June 2013: Streaming and Screaming

June 10, 2013

There’s always been sharply divided opinion about streaming our audio online, and recent developments have further intensified the debate.  They range from “I need to make sure I get Arbitron to count every listener to my station” to “I only need to serve the people in my metro.”  Then there’s the new discussion about whether or not to insert spots in-stream.

There’s a short game as well as a long game here.  First, let me reiterate — I’m in favor of streaming and always have been.  I’d also like to be making more revenue from our streams while paying less to Sound Exchange for the statutory license to stream.  I’d like better technology and I’d like to know more about who is listening online to our stations.

But these are growing pains.  There is a greater goal to be attained and that is to keep our local brands viable and relevant to rapidly changing audience habits.   We are seeing the increases in listening online and the latest research indicates that some fans of our stations are now spending between 10% and 15% of their listening online.   Whether it’s at work or on a mobile device, that is listening that was going to be lost to our brands.  With online platforms we can retain our listeners’ loyalty.  We need to be wherever they want us to be.   There are new battlefields — the digital dashboard, the mobile devices we all carry, and the desktop computer.  Our brands must expand to be able to provide service to all of them as well as reach beyond the 6 or 9 counties that define our broadcast signal.

A lot depends on how we define our business.  If you are in the broadcast business, it may not matter to you that Pandora has 200 million registered users.  It may be a distraction that Apple is about to launch an ad-supported music stream.  But if you are in the communication business, these and other online competitors should keep you awake at night.  The gravitational pull of online and personalized music services is strong, especially for listeners below the age of 30. We are challenged to compete with them not by imitating their qualities, but by making our unique brands just as easily available at all times to our listeners.  We are competing to remind our audience every hour that there is much more to their favorite station than the music mix; that we are a connection and reflection of their hometown and their favorite music format.

There are those who will stand by their judgment that “streaming is not a business” or “Arbitron has to change the simulcast rules”.  They are not mistaken in the present or in the short term.  There are no riches in streaming audio today, when it’s not yet a widely-accepted market.  But it’s growing faster than broadcast revenues and will continue to grow.  Arbitron struggles to adapt their estimate system to a delivery system that doesn’t need estimates.  Online audio can provide an accurate measure in real-time, counting exactly how many listeners are active at any time.  It will not be long before we can not only count everyone, but we will be able to describe their exact location, their habits, preferences and other details revealed by the ocean of data that is being assembled in the digital world.

Don’t get me wrong; we should fight today’s battles as aggressively as possible and get every listener estimated and get every online spot sold for as much revenue as we can produce.  But if we look a few years down the road, we will be competing in a dramatically-changed marketing landscape, where big data and real time buying combine to change radio budgets to audio and exponentially increase competitive forces.  We no longer have the luxury of regulated competition within a defined piece of real estate; we have to make every effort to entertain and deliver to advertisers as many highly targeted listeners as possible, wherever we can acquire them.  Platforms, geography, delivery, media-buying and media usage are all changing and we have to keep pace. This is the real definition of our competitive landscape.

The good news is that we have established relationships that many digital services would die to have.  Notice who Pandora has hired in many markets to proclaim how “they’re radio too”?  Ex-radio salespeople and managers.  Wonder why Apple is announcing that they can target the audio ads in their music service?   Disregard the rhetoric; they are serving notice that they are competing for our relationships.   Radio has proven to be amazingly resilient to date in the digital revolution, and if we tend to our primary strengths of strong local service and relationships with clients and consumers and adapt them to the new landscape, we will continue to be the audio medium of choice for many, if not most.  But we need to embrace, adapt and reimagine our stations as local brands offering multiple channels as well as on-demand audio, video, mobile and social relationships with our listeners.

Let’s stop the screaming and keep on streaming.   The details can be worked out as we move forward, but the time for our industry to move aggressively forward is now, even if it is kicking and screaming.