August 4, 2015
If there ever was a radio company that adhered to the motto, "Go big or go home," it would be Cumulus Media. Since launching its own Country label, NASH Icon, with Big Machine Label Group's Scott Borchetta, Cumulus has doubled down with the creation of NASH NextCountry.com, an online American Idol competition for Country talent -- and a label to support them, also called Nash Next. In an exclusive interview, EVP/Content and Programming John Dickey detailed the plans behind NASH Next to All Access Pres./Publisher Joel Denver and Country Editor R.J. Curtis. Here, Dickey also expressed very strong feelings about the current Nielsen PPM/Voltair controversy -- and its impact on radio revenue.
R.J. Curtis: First off, what do you want the industry and public to know what Cumulus is doing with NASH Next?
We're trying to do a groundbreaking thing here. I would love to get everybody to focus in and see what we're doing, because it's good for radio. It's good for our business, and it really is shining a light on what the scuttlebutt is right now in the music business, and specifically in the record business. There's a definite sort of shifting of the tectonic plate - and there's a lot of open questions and not a lot of answers yet, as to what the record industry is going to look like one, two, three, four, five years from now. What will it mean for business 24 months from now? My strong sense is that it's going to look a lot different than it does today.
And you're seeing that. What we have already started to do with Big Machine and NASH Icon is a very good indication of what is to come. There will be a lot of constituents -- who haven't been in the business -- getting into that business, either through strategic partnerships or just getting in the business by themselves. You'll see artist management and talent management getting formally into the record business. You'll see the agent side of the business saying, "How do we get into that game?" No one thought they'd ever live long enough to see a radio company, so to speak, get into the record business. And we are, and growing and doing more of that, and that's what NASH Next is all about.
This is a new frontier; it's a new world. It's a new world order. Streaming is obviously just a piece of that, because streaming is redefining how people consume product. It potentially could be very disruptive - in a good way, by the way - but right now it's too early to say one way or the other where that's going to head. It has already been very disruptive in the video landscape with Netflix, so you've got a lot of things going on right now with respect to the record business as it sits, hoping that streaming is going to re-inflate the industry, with the whole idea of ownership - buying physical product or even digital downloads - versus accessing music anywhere, anytime, anyplace, and not actually owning it but paying a fee, in essence, to rent it.
The industry is all in on that now and hoping that's going to be a success for them. But what is also going to be extremely interesting, and also potentially damaging to the record industry as it sits with three big players, is the continued emergence of independence and unions of companies that are touching the music business in various respects, getting together to get into that space and - in essence - do what record labels are supposed to do, which is to take bands and turn them in to brands. To find people, through an A&R process, and to create relevance to monetize that through radio airplay, touring, and everything else to get a piece of that. So it's going to be very interesting to see how that plays out. We are getting deep into that business, certainly on the Country side first, but we are not going to stop there.
R.J. Curtis: NASH Next is now also going to be a record label. How does this complement the existing partnership you have with NASH Icon?
First and foremost, NASH Icon was our foray into the artist re-development business. And I say that tongue-and-cheek in a way, because Reba doesn't need to be re-developed. Reba just needed to have a reason to go back in the studio and be creative and put out great music again. And we gave her that reason by creating NASH Icon the format, creating a platform, and partnering with Scott [Borchetta], and getting her excited again to go out and be creative. And it has worked wonderfully. Ronnie [Dunn's] new single just dropped, and it's just amazing. I fully expect that to be embraced by mainstream Country. Obviously it's right in the wheelhouse for NASH Icon, and he's over-the-moon excited about where he is now in his career, his music, and the creativity that's coming out of it. We've got Martina [McBride] and Hank Williams Jr. on the label as well.
That was our first start in that space. Scott is a great partner, and it has been a wonderful relationship. We started out to be very successful, and hopefully we continue on that path, and I think we will. The artist development side - really getting into finding and discovering and developing the next generation of superstars in Country - was something that was a natural for us as we looked at the entire context of NASH. NASH will be to Country what ESPN is to sports. As part of that, what really anchors NASH to the business of Country is the music and the artists. That's what binds the 95 million people across the country who are self-identified Country fans and fanatics who live the lifestyle. It starts and stops with the music and the artists through the whole discovery process ... finding the next Kelsea Ballerini, the next Jason Aldean, the next Luke Bryan, those kind of things ... getting the music out, bringing the fans along on the journey, touring, the whole experience, everything. And getting to know the artists in a more intimate way, which is what NASH is going to be doing through its various platforms, whether it's on digital, video, audio, print with NASH Country Weekly, etcetera.
