Fred Jacobs

Fred Jacobs came from a research background, as well as a stint as PD at WRIF/Detroit, to start his own consultancy in 1983, where he was instrumental in the creation of the Classic Rock format. Since then, Jacobs Media has been a consistent and potent force in the Rock radio world, but rather than rest on his laurels, Jacobs decided to branch out to accommodate the burgeoning impact of digital technology. JacAPPS has caught on to the rising wave of smartphone applications by creating unique apps for radio stations and other entitles, including All Access.

Jacobs also offers the industry research into today's digital revolution with an annual Tech Survey, as well as daily insight through his own blog. Here, he analyzes several of the pressing issues facing radio today.

Jacobs Media's 6th Tech Survey, which you discussed in an All Access webinar a couple weeks ago, offered an unsettled picture radio's Net efforts, in that radio has not exploited its Net presence to optimal effect and is, in a sense, behind the eight-ball compared to other media. Could you elaborate on that?

We are behind the eight-ball in some ways and ahead of it in other ways. We have the best brands and in many cases, strong personalities. We have the potential to build great local connections and knowledge; we have the sales staffs and production facilities. Radio has lot of tools at its disposal. The issue radio needs to address is acknowledging that it's moving beyond towers and transmitters. Other platforms are becoming far more powerful very quickly; it's less about radio being behind and more about the importance of recognizing where the puck has moved.

That's really been the whole purpose of our Tech surveys over the past six years. So often in radio, we continue to research what is happening now -- and how we compare against stations across the street. The purpose of these Tech surveys is to pull back the covers and identify all of these other media and gadgets that are becoming important to people above and beyond radio. We have to recognize that listeners are going to other places to entertain themselves; then we have to determine how to participate in other platforms and settings -- which ones should radio be most involved with now ... and which can we pass on. But the bottom line is that radio companies need a coherent digital strategy.

What was a very simple business has become very complex. At one time, you could buy a bunch of stations and achieve huge margins; it was virtually a license to print money. But those days are over; you have to really work hard for results ... and be a lot smarter strategically to tap into people's entertainment sphere. For many of us, it's the challenge of our careers, especially those of us who have been doing this for decades. The whole game has been redefined; part of our problem is that we have the task of trying to fix the airplane while it's flying at 30,000 feet.

What can you do to persuade the radio executives who don't see the financial value and upside in investing early -- and seriously -- in a Net strategy?

That mentality has been a part of radio for a long time; you're not going to go to a new place until you're convinced that it's ready and you can already make money. That kind of conservative approach is what doomed Kodak. Was digital film ready to explode in its first year? No, but was the potential there? Kodak said they were in the film business, not the digital biz ... and if digital grew, they'd move there soon enough. By the time they figured that out, it was too late.

We know what happens when a traditional business doesn't embrace change. Look at the record business and how it treated mp3s ...and the newspapers business with the Internet. You see it again and again and again; the legacy industry gets stubborn, has its head in the sand in denial and waits too long to move to a new space - then gets lapped by the field. History is littered with industries that waited too long, and sat back waiting to see what was going to happen before making a commitment.

Of course, it's expensive and risky to go to a new place that may not be proven, where the dollars aren't gushing yet. That's what's known as strategic investment. We have to be smart about this. How many radio companies are spending seed R&D money to research what's happening -- beyond music and prizes the audience wants to win? That's what radio programmers are wondering about, but it's not what consumers are thinking about; they're looking at entertainment on a larger scale.

How does radio keep up with the pace of change in the media?

The beauty of our national Tech surveys -- now that we have six under our belts in six years -- is that it really is an incredible voyage. You watch things like iPod ownership rising from 21% in 2005 to 66% in 2010. Our studies track usage and adoption. We've trended everything from streaming to cell phone-only usage, which we caught six years ago, Fortunately, both Arbitron and Nielsen stepped up to include CPO households in their samples. These studies have been very gratifying to us, and they've helped our clients and stakeholder stations better understand a rapidly changing space.

We've boiled down the entire survey on media usage into a visual pyramid that shows, at a glance, what people are utilizing for entertainment and information and to how great an extend. There's a lot of data packed into these pyramids and they tell a great story.

This year, there are three major stories: The explosion of social media driven by Facebook. Another big finding is that Pandora has really emerged as the dominant streaming source; we believe it's an imminent threat to traditional radio. Then there's the smartphone phenomenon, which is happening fast. Smartphone owners are downloading a lot of apps, so they're participating in those devices in a whole new way. And half of those who have a smartphone have owned them for less than a year, so it's still very emergent.

Why do you consider Pandora to be a legitimate rival to radio?

Pandora is different than other Internet streaming channels because it has broken out of the pack. Prior to Pandora, you could look at streaming competition as so dispersed that it didn't have the potential to be an effective rival. On the other hand, what Pandora has accomplished over the past couple of years, primarily on the back of mobile devices, has shot it past all other streaming sources.

