After more than a decade of radio streaming, a lot of people still are wondering whether the phenomenon can certainly provide real profits. A better solution depends on whom you ask, based on Skip Pizzi, director of digital strategies at the NAB.
As radio stations seeking to increase listenership attempt to become ubiquitous, Pizzi encourages managers to understand online content, not just copy their on-air programming onto the Web.
He used the analogy of broadcast television. "They carry out some news, some soap operas, some movies, some sports." However, the advent of cable created "channels which were just one of those things all the time." Then you've also got "on demand" offerings, streams that appeal to newer audiences who are selectively thinking about just bits and pieces of a channel's regular programming.
A true game changer in streaming radio may be the smart phone, says Jennifer Ferro, gm of streaming radio pioneer KCRW(FM) in Santa Monica. Once the iPod was introduced, it offered music portability but eliminated radio through the equation. Now, however, though a smartphone can be utilized like an iPod, allowing the user to listen to his or her own music, it may also easily access the Internet for streaming content.
Ferro cites a lack of trustworthy audience measurement systems as a hindrance to Internet radio's profitability. "I really believe the current metrics that everyone uses in radio aren't at all capable of reflecting our audience usage," she says.
Though her station is noncommercial, Ferro believes exactly the same rules apply to the radio industry generally speaking when it comes to integrating online features.
"Any sort of . audio content provider cannot afford not to be streaming, to not be podcasting, not to be making their content readily available for on-demand listening on any device possible."
She believes that after commercial radio managers hesitate about jumping feet-first in the world of streaming, it's because of these limitations in quantifying non-broadcast audiences. "All of your advertisers are looking at that [on-air] metric, but that metric only targets one aspect of the way people consume media."
Go above Copying Yourself
Alexis van de Wyer, president of AdsWizz Americas, encourages r / c to look beyond simply duplicating their on-air ad delivery strategy.
"What we found is that there is actually a pretty big difference between the broadcasters that try to reproduce whatever they used to do over the air, and the wonderful that truly embrace digital advertising," according to him. Utilizing the multimedia capability of Internet streams "allows that you have much more targeted ads, permits you to combine display with audio and streamed video, and lets you track your ads and extremely report your performance."
Van de Wyer may also put a number on how much per-spot revenue a station misses out on by not taking advantage of what you can do with Internet optimization. "The money (these stations) get is roughly 5 times less than the money that (stations get) . after they target by device, whenever they target by location. All of the elements will allow broadcasters to have much more money out of each impression, which allows them to get more revenue."
Getting good money per spot is essential, he says, because Internet stream listeners may not put up with as many ads as on-air listeners will. Charging more per spot "allows these phones play fewer ads, which can be very important online, because listeners online actually come to expect a slightly different experience." Van de Wyer adds that listeners seem happier hearing ads for goods that are of actually of curiosity to them.
Outsourcing
Because profit loosely is defined as what's left of your revenues after you subtract your expenses, it's crucial that you focus on the costs of streaming. Whereas the on-air broadcasting operation stays on the same regardless of how many are listening, costs for Internet bandwidth and copyright royalties increase and reduce in sync with number of listeners.
Zackary Lewis, CEO of Liquid Compass, a content delivery network or CDN, makes the argument that outsourcing streaming to brands like his is the smartest method to keep these incremental costs away.
"If you have a T1 connection at your studio along with a 64 k stream, the same as an FM-quality radio, you would simply have the capability of having 15 [online] listeners in your station at any point in time," he states. And that would preclude any other uses the station might choose to make of its Internet connection.
As Lewis explains, CDNs buy Internet bandwidth in these massive quantities that the economies of scale, combined with efficiencies of their own IT infrastructure, allow them to pass along some of the savings to their customers and still make money themselves.
An agenda with a CDN can include "lots of different options as much as enhancement playing, social media integration, ad replacement software along with other services, [along with the bandwidth]," he says, adding that for qualifying stations, ad spots can replace cash payments.
Clear Channel's iHeartRadio is an online network of stations best known as a mobile application, although it can be accessed on various game consoles, too.
Brian Lakamp, president of Clear Channel Digital, declined to debate profit specifics, but says that iHeartRadio encompasses "900 of the nation's most popular live broadcast and digital-only stations from 150 cities, plus user-created custom stations, delivering everything listeners want, in one free, fully-integrated digital listening service."
While unfortunately there aren't any industry-wide figures on the profitability of streaming radio, the final quarter 2011 financial filing from Salem Communications has an example worth mulling. Overall broadcast revenue at Salem increased 2.8 percent compared to the same period a year earlier, however the Internet revenue portion increased 37.One percent. Internet operating income nearly doubled. (Salem owns or operates 96 stations; it calls itself the biggest commercial U.S. radio broadcasting company providing you with programming for audiences considering Christian and conservative opinion radio content.)
In the 2012 NAB Show, a day-and-a-half an eye on the Broadcast Management Conference titled "Digital Strategies Exchange" promises a non-technical look at technical innovations for radio, including Internet radio streaming, mobile devices and social media. The Digital Strategies Exchange track will run Tuesday afternoon and all day Wednesday.
Author Resource:
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