It really made perfect sense for us to be in that side of the business, to really figure out how we wanted to play in the artist development side. NASH Next is the brand we're going to be doing that under. What's really exciting, not only for NASH and for us, but for music, is how we're going about discovering that next superstar in Country radio.
Two things make this very unique. One, we are, for the first time, running a full-scale national talent competition focused on one genre of music. No one has ever done it before that I'm aware of, and not in that scale, certainly, and with that purpose. American Idol obviously wasn't and isn't set up to try to find artists in Country or artists in Pop; it just so happens that most of the artists who have come through there have either been Country or Pop - with a few Rock examples such as Daughtry and others - nor is The Voice. But this talent competition is all about Country, and it's all about looking high and low across the country - not just in Nashville, but across the country - to find that artist or band, who is ready to break through, grow and expose their creativity to throngs of people through radio."The industry deserves better from them [Nielsen]. We have all suffered over the last four or five years as a result of the deployment of this methodology and the technology that they've used, which has been inferior."
Two, it's the first talent competition, in my understanding, that has ever been done like we're doing it - online. This has been designed and engineered to be interacted with and be platformed online. There aren't open auditions at arenas or theaters. This isn't being done in VFW halls where people come in and look at the talent; this is all done online, which adds to the accessibility and the scalability of the competition. And third, we are, for the first time, engaging the fans in the discovery process. Fan advocacy is woven through this talent competition.
You guys had a question about this -- where do fans vote? It's not a vote necessarily, per se, where you put the talent out and people vote - they text whether they like somebody or not, and they vote up and down. This is designed to find the special artists or bands that have engaged and motivated their fan base to go out and evangelize on their behalf. To go out and tell everybody that they can reach through their various social platforms and word-of-mouth that, "Hey, this artist or this band is the best thing I've ever heard, and you have to check it out."
That's what the Spin Index is all about. It actually quantifies the ability of an artist or band to engage their fan base and bring their fan base into that effort - to get them to go out and advocate on their behalf and get more people jumping on the bandwagon to watch, listen, and like what they do.
Joel Denver: I've been on this site a number of times, and I asked that question about voting, because it says, "Fans, voting for your performer begins July 27th," but where's the voting? We just blew right past that.
It's right under the countdown; you either click on it as a fan or a band, but you kind of missed through that. So those are growing pains as we work out the details. But the cool thing about this is how easy it is to go through it. You can create your own playlist, you can follow very easily, you can categorize the people you like and want to follow and push that out to your social platform - which is what this is all about.
The whole "A&R'ing talent and putting a competition together" of this nature are all done on various social platforms, whether it's a Twitter challenge or a Periscope challenge, or something thereabout. The other interesting thing about this is that this isn't cover music; this is all-original music by these artists or bands, and so they're going to have an opportunity -- unlike Idol, when Scott did a wonderful job of choreographing that, mentoring them and laying out music for them, keeping the audience and television audience interested by virtue of the selections -- to get to know that artist or band through their music, and through their art. These are all unsigned artists; these are people who do not have a formal relationship with a label, who are not working with William Morris or CAA. They may have sort of informal talent management - it might be a friend, or their mom or dad who is helping their career - but this is raw talent, and that is really exciting.
R.J. Curtis: As opposed to essentially an amped-up karaoke show, this is a crowdsourcing of A&R with listeners voting on who they think should get a shot at a record deal. Does this in some way send a signal to Music Row that maybe sometimes their A&R efforts miss out on some potential talent that would otherwise go unnoticed, unsigned, and unheard by Country fans?
