Pandora is the leader in Internet radio.  They worked away in obscurity for many years.  Their early entrance combined with their  unique (many have copied now) approach to generating a customized listener playlist, gradually built a significant audience.  With listener registration data they have reached a scale where they can now geo target and sell local advertising in many markets.  Their recent deal with AdReady on the display front and positioning this as an ad opportunity for SMB’s is just one step in maximizing their advertising opportunities.  They have created music genres and I would not be surprised to see them expand to offer other types of content, news, weather, sports, etc although this gets them away from their music (genome) roots and this type of content creation would be more expensive.

Arbitron states that Sirius XM has 32 million weekly listeners.  Quantcast states Pandora reaches 8.4 million people on a weekly basis.  While Pandora’s audience is roughly one quarter of Sirius XM, Pandora is growing rapidly (Pandora audience increased 104% from 9/09 t0 6/10.  With Pandora pushing hard for in-car placement we believe Pandora will overtake Sirius XM’s audience within three years.  It blows one’s mind to think about the billions of dollars invested in Sirius XM to create their audience compared with the $100 MM (just a guess) that Pandora has raised to date.  Public offering for Pandora within one year is my bet.


Yes mobile is hot.  It is hard to read any publication without coverage or prognostication on where the industry is headed.  For the radio industry mobile currently means streaming their audio content to a mobile device.  The primary way of doing this is to create an application for each major platform; iphone, android, blackberry.  Some early entrants in this field built a portal where client stations could be listed.  While some adopted this strategy Radio Time listed all stations in a guide format even though they had no business relationship with the stations.  This mobile strategy was not attractive to radio stations as their brands were lost and as a result mobile companies such as AirKast began building applications for stations.  The mobile handset also created opportunities to interact with listeners including album information, lyrics, station playlist, concert information, song purchase, music video or share station with friends.  Some mobile apps are not superior to many audio players on the market.

There are a preponderance of app developers but only a few which specialize in the radio vertical.  Like the early days of the web companies such as JacApps produce apps that are static and if a station wants to make a change they must go back to the creator of the app or start over again.  AirKast has built more of a mobile CMS platform which can be customized by the station and its service runs on its AirBridge platform (specially developed server architecture).   We see this more as the future of mobile.

While its cool to have a mobile app most stations will want to generate revenue.  Just like internet radio there are numerous advertising opportunities including video preroll, in-stream audio and display.  Typically when referring to a mobile network such as AdMob or Quattro Wireless this means display advertising.  The CPM or now mostly CPC campaign are not attractively priced as ads are not targeted or contextual but just fit to a mobile device.  I believe a listener/viewer is more engaged on a mobile device and thus CPM/CPC’s should be higher, witness what Apple is doing with iAd.  The problem is most ad campaigns are not designed for mobile and the creative is poor.  If we factor in geo advertising mobile ad rates should be significantly higher.  Stations need to participate both in a national mobile ad network (one that can sell video/audio/display) as well as sell it locally.  Currently mobile audiences are small but will grow significantly over time.  In car applications and better device tethering will propel mobile audience growth.

The question you should be asking your mobile provider is whether they can measure your mobile audience (something that Ando has not fully implemented) as well as insert the various forms of advertising and of course measure impressions created. We are in the first inning but this channel is going to develop quickly.

We need innovation

Radio stations are content to take their over the air content and just stream this content online. While this may allow their P1’s another way to listen it misses the significant opportunity to create more engaging content that is customized for the way people are consuming this new media. As discussed in a previous blog, one of the largest impediments to building an audience is the high commercial load carried by terrestrial stations. No longer is a station compared to a limited number of other stations in any market but to a much larger universe. A social element definitely needs to be included. While it is more difficult to compete for audience in this new world one cannot deny its existence as many radio groups are doing. Let’s stop paying lip service to Internet radio and put some thought and resources behind it.

My wife recently asked me to read “Who Moved my Cheese” by Spencer Johnson, M.D.  He uses cheese as a metaphor for what you want to have in life and the characters in the story are faced with unexpected change.  Some of his tenets which I list below are quite applicable:

– Change Happens – they keep monving the cheese

– Anticipate Change – get ready for the cheese to move

– Monitor Change – smell the cheese often so you know when is it getting old

– Adapt to Change Quickly – The quicker you let go of old cheese, the sooner you can enjoy new cheese

– Change – Move with the cheese

– Enjoy Change! – savor the adventure and enjoy the taste of new cheese!

– Be ready to change quickly and enjoy it again & again – They keep moving the cheese


Back from NAB in Washington, D.C.

We just returned from the Fall National Association of Broadcasters convention in Washington, D.C.   The mood was significantly more upbeat given the positive growth in radio revenue this year.  One of the key themes of the convention was developing a digital strategy.  Of course there are those who don’t want to acknowledge that the world has changed.  Advertisers now have a way to measure results and be more efficient in their advertising expenditures.  This structural shift in advertising has taken a heavy toll on traditional media including the radio industry.  Lay a recession on top and well 2009 was a year the industry would like to forget.  However, increasing revenue in 2010 has caused some to believe that “radio is back” and that digital is not important.

The radio industry is confused as there are so many different strategies and groups hawking digital initiatives and tools including social, web site, mobile, couponing, etc.  Some of these products have a “cool” factor but I question the ability for a station to generate revenue given what little resources are being devoted.  Just having a tool does not lead to revenue generation.  In one of the panels a gentlemen lamented that he had done everything recommended, he had a non-station centric website, he was streaming, using Ando, but had no clue as to how to effectively monetize it all. Someone needs to bring some order and research to this chaos.  In future blogs we plan on addressing each of the silos in a station’s digital media arsenal.