08/29

Radio’s Ridiculous Debate about Streaming – Part 1

The debate-of-the-week in the radio business is: What do we do to monetize our stream?  Do we simulcast what’s on the air and throw it in as added (non) value, or do we treat the stream as an additional component in our brand arsenal and monetize it as such?

Look, there’s no magic in adding what amounts to a second distribution channel for the same content and running the same spots on it to sell it in bulk to agencies which like to buy in bulk and ratings companies that like to measure in bulk.  This is simply a process of clinging tenaciously to a business model that is ever-tougher to execute simply because it’s the legacy business model that built our broadcast companies and made them so flush for so long.

What folks don’t understand is that this debate is not really about audio levels and public service announcements and whether or not a company “cares” about its content.  These are all distractions – excuses. This debate is about business models.

What you’re witnessing here is the atomization of the radio industry into numerous industries that are not, strictly speaking, “radio” as we used to define it.

Broadcasters have differing event strategies, digital strategies, streaming strategies, brand strategies, and sales strategies, and they’re getting more different all the time.  Many broadcasters no longer even speak a common language on these topics.  How else to explain how one major broadcaster can dismiss streaming as fundamentally unprofitable while others rush in to illustrate how they are making serious money via streaming with some extra elbow-grease and some novel thinking?

Radio is becoming multiple industries: Some which look ahead and some which don’t.

You can treat your stream as an asset or you can treat it as another way to pray for a meter in some random chance encounter that PPM devices are becoming increasingly famous for.  Let’s not worry about what the advertiser will do when they discover that our ratings methodology is, at the margin, based on hopes of winning that are no different from what drives the purchase of a lottery ticket.

Seth Godin, a guy broadcasters used to like to hear from until he started saying things they disagreed with, nailed this the last time we talked:

What you’re really saying is you would like the new money to be as brainlessly easy to get as the old money, and it’s not.  And because it’s not and because you’re lazy, you’re not getting any of the new money are you?

If you had listened to me and Mark when we first talked six or eight years ago and said:  “We’re going to start collecting permission by zip code of people who want to hear from us,” by today you’d have maybe half a million people getting your daily newsletter.  You know what that’s called?  That’s called Groupon.  Tell me why Groupon wasn’t started by your radio network?  I don’t know why it wasn’t started by your radio network.  You had everything you needed to start Groupon, except guts.

The problem is that too many broadcasters aren’t interested in developing new business models when the old ones are so easy.  Unfortunately, our new economy is all about new business models and the innovations which drive and are driven by them.

How is monetizing radio’s streams any different from the monetization puzzle faced by Facebook or Twitter?  How successful they will be in monetizing their brands isn’t my point.  My point is that new business models are the only way to do it and they – and you – have every incentive in the world to develop them.

Before we blame the child for his sins, maybe we should consider how good or bad a parent we have been.

Focus on new business models.  The past is over forever.

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  • Anonymous

    We can’t say we weren’t warned.

    Your space is like the ‘National Center for Disaster Preparedness,’ trying to help broadcasters survive and understand that a well-executed evacuation – FROM THE PAST – is step one.
    Unfortunately, until we believe that a Katrina-like event is approaching, and that you guys aren’t crying “wolf,” I’m concerned that many of us will choose to stay in place no matter what the warnings are.
    Regardless of how much destructive power the approaching storm has, the need to focus on a new business models is absolutely correct. Those solutions will only be discovered through experiments and testing. That’s risky business and many broadcasters are risk averse.
    Your repeated warnings are a reminder that riding it out has become more risky than moving out into the unknown with a well-developed plan.

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

    Thanks for the note, Gordon.

  • http://www.facebook.com/hdn2020 Hemat Dwi Nuryanto

    100% agree with you

  • http://twitter.com/jsinon Jeremy Sinon

    I agree with just about everything you say here. I especially agree with the “excuses” of audio levels and PSA’s.

    I think the biggest problem with streaming is that we want it to make us money before we decide to invest money into it. For a decade radio has sat on the cart waiting for the horse to show up. The result of that approach is what gives us a “poor listening experience”. The industry for the most part is not investing in people to manage the streams properly and is reluctant to adjust the rolls of traditional employees in order to ensure the stream is being groomed properly.

