The Subscription Model
August 7, 2012
Nothing beats free.
Most of us are used to paying to watch TV.
I don't know one person who doesn't subscribe to, at the least, basic cable or satellite service. And I'm one of the few people I know who doesn't pay for the extra stuff, like HBO and Showtime.
Getting used to paying to watch TV happened gradually, and when it started, cable TV offered stuff we couldn't see without paying, stuff we wanted to see. Even now, you can't watch BCS bowl games if you don't pay for ESPN, and the time is probably coming when those huge games will only be available through pay-per-view.
The record is clear: We will pay for exclusive content we desire and can't access any other way.
That's the theory Mel Karmazin was working under when he paid $500 million to sign Howard Stern to Sirius.
And while Howard may -- may -- have paid for his contract with subscriptions, he certainly didn't cause a mass migration to satellite radio.
Lots of people try satellite radio when it's a free option in their new car, but the stats on the number of consumers who re-up after the "free" trial period expires is discouragingly low.
The truth is, though, that the subscription model pioneered by cable TV is probably the future, despite the book FREE, and all the chatter about Gen Y not being willing to pay for anything.
What Gen Y, and the rest of us, are increasingly unwilling to tolerate is ads, and as broadcasting becomes more fractured, rates fall, and every blank space is filled with a marketing message, mass media is making the problem worse by crass over-commercialization deemed necessary to drive revenue and stock price growth.
Clearly, most of us have a limit on our tolerance for commercials in any medium. And clearly, most radio and TV stations have exceeded that limit by a wide margin, and have been doing it for years.
Network TV is doomed with the system under which it was built, exchanging eyeballs for free programming. Cable TV channels are already more profitable than broadcast networks, primarily because of subscription fees, which is why Comcast bought NBC Universal. They didn't care about NBC the network; they wanted their cable channels -- USA, Bravo, SYFY. MSNBC and CNBC.
They wanted content worth paying for.
As an air talent, what do you offer me, every time I listen, that is worth paying for?
What does your station offer that's worth paying for?
Or looking at it another way, are you willing to cut your commercial load to six or eight minutes an hour? Can you be satisfied with lower margins? If not, you will drive listeners to one of the many choices they have.
They don't want to leave you and pay for something they've always used free, and I don't think most will for the versions of "radio" now offered online, including Pandora or Spotify.
But they will leave you once the content they hear is worth the price, when subscription radio is better and less cluttered than your commercial version. At 30 units an hour -- which I've heard on AC stations this year -- how long will that take?
We control our fate, if we can control our greed. If not, it's not a question of "if," only "when."
We're all used to the model now.