April 15, 2014
A year ago, Jeff Smulyan helped spearhead the launch of NextRadio, where FM chips were activated in Sprint's Android smartphones. Since then, almost a quarter-million NextRadio apps have been downloaded and almost 8,000 FM stations have been tuned in by users who listened for almost 200,000 hours - and those numbers are continuing to grow. Something is happening here; will other carriers and smartphone manufacturers realize what it is? Here, Smulyan offers the reasons why they eventually will.
Since NextRadio was launched, it has experienced slow, but steady growth. Are you satisfied with its reception so far?
I am ecstatic especially since we really didn't have a massive public outreach. We've been doing some research on it to make sure broadcasters understand its potential. Now we're ready to move it to another level.
You're going to see us go on the air and talk to listeners about it, as well as be more vigorous talking to people in Washington, DC on why every smartphone in America should have the FM chip activated. We'll be going on public radio to do outreach to their audiences about this. And we're going to make sure every broadcaster understands it, because there's a lot of misinformation going around.
What kind of misinformation?
The biggest one is that people still don't understand the difference between streaming and the over-the-air signal. That's probably the biggest issue people really need to understand. I use Power106 as an example. The electric bill for our transmitter is $39,600 a year. Whether we reach one person or 15 million, there are no incremental costs. However, if I took our transmitter down and just sent our broadcast through the data networks, the streaming costs to reach our current audience be a million dollars a year ... and for the audience to receive your signal, it will cost them well over a million dollars a year because they pay retail for bandwidth and we buy it in bulk.
That's also before we pay any music licenses. That's why no one makes money in streaming. We all stream but it's more of a service than a viable business proposition. A broadcaster friend told me every time a listener switches from over-the-air listening to streaming, he turns a 40% margin customer turns into a 0 margin customer ... or worse!
So your goal now is to alert the consumer about the cost of streaming, in terms of taking up bandwidth, etc. vs. the virtually cost-free use of an FM chip...
Yes ... and streaming drains a smartphone battery three times as fast as an FM chip. We know there are billions of hours of listening to local radio stations on data networks. If these chips were turned on, every American could listen to the same content for absolutely free. Just look at the research: Every time people understand it, they fall in love with it.
I get very excited after every convention because the more people in our industry understand it, the more they love it. I know there are a lot of people in radio who are consultants for streaming companies, and they feel threatened by this, but if you are actually in the business of running radio stations, this is a game-changer.
What will it take for NextRadio to get other carriers on board, as well as Apple's iPhones?
There's one issue: If we continue to see this kind of positive response from our listeners - if our industry delivers and engages the American public - I'm absolutely certain it'll be activated in Apple iPhones and we'll get Verizon and AT&T on board. Once the public says, "Hey, we want this," AT&T and Verizon will have to realize that it's not as important to get every last penny for the data -- and that's the key.
You believe the other carriers have been reluctant to get behind NextRadio because they'd lose the money they charge for bandwidth.
Absolutely. Make no mistake, the same carriers who are going to the government, asking Congress to give them more spectrum, are the same people not willing to free up billions of hours of spectrum use, by allowing the same content people are paying for to be listened to for free. Every smartphone in the world because has a radio built in; we just need them turned on.
Another key to NextRadio's success is creating an "interactive compelling experience." Outside of promotions and contests, are you satisfied with what have your participating stations come up with?
A lot has been done and a lot more needs to be done. Some companies such as Hubbard, CBS, YMF, Lincoln, Entercom, Bonneville and Emmis have done some great interactive things. We are now seeing a lot more broadcasters sign up for interactivity. The greatest strength of our industry is the interactive relationship we have with our listeners ... we've been doing that for nearly 100 years. We can now take our relationship with our listeners and make it even more compelling in smartphones and the automobile dashboard as well. The automakers have embraced NextRadio and we are now talking to Ford, GM and Honda. With interactivity, we can capture the strength of our medium and compete with anyone in the digital space.
If we can cement listener interactivity, we can build the industry's future. Our radio stations have an incredible bond with their audiences -- and that's our greatest strength.
A month ago, you started beta testing enhanced ads. Can you offer a progress report?
The testing has just started; it'll be a while before we have real stats. We're just working it out right now. Currently we have just 300,000 users, so we're obviously in a very early stage. When we get 10-20 million listeners to use it, I think it'll be the biggest mobile thing out there. The FM chip gives the radio industry its best chance to compete in the mobile space on a local basis to a one-to-one audience. Clearly mobile will be a tremendously valuable part of our business, generating brand new revenue that we've never been able to have before
How is the average FM chip smartphone listener different than the terrestrial radio listener, demo wise?
I don't have the data in front of me, but right now, I would say it's a little younger.
Does that suggest you tailor programming to appeal to that particular segment of listener?
No, whatever we do over the air that works for our listeners will work for the people who listen on NextRadio.
A couple of other issues: Emmis recently offered employee retention stock - how that come about?
It was part of our preferred litigation. We saw an opportunity to give our stock to our employees and obviously, I couldn't be prouder. I wouldn't have survived with Emmis for 34 years without the best people in the world working here, so whenever we can get the chance to have them share whatever benefits we have, we do it
So what's your prognosis for Emmis and NextRadio for the rest of 2014?
We're pleased with how we're doing and we think we'll continue to do well as long as NextRadio continues to grow and we incorporate new enhanced advertising. Remember, 20 years ago, they sold 40 million Walkmans in one year. Today, they hardly sell any portable radios, but there are 300 million people carrying a smartphone every day. To be in them with an activated FM chip - which costs the consumer nothing -- is a game-changer. That's how this industry can break out of its 1% growth cycle.
Can you see a tipping point for NextRadio in the near future?
We're getting close to it. When other carriers join up and we do outreach so the audience really understands this, then it will be great for everyone.