RAIN Summit West 2013 Looks At Present, Future Of Internet Radio

At The Summit

KURT HANSON's RAIN SUMMIT at the NAB SHOW in LAS VEGAS offered a daylong series of panels and presentations on the future of radio and streaming audio.

The day opened with a panel on the connected dashboard, with JACOBS MEDIA and jacAPPS' PAUL JACOBS, ENTERCOM's AMY VAN HOOK, TUNEIN's CARL ROHLING, PANASONIC's HAKAN KOSTEPEN, and AHA BY HARMAN's CHIA-LIN SIMMONS discussing the future of in-car entertainment and information with moderator ROGER LANCTOT of STRATEGY ANALYTICS.

"The radio is no longer two little dials and five buttons," JACOBS noted.  He said that he sees few radio people at the CONSUMER ELECTRONICS SHOW and urged radio people to go to that show, adding that car manufacturers "love radio" and asserted that "the radio industry needs to take a more intense view of radio's relationship with the car."  "Our imperative," he said, " is to create a partnership with the automotive industry ... there is so much opportunity ahead." 

ROHLING touted his service's relationship with the automotive industry, VAN HOOK said that consumers have "made clear that they want the smartphone experience" in their cars and added that local personalities and unique content are important for radio as it loses its dominance in cars.  SIMMONS and ROHLING discussed their companies' approaches to in-car streaming, with ROHLING noting that TUNEIN's experience has been different in dealing with each auto maker and SIMMONS explaining AHA's two-way interactive capability and location-based services.  KOSTEPEN pointed out the different media consumption habits of younger audiences and the need to change terminology (offering, for example, that the word "coupon" does not go over well with younger consumers).

EDISON RESEARCH and ARBITRON offered a review of the "Infinite Dial" study released last week, with EDISON's LARRY ROSIN and ARBITRON's BILL ROSE giving a summary of highlights from the results.  The RAB's ERICA FARBER delivered a talk on radio's post-2008 revenue growth and the industry's diversification in online advertising (although 15% of radio managers in a survey said they didn't know what their stations' digital strategies are) and new digital offerings.

"This is the most exciting time I've ever seen for this business," FARBER insisted, noting that "we can be anyplace our listeners want us to be."  She also requested that radio stations refer to themselves as just radio rather than "terrestrial radio," pointing out that broadcast television stations do not refer to themselves as "terrestrial television."

The INTERNET ADVERTISING BUREAU's MICHAEL THEODORE conducted a panel on "Profiting from Mobile" with PANDORA's STEVEN KRITZMAN, ESPN's PATRICK POLKING, ABACAST's MICHAEL DALFONZO, and CLEAR CHANNEL's MICHELLE SAVOY.  The panelists discussed how audio helps monetize mobile apps, with KRITZMAN saying that 65% of his company's revenue is coming from mobile.  He said that some agencies "get it" regarding mobile and others don't.  SAVOY said her company is seeing success in selling restaurant spots with time-of-day advertising.

TRITON DIGITAL Pres./Market Development JOHN ROSSO gave a presentation addressing what buyers want from radio that the industry isn't giving them, including targeting, accountability and third-party tracking, but he noted a "major paradigm shift," programmatic audience buying, is transforming online advertising by targeting audiences rather than locations, and he noted that display inventory is already being sold that way but audio has been left out.  He touted his company's a2x, a programmatic online audio trading platform.

International online audio was explored in a panel with RADIONOMY/s THIERRY ASCAREZ, LIVE365's HONG LAU, SAAVN's PARAMDEEP SINGH, and AUPEO's HOLGER WEISS, moderated by TURKEY's SPECTRUM MEDYA's ALI ABHARY.

A session on "Accelerating Your Audience Growth," moderated by ROSIN, featured ABC NEWS RADIO's STEVE JONES, consultant ALAN BURNS, SIRIUS XM's RACHNA BHASIN, THE ECHO NEST's JIM LUCCHESE, and PANDORA's CHRIS MARTIN. 

