Has Radio Lost Its Monopoly?
Perhaps The Current Radio Model is Outdated
Pandora founder Tim Westergren strolled into the RAIN conference yesterday and could have easily been mistaken for any college kid looking for a Starbucks to plop down his backpack, flip open his MacBook and slide in his earbuds. Instead the former musician who couldn't get his songs played on the radio has developed a plan to make sure all performers have a place to be heard and get compensated for it. Westegren also had a quietly delivered message that landed like a hammer aimed at the people who will walk the floors of the Hyatt Hotel in Chicago today. That message; your advertisers are starting to drift our way and we plan to keep them. He makes a good argument. And he makes it with an air of confidence absent cockiness.
It does make you wonder. Well, it should make you wonder. Westergren says, "There is no doubt the future of radio is Internet radio." And this time he gave some very specific details on how Pandora is having success taking revenue from radio. Westergren -- who spends a lot of his time hosting town hall meetings with listeners -- says, "Advertisers are flocking to this space, and Pandora is experiencing a growing demand from them." He touted success from a car dealer in Dallas, Whole Foods in San Francisco, and the hospitality category. Westergren said, "We have visibility on the advertiser side, and we are seeing a shift of money from broadcast to the Internet."
The question that remains is whether or not Pandora can bring in enough advertiser revenue to pay the bills and satisfy shareholders over time. What is that hourly spot load count that will turn listeners off? It's clear Westergren believes Pandora will grow and prosper. "We run over 500 simultaneous campaigns, which allow us to target," he said. "Advertisers recognize this is a good place to spend money. There is a growing demand from local advertisers." He added traditional radio "is approximate and will not survive in an age of data. Accuracy is in demand." Westergren says Internet radio is drawing ad dollars because it offers sight, sound, motion, and data.
Maybe, just maybe, Clear Channel's John Hogan has it backwards. Maybe Pandora is much more than a playlist on shuffle. Maybe it is a viable business model that offers consumers a radio experience they love without unbearable interruptions. Maybe it offers advertisers geo-targeted ads using sight, sound, and motion but more importantly, provides them with accurate and specific user numbers, not AQH, rating and share projections.
feedback edryan@radioink.com or leave comments below.
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(9/19/2011 10:58:47 AM) One idea I would listen to on terrestrial radio would be a commercial freeform music approach based on genres that have diverse histories. |
| - Bradley Olson |
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(9/16/2011 1:43:24 PM) While it is crucial for radio to embrace new technology and be ever aware of the marketplace, it is also imperative to remember what made radio great...involvement, interaction and localism. These elements are not only the foundation upon which radio was built but the base upon which radio has an opportunity to insure its future. |
| - Bruce Thiebauth |
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(9/14/2011 11:42:50 AM) Maynard is 100% correct. Music radio is DEAD! Groups like Clear Channel killed it then they fired all their personalities and went to voice tracking all over the place. It used to be that listeners turned to radio for two things: Music and COMPANIONSHIP-knowing that there was someone else in their city who would answer the phone when they called to make a request and understood what was going on in THEIR town! Now stations have become jukeboxes-and people don't NEED them and all their spots. |
| - danapop |
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(9/14/2011 10:39:32 AM) So what does Pandora do when the government starts regulating the internet and streaming audio starts sputtering from lack of bandwidth. That model will no longer exist 5 years from now. |
| - Joey |
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(9/14/2011 8:30:28 AM) Pandora is an amazing product like Youtube (3rd Largest website and Youtube has never made a profit). How does Pandora scale and monetize it's business, difficult unless RADIO does not exist. Internet delivery is the future of delivery; Pandora pays 50% of Broadcasts' rates to SoundExchange. Newspapers gave free online content and pushed readers online without creating a profitable business model. Radio should STOP streaming until fees are negotiated correctly; while there is still leverage. |
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