This is a cannon shot across the bow on that. I can't tell you how many conversations I've been in with people - unnamed - who have said, "If they're not in Nashville, then they're not worth talking to." If you don't think there are a lot of people on Music Row on our site right now, looking at this talent, scratching their head and saying, "Where the hell are these people coming from?" I'll put in with you. This talent competition and what will result from this - the winner, the 10 finalists, the tour we're going to have starting in the first quarter of next year, and just raising people's awareness of what is out there - this is going to turn a page that will forever make a lasting mark on how A&R is viewed and done in Nashville.
That's one. Two, we're already finding artists coming to the NASH Next platform, not only to enter the challenge, but as a landing page for anybody who is new and wishes to be discovered and have a light shined on them. They're now coming to NASH Next and saying, "I'm going to post here, I'm going to put everything here, and I'm going to start releasing new music on to this site." We have artists and bands that are registered for the competition that are out touring and are out onstage saying, "Hey, I've got a brand new song that you're going to hear only on NASH Next. Go to your app or go to NASH Next Country dot com, and you'll hear a brand new, never-before-heard song from me on that platform."
What I think you're going to find is that over time, as this grows, this is going to be the definitive place for anybody who wants to be discovered in Country to put their body of work, tell their story, and be there for people to look at. It will be the gathering place for everybody to come in and do very efficient, thorough, scaled A&R. That's going to be one of the most significant changes that will take place over time.
There will still be example of the kids getting off the bus and walking in to Espo's office or Scott's office. That, or somebody has a friend of a friend who has a tape of somebody. That always happens. But this is going to raise the bar on talent - period - in our space. And I don't want to get too carried away, here, but my sense is, we're going to an increase in the deal flow of great female artists who will come into this format. There are a lot of them out there, and this is going to solve that. The process of getting discovered, signed, and everything else is a very difficult road for female artists; this is going to level the playing field and make it happen.
R.J. Curtis: Radio has gotten tagged for not playing enough females on Country radio, which I completely disagree with.
Think about this: We're all sitting in a restaurant - about 150 of us, basically what the radio panel is - and we have a limited menu. We have to order off the menu, and that's it. That's the way it has always been done. And that menu is created by the three big labels and some of the other independents now, and there's only so much room on the menu to print today's fare. So we do the best we can; we all try to get more involved in that process.
Lately, with larger platforms like ours, we're in a position with more leverage to start influencing what we play and how that comes down. But this is going to change things definitively. This is going to open people's eyes to what is out there. And by the way, my brethren on the radio side surf this site and see artists that they like; this doesn't stop them from getting to know them and saying, "I believe in you. I'm going to play your music on my radio station in Fort Wayne, IN." There's nothing wrong with that. That used to happen on the Rock side all the time; it's a lost art form in A&R and discovery, and this is going to encourage that, too.
Joel Denver: Could other TV shows be coming - especially through NASH TV and your own platform - for other genres, with a huge variety show of that laces all of these efforts together?
You're spot on. People are starting to see it as obviously what you just saw. This will be the next generation of televised talent search, and it will be done differently. It will be more engaging, it will be more real, and I wouldn't be surprised for us not to get too far past Season Two of NASH Next Challenge before you start seeing this purposed on another platform."[Nielsen's] Response to this was designed to do a couple of things. One, to protect them from a class action lawsuit and have mass defection and problems; two, they need to keep the genie in the bottle and have control over what they're doing, and take the high road but still swat away people who are taking shots at them."
Joel Denver: When do you think you're going to roll out additional platforms or genres in to this thing? Or are you working for proof of concept right now?
We're very focused on building out NASH. It's a super-exciting brand and opportunity, and we're very focused on that, but you'll see more from us with respect to taking some of these proven concept things that are working in Country and moving it in to other formats. Rock is probably going to be the next thing we'll spend a lot of time on.
R.J. Curtis: Once signed, how will these artists be promoted or delivered to radio? Will you have an additional promo staff, or will you partner with an existing team? Will it be in the traditional sense of taking these people to radio?
It's going to be one or the other. We may have a strategic partner on the label side that will come in and work with us to do all of that, or we may go at it alone and develop all those different resources internally - promotions team, etc. - to take these artists to radio.
R.J. Curtis: The ultimate goal with any artist is reaching critical-mass at radio with airplay. You're aware that there is some reluctance with non-Cumulus programmers to get on board with NASH Icon artists. Are you concerned that the iHearts of the world will say, "We don't want to play?" Great music rules and they should pay attention to that, but are you nonetheless concerned about that potential "reluctance" in any way?
