Elsewhere: Will The Money Trail Drive Radio Innovation?

A couple of weeks ago, I received a tweet from an Australian chap called Anthony Gherghetta (@wheredidgogogo) who, based on my previous writings about a personalised radio service, suggetsed I consider adding some of them to a collection he was curating over on the writing platform, Medium, about The Future of Radio. I thought about this for a while but, while I was in Melbourne recently, local news about audience figures and money got me thinking about how such a personalised product would be funded. So I wrote Will The Money Trail Drive Radio Innovation? over on Medium (which, I have to say, is a lovely writing platform). As always, I also keep my own copy here but I do suggest you head to Medium to read it!

In the introduction to his 1979 book, The Piccadilly Story, Philip Radcliffe tells how Piccadilly Radio’s broadcast frequency – back then expressed as 261 metres, medium wave – was so ingrained in the Manchester community that shopkeepers would, at a bill of £2.61, simply ask their customers for ‘Piccadilly, luv’.1

For some reason, this – I have always assumed apocryphal – story popped into my mind when sat in a Melbourne coffee shop this week reading about Kyle & Jackie O’s latest audience figures.

By way of a quick summary, last Wednesday’s news was all about the top-rated Sydney breakfast duo who switched stations at the start of the year and, when the first audience figures were released, seemed to have carried most of their listeners to their new morning home. An astonishing switch that generated discussion on my Twitter feed of UK radio pundits. In itself, this has much to say about the power of broadcast radio and why the personalised radio future I envisage, maybe a way off yet.

While there was plenty of commentary about the audience numbers there was, in many ways, a more interesting number buried towards the end of The Australian’s piece on the news. The move had wiped $350 million off the share price of the duo’s former employers Southern Cross Austereo.

Both of these stories – some 35 years apart in their origins – tell of audience scale and it’s relationship to money. Historically, for entertainment media, the two are undeniably intertwined. And this relationship got me thinking, how would the finances of a personalised radio service stand up? In some ways scale and personalisation are not natural bedfellows but does that mean a personalised radio product would struggle to find revenue? In a previous musing on this topic I suggested that sponsored content blocks, mixed with a listener’s own music selection, might be a way forward. But when the audience is combining a unique mix of content selections, can this work? After all, what would the advertiser be buying and can it be sold at a profit?

To help answer that question, and in parallel to any thinking about a future radio product, we have to consider the funding. Is audio content suited to a subscription model so that a radio equivalent of the paywall could be erected? SiriusXM might suggest that it is. But are there many other countries where substantial audiences pay for radio content? None spring to mind. Perhaps there’s a smartphone subscription app-model that may work. But I don’t think that there’s precedent for profitable apps in-car (quite yet) or on kitchen radios. Which leaves us with advertising as the primary revenue model.

There’s a shift in media buying that’s being driven by the connected world whereby advertising space is increasingly traded in real time. On the web, a publisher may offer up an advertising spot to the market in the milliseconds before the advertisement is shown in the browser. One of the leading players in this space, The Rubicon Project, suggested in September 2013 that an average of 40% of online display advertising was traded in this way. In April last year Forrester suggested that almost 25% of online video advertising will be traded programatically by this year.2 The latter figure is important, because this automated trading will become an increasingly important way to generate revenue from television content when consumed online. And if TV goes there, why should we assume radio won’t?

There are many attractions of buying advertising space this way but the ability to easily group audiences that are increasingly consuming fragmented media is one. It’s becoming just as efficient to reach these disparate audiences as it used to be to reach mass audiences by buying, say, Piccadilly Radio.

Interestingly, when researching this piece I couldn’t find numbers for the amount of audio media traded this way. There are companies who specialise in the automated trading of radio advertisements but, when compared to those in the digital display or video space, they appear forgotten. Then again, perhaps it’s not surprising. There are a few stations doing new and innovate things with radio commercials – in the UK, Absolute Radio’s In-Stream is a good example – but they are the exception and not the rule. Therefore where’s the market for the automated trading of radio ads?

It seems to me, radio is missing out. If the advertising world is shifting to more automated way of buying then that means, by necessity, they are buying a connected product. Yet much of radio’s connected offering is simply delivering the same old product in a slightly newer way. For revenue growth, and maybe even for revenue parity, the radio industry has to adapt to the connected world in more ways than just offering up a stream of the broadcast signal.

