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07/16

The Death of Distribution Channel Advantage

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So I read with interest today this distribution-related tidbit from NTS MediaOnline:

Cumulus Media-owned Westwood One has announced an agreement with NextRadio that will enable all U.S. radio stations to use advertising inventory to fund the industry’s payments to Sprint. Over the past year, broadcasters have been asked to commit dollars and/or inventory to fund the Sprint NextRadio Initiative, which plans to sell at least 30 million FM receiver-enabled smartphones in the next three years. Broadcasters can now meet their commitment by providing two minutes per station per day (Mon-Sun/ 6am-midnight) that Westwood One will sell on NextRadio’s behalf to pay the proceeds to Sprint.

In other words, you now have a new way to use your precious airtime (or not-so-precious, as the case may be) to act as an enabler to NextRadio’s Hail Mary pass aimed at getting FM on mobile phones without having to go through the senseless and cumbersome effort of convincing consumers to actually demand it first.

One would think a useful alternative would be to use that precious airtime to fund improved content which has historically shown to actually drive demand for radio through demand for what’s on it. 

But evidently one would be wrong.

I suspect that Trey Parker and Matt Stone would shake their heads at this lapse in good sense.

Trey and Matt are, of course, the creators of South Park, and they just announced a three-year deal with Hulu for exclusive streaming of the huge catalog of South Park episodes in a deal worth more than $80 million.

This reflects an important trend, writes David Carr in the New York Times:

First and foremost, high-quality content is only going to become more expensive as additional platforms open up. Content, we were told, wanted to be free. Turns out, it wants to be paid at every turn. Distribution, which used to dictate everything, has become commoditized, and it is content that is now precious.

Let me repeat that for emphasis: “Distribution, which used to dictate everything, has become commoditized, and it is content that is now precious.”

This was a theme of my opening presentation at hivio, and now here it is again, emphasized more than 80 million ways.

While I realize that radio’s historical business model is rooted in the power of what used to be exclusive audio distribution, the smart broadcasters and the smart content-makers they collaborate with had better wake up to the new reality:

Distribution, while critical for the success of content, is increasingly not where future value is. The value is in what’s distributed. The value is in high-quality content.

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  • paulgoldstein

    Great piece Mark. The sweetest kiss broadcasters are giving Pandora and iTunes Radio and Spotify and Youtube and Xbox Music, and Google Play, etc., is their absence from content innovation online/mobile. As broadcaster’s AQH collapses and the migration from FM to online/mobile rises, Spotify/Pandora/Apple celebrate broadcasters safe, slow decline. “Take your time boys…take…your….time” http://goo.gl/vsAADR

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

    Thanks for the note, Paul!

  • Nathan

    Entertainment… Period. Rush used to be fun to listen to. I’m conservative but regularly watch Jon Stewart. Entertainment first.

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

    Right on, Nathan!

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