"It's about time," I thought. "Finally, I'm hearing something great about a local station." I was in a national chain store, and music was blaring over the PA system. When I went up to check out, I heard the two girls at the counter talking.
Girl One: "I love this station. It's absolutely incredible."
Girl Two: "I know. It's so awesome."
Then they spotted me waiting to pay, so I said, "New station? What station is it?" I was indeed curious because every song the station was playing was a smash, but I hadn't heard a break to hear what it was.
Girl One: "It's a hot new station on Pandora. Queen Radio."
Last week at Radio Ink Forecast, there was a lot of discussion about Pandora. The analysts were debating whether they should include Pandora in radio numbers -- up to now, they've been monitoring it as "digital revenues." But the debate was never resolved, even though Pandora has opened local sales offices and is selling radio to local advertisers. It was also mentioned that the market cap of Pandora is larger than all the publicly traded radio companies combined.
Perhaps the answer comes from the listener. To those two girls I encountered while shopping, Pandora is a station. They didn't say it was an Internet station or a local station, just a station. If their PA system accesses the Internet for its content, all stations there have an equal shot to get played. They chose Queen Radio.
Does radio have its head in the sand? Certainly Clear Channel doesn't, since it's investing heavily in iHeartRadio. CBS Radio also does not, as it continues to support Last.fm and Radio.com. But what about the rest of us?
Some slough it off because online makes up only 2 percent of all radio listening. Others think that the business model can never fly because of the cost per listener minute of streaming. But should you ignore it?
Certainly if you're in any of the top markets where Pandora has local sales organizations, it's not practical to keep your head in the sand. To think they won't convert your advertisers to their advertisers is probably naive. Though Pandora may not have the numbers you have, they have an exciting story to tell, and they have the advantage that everyone is buzzing about them.
Early in my business life, one of my mentors told me a couple of things that apply here:
1. Healthy paranoia will keep you from being complacent and arrogant. You need to understand your competitors better than they understand themselves.
2. Never ignore a competitor. You may not have thought of everything, and one little thing can change the game forever.
3. Things change so fast that sometimes you don't know what hit you. One day things are normal, the next day everything has changed.
4. Always do an analysis of your true vulnerability. You're always vulnerable somewhere.
At Forecast, Lou Dickey said, "Radio's usage stats and efficacy have not changed like they did for the newspapers." He is right. Radio remains strong. We do not appear to be losing our audiences. We're still a part of people's lives. But we need to understand that things could change in a split second and that Pandora, Slacker, and other online radio plays are a factor not to be ignored. We need to be smart and make sure we're extending our brands online and, most importantly, cementing our local relationships with listeners and giving them deeper reasons to listen than "the greatest hits."
My dad was in the meat case business as a young man. Every grocery store had meat cases. When the supermarket was introduced, everyone predicted the doom of the small local grocer. My father thought it was the end of his meat case business. But after all the predictions of doom, he found his business actually increased and he sold more meat cases than ever. His industry was reinforcing that: "Ah-ha! They were wrong. The supermarket isn't changing things after all!"
Then suddenly, almost overnight, not another meat case sold for 10 years. He had to reinvent and go into a different business. He said the change was like flicking a switch.
Will consumers and advertisers flick the off switch on radio? Though none of us like to think so and though the numbers remain strong, what if this shift in listener-directed music has changed everything forever? What if the predictions of Pandora eating radio are right? Are you ready? Is it possible that the iHeartRadio Clear Channel is investing in will replace the transmitters they so dearly hold? Though I don't think so, I know people who do. One of us is probably right. A little healthy paranoia can't hurt.
And from the consumer standpoint, it really doesn't matter. If they can find it on computer, their car, their mobile and streaming devices, to them it's just another station.
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