Undoubtedly, there are many hurdles before there are mass market personalised radio products. Kyle & Jackie O have shown the enormous power of today’s mass-reach broadcast breakfast radio product. Yet, also this week, the BBC announced plans to close the youth-oriented BBC Three television channel. While reduced finances are the reason behind the proposed closure, the channel was selected in part – according to the press release – because it’s young audience “are the most mobile and ready to move to an online world”. A trend that suggests future audiences have different expectations of their media consumption.

There’s a convergence here that the radio industry needs to see: an undeniable shift to consumption on connected devices. This represents opportunities for both sets of radio’s customers. With the right product, audiences will increasingly personalise their radio experience but, I believe it may not be listeners who are the drivers of such innovations. The advertising industry, increasingly looking for ways to better justify their media spend, is pouring an ever growing share of their budgets into automated buying. Radio needs a product to capitalise on this move.

So it maybe that the money trail is the driver of innovation in the radio space and it the advertising industry that pushes radio to reinvent itself for the connected world.

1 Radcliffe, P. The Piccadilly Story, Blond & Briggs, 1979. p9
2 Strictly 24.7% of video spending by 2014.

It’s My Station: 18 Months Later

Can it really be almost 18 months since a discussion, on Media UK, about an Apple patent spawned a piece of writing here? Feel free to customise this post by inserting your own reference to one of TARDIS, flying time, or a reference to clocks. I did mention the Olympics – by which I meant London 2012 – which now just makes it seem old.

I genuinely believe the substance of that post & discussion: that if somebody gets the user interface right (and that will be the hardest task) then It’s My Station (that was the post) is the future of a lot of radio listening.

Radio has, of course, changed in so many ways thanks to the Internet. Just last week there was a piece by James Cridland over on Jacobs Media Blog discussing the very use of the word radio: No, Pandora Is Not ‘Radio’ (which is totally worth reading for the way James can crowbar a beer reference into a conversation). There’s a lot to be said for the idea of making the ‘radio’ brand stand for something but, I fear, much like music, the press and television, it’s too late to make broadcast radio stand for something different – or just reclaim the brand – now. Time to face what’s next.

I think when radio in the traditional, broadcast, sense has lost people like me – who were once big fans of the medium – that last statement is important. My own listening is now mainly driven from iTunes and a dip into things around the world via TuneIn: this week it was Blake Hayes’ first week on Mornings at Coast 93.1 in Portland. Sorry to the good people of Portland but I had to look it up on a map. How did I end up listening to to that? Twiter. But that’s probably another post.

Which is why I was delighted to read that the Australian radio group, Southern Cross Austereo, have invested in a service which sounds similar to that I was arguing for in It’s My Station. I’m glad somebody has done it and only a little disappointed that it’s exclusively available to Australian users right now. After all, I’ll happily listen to Hamish & Andy mixed in with my music collection – they make great radio while you can argue about my musical taste.

It’s fantastic news that a radio group is in a position to be able to invest like this. Now, if only I’d actually done something myself with that idea.

A More Personalised Radio Experience Is Getting Closer

One of the most infuriating things about modern smartphones (and, more specifically, the apps that you download to them) is their constant need for love and attention by way of an endless stream of updates. It’s not really a problem the G20 leaders are keeping themselves awake at night thinking about but those little icons drive me insane (and I am fully aware some phones allow apps to automatically update but I refuse to engage in that whole ‘best smartphone platform’ nonsense).

So, yesterday I went through another round of updates. Rarely do I pay attention to the ‘release notes’ given that the usual excuse for consuming the bandwidth is ‘bug fixes’ but, for some reason, I did when it came to Apple’s Podcast app.

Apple more-or-less created mass market demand for podcasts in 2005 by including them in iTunes but, in recent years, the format has appeared to have lacked much attention from them; on i-devices they were spun out of iTunes into their own app a little while ago.

I suspect it’s that lack of love that spurred me into reading the release notes. And, in those notes, the first item read,

“Create custom stations of your favourite podcasts that update automatically with new episodes” [source]

Podcast App on the iPhone
Screenshot from my phone

which is accompanied by a lovely image of the ‘My Stations’ screen in the app showing ‘stations’ named ‘Morning Commute’, ‘Kids Shows’ and ‘News’ amongst others (the image here is of my phone, with three customised stations).

Six-or-so months ago I wrote a piece called “It’s My Radio Station” which suggested that, at some future point, I would become my own programme controller by setting some basic rules in an app that mixed music and speech to create a customised radio station (which is wholly different from a customised music stream). I genuinely didn’t think it fanciful then and I think it’s even less so now. Imagine the next iteration of Apple’s app where I can mix an iTunes playlist (from my machine or their rumoured streaming service) with this functionality.

