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June 15, 2011


Rick Hayes. fcclaw@rjhayes.com

If radio is to be nothing more than a medium which plays songs from a hard drive, interspersed with voice tracks and spots,radio better be worried about Pandora because Pandora does music better than radio. If you want to hear how radio kicks Pandora's butt, listen to what Jerry Dietz is doing every day on KCSI-FM, Red Oak, Iowa. Listen to Steve Swick's WLKI, Angola, Indiana (Steve is also digital with 2 separately programmed HD channels which he re-broadcasts on translators). Check out Larry Mariner's KDLK in Del Rio, Texas. These are just a few very local
broadcasters who know that local radio is unbeatable. You might get a kick out of the birthday greetings, obituaries, real estate closings, birth and wedding announcements, endless local news, network news, commodity reports, recipes, swap shops, graduation notices, weather forecasts, talk shows, and a little bit of
music to give the guy on the board a chance to smoke a butt and maybe go to the bathroom. Real radio. Local radio. There's nothing like it. Except in a very few markets. Those towns are very lucky.

William Bowin

While I'm the chief engineer for our company, I believe that my position is more important that just fixing a sales computer or installing a new headphone amplifier. I'm the technical rudder for this company and do my best to stay apprised of the latest trends, both technologically and socially.

That being said, while I greatly respect Jerry Lee's opinions, I have to politely disagree with his decision not to stream. When it comes to making money with streaming, as you mention in your commentary, "we'll worry about that later." Radio's traditional delivery method, including HD, is dated and will some day go the way of analog TV. With cable penetration in the neighborhood of 85%, over the air viewing is only a small portion of TV's audience. Radio needs to exploit every possible delivery method in order to maintain and grow our "loyal base of users". Streaming, podcasting, smart phone apps, they're all essential. When new delivery methods become available we'd better take advantage of them too. In this age of technology, radio stations are nothing more than content providers that just happen to have a license to emit RF. If we don't take advantage of every delivery method available to us, we'll end up in the sinking ship right next to the newspapers and other print media.

My youngest son, a college student who obviously grew up in a radio household, recently installed a new radio in his car. Shortly after he commented to me "Hey dad, this radio has Bluetooth and I got it to connect right up to my phone. Now I can listen to Pandora and my iTunes playlist through my car's speakers." If radio is to have any future, kids now days have got to grow up listening to it and failing to stream or provide smart phone apps is just a nail in the coffin. Fail to provide compelling local content and they won't even try.

Burt Sherwood

this ia a brillant article, well thought out and properly presented.
For years we have said "it is only a matter of time". Perhaps it is time to wake up and smell the "coffee" Great thoughts Eric!

Gary Willson

You seem to have a vision for how to blend both radio and online radio. Lets hope those guys don't figure that out and take you away from radio by putting you on their management team or board of directors. Seems they would increases their chances of success substantially by doing that.

Rich Sadowsky

Darn this iPad, I couldn't figure out how to edit my post. It needs the equivalent of arrow keys so you can scroll within a text box. There probably is such a feature but it isn't very discoverable. Back to the hockey game. Go Bruins!

Rich Sadowsky

It was truly an honor to be part of your brilliant vision of the digital future of radio when we build RadioCentral. It is interesting how much has changed in the decade since but even more interesting how much has stayed the same. Many of the same operational challenges we faced remain the same obstacles that Pandora faces. While streaming services may be more of a commodity now than they were for us, the same harsh reality that you must pay an incremental fee for each new listener still remain a basic truth. I believe it will take more than just a clever business model to turn a service like Pandora into a profitable company; it will also take a technological breakthrough that wrestles the cost structure to the ground. So while the reporters are peppering Tim and Joe about how they plan to MAKE money, I would like to know how they plan to manage operational expenses. I see many possible avenues for this as this new age of cloud-based hosting emerges. Imagine if the challenge of delivering the songs is shifted from Pandora's servers (or Pandora's CDN's servers) to a cloud service such as Apple, Google or Amazon that handle the delivery over the last mile (or the last inch as I like to think of in this age of mobile devices). If Pandora doesn't exploit this emerging opportunity someone else will. At the end of the day people want compelling listening experiences. Pandora has some good core technology for generating compelling playlists but I have yet to see any breakthrough innvovation that will help really disrupt the operating cost structure. Their costs must be quite high with a need to create a custom experience for each listener's channels. If I was looking to invest I'd want to peak under their kimono and understand the technology roadmap.

Switching gears back to the revenue generation side, I see so many revenue producing opportunities lurking just outside of view. Think partnerships with LiveNation, tighter integration with their listeners online social networking activities... I recently pitched a business development idea to Tim over email and got back a polite messge about how many such pitches he was getting but he needed to focus on the IPO. Now that the IPO is behind them I can only imagine what the biz dev pipeline looks like!

Jay Clark

Right on. J.


This 'graph in your article piqued my interest:

>>A year ago my eyes were opened at a local community street fair when three bright green Groupon vans pulled up and about 20 college kids in Groupon shirts started handing out prizes. It was an eye-opener that an Internet company was penetrating locally and doing radio-like street promotions. We also must not forget that Pandora can make money on things other than audio commercials, like player ads and direct marketing to its user base. Why not compete with Groupon? What if Pandora starts doing radio-like promotions in local markets like Groupon is doing?<<

This was most interesting because "radio-like promotions" have become extinct! The collateral damage of all the cuts in the last few years: eliminating the street teams pounding the pavement, doing van hits in hot ZIPs, canvassing street fairs. In my market, unless a client is paying for the "street team" (read: promo kid) to come out and set-up, those hours are non-existent. Rolling a van load of kids out to where the people are, to hit-up potential listeners and advertisers with specialty items? LMAO!

It seems as an industry we are completely moving away from the basics that ingrained radio into our culture. Our legacy of being on the street, connecting with people and building our radio stations one listener and one advertiser at a time has been foregone as we chase bigger margins by cutting costs with technology-based (read: virtual radio) solutions that actually are moving us further away from local, in-your-face station-building.

How paradoxical, but perhaps fitting, that our enemies (Internet radio, Groupon, etc) are pushing into our territory by using radio's tried-and-true tactics, while radio abandons the things that got us here and instead invests resources to become more like the enemy, adopting more of the areas where our enemies are weak (read: automated playlist, non-existent local presence, etc).

The formula for keeping our industry healthy and growing: get back to investing in local people, and return to executing our basic marketing tactics to promote all the things TODAY's radio has to offer. That's how we get to higher margins over the long term and fortify our loyal audience and advertiser bases.

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