These are two different issues. First, on NASH Icon, the format today needed to fragment. It's a multi-generational format, and there is a ton of great music with an exceptionally large amount of demand to see and hear these artists. Garth is proven case on that. And these artists are not being exposed given what the format is today. So NASH Icon was the solution for that, and that lead to obviously the label getting Reba, Ronnie and others back in the studio and putting out music.
Getting somebody - whether it's iHeart, CBS, Cox, or anybody else - to look at Reba's single and say, "That's a great song that should be on my contemporary Country station, even if I don't have a Gold-leaning station or an Icon-esque station," I get how some programmers might be hesitant to do that, because they might feel like that doesn't reflect where they're trying to be on the young end of it. I don't necessarily have someone saying, "Hey, this is Cumulus' effort, and so therefore we're not going to support." I just think it still presents a challenge for them to get their head around, "Does Reba fit in the context of everything else I'm playing?" Whether it's Brett Eldredge, Frankie Ballard, Maddie & Tae, and etcetera.
What you said is absolutely right: If the music is there, there is no denying the star-power of Reba and how beneficial that is to a station. So the music has to be there first and foremost. I think the music is there with Ronnie's single, and you're going to see that get acceptance as well. But is there a bias out there? I'm sure there is, but I think over time that will fade.
Think about it this way: Everybody in the business side of radio works with Katz. And Katz is owned by iHeart, so once people finally get their head around it, they settle down and move forward. I think the same thing will prevail. Good music will rule at the end of the day.
And back to that point, if iHeart gets behind something as an On The Verge, and our guys feel it's great music - we're not going to ignore something just because iHeart has already put their stamp on it and said, "Hey, I believe in this artist and this song, and we're going On The Verge early." We don't do that.
R.J.: I know a head of programming for another company who advises his guys in a competitive situation to lay off an On The Verge artist or song on the front end of that.
Here's what we all need to do. We need to once and for all discourage everyone from trying to bring artists into our competitive fracas. Leave the artists out. Do your job, compete, put on a better morning show, do a better promotion, work between the records more successfully, put better talent on, market more, whatever. That's great, and we can all accept that at the end of the day if we lose.
But don't use an artist to advance yourself or to hurt someone across the street. Leave them out of it. If the music is great, play the music. If you don't believe in the music, that's a different story, don't play it. But at the end of the day, you're either going to be proven right or wrong based on how successful that music is, and if you didn't get on Kelsea early or at all on her first song, and then you see the success she's had, well, then you can go back and say, "I missed it. And why did I miss it? Was I blind to it, or did I not just hear it?" And you try to learn from that. But don't punish somebody because somebody across the street is excited about something. That is the dumbest thing we can do as an industry. And Country as a business is too smart for that.
Joel Denver: You just brought Lori Lewis on. How closely are you working with her, her staff, her people, and the digital department to bring all of this together to monetize opportunities with social along with NASH Next?
We're doing that very aggressively. Obviously, NASH Next is tweeting -- we're doing that selectively -- and Taylor Swift has already tweeted back; she is following and is excited about what we're doing with this. This is really set up for encouraging the leveraging of social platforms. We send out talking points every week to our stations to have our talent review. And then we give them - through Lori - advice how to tie their social media platforms and social media accounts into this. And the amount of impressions and the amount of visits and page views we are getting on this is staggering.
Joel Denver: The opportunities to carve new audiences and affiliations and branding with so many consumers are unprecedented. Moving in another direction, radio is at a really important tipping point. While you're doing things to raise the presence of your product, the brand, the platform and so on, we come to this crossroads about Voltaire and Nielsen, and the encoding of signals. It seems that radio, as an industry, has been absolutely bent over for years now with an inferior system. And now, all of the sudden, the hens are coming to roost, and everyone is questioning what is happening out there. They talk about protecting the PPM currency, then all of the sudden, Nielsen says, "We're going to go fix this, and we're going to fix that." Did they essentially reverse-engineer the Voltaire box? Or did they just realize that they've been officially called out? Finally, have you used the Voltaire box at your Cumulus stations?
