Wednesday, 3 December 2008

CBS Radio takes Yahoo! Launchcast - be afraid, be very afraid!

While UK radio groups are busy scrapping behind closed doors over the future of the DAB platform, the cost of their Arqiva transmission contracts and the intransigence of the regulator, elsewhere in the world the real 'future of radio' is being decided in boardrooms by companies whose individual revenues are greater than the earnings of the entire UK commercial radio industry. Today, CBS Radio announced that it will effectