Greg Nisbet
If there’s one thing I’ve learned with all the radio folks I’ve been talking to lately, it’s that the radio business has been much more open to evolving into new business models than other equally entrenched elements of the music business. If there was any doubt of the truth of this going into my final event of Canadian Music Week, the RAIN (Radio and Internet Newsletter) Summit North, that doubt was quickly and completely dispelled. Radio is not only ready for the Internet, it’s already evolving with it.
The tone of conciliation took hold right from the beginning. After setting the table with an overview of how few internet radio services were available to Canadians, David Basskin of CMRRA-SODRAC had a clear message for such services wanting to follow sole entrant Slacker and make the jump into Canada – “We are open for business”.
Most of the next panel, Features for Stations’ Digital Platforms was mostly a commercial for the panelists’ services, but it was a very watchable commercial. I was particularly impressed with the creative ways in which Jelli’s “crowdsourced” platform was being integrated into terrestrial radio offerings, kicking off with two-hour spot Sunday nights on Live 105 KITS, a local San Francisco FM radio station. Only slightly less impressive were Emmis Interactive’s Base Station, conference organizer Kurt Hanson’s own Slipstream Radio and Montreal’s StreamTheWorld. I found it particularly interesting that according to STW’s Jean-Phillippe Gauthier, 10-15% of the service’s clients in some regions were already accessing radio on their mobile device.
In one further commercial interlude that continued the theme of engaging listeners to terrestrial broadcasts using the power of the Internet, Chris Byrnes from Canadian radio consultancy Byrnes Media tag-teamed with the founder of Listener Driven Radio, Daniel Anstandig, to demo a very comprehensive piece of software that uses detailed listener interaction through web-based software to update a station’s programming in real time.
The highlight of the summit for me was RAIN founder Kurt Hanson’s data-packed State of the Industry address, in which he cited the accelerating growth of audio listening on the Internet as heralding an upcoming 4th Golden Age of Radio. Whereas in terrestrial radio the brand is the genre (ie. HITS 109, 109 Classic Rock), the differentiator in the Internet space would be the user interface and experience. Hanson spent a lot of time discussing the predominance of Pandora, not only over Internet radio listening but, strikingly, even into mainstream terrestrial radio territory. Not only does Pandora’s AQH (a metric for average listeners per station) of 257,000 give it a 25% share of Internet radio (making it number one by far), but it commands a 1.1 share of the entire US radio market. In other words, according to Hanson, it’s at pretty much exactly the same position as FM radio was in the early seventies.
This success of Pandora is tied heavily to the uptick in growth provided by the company’s iTunes app, and so their story comes with an important lesson for Canada, whose carriers, unlike those in the United States, have not yet evolved into an understanding of the beauty of the unlimited data plan. According to Hanson, Pandora gets 4 cents per listener hour off its advertisers, whereas terrestrial radio typically gets 10-15 cents per hour. This is certainly a sustainable model for such a service in Canada that focuses on the desktop, however Hanson then pointed out that, with Canada’s draconian data plans, Pandora’s 4 cents per listener hour would cost $2 in Canada to serve on a mobile platform here. As he spoke, I could see visions of my kids racking up a $1000 cell phone bill because they shared headphones on the school bus and streamed radio for a few hours.
The star of the next panel, entitled Making Money in Streaming, had to be Slacker‘s Jim Rondinelli, who charmed the crowd with a few references during his comments to enough Canadian music to establish some hometown street cred. According to Rondinelli, most of Slacker’s ad business comes from sales by outside agencies like Targetspot who can target locally, which is good for services like Slacker because economies of scale ensure that local advertisers pay higher rates than national advertisers. He also tossed out one of my favourite sound bites of the summit, describing the point at which audio ads stop becoming tolerable and start becoming annoying as the “threshold of annoyance”, which he vowed that Slacker would always endeavor to respect.
FYI Music’s coverage of the Digital Media Strategies conference hinted at a growing willingness on the part of advertisers to start diverting some traditional ad spend into “new media”, and the Making Money in Streaming panel reinforced that notion, but it was interesting to hear Corus Toronto’s Victor Giacomelli state that “advertisers are willing to try digital but there tends to be a high churn rate (i.e. advertisers tend not to renew), so there is a need in new platforms to focus on advertiser retention.”
I was quite looking forward to Pandora CEO Joe Kennedy’s keynote as a highlight of the event, but I found it came out a little flat. Perhaps it was just me, but I wasn’t enthralled by Kennedy’s entirely-too-distant cinematic overview, in which online radio was painted in broad strokes as a unicast rather than broadcast medium that required entirely new ways of delivering user experience. I certainly agreed with this assertion, but I was hoping for some of the juicy data tidbits served up by some of the summit’s other panelists and was therefore left wanting.
I guess I should be careful what I wish for, because I found the presentation by Hanson and Vision Critical’s Jeff Vidler of Radio Future 2010, a study of about 3,000 adult “engaged online consumers in the U.S., U.K., and Canada.â€, a little heavy on the data and light on analysis. The most revealing statistic was one that indicated little or no growth in terrestrial radio listeners, contrasted with upswings of 42% for listening on portable devices, 22% for streaming music on demand, and 22% for Internet radio.
The last panel of the day, nimbly moderated by Toronto music startup RockPeaks‘Â founder Barnaby Marshall, was all about The Leap to Mobile. Given the issues surrounding mobile streaming in Canada, it wasn’t that much of a surprise to hear Corus’ Earl Veale reveal that only 3% of Corus listeners are listening on mobile devices (ie. iPhone app), though that was certainly expected to grow substantially. Pete Watson from Blackberry manufacturer Research in Motion agreed with the growth projection, stating that “music is driving significant consumer adoption on Blackberries.” He even hinted at the development of a “super app” for Blackberry, in which various media consumption services would be brought together on the device usually better known as a corporate power-toy.
Seal the deal with some upscale appetizers and an open bar and you have an afternoon very well spent. Even for a digital music denizen such as myself with an Internet I.V. drip fed into my digital arm, information such as that shared at this event is very difficult to come by, so I owe a hat-tip to the folks from CMW and RAIN that I didn’t even have to drag my usually chair-bound butt east of Yonge Street to hear from pretty much everyone who is anyone in the internet radio space. Mark me down for next year’s summit!
Greg Nisbet is a storyteller, music lover, and entrepreneur who has worked in jobs as varied as busker, actor, safari guide, private school principal, and mergers and acquisitions broker. He is the founder of an Internet media start-up called Mediazoic [http://www.mediazoic.com]. He also enjoys sharing his ideas on the use of technology and social media in presentations, workshops, and carefully chosen consulting contracts.
