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The NAB doesn’t seem to understand Radio’s Future

Sometimes the NAB doesn’t understand the future of its own industry.

I’m referring to one point written by NAB to Radio Ink and following up their royalty settlement proposal which was evidently so out of tune with the expectations of the folks on the other side of the table, they have reportedly called off any further negotiations:

Consider what we might get in return [for paying a performance fee]…Decreased streaming rates and the ability to simulcast our signal — commercials and all — on our respective websites, increasing radio’s ability to grow our online revenue.

This is so full of assumptions I don’t know where to begin.

First, the reduction in streaming rates requested here was frictional at best and disconnected from the revenue – today or in the future – which broadcasters might derive from the performances we’d be paying fees on.

Second, the “ability to simulcast our signal – commercials and all” presumes that this is an ability worth having. Does Pandora have this “ability”?  Sure.  And they don’t exercise it.  And that’s because Pandora and other pure-plays know more about the consumers on the other ends of their streams – as individuals – than broadcasters do.  They have precise metrics – rich, targeted, accountable metrics.  These are vastly preferred – and way more valuable – than the vague “estimates” provided by broadcasters for audiences in bulk.

I dare you:  Compare your stream listenership metrics with the PPM Arbitron estimates for that stream.  Go ahead.  And reply here with what you discover. How close are the “estimates” to the real listening?  And why in the world are you trying to sell “estimates” to advertisers when real numbers and richly defined consumers are a handful of metrics away?

This amounts to a con job on our partners, the advertisers. That’s right. When it comes to streams, ratings estimates are nothing less than a con job. It is an insult to our industry and our partners, and its one they can see right through.

Broadcasters can achieve much better results for their advertisers and much better experiences for their consumers by tailoring the messaging in all its dimensions to the individual targets of that messaging.  Period.

If we’re not in business to connect the right message to the right consumers then I suggest the joke will, in the long run, be on us.

Monetizing your online audience using the same estimates you are forced to rely on for your on-air audience will help you pull the wool over the eyes of your advertisers in the short run, but in the long run you will forsake a new pool of advertisers and agencies who buy metrics and accountability, not easily disproved “estimates.”

Third, these streams don’t necessarily live “on our respective websites.” They live on the devices of the consumer’s choosing and may have nothing to do with your website per se. This illustrates an understanding of our future so fundamentally flawed it’s hard to believe the NAB could pull itself away from its AOL dial-up email accounts long enough to write to Radio Ink.

Fourth, “increasing radio’s ability to grow our online revenue” does not mean increasing our shares in an Arbitron world so as to extract a greater slice of the traditional agency’s shrinking media pie via story-making around statistical outliers. It should mean increasing digital revenue from agencies and marketers organic to the digital space who understand digital offerings and buy using digital requirements.  And those requirements are, more often than not, precise, targetable, and accountable metrics.

Quick, someone tell the NAB the car goes in a direction other than “reverse.”

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