Look at some of the advantages Pandora has over conventional radio. It's almost commercial-free; it has a huge library; it's not rated, so it can play whatever it wants; it's a cool music discovery tool; and it provides consumers with the ability to construct a "station" that fits their particular tastes. There's a lot of potential for advertisers there.

The other thing that Pandora has navigated particularly well is that their CEO, Tim Westergren, has committed to being everywhere -- in cars, iPhones, computers ... wherever you are, Pandora wanted to be there. Some of those devices don't work as well others, but then there are things like the iPhone app, which enables Pandora to sign up 35,000 new users a day. Talk about a cume builder! Most radio stations don't have an ongoing cume campaign; here's a competitor that's adding a huge number of users every day. And we've learned in our Tech survey is that people with Pandora often feel its superior to FM music radio.

Now having said all that, there are weaknesses, too. What people don't like about Pandora - and there aren't many serious complaints yet because it's still pretty new - is that there are no live people or local orientation. When you think logically, that's what terrestrial radio is all about - if we offer local, on-the-ground knowledge and compelling personalities, we'd be in great shape, right?

But think about what local radio has been doing over past couple of years: getting rid of key personalities, shutting everyone up in order to segue as many songs as possible. It makes you wonder whether terrestrial radio will be well postured to compete against Pandora ... and new competitors that don't even exist yet. A time will come when Internet radio will be available in most cars, which is truly the last bastion of core radio listeners. The car experience is about to be corrupted or expanded by Internet radio.

How will local radio be postured and positioned when it comes to local personalities and local content? Or will it be thinking mostly about saving money, or being so focused on PPM as to jettison a lot of that local content? Those are good questions that broadcasters will have to ask themselves -- perhaps not today, but somewhere down the road when Internet radio becomes a more widespread entertainment source. Consumers will inevitably have even more choices; will local radio step up and retain its vitality and relevance?

You've launched a new division, JacAPPS, to help radio get invested in the smartphone platform. How much potential is there in apps for radio?

Although Apple's App Store doesn't turn two until July, it has changed the mobile experience. But even though the phenomenon of apps is still very new, when we talk to prospective app clients, we tell them we've been in business for 27 years as a media research and marketing company, and we're developing apps under the umbrella of what a smart marketing strategy can do with apps. We ask a lot of questions; what are the app's goals and how does it fit into the client's strategic digital strategy?

Our apps are very customizable. When we specifically designed the app for All Access; it's not like we did 10 more just like that. Brands require their own unique app strategy. It's like buying a custom suit; we take that approach with everybody. That's where our background in research, marketing and branding comes into play.

In terms of development, the app business is still quite young. Are you still early in the learning curve in terms of optimizing the apps' potential?

It's still very experimental and fluid, and it's changing at breakneck speed. New platforms are coming online -- such as Android and iPad -- and it keeps going at Mach 3. It's an ongoing learning process. We've done a lot of research on mobile which has been extremely helpful.

We were hired by an Asian corporation last year to conduct research on mobile app technology that isn't available here. Research has been extremely helpful to bolstering our mobile education. Our Tech surveys have been informative as well. We did "The Bedroom Project" for Arbitron three years ago where we learned so much about digital media that it helped us build a foundation, which we used when we launched our app business.

We're also involved in a new ethnographic project this year where we actually spend entire days with people, observing them using their mobile devices, then going back to talk to them about the things they do. It's groundbreaking research that opens our eyes to things about mobile we didn't know about. It's a work in progress; no one is truly an expert in the mobile space, but ultimately mobile will be the most dominant medium of them all.

A Finnish consultant named Tomi Ahonen has taught me a great deal about mobile. Tomi says that mobile is the seventh medium; it does everything the other six media (Internet, TV, radio, print) can do. The game changer is that mobile devices are with us all the time and they're always "on." In the not-too-distant future, everyone will have a smartphone that will be capable of doing everything a laptop does today.

What's the main advantage for radio stations having a good app?

For radio, it's about branding and location, location, location. You get to position your station brand on the hottest devices, the desktop of an iPhone, Android or iPad. It sits right next to the biggest brands on the planet -- Facebook, Google, YouTube, and yes, Pandora.

Although radio lost the portability wars when iPods came along, with mobile devices and a strong app store, you can be front and center on the smartphone desktop. Whether Steve Jobs knew it or not, he opened an important door for local radio stations. I get excited when we sign up a major-market station to get an app, but it's even more exhilarating when a small-market station -- such as The Coast in Medocino, CA -- gets an app that can be as every bit as cool as an app from a global player. It's been a great equalizer opportunity for smaller stations and Internet-only stations.

With the advent of the iPad and its imminent rivals, as well as the ubiquitous smartphones, it seems that JacAPPS will have to make two separate designs to accommodate both platforms for each station.