In my earlier piece I suggested the people best placed to develop this are today’s radio stations because they have experience generating the bits between the music (rather than the Spotify-type music-focussed services of this world). So, it’s sort-of encouraging to read that American broadcast giant Clear Channel is trying something along those very lines (of course, I can only report this second-hand not being able to use the iHeartRadio app in the UK). Fool.com reports,

The beauty of Add-Ins is that it’s not just about the local perspective. Add-Ins can be customized. Someone that isn’t hitting the open road may not care about traffic. Someone staying in may not care about the weather. Not everyone cares about local news headlines. [source]

I believe that any radio station with ‘talent’ that is not getting that content out in alternative ways, including some form of regularly updated podcasts (long and short versions), is missing out on a market. More importantly, they’re missing out on an opportunity to learn about how radio will be consumed in the future.

Personalised radio is coming (just as personalised news is already here). I don’t think Apple’s use of the word ‘stations’ can be dismissed but it remains to be seen if it indicates a direction they’re prepared to take. Nonetheless, it could be either new players in the radio space – or an existing broadcaster – who will get there first.

Three things fascinate me about how this plays out. Firstly, will a broadcaster be prepared to take a risk on this kind of development or will it need to come from outside broadcast groups to truly allow people to mix-and-match the content they want? Secondly, given it’s proven people like to time-shift television, is radio content sufficiently compelling and/or useful to put the time-shift effort in? And, thirdly, can audio producers generate a revenue from such personalisation?

Time will tell. But we’re going to rapidly see innovation on this space. I wonder who’ll get left behind?

It’s My Radio Station

I’ve been meaning to write something for quite a while about radio services in an age of connected devices and multiple music services. But news of Apple being awarded a patent to enable “seamlessly switching media playback between a media broadcast, such as a radio broadcast, and media from a local media library” and the subsequent Media UK discussion finally got me to start writing.

I’ve been a radio fan for most of my life but lately my love affair with the medium has turned into a marriage where we don’t speak much anymore. So much radio seems to be back-to-back music (which my phone does better, thank you) or back-to-back Big Brother chat (or back-to-back songs with Big Brother chat breaking them up) that I normally work with iTunes running. I listen at breakfast for an hour or so and that’s about it. Perhaps that’s fine with the industry, I would hope not.

I read, occasionally, an argument from radio people that the only way to compete with music services – such as Spotify or Pandora, or personal libraries like iTunes – is with the bits between the songs (the entertainment that I don’t store on my iPod). That seems a reasonable position. So, I’ve been wondering what would happen if there was a ‘mashup’ between radio (for the entertainment bits) and my music player (for the songs I really like)? The technology can support it, Apple’s patent just reminded me about it.

Simply put, my radio station would allow me to set preferences allowing me to opt-in to news (say, every hour); to add local travel news every 20 minutes (between 0700 & 0900 if there was something to report); to add sport (every 2 hours except during the Olympics when I’d change it to more often) and to add celebrity news (once per month). The rest of the time music is coming from my local music library of tunes I want (sometimes I select individual tracks or albums; sometimes I pop it onto random). The content is downloaded in the background and inserted between the songs I’m hearing. Of course I could opt-in to a bunch of other things if I wanted to (one new music track every 90 minutes; breaking F1-news as it happens; interviews with artists in my library or a ten-minute blast of a phone-in). All of these things could be surrounded by an ad break or sponsors (as they are today) but the station pays no music royalties, bandwidth costs are limited to only updating content and if the connection is down the music keeps coming.

Take it a stage further and my news comes from LBC; travel news direct from Transport for London, sport from Sky and, perhaps, a film review from 5Live. If the content is what I want, I’d choose it and hear supporting commercials (or promos, if it’s the BBC). I don’t need a presenter telling me what I just heard, my phone shows that to me quite happily so the entertainment is more than being successfully able to ‘hit the vocals’ with station name-check.

I don’t see that it would be hard for Spotify or Pandora to add these services in now (perhaps they already are and I’ve missed them) but experience with this kind of content is certainly at radio stations today (and, if we’re honest, RDS has been allowing it for years if you’re in a car and listening to your own music).

Of course, radio’s real advantage is that there’s no effort involved to turn it on and start listening; this would be an effort to set-up and configure. If I wanted live presentation then I’d still switch to radio services but, this way, I get news & entertainment on a schedule I want and it really would be a station playing today’s best music mix (just for me).