RAIN Summit West 2014 Looks At Radio's Digital Future

Summit

KURT HANSON's RAIN SUMMIT WEST was held SUNDAY (4/6) at the LVH casino hotel in LAS VEGAS, with another agenda looking at the development of digital media and how radio fits into that picture.  The day-long session was busy with panels that largely looked forward to the next generations of radio, online audio and in-car entertainment and information, with a roster of prominent speakers offering a great deal of information on current trends as well as predictions for the near future.

Digital's Local Focus

The opening session gave an overview of different aspects of digital ad spending, with presentations by moderator RICK DUCEY of BIA/KELSEY analyzing small and medium business spending's move towards emphasizing promotion but noting that while digital media spending is growing, "it's not insane ... they're still not getting most of the money; COX MEDIA GROUP's TIM CLARKE stressing that radio's value is not in its platform but in its "super brands," content and personalities; MARKETRON's MARTIN KRISTISETER highlighting his company's success in the automotive sector using geofencing around competing dealerships to serve up mobile ads for a HYUNDAI dealer in LAS VEGAS; CLIP INTERACTIVE's BILL FREUND showing off his company's technology that allows listeners to pull radio programming-related content like offers, polls, and contests through apps; and THE MEDIA AUDIT's PHIL BESWICK offering data from the ATLANTA and LAS VEGAS markets showing radio websites competitive or leading in several important target segments.  In the discussion that ensued, CLARKE described how he grew up listening to NEW YORK Top 40 powerhouse Z100 online ("before that SAG-AFTRA thing wiped out everything") and created his own LIVE365 station.

It's Nice To Share

EDISON RESEARCH's TOM WEBSTER presented more data from the INFINITE DIAL study, looking at social network users who share music: More than a third of social network users have shared a song with friends online, and while demographics of those users skew young, they are also strong customers of PANDORA (and iHEARTRADIO, SPOTIFY, and other services, but PANDORA has a substantial lead).  Six in 10 song sharers are "habitual" social network users.  WEBSTER noted that the issue in reaching these users is determining their behavior, and the problem of so much content, like the BUZZFEED and VIRALNOVA posts flooding FACEBOOK, being shared (much of it, in WEBSTER's term, "crap").  Using his love of progressive rock and the group YES as a college student (evolving from his first album purchase -- the "Xanadu" soundtrack), he stressed empowering, motivating and rewarding music curators with tools to not just share but tell stories about the songs they listen to through radio services.

Cridland's Best Apps 2014

U.K.-based "radio futurologist" JAMES CRIDLAND offered a look at what he believes are the best mobile radio apps, taking the medium beyond a logo and listen link.  Included in his presentation were RADIOFEED, which pops up content simultaneously with what's on the air; the BBC's PLAYLISTER, which lets listeners to the BBC press a button within the BBC's iPLAYER and add it to a playlist that can be used within SPOTIFY and other on-demand music services; LISTENER DRIVEN RADIO's GRUVR app, which adds a personalized wake-up greeting and notifications to its alarm clock functions, and LDR's OPEN MIC feature that lets listeners send comments via voice clips to the studio, where the host can see an instant transcription and send back a notification when the clip is about to air; Australian startup OMNY, a customized streaming service that aggregates desired content, from music to personalities and news; SOUNDCLOUD's mobile player, which encourages sharing; COMMOTION, which aggregates comments about a station's programming from different platforms and social media sites into a single feed; SOUTHERN CROSS AUSTEREO Active Rock TRIPLE M AFL app for Australian Rules Football coverage; and the NEXTRADIO app, which CRIDLAND cited for the images being displayed rather than the FM listening experience.

