Why NextRadio Failed

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Over the years, at times, Emmis CEO Jeff Smulyan talked more about NextRadio than he did his own radio stations. It was his baby, prompted by a push from industry executives who saw the need to get radio onto mobile phones as they recognized how important the device had become to consumers. In the end, consumers didn’t really care much about having the NextRadio app on their phones, the industry lost interest, and Emmis lost boatloads of money.

On his earnings call Thursday morning, Smulyan didn’t come out and say NextRadio was shutting down, but he did say the NextRadio would be winding down dramatically. The reason he gave was his efforts to form a consortium for NextRadio have not been successful. “We have tried, we have worked with a number of broadcasters. We have so many people that support our efforts but to make this business what it needed to be it needed data attribution and we needed much deeper involvement. We tried. We couldn’t get the industry to come together. Everybody said we have to have this but when it came time to pitch in and help fund it, we could not get enough support. We (Emmis) are not willing or able to keep funding NextRadio and Tagstation. It’s very heartbreaking to me. I’ve put many years of my life into this but we can’t do it ourselves. As one of our board members said, ‘We just can’t continue to support R&D for the entire radio industry.'”

It was only two years ago at The Radio Show in Nashville that Smulyan was still very optimistic about the future of NextRadio. Smulyan told the Radio Show crowd that, due to their support, NextRadio has helped activate FM radio in a smartphone on every carrier. He said progress is being made in reaching compatibility on every Android phone. “That’s 62% of the United States market. And, yes, we will get Apple too. Not only do we gain FM portability for our medium, but we’ve also enhanced the listener and advertiser experience. Your station can now go everywhere your listeners go on the one device they carry with them 24/7. We built a platform that provides the best way to listen to your stations. With the benefits to your audience of two-way interactivity, we’ve given them the ability to see what’s on the air in your markets and to interact with your programming, all the while saving the phone’s battery life and without breaking their data plan. We are the free alternative.” Also at that show, analysts Marci Ryvicker and Davis Hebert were touting NextRadio as a catalyst to bring new revenue to the radio industry.

For years the industry has said it supported Smulyan and his NextRadio efforts. But when it came to shelling out money for it, that’s another story. Radio revenue isn’t growing and when iHeart has iHeartRadio, Entercom has Radio.com, Cumulus is on TuneIn, and with thousands of individual radio apps floating around out there, it’s easy to understand why this didn’t work and Emmis is bailing.

On Thursday, the NAB had no comment on Smulyan’s announcement and several major group heads, who’ve supported NextRadio in the past, did not respond to our request for comment about Smulyan’s plan to wind down NextRadio. At least one executive told us, off the record, that this is the end for NextRadio, unless someone swoops in and buys it.

And you can certainly understand why Smulyan no longer wants to be the lone wolf on this project. Emmis lost $7.6 million from NextRadio and Tagstation over the past year and that has been going on year after year. When asked what lessons he learned, Smulyan said, perhaps only half-jokingly, ‘The next time you’re drafted to lead an effort, leave the room.’

Efforts to develop NextRadio go back to 2012. The first product launch was in 2013. Tagstation started in 2009 with iPod FM song tagging. In a Radio Ink cover story back on August 22, 2016, NextRadio’s Paul Brenner said: “Everything I work on, whether it is BTC or that opportunity with Apple, an outsider to the industry always has doubts about the radio industry’s ability to unify and to do some type of innovative development that requires everyone to support it and everyone to act in a common way. That holds true with everything that I’ve worked on.”

It’s unknown what will happen to the employees at NextRadio. Neither Smulyan nor Brenner were available for comment Thursday. In our 2016 interview, Brenner had said that the company was up to about 18 people in Indianapolis and 18 in Chicago, with others spread around the U.S. In all, he said then that there were about 40 either full-time or committed contractors.

The failure of the industry to come together to support NextRadio doomed the product. Is the failure to come together also going to doom the NAB’s deregulation plan at the FCC?

14 COMMENTS

  1. Let us consider that the big outfits want to control the distribution of their stations to your phone via corporate owned streaming apps which often do not carry their competition.
    That’s what’s going on here.

  2. The industry didn’t support it because the bigger companies know the way to get their content on cell phones is by streaming. That’s why they invested in their own streaming platforms. NextRadio was a way to get around the fact that the US government refused to mandate FM on phones as other countries do. Paying telecom companies for something they are required to do for free in other countries is wrong. This is also why the industry isn’t united about deregulation. If you own a major streaming platform, it doesn’t matter how many FM stations you’re allowed to own.

  3. “The failure of the industry to come together to support NextRadio doomed the product.”