Like other companies operating in the 49 markets where PPM is deployed - that methodology, that technology - we have bought Voltaire boxes. We have not gone as aggressively into that as others have, because I think it's inconclusive. If you survey 10 people, you might catch eight on a given day with weeklies just released who say, "Voltaire is the next best thing since sliced bread." Then the next weekly comes out and you might have people who say, "I missed my share."
I think it has exposed a flaw in the encoding process and in how that watermark is picked up. Furthermore, as some in the Talk business have been saying all along, it certainly has exposed the prejudicing of that system or that methodology and technology on certain formats.
So, Nielsen's vary well-crafted conference call and response to this was designed to do a couple of things. One, to protect them from a class-action lawsuit and have mass defection and problems; and two, they need to keep the genie in the bottle and have control over what they're doing, and take the high road but still swat away people who are taking shots at them. They did that pretty artfully. But three, they acknowledge that improvements are being made based on either what they've reverse-engineered from Voltaire and are responding to, or if you take them at their word, things they've been working on for the better part of a year or more to improve this system.
Now, if you believe the latter, I've got some swamp land to sell you and a bridge in Brooklyn. So, kudos to [Telos CEO] Frank Foti and his team for helping the industry and helping themselves along the way, which is great for them. I applaud them for that. It's shameful that Nielsen would have done nothing had it not been for Frank and his team looking at this and seeing an opportunity, putting the time and the effort and the smarts behind it to figure this out.
We deserve better from Nielsen; the industry deserves better from them. We have all suffered over the last four or five years as a result of the deployment of this methodology and the technology that they've used, which has been inferior. And again, we deserve better. If this is a step in the right direction, then so be it. But I'd like to see a lot more, and I'd like to see a lot more openness and obviously, the other two things that are ever-present -- sample size and the inherent bias that goes with the pager or meter device. Certain types of people will not wear that device and carry it around. This belongs in the smartphone, and I said that at the very beginning when Pierre Bouvard was working for Arbitron and talking about this in the very beginning."Nielsen knows how to do a better job, but they decided it was easier and more efficient for their company to buy a company that was doing a poor job but was the established player, and just keep doing what they're doing. But they know better."
We led a coalition to try to get some other research companies to come in and present a competitor to Arbitron and solve this using smartphones. We were just a little ahead of our time, and we couldn't keep the coalition together - the other broadcasters together - to make that happen. So, with this technology, you think about how old this is when they drafted this up - you're going back probably 15 years. It's shameful because the technology has so far surpassed what we are using. And considering what's at stake and what we pay, we deserve better. A step in the right direction? Yes. Did Nielsen do it begrudgingly? You bet! And is it going to take more Frank Fotis of the world and other companies to encourage them to do it? My sense is yes, and that's too bad.
Joel Denver: We had a 20-minute call with the Nielsen folks following the webinar, and we asked why this isn't on a smartphone yet. And they said, "Well, that's another issue." We asked why Shazam and SoundHound can both pick up audio in a very noisy room, and the PPM can't. The sample size would increase, legitimacy of their data would increase. And it was like crickets. Which leads us to the advertisers; are they expressing any concern as to the legitimacy of PPM data, and is that hurting you right now?
It's hurting us, but not for that reason. It's hurting us because their whole technology, from the time it was deployed, has compressed ratings from each of the 49 markets it's been deployed in. So if you go back and look over the last five or six years, you'll see, on average, about two full ratings points have evaporated - just gone - from each of these markets. Based on studies that we have funded through Westwood and from what Nielsen has put out themselves, the erosion of listenership to radio has been very small - and a lot smaller than everyone has thought. And two, the reach of radio is still extremely significant, and more so than television. We now have quantified the primacy of radio as the king of reach, and we know listenership to the medium, especially on the millennial side - the younger end - is not waning as fast as everyone thought. That's the good news.
The bad news is, when you go into these markets and look over the past five years, you'll see the equivalent of three or four really successful radio stations just evaporating, and with the quarter-hour compression that has happened, the buyer is having a field day. Because we are going to market with a smaller ratings point, they aren't resetting their cost-per-point to reflect that. The end result is they are able to buy us cheaper, and they recognize the advantage this has had for them. They all know the reach of radio - they get it - and they realize the importance of it. It's a $17 billion industry for a reason, but it deserves to be - quite frankly - probably a $30 billion industry based on our reach and our ROI.
