if you’re tuned in via wifi.

And remember two things:  First, listeners have been trained to expect inconsistent reception from radio over the years.  Second, there is a huge incentive for technology to solve this problem not for Pandora’s sake but for the sake of the infinite number of other digitally-powered solutions that are and will come our way via mobile devices.  Don’t bet against technology when it has huge consumer demand on its side.

Weak Argument #5: “Pandora is non-social.”

Broadcasters don’t really know what “social” means.

“Social” doesn’t mean “we have voices on the air and listeners can call in to win things.”  ”Social” doesn’t mean “everyone can listen to us separately at the same time.”  ”Social” means that every consumer is having an experience they share in some way with others.  By that measure, it seems to me that both radio and Pandora are “social.”  Although I would also add that both radio and Pandora could be a lot more social than they are today.

The problem is that radio is functioning from the perspective of scarcity – the idea that we must hold on to every bit of everything we have had the way a man hangs from a highrise on a ledge.

What broadcasters are missing in this picture is that while outsiders will encroach on our turf, the playing field for your company has just expanded tremendously.  You are both the aggressor and the defender. I don’t see nearly enough broadcasters recognizing that broader potentiality.

Instead, I see an almost delicious zeal in diminishing these new definitions of radio, whether by damning Pandora, by ignorantly arguing that “nobody has ever made money from streaming,” or by foolishly pursuing the ability to duplicate spots on air and on-stream despite the fact that this undercuts the value proposition of the digital stream for the sake of presumed short-term ratings dollars in a world of infinite reach where ratings will matter less than attention.

It’s as if many of our leaders are so committed to the past that they are deliberately blind to the future.

As Seth Godin said to me not long ago, “if radio had collected all the email addresses of their listeners when you and I first starting talking, Mark, do you know what they would have today?  They would have Groupon!”

Wake up and smell the future, radio.

* = required field
  • http://pulse.yahoo.com/_GXLVR4TD6EGZHAI2YST6GXJSEM Guy

    Does it really matter if Pandora is radio or not if doesn't have what you want to listen to. In my office and at home I want to listen to Mandarin Chinese easy listening with a DJ roviding social interaction. Well, that is now an option, and I'm hoping they are getting a chance to sell some of the add space on InTune to advertisers who i might buy from in the US

  • http://www.markramseymedia.com Mark Ramsey

    It matters primarily to many broadcasters who have a mental block about the issue – real or delusional.

  • http://twitter.com/djmaleko Maleko

    Mark, I usually enjoy reading your insights but lately it's like watching chicken little. You're running around screaming about the sky falling and no one believes you. I get it, we all get it. How about providing some real suggestions to evolution of radio. The ipod is dangerous, radio is old, pandora is radio. Jesus man, how about some good news – show me an example of a PD that doesn't have his head in the sand waiting for the world to end. This isn't helping anyone.

  • http://www.markramseymedia.com Mark Ramsey

    When Chicken Little shouted “the sky is falling,” he was wrong. A better analogy would be a canary in a coal mine. :-)

    Honestly, I spend TONS of space in this blog providing thoughtful ideas to help broadcasters solve problems. If what you seek is a recipe, then you're in the wrong place. But if you want thought-starters so you can solve what are bound to be your own unique problems, welcome aboard!

    Alternatively you can always hire me.

  • Tim Moore

    Mark-

    My response is again below-for those who would rather not LINK away the day….
    this is from my little daily blog….

    Radio: It’s “Community”, Not “Local”

    Today’s blog is a bit radio industry-centric, so regular readers expecting everything from politics to stupid videos may be disappointed, but I can also presume that fans of the blog also listen to 94.9 WHOM, so radio is at least marginally a part of your life (for which I am eternally grateful, as are the colleges where my kids attend…ahem)

    First of all, I greatly respect the one-man industry think tank that is Mark Ramsey. He is a radio advocate, a fan and a promoter of radio. He is also objective about radio’s challenges as an industry—and pulls no punches when he thinks we are collectively playing the fiddle while Rome burns. It’s a fact that well over 95 percent of Americans listen to radio weekly. This level of usage beats television and the internet and trounces newspapers and magazines.