Podcasting ... Er, Let's Call It On-Demand

A podcasting panel moderated by RAIN's BRAD HILL featured PODTRAC's MARK MCCRERY, NPR's BRYAN MOFFETT, SWELL RADIO's RAM RAMKUMAR, FOX NEWS RADIO's WILLIAM SANCHEZ, and THEBLAZE RADIO NETWORK's CHRIS PETERSON.  The panel looked at what HILL termed podcasting's "resurgence," with SANCHEZ noting that the definition of podcasting has changed from describing the mechanism by which the shows are obtained to describing "on demand" programming.  MOFFETT said that his network's subscribable podcast growth plateaued but that on-demand listening online without subscribing is growing.  PETERSON, whose network launched as a live stream, said that the term "podcast" is "outdated ... almost a stigma" and noted that a friend likened it to AOL; he said THEBLAZE calls its shows "on demand," offered through SOUNDCLOUD as well as iTUNES, and said that the demographics for listening to the shows are remarkably young.  RAMKUMAR described how his site allows on demand listening and "learns" what kind of shows the user likes to make the user experience easier; this prompted HILL to assert that people are still confused by how to listen to podcasts, adding that KATHIE LEE GIFFORD recently offered a five-step tutorial for her fans to teach them how to get her podcast.  MCCRERY said that his company, which has sold advertising for podcasts since 2005, has seen growth in ad sales for the medium ever since ("it's been working out well").

As to what makes a good podcast, MCCRERY said that about half of the top 100 list on iTUNES are shows produced by media companies and terrestrial stations, and most of those are about 30 minutes, which he said encourages the commitment to subscribe.  He added that the shows need "a great host" and hosts need to read the ads and be integrated into the ads, although NPR shows, which are, he said, effective, do not do so.  SANCHEZ said that "for us, the story is the star," and said that he looks for the human interest element.  MOFFETT said that a "personal feel and connection" and consistency are necessary.

On what HILL criticized as the "chatty" aspect of podcasting ("guys shooting the breeze"), MCCRERY noted that there's room for both the chatty (he used LEO LAPORTE's TWiT shows as an example) and formal (as in "THIS AMERICAN LIFE"); PETERSON added that he enjoys the chatty, engaging nature of shows like LAPORTE's.

Regarding measurement and monetization, MCCRERY said that his own company has measurement methods that it uses, including analyzing user agents, to compile download statistics that it uses to sell ads.  The medium, MCCRERY said, uses the unique download metric, because iTUNES does not provide play figures for shows.  MOFFETT noted the "murky" nature of measurement, including whether a show was listened to or skipped; PETERSON said that the development of services like SWELL and STITCHER portends a move away from iTUNES and more measurement information for content providers.  And PETERSON noted how ADAM CAROLLA can do compelling and entertaining live reads, which the panel generally agreed is the most effective form of ads (two per episode, MCCRERY said, is optimal).

Self-Service Music

TAG STRATEGIC's TED COHEN moderated a panel on customizable or on-demand streaming services with the open question of how to get people to tune in.  RADIONOMY's THIERRY ASCAREZ, K-LOVE/AIR1 Pres./CEO MIKE NOVAK, MOODAGENT CEO PETER BERG STEFFENSON, LYRICFIND CEO DARRYL BALLANTINE, 8TRACKS CEO DAVID PORTER, and RDIO CEO ANTHONY BAY discussed the difference between on-demand services like SPOTIFY and radio-stye services like PANDORA (BAY said that his service is "like an alternative to ownership" as opposed to "a programming experience") and listeners' complaints (NOVAK saying that some find selecting music "too much work" or "got bored with it quickly"); a debate broke out over price points and whether people value music enough to pay a monthly fee (with COHEN and others noting that people are willing to spend a monthly fee for NETFLIX and that users would be willing to pay for curation while PORTER saying that consumers are not as willing to pay for music as a subscription).

NOVAK said that there are differences between his company's terrestrial and online listeners, and asked how important "having someone between the songs" will be going forward; STEFFENSEN added that SLACKER got positive response from adding hosts to channels.  The discussion touched on whether music plays the same role in people's lives as it did years ago (NOVAK bemoaned how "there isn't any fun music anymore"), and BAY, asked about BEATS MUSIC's effect on his company, said that "the number one thing is more awareness."