BURNS noted, "The younger and more removed from the bottom line an individual is, the more they want to grow online listening," while older radio people with more knowledge of the revenue situation are more focused on the traditional product.  BURNS advised stations to fully simulcast online to eliminate the repeated government PSAs, and noted that one feature that users would appreciate is allowing them to skip songs they don't like. 

JONES discussed his company's efforts in providing news to digital radio, including four digital stations.  The key for ABC News in accelerating audience growth in the digital space, JONES said, is the quality of the user experience; he said that his company is trying to expand its horizons beyond merely the news space, with the example of serving entertainment news content about TAYLOR SWIFT to someone who just listened to a TAYLOR SWIFT song.

MARTIN  criticized some of the broadcast industry's digital offerings as too complex; LUCCHESE said that radio should get past the idea that programming has become "man vs. machine" and recognize that computers can competently program music, and advised that radio take advantage of the vast amount of information returned via digital consumption of programming.

HANSON's "State of the Industry" address looked at seven key trends for the industry and responses to them.  The trends included "a world of on-demand variety," with content being cheaper, more convenient, and better; the primacy of the smartphone; the rise in online radio (up 490% in five years); the rise of the tablet; the open dashboard and related "safety issues" with in-car apps; "near-infinite bandwidth" and off-loading (using Wi-Fi instead of cell phone data); and digital radio's "first billion dollar brand," PANDORA, with the prospect that the royalty issue will be resolved.

He advised radio to define itself inclusively, including online and satellite; maximize the value of AM and FM stations by being "live, local, and linear"; look to online radio for growth, embracing new business models and develop new brands while specializing and spreading globally; develop "20-20 vision,' projecting what the industry will be in 2020 and planning accordingly; and gambling, taking chances rather than a wait-and-see attitude.

TARGETSPOT CEO EYAL GOLDWERGER gave a presentation on digital audio listening among multicultural listeners, specifically the Hispanic and African-American audiences.  Following that, TRITON DIGITAL's DOMINIC MILANO headed a sales panel with SPOTIFY's MICHAEL KACKEL, KATZ360's DEAN MANDEL, MVYRADIO's JOE GALLAGHER, and SBS INTERACTIVE's ANDREW POLSKY.

RUSS CRUPNICK of NPD GROUP presented research on online listening habits and asserted that the battle "will be won in the car."  He noted that the vast majority of listeners will not pay for listening or downloading online, but he suggested that the market will evolve organically and the industry should concentrate more on growing the pie than slicing it up.

RHAPSODY INTERNATIONAL Pres. JON IRWIN gave a keynote address on changing music consumption habits, monetization, and business models, noting the growth in subscription music audience (8.2 to 13.4 million globally from 2011 to 2012).  He warned, however, that costs for PANDORA are outpacing revenue growth, and said that the key is not just the provision of music but the experience, which he said "nobody's really nailed" yet.  "We have to innovate ... in order to generate real value for the customer," IRWIN said.

The sessions ended with a panel on music royalties moderated by attorney DAVID OXENFORD.  SOUNDEXCHANGE's BRAD PRENDERGAST and BMI's DAVID LEVIN were joined by consultant TED COHEN, SOMA FM's RUSTY HODGE, and artist PATRICK LAIRD of BREAK OF REALITY on the panel.  COHEN recalled spending millions with independent promoters when he was at WARNER BROS. RECORDS to get songs on the radio, but noted that the pendulum has swung the other way; he said, however, that he's not sure artists and copyright holders should get more than they get now, considering the percentage of revenue it represents. 

PRENDERGAST said, "This is a young industry," and that artists want fair-market value for the use of their music.  After LEVIN asked what the point is where artists need to take a lower rate to help the medium grow for future benefit of the artists, LAIRD said he wants a royalty system that supports Internet radio's growth. 

PRENDERGAST defended the per-performance per-customer method of royalty determination as opposed to the percentage-of-revenue standard, saying that "it has a beauty to it that we like," but COHEN noted that the accounting costs are "crushing" for a small webcaster, and HODGE pointed to the problem of spotty connections and reconnections making accurate reporting difficult.

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