Six dollars returned for every dollar spent; Bob Pittman has been out talking about that. And yet, our buyers are not going to sit back and say, "Oh, geez. This is a measurement system that we don't have faith in, and so we're going to punish you." Remember how much money was spent in newspapers off of readership numbers that were basically made up? No one cared.
Agencies love it. They love Nielsen. They loved Arbitron. It's giving them a club to beat us over the head with it. They don't want to change. And that, at the end of the day, might be the rub ... the dragging of the heels on Nielsen's part to do what they know is right. Because if they did, this industry and what we would see in each of these markets - the quarter-hour ratings would return, the business would reinflate, and we would be in a much stronger position on the transactional side of our business, and we would be able to drive a higher rate through that. But right now, we're all playing defense, and I lay that at the foot of Nielsen.
Joel Denver: Once they put this system in place, if every broadcaster isn't banging on their door going, "Sample size! Sample size! Sample size!" then the industry deserves what it gets. Once they get this encoding part figured out so that everybody gets the credit they deserve, where the meter is hearing it, that should be the next step. And radio shouldn't take its foot off Nielsen's neck until they give it up.
I don't disagree with that. What we have to do as an industry is understand why we want a bigger sample size. We haven't focused and dialogued enough on that. The reason you want a bigger sample size is because you perceive the sample size you have to not be large enough where you can make the decisions off the data you have in front of you. Meaning, the margin of error based on the sample size is too big to make the kind of decisions you need to make. Therefore, you increase the sample size to decrease the margin of error, right?
Joel Denver: Absolutely. When Z100 and KISS FM, arguably two of the most-listened-to stations in America, are carrying on the hour an average of 13 or 14 meters maximum, there's something really wrong.
I agree with you. So what is the margin of error for a month in New York on Z100, persons 25-54, persons 18-34, persons 18-49? What is that margin of error? If Z100 persons 25-54 posts a .6 rating, what is the plus or minus on that? Is it a .4 and a .8? What is it? What we don't do, as an industry, is go to market and say, "Here's our rating point, and it's plus or minus X, and you're going to pay as long as it stays within that range." So if Z100 goes to a .5 or a .7, they still get paid the same, because of the margin of error
We as an industry need to sit back and say, "We want a larger sample size for what reason, and what are the implications of that?" Are we saying that we really want to shine a light on how inaccurate the current ratings are today and what the margin of error is? And we want to address that ... because why? How would we go about doing it? Can we afford to address it? Because we are already paying through the nose for an inadequate sample size with a large margin of error to begin with.
Maybe to accomplish that larger sample size, we need to go about the whole process differently. First and foremost, we need to lower our sampling costs so we can increase the size of the sample, and the cellphone or the smartphone is the path to doing that. Then maybe we need to have a really good conversation about how we interact and transact with the buyers. At the end of the day, if the buyers don't want it, they're not going to recognize it and it's not going to influence them one way or the other, then why are we doing it? All of that needs to be put on the table, but to your point, it starts with, "What is the margin of error?" And why can't we get Nielsen to give us a hover-over, a number, to show it to us at any given time? Why do we have to go back and try to remember how to do that math like we're in 10th grade in high school again and try to do that that ourselves?
It's crazy. It's not what buyers are looking at. If you've got a system, and you've got hundreds of millions of dollars spent with a company to produce something that no one knows how accurate it is, but everybody is taking as the gospel, that to me is the first sign that something is whacked out.
Joel Denver: They tell radio to "Respect the currency," but wait a minute! What really is the currency and how accurate is it? And if they got out of the hardware business and stopped producing meters and docking - possibly saving millions of dollars - they might even be able to offer more sample size at the same price. Because, everybody in radio is sitting there wondering, "Okay, what's our next bill going to cost us?"