Keynote From Calacanis

Entrepreneur JASON CALACANIS gave a "state of the media" address, a fast-paced recounting of his provocative view on the future of media.  Rattling off his observations in rapid-fire order, CALACANIS touted the growth of Internet-delivered media, noting that APPLE is now valued at almost as much as all "old media" combined; projected radio revenues as slightly up while other legacy media are heading downwards; asserted that video games, but especially mobile casual games, are becoming "huge" even as console sales, after a brief spike from the introduction of XBox One and PlayStation 4 last year, sag; compared "AAA" video game titles to blockbuster movies in both revenue and budgets; alerted the audience to the growth in ASIA of alternative mobile messaging apps with gaming components; pointed out how YOUTUBE has grabbed about 10% of television revenue but also noted that YAHOO!, AMAZON and TWITTER are planning to compete for YOUTUBE's market segment; gave an overview of how cable television is declining and online video is rising; reiterated his 2008 prediction of an APPLE TV; said he expects online radio to overtake AM/FM radio for in-car listening, and predicted that podcasters would become coveted by companies like CLEAR CHANNEL hungry for fresh talent; called YOUTUBE "the real SPOTIFY" for its music selection and ability to send songs to the top of the charts based on their use in viral videos; and asserted, after noting the success of "data journalism" sites like NATE SILVER's FIVETHIRTYEIGHT.COM (recently relocated from THE NEW YORK TIMES to ESPN), that radio "underestimates the audience," intelligence-wise.  He joked after looking into buying a radio station that "if it cost $4.5 million to buy a radio station (in SAN FRANCISCO), it might make sense," but the price was too high for his group.

Royalty On Royalties

How can streaming audio pencil out and make a profit when the royalty burden remains heavy?  Attorney DAVID OXENFORD hosted a panel on royalties with BMI's DAVID LEVIN and SOUNDEXCHANGE's COLIN RUSHING joining BEATS MUSIC's DAVID ROSENBERG and DIGSIN's JAY FRANK to examine whether a viable financial model exists under current royalty structures.

OXENFORD noted the list of streaming services that fell by the wayside over the years, from MYSPACE MUSIC to TURNTABLE.FM then launched into a discussion of the Songwriters' Equity Act, a bill supported by BMI and the other publishing rights organizations that would allow publishing rights fees to be set more closely to the rates for sound recordings.  RUSHING declined to give any new information on his organization's negotiations on sound recording royalty rates, while ROSENBERG said that the rates negotiated by PANDORA and others have helped them grow, but the prospect of rate escalation with no cap makes future profitability uncertain.

On artists and songwriters' complaints about how little they make, FRANK said that there is "a lot of misinformation," because while digital has taken over a larger percentage of the revenue stream, there are also many more individuals eligible for royalties because more artists can be heard on digital services but that means the revenue pie is split among many more people, which leads to lower payments.  "It's not the rate's fault ... there are a lot more people who will get a lot less revenue," FRANK noted.

OXENFORD, citing PANDORA's paying around half its revenues in royalties despite having a discounted rate, asked if the streaming services are adequately monetizing themselves,  RUSHING suggested that if PANDORA had been paying the standard rate, they "would have done business a little differently," and added that there are ways to control costs.  ROSENBERG called the idea that PANDORA should have retained its 40-hour cap on listening "absurd," leading to a discussion of costs (ROSENBERG saying that 70% of a $10 monthly fee would go to content costs, leaving $3 for "everything else," including operational costs, marking, R&D, and salaries).  FRANK responded that "I'm not gonna cry because you have to work off a 30% margin," saying that a lot of businesses have to work with less and that the focus needs to be on making "the whole pie bigger."  ROSENBERG returned that volley with the assertion that the present rates are preventing smaller competitors from entering the field.

NIELSEN's JEFF WERDER gave a brief presentation on digital audio measurement, followed by MUSICMASTER's JOE KNAPP in a "Pecha Kucha" talk about his company.