    This radio usage statistic has been used by the: “radio is just fine, thank you” camp to assert that new competitors are really not making inroads. On the other side is the “doom and gloom” camp, those who are already engraving radio’s tombstone.

    Neither side is correct.

    Radio faces huge challenges, but so does every industry in a world where the internet has completely changed the existing business model. Imagine yourself in the boardroom at Borders Books & Music, grappling with the notion of competing with Amazon—and you’ll get an idea of the scope.

    Time spent listening to radio is on the decline—and the demo using radio is aging. One of these truths is largely unavoidable. The other is completely addressable.

    For any media that requires devotion of time, the introduction of a competitor will obviously impact usage of existing media. Until someone invents a 25 hour day or postulates that the population at large will collectively agree to one less hour of sleep a day, it’s a zero-sum game. When the internet appeared and people began spending time on the web, it came directly out of the hide of TV and radio. This doesn’t worry me in the least, mostly because there are no “product solutions” for radio that will compel consumers to abandon or greatly lessen their usage of another media that provides different attributes.

    The demo issue could be the subject of another entire blog, but is something that radio and the advertising industry have chosen to let happen. We call it “25 to 54–itis”, the myopic devotion to one age demographic to allocate the lion’s share of radio advertising dollars to. This suicidal trend forces radio programming to become homogenous and most definitely alienates the younger demos, who HAVE to gravitate to other media to satisfy their entertainment desires.

    If large radio companies with an underperforming FM in their cluster (is there not at least ONE in every market?) immediately flipped that loser to appeal to 12-24 listeners (and I don’t mean Radio Disney), they could have a real winner, provided the sales staff could convey the value of this audience to local advertisers.

    But I digress….

    Mark Ramsey’s latest blog asserts that the ongoing debate about whether or not Pandora is “radio” seems to me to miss the mark. Assigning a label to it makes no difference at all. If people wish to perceive Pandora as “radio”,fine. The word “radio” has consumer power—both XM and Sirius (when they were separate and competitors) chose to label their new, cutting edge product with the word “radio”. It was instantly identifiable by the target market. Their marketing challenge was therefore a “better mousetrap” approach that sought to suggest that satellite was “radio worth paying for”.

    With millions of subscribers and the corner turned on finally becoming profitable, the future of XM/Sirius seems to me to be far more challenged by the notion of Pandora or Slacker than terrestrial radio is. Traditional radio is still free to the user.

    Lost in all of this debate is an important distinction that I think has been overlooked or misinterpreted in making radio’s “case”:

    It’s the difference between “local” and “community”. Nuance—or critical? I assert it is the latter.

    Howard Stern proved years ago that “good” beats “local” as he systematically destroyed local rock morning shows around the country. But what about “good AND local”? And what about the notion of “community”?

    “Community” as I use it here is the notion of “shared experience”, which I believe has value—and could be a core strength for radio going forward.

    Pandora is the latest evolution of “media as isolationist”. It is so personal that it is…well, selfish. What occurred with iPods has extended to a truer radio experience (element of surprise, introduction to new music, etc)—Pandora. It is so individual that virtually no one else likes it except its sole consumer. In short, it’s a rather lonely experience.

    There is something missing: Shared experience.

    Satellite radio fans still listen to terrestrial radio—and the reason many of them give is along these lines: “When I listen solely to satellite (or Pandora, iPod, Slacker), I feel DISCONNECTED from where I live”.

    This need to feel “connected” is what drives human interaction, all social organizations—and yes, even Facebook and Twitter.

    Not hearing the local weather, not hearing about the concerts coming to town, the antics of the local politicians, the road closing that will screw up my commute, even the going-out-of-business sale at the local furniture store—all these things and more are part of a shared experience that defines a community. At its best, it is the radio station that dumps music to take listener calls after a local tragedy or emergency. It is the dominant local morning show whose stunt this morning is literally the talk of the town.