We pre-ordered the iPad and the first thing we did was download all 150 of our apps just to make sure they worked well. They all did well, after which we breathed a collective sigh of relief. But when we started really looking at the iPad, it's a platform that demands a different strategy than the smaller iPhone or iPod Touch.

With iPad, we have all this additional real estate to work with, thanks to the larger screen. It's a different experience, which raises some interesting questions about how to use that space. Some of the native functionality of iPad enhances the experience for the user, so what kinds of entertainment and information values can be integrated that go beyond what a radio station does on the air? Things that transcend the sound of the station. We can use that additional space to provide new music discovery tools or enhance our own events by making better use of video.

I don't think we're there yet in terms of having an answer to what constitutes a great iPad app. We're working with a number of clients in development for iPad. It's like using a digital machete to discover new concepts and to try new things. We can always re-submit an app change to enhance and correct those things that we didn't get 100% right the first time. There's an element of experimentation that goes into app development, and it's a good mind stretch for brands.

Whether the different-version apps come from the New York Times, NPR or WMMR doesn't matter. People expect enhancement on an updated format such as an iPad; for us, we're in an experimental time. To learn more about how consumers view mobile apps, we're in the process of designing usability studies to observe how people download, use and navigate apps, where they run into problems, and see how they use their fingers on the buttons to work through content. App usability studies give us a better understanding of how the consumer interfaces with the hardware and software.

Let's leave the app business for a second and discuss how the PPM has impacted the stations you consult. Would you agree that programming for the PPM is considerably different than programming for the diary, which is creating two different types of radio, depending on the monitoring system?

In one sense that's true, but some of the lessons of PPM are also applicable to stations that are still or will forever be in diary markets. What's interesting is that with the diary, you never really knew precisely what worked because it was all recall-based. You could get an idea of perceptions, but you were never able to measure behavior. Now you can track the behavior of listeners in PPM markets, and even apply some of those lessons to stations in diary markets.

What's problematic is in how you apply that PPM info to your brand and your personalities. The challenge for programmers is to take their great content and streamline it ... but not strip out its value. Gone are the days of 60-70-second-produced promos. You have to work very hard to condense your brilliance into much shorter bursts. It's the same thing for personalities, who used to get away with a lot of rambling. You don't necessarily have to talk less to succeed today, but you have to be more efficient to hold people's interest.

We're living in an ADD world, where consumers are multitasking like crazy. Just about everyone is doing something else while they're listening to the radio, be it driving, working or surfing the Net. People are easily distracted when they have a lot of different options; you have to make sure that what you deliver is better than what they expect.

Another challenge is to create more occasions for listening. Radio stations have traditionally cruised through the day without a whole lot of programmed high points. Now programmers are beginning to think about how to take what we have and create more special occasions throughout the day.

It seems that the actions that radio needs to take in a PPM world - such as cutting back on talk, less goings-on between the music - contradict the actions needed to compete against Pandora, where having more personality and local appeal are the effective weapons.

You're right; it is a dichotomy, which is something we've talked about on our blog. The things that get you to the PPM dance today may end up strip-mining your long-term brand value, especially on the local front. It's hard because stations are so focused on winning the PPM wars, where it's station A vs. station B. But if you pull back and look at an expanding battlefield, you're playing 12 spots an hour vs. Pandora's one minute of commercials and hour ... so who's going to win?

It's tough. I really think it's the classic example of fighting a war on two fronts. Most radio programmers and companies are accustomed to beating the station across street, but rarely consider the second front of expanded digital competition. The bigger opportunities in generating more digital dollars are really part of the ultimate game. You have to be able to look at it through both lenses. It really will become the main challenge broadcasters face in the next couple of years.

For someone who was instrumental in the birth of Classic Rock decades ago, you certainly don't appear to be slowing down. Do you still hold long-range career goals? Have you thought about retirement, or is there too much going on right now to stop?

I've thought about it, but for me there is no retirement. I'll always be doing this; that's just how I'm wired, but you're also correct about what's going on now. I feel like I've done two start-ups -- Jacobs Media back in the '80s and JacAPPS now. The fact that the second one was accomplished in the heat of one of the worst economic eras of our entire lives is especially rewarding.

I'm really blessed to have a staff that has been very flexible and fluid throughout all this. At the core, we're radio guys, but we've had to morph our skill sets to succeed in the digital era. Tim Davis has been a big force in changing the whole DNA of our company. He envisioned the app opportunity, which has opened us up to new opportunities. We've attracted a lot of different customers as we've expanded our knowledge base and our scope.

We are walking the walk when we advise broadcasters to get out there, try different things and better understand and optimize the digital opportunities. That's exactly what we've done as a company -- taking risks at a very unpopular time -- and it has worked for us, not just in the apps field, but it's made us a better radio consulting firm, too.