Hanson's View: Create Internet-Specific Content For Online Success

HANSON's annual "State of the Industry" address cited the INFINITE DIAL study's statistics for sharp growth in online listening and time spent listening online, comparing them to RADAR reports of hours per week spent listening to traditional AM/FM radio and concluding that the trends will have online listening passing AM/FM listening sometime around 2015-2016. He added that usage of broadcast and Internet-only streams indicates that consumers prefer listening to streams made specifically for the Internet on the Internet. He claimed monetization of online radio is improving, PANDORA increasing to about 3.8 cents per listener hour in 2014, a 30% increase in a few years.  He said listeners like short stopsets, visuals, creative ads, and precise targeting.  He also said that billions of dollars in new value is being created with the move to digital, and noted the way that the department store industry tried to join in the move to discounting and failed, except for DAYTON'S, which created TARGET as an autonomous unit that it insisted be quickly profitable.

And Now, The News

ABC RADIO NEWS VP/GM STEVE JONES discussed his network's success in digital audio, citing CUMULUS News-Talk WBAP-A-F/FORT WORTH-DALLAS' use of ABC coverage of the second FORT HOOD shooting as resulting in a substantial jump in listening to the station via iHEARTRADIO alerts.  He suggested that the challenge for spoken-word radio is to drive listening to more content from what they initially select, giving the example of his wife using voice commands in the car to get a horoscope segment but not being pushed to more content, like GOOD MORNING AMERICA audio.  He also showed how content based on shows like "DANCING WITH THE STARS" and "SCANDAL" drew greater impact with reinforcement on Twitter (yet one for a segment on "HOUSE OF CARDS" did not).

Ads on Streaming Audio

How to best take advantage of Internet streaming audio growth with advertising sales was the topic for a panel moderated by ADSWIZZ's ROCKIE THOMAS.  TRITON DIGITAL's JOHN ROSSO, SPOTIFY's LES HOLLANDER, TARGETSPOT's MITCH KLINE, PANDORA's ANDY LIPSET, and SOUNDHOUND's CHERYL LUCANEGRO discussed how online radio fits in the overall sales scheme (LIPSET noted how the business seems to have broadcast and digital "buckets" and streaming audio has not fit into either, but that the two sides are coming together).  LIPSET noted the dominance of the click in online ad sales, but added, "the click is nice, but at the end of the day, the real driver (of listening and engagement) is the audio."

The panel also discussed the value of collecting registration data and profile information to determine which ads to serve up to individual listeners.  LIPSET added that advertisers are increasingly asking for "frequency capping," complaining that they hear their spots repeat too often, while HOLLANDER added that clients are also asking for more separation between spots from competing advertisers as they get from traditional radio.  LUCANEGRO said that she gets requests for location-specific advertising -- geofencing to serve up ads based on a user passing a particular store location -- but she noted that "it's hard to do and hard to quantify."

After the panel, TRITON DIGITAL's NEAL SCHORE offered a presentation on his company's adapting to changes in the online audio business, adding 60 new positions and employees to support digital sales.

Driving Home the Point

The final panel, hosted by INSIDE RADIO's PAUL HEINE, looked at the continuing hot topic of the connected car.  FORD's SCOTT BURNELL, TUNEIN's CARL ROHLING, GRACENOTE's TY ROBERTS, the CEA's MICHAEL BERGMAN, and PANDORA's GEORGE LYNCH discussed developments in the category, including BURNELL pointing out that customization -- setting up the apps for the in-car system before a user gets into the car -- will make the experience easier.  BERGMAN raised the safety issue: "You can't have 40 icons on your dash ... six is probably right," the standard number of preset buttons in each bank of presets on present-day car radios.  ROHLING discussed how TUNEIN "levels the playing field" by allowing stations to get access to the new dash screens through TUNEIN's presence that they might not be able to negotiate themselves, and LYNCH said that the biggest issue is user's expectation of instant gratification that leads to them paying more attention to their mobile phones (to select apps, for example) than to anything else.  "We have to wean people off the easy way of doing things (using the phone) onto the safe way of doing things (using the in-dash screen)."

The next RAIN SUMMIT is scheduled for NOVEMBER 4th in LONDON.

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