    The loss of “shared experience” in media is a function of the proliferation of choices. Today, we have 300-400 channels of TV, yet complain that there is “nothing good on”. Those of us old enough to remember when TV meant 3 or maybe 4 channels had a shared experience.

    The Beatles on the Ed Sullivan Show was a national phenomenon because EVERYONE saw it. And somehow, we never complained that there was nothing on. Our shared pop culture is defined by Top 40 hits on the radio and TV shows that defined an era. We might not especially “like” those songs—either then or now—and the TV show that “everyone watched” back then—we might not choose today, but there was a power of shared experience that gave added value to our lives and was a social touchstone for interacting with our peers.

    This is largely gone now, with the exception of shows like “American Idol”, which, at its height, provided the same “shared experience” benefits:

    1) “Everyone”watched it.
    2) The next day, “everyone” talked about it
    3) The shared experience provided a common bond between people

    These programs provided a “social entry to conversation”—and the notion that others were sharing your delight as you watched (or listened) provided another element of “community”, however trivial.

    There are still local morning shows on radio that command this type of attention. Just as no one can remember what TV program was on opposite “Seinfeld” (because “everyone” watched Jerry & friends), there are local radio programs that have hit a critical mass that elevates them to “must listen” status. Often, these morning shows are much bigger than the daypart in which they reside, helping to define the radio station’s brand overall.

    One can argue that traditional radio was (and is) the first social media.

    Perhaps still behind the curve, radio is making progress in integrating web-based social media, mobile and interactive components in keeping the medium relevant. Terrific innovations like Jelli and LDR (Listener Driven Radio) are redefining how our huge audiences are interacting with us and expanding our platforms of usage.

    The biggest mistake that radio companies can make is to de-emphasize the local component that drives listener engagement. And while radio has sometimes been guilty of laziness in truly integrating themselves with their communities, most of our troubles in doing so lately have been because of depleted staffs through downsizing.

    Radio is poised to capture a huge amount of former newspaper dollars and our fair share of digital revenue. This makes us a growing industry—if we choose to see ourselves as such.

    A growing industry is not one that lays off people, however. Google is making investments in people and technologies to expand their empire.

    Radio? We’ve been doing the exact opposite, yet expecting the smaller staffs to absorb the duties of those who exited—AND, by the way, expand into web and digital initiatives—all without people or resources. That’s just dumb.

    Radio needs to take the larger view that growth requires bold investment in people and innovations, not cost-cutting through shrinkage. Satellite shows replacing local, compelling people is not the strategy of an industry that truly believes in growing.

    Think “community” when you or anyone else says “local”. There is a massive difference.

    It’s not WHERE you are, it’s WHAT you are. Ryan Seacrest is talented, but he is not Portland, Maine. He is Hollywood. I want my radio station to be about MY community, not someplace that’s largely unrelatable to my audience.

    This is the distinction that could spell disaster—or unmitigated success for radio.

    Yogi Berra said “ I came upon a fork in the road, so I took it”. He was confused, but that may be our dilemma right now as well. Radio’s at a “fork in the road”, but we’ve been there many times before. Television was supposed to do us in, but turned out to spark a new and profitable direction.

    Are we confused, too?

    Today’s radio industry captains have to respect the power of COMMUNITY when making decisions that will affect our future.

    Let’s hope they have the wisdom to do so.

    If you’d like my blog in your box, just let me know: tim.moore@citcomm.com

  • http://www.keylogger.in Keylogger

    Thanks for sharing the interesting post, i enjoyed reading it,
    can you please tell me more how Pandora
    is a non-social element.

  • http://www.markramseymedia.com Mark Ramsey

    I'm arguing that it is NOT non-social.

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  • roysand

    Next question, why is a broadcasting licence so much worth?? course you get much more listners per station than a station on the web. Even a local AM licence is more worth than a web radio licence.If there wasn't any future of AM/FM/DAB+ broadcasting, all stations were for sale within 24 hours for  one usd or bids.

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