    Where I do respectfully disagree with you is this notion that broadcasting your terrestrial signal over your stream is some sort of digital cop out. The way I see it, if you can take what is 2 different audiences right now and combine them into one audience isn’t that the best possible outcome for digital? If both terrestrial and stream are encoded the same for PPM purposes you all of a sudden have 1 product and crystal clear goals for everybody in the company – 1. Get more listeners. It doesn’t matter how they listen – just as long as they listen. 2. Monetize it – sell 1 product, 1 audience. Don’t worry about how it’s distributed

    People seem to think that putting your terrestrial broadcast on your stream is somehow a step backwards and an indication that old school radio has won the tug-of-war. I think it’s the complete opposite. If we do this – radio is now digital.

    The only thing to figure out once the change is made is how dollars are split up. What exactly is “digital money” at that point?

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

    Your last point is why I disagree with your simulcasting conclusion.

    When you simulcast the spots there is no such thing as digital money. It’s all one big pot drawn from the same sources for the same spots delivered against the same faceless, nameless ears.

    To treat a digital asset identically to our over-the-air one ignores the true added values of that digital asset – both to advertisers and consumers.

    The notion that it puts everyone in the station on the same page will be a thin reward when the advertisers and consumers decide to turn a different page.

  • http://twitter.com/jsinon Jeremy Sinon

    You make good points and I think we can both agree that this is not something that is going to be solved easily.

    I think you are still viewing this as radio throwing away digital. I tend to see it as digital absorbing radio.

    The measurement can be figured out. The dollars can be figured out.

    We need to stop looking at our distribution channels as if they are different businesses. We have one product – a radio station – that’s our business.

  • Radio Guy

    I’ve never, ever heard of any station that simulcasted while developing a digital business. Ever. I think it is safe to say that in virtually every case you can name simulcast means there is no investment and very little revenue coming in. At the very least they are losing all of the high revenue generating ad types.
    Honestly, it is just plain stupid, there’s no other way to describe it.

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

    Jeremy, it looks like you and I disagree, because I think those are exactly different businesses. What radio has are relationships and the freedom to leverage them. If we get married to one product one way, then we risk the world and the audience one day passing us by.

  • retired radio guy

    It’s a separate business. Radio people don’t have a clue how to maximize digital assets. Guilty. I know. I managed major market stations for 30 years and we never figured it out. Streaming is expensive and adds nothing meaningful to ratings or revenues. The radio sales model is now 90 years old. Maybe, just maybe, isn’t it time for a change???

  • http://twitter.com/jsinon Jeremy Sinon

    I don’t know Mark, you’re losing me on this one because ultimately all we are talking about is covering up ads.

    I 100% believe in innovation and leveraging our relationships. But I don’t think removing the ad replacement technology from our streams paints nearly the doomsday scenario that you are hinting at.

    Smart radio groups will continue to innovate and try different things in the digital space. But broadcasting your radio station on your online stream with the same commercials that you hear on the air – well, I just don’t see the harm.

    Remember, when a listener from the general public comes to a radio station app, or web site to stream their favorite radio station they expect to hear the same product they hear on the radio – and finally we can deliver that to them.

  • http://www.facebook.com/iparamanandam Ivan Paramanandam

    As marketing consultant, on the front lines, I can see a number of positives on both sides of this debate. With any change in technology we are going to realize the same discussions. With more than 30% of radio listenership taking place on stream, and growing, there is no discounting the fact that stream is here to stay. The added benefit that I have found with stream is that I have actual analytics that I can present to my clients showing how many clients have been listening to the stream over a given period. These are not an extrapolation of sample data, but real number. It wont be long before every mobile device will be outfitted, with an opt-in “PPM” app, that will give real-time data of listeners in any market. I expect to see this in the near future. This will really upset the apple cart. Monitizing the stream is inevitable and necessary for any radio group to stay competetive and relevant.

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

    Ivan, thanks for the note, and I agree.

    However, can you tell me where your 30% statistic comes from? That seems way too high….

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