Remember when I brought Nielsen in the business years ago on the diary side? They put a product out that was superior in all respects to what Arbitron was doing. Their sampling methodology was better, their sample sizes were twice the size, and they ended up putting in a rolling sample, so in the two-book market, you'd get one survey a year. In a four-book market, it was twice a year. But you doubled the sample, all the wobbling went away, and the margin of error decreased. In other words, it was a much better product. We used it and liked it, but eventually, they didn't see a path toward growing in to the bigger markets and taking on Arbitron, because CBS had signed a long-term deal. iHeart/Clear Channel signed a long-term deal, so they got out of the business, only to come back later and buy Arbitron. And that's how they got back in.
Nielsen knows how to do a better job, but they decided it was easier and more efficient for their company to buy a company that was doing a poor job but was the established player, and just keep doing what they're doing. But they know better.
Joel Denver: This has shined a huge spotlight on the inadequacy of the system, the data, the presentation, and the collection process.
Totally agree with you. What they need to do is really start engaging the industry on a much more meaningful and honest level. And everybody needs to figure out what they want to do. Or, at some point, it's not too far-fetched to see the industry do what the Canadian broadcasters did, which was tell Nielsen to pounce off, everybody get together and have a concoction that is expensed on the pass-through and go out and put our own product on the market and have that become the currency.
Shazam could take its existing technology, white-label it, sell it back to a consortium in radio, and go, "We can do this!"
You don't even need Shazam. As I told Jeff Smulyen, with NextRadio turning cellphones in to FM receivers, he's got in his possession - if that really becomes more ubiquitous - the sample size to understand who is listening to what at any given time. He could get into that. That ultimately could be the ratings service, beyond what he has purposed that app to be and what he is trying to do with that technology. That data collection and what he's in a position to be able to do with that could be a game-changer against Nielsen. And who knows, someone else could decide they want to come in to this space and do it the right way.
Nielsen shouldn't act as if they have this business for life. They obviously have proven that they are not focused on the customer they should be focused on, which is us, and if it wasn't for Frank Foti, they wouldn't be looking at this and figuring out how to solve at least this problem to placate us. It's very disappointing; it's disingenuous at best, and the industry deserves better. Everybody has to take a hard look at their Nielsen bill and their contract and decide, "Do I want to keep doing the same old, same old, watch my costs go up and watch the ratings service hurt and not help my business?"
Joel Denver: Moving to another topic. Cumulus is in an expansion mode at this point in property value. Word has it that CBS Radio preparing itself for a spinoff or a downsizing or a sale. Can you comment on that?
As a public company, you never comment on what your M&A plans are. And Lew has always said that we are opportunistic and inquisitive. We've been the most inquisitive company over the past five, eight, nine years. I would just answer that by saying that the platform that Lew has assembled through these deals -- Citadel and most recently Westwood -- have really given us a scale that allows us to do the things we need to do. That being said, if there are opportunities to grow that platform in ways that are accretive, I can promise you that Lew is going to be looking at that and focused on that."To find people, through an A&R process, and to create relevance to monetize that through radio airplay, touring, and everything else to get a piece of that. So it's going to be very interesting to see how that plays out. We are getting deep into that business, certainly on the Country side first, but we are not going to stop there."
For the job I'm tasked to do, running content and programming for the company, we've got a platform, a reach and a scale that allows us to be inventive and try new things. And to be able to do those things with scale. Would it be great to have more heft? I don't know. It depends on where it comes from and what it looks like. As we look at the landscape as it is changing, and we look at investing capital and how we put our balance sheet to work, it's not just about how many radio stations you own today, but it's about your platform, your reach and what you're doing to try to transform your business. And owning more radio stations may or may not be the right thing for us to do.
Right now we have a great company with a great platform and reach. And there's really only two companies right now with that kind of scale and reach -- iHeart and us. We're hard at work to take advantage of it. So the good news is, we can be patient and very mindful of the landscape and how it's changing and what's out there. If the right opportunity presents itself, we'll be looking at it. But it may not necessarily just be buying more radio stations. It may be lots of other things. The next two, three, four years are going to be really interesting, not only for our space and our company particularly, but - as we started the conversation - for what you see in the music business and the record business. There's a huge change in the model and a paradigm shift going on there, too, and we're going to be part of that. And that's exciting, as well.
Joel Denver: Can you comment on the downward pressure on the stock price and what's causing that?