    That sentence is laughable. The failure of NextRadio is solely a result of their inability to understand consumer/user behavior. It’s not the fault of the broader industry. There has been no consumer demand for their product or FM chips on phones in general. Why should be industry be expected to support an initiative that was never going to succeed?

    Smulyan was short sighted in not including digital streams on the platform from the start. Had the push been to deliver audio to mobile handsets, regardless of the distribution technology, he may have had a fighting chance. That would have allowed iPhone users to use the product earlier in the cycle BEFORE usage habits were formed elsewhere.

    • “The failure of NextRadio is solely a result of their inability to understand consumer/user behavior.”

      True, but you can’t lay that blame solely on Smulyan. Remember there was a fierce and expensive lobbying effort by the NAB and the entire radio industry to activate those FM chips in phones because they all thought it was so critical to their business model. It’s a classic case of a bunch of old folks stuck thinking inside the old box. They hoped people would keep using their smartphones like the transistor radios they grew up with themselves, when the future was really in streaming.

      They also saw their grip on the listening market slipping away. Remember there are only a finite number of radio licenses available in any given area, and a pretty small number of privileged owners who control them. Streaming services were starting to kill their monopoly and they were scrambling to find ways to stop it. Whatever you think of iHeart, you have to hand it to Bob Pittman for seeing where things were really headed and investing so heavily in streaming early.

      Meanwhile, NextRadio’s big selling points were to save your data and battery life by not streaming. But the way technology has progressed, neither of those things are of much concern to anyone any more.

      • “Remember there are only a finite number of radio licenses available in any given area”

        Then again, there are even fewer streaming platforms that are getting action, as few as five, and they have no limits placed on them by the government.

  4. Could it be that radio has peaked? Has anyone listened to a terrestrial station lately? 40-song playlists repeating over & over, huge stop-sets full of un-listenable ads & when announcers are on the mic, (rare, by the way), there are very few good “radio voices”. Sad. If radio got back to it’s roots and had well-trained, entertaining & GOOD live jocks on the air 6A to at least midnite, did entertaining & engaging local promotions, created every commercial to involve listeners emotionally, and hired salespeople who understand business, the true goal of business owners, undestood marketing and how to integrate digital platforms into advertiser campaigns, radio might stand a chance. Might.

    • John Craft summed it up perfectly. It doesn’t matter how advanced the technology may be. If the product is bad, in this case the station and its format, then the listeners will be going elsewhere. Automation, satellites and voice tracking have ruined radio. They make it sound so antiseptic. Not to mention boring. When you lack the human touch you deprive your listeners of effective quality broadcasting. Radio has become the fifth man in the bullpen. And we all know how good he usually is.

      • And yet those same techniques are used at Sirius, Pandora, and other internet radio stations, and it doesn’t seem to bother the listeners. If there were live & local voices on Sirius and Pandora, you might have a point. Not everyone views things the way you do.

        • People only switch over to Pandora and Sirius when they can’t find what they want on terrestrial radio. These two outlets are nothing more than glorified juke boxes. They win by default. If you can put together a credible music format and combine it with live air personalities you will get this audience back. The key is how you approach the situation. If you show the listeners that you care, they will listen. Machinery can’t do that. A live, human voice can.

  5. A product that required users to have wired earbuds (to serve as the FM antenna) in a blue tooth era was sadly behind the tech curve. That’s why NextRadio pivoted from their FM chip focus and started trying to be the streaming radio app earlier this year. About 5 years too late for them to recognize and jump on that bandwagon. The industry didn’t climb aboard because NextRadio was a stillborn product.

  6. But keep telling yourself how radio is still a relevant media channel. Forget the car dashboard…. without the smartphone, you are nothing. Everything originates from there, and with so many other customizable choices available streaming the air signal (that typicallyjust rotates tired spreadsheet developed playlists of “hits” with a guy who reads reddit clips and laughs for 90 seconds an hour) isn’t going to save you.

  7. When we were kids, we had our crystal radios clamped to our bedside lamps and our transistor radios dangling from the handlebars of our bikes.

    What we got were The Hits – compressed and pumped out over the AM band. We also, as a bonus, got the “Personalities” of all skill levels. Spots were provided, as well. But they did not interfere with our primary needs – the injection of The Hits directly into our cranial regions. Radio was available to us everywhere and at all times. That’s how we took on the soundtrack for our lives.

    That the radio industry did not get behind the NextRadio project demonstrates, in my view, that leadership does not hold out for, or have a belief in the idea that the medium has much in the way of a secure or exciting future – despite the continuous bleating to the contrary.

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