I can't comment on those things. That puts me in a position that I can't get myself in. I get it. All media companies are suffering in an economy that's changing, in an environment that's difficult. And everybody - investors in the stock market and people who drive that engine - have a perspective on what that means. Obviously, I wake up every day thinking about how I can drive more value for our shareholders and our stakeholders. That's what I'm paid to do. But I don't fixate on the stock price, I fixate doing my job and trying to let the rest take care of itself. And I think it will over time. I'm confident in that.
Joel Denver: You just had a big integration with Westwood One and the efficiencies that have been created from all of that. What is your gut feeling? You've taken people who are experts at running 24/7 formats and all of the sudden, you're going to have existing station folks doing some of that work.
As I mentioned, we have one company - one great big platform - and we have a lot of interesting aspects to it, including our radio network. And the way these businesses have been run in the past, they've really been siloed into separate entities that have had some relationship to one another through ownership. But that's inefficient, number one, because there is redundancy and duplication where it doesn't need to exist.
More importantly, if you view the business as one business that includes Westwood, Cumulus and our relationships with Rdio and NASH, we're all put in the position to take advantage of the larger company. You improve on each of those products, offerings and services as a result of tapping in to the best talent, regardless of where it exists. You don't have these artificial barriers that say, "If you're not a Westwood One employee, you can't help advantage Westwood One product." We've done away with that, and the outcome of that is going to far superior, higher quality product and offerings to service the thousands of radio stations we supply long and short-form programming and 24/7 programming for, too.
With respect to the expertise of putting these stations out, we think about the 24/7 business very simply as a collection of radio stations that we are programming and assembling, and then sharing with thousands of customers across the company. We haven't lost the skillset to do that. The technology is the technology, and we have best-in-class, patented technology - the STORQ System - to give users of our 24/7 business the ability to customize, in real-time, these format offerings and quite frankly, put stations on that are seamless with talent that people swear are in studios in their hometown ... and put that product out. The advantage and purpose of what we just did is to keep all of that in place.
Like anything else, as you integrate, you wind up with some redundancy, and it affects some people, and that's a tough thing. We're doing our best to help those people stay in the company or find them work elsewhere, but the whole idea of this was to put better product out and serve our customers in a more meaningful way, not to start with an end in mind, which is to take cost out of our business and figure out how to make that happen. That wasn't the goal. As you go about doing your work, that ultimately is a byproduct of it.
Joel Denver: Is there anything we haven't covered here that you'd like for us to get in before we call it a day here?
As time carries on and we get into the challenge phase here, I would love to give you the opportunity to follow the story through. Halfway through this process, I'd like to give you a more in-depth, specific interview regarding the artists that are tracking. And the thousand-plus that are in now at 60 days, 75 days, that's going to be down to three or four dozen people, or maybe less.
Joel: We'd love to have that opportunity to come back and do another visit with this. You're doing something that's groundbreaking, and it could have some extremely positive benefits not only to your own company but for the business in general and how artists get discovered. That process is streamlined, and bringing the public into a radio platform is huge.
It is, and getting the fans into a position where we can quantify their engagement and advocacy, so we can factor that into the decision process on who makes it through - that ultimately is something so different than what has been done. This isn't a vanity contest. This isn't a singing contest. It's all about true talent, and talent defined not just by how well people sing and how creative they are with their writing and their music, but their talent as far as running their business.
When you invest in somebody at a record label, you want to make sure to the best of your ability that person checks the box in all those areas. Can they put butts in seats? Can they engage a fan base? Do they have the social media chops - a la a Taylor and some of the others who are out there - to really blow something wide open? Do they get it? And again, it's not a singing competition. It's not any of that. It's a combination of all of those things that conspire to give you a really good, clear picture of whether this person has ability and therefore deserves a shot or they don't. And that's why this is so exciting.
We're off and running, and you can see the countdown. This Sunday, we close off registration, and we begin the process of whittling down and finding and crowning the first winner of the NASH Next Challenge on December 7th. As we get into football here, maybe early- to mid-September, we should do another and catch up on where we sit. And I will tease you and leave you with this: Two celebrity guest judges are going to be announced here shortly who are going to come in and join myself, James Stroud, and Kix through this process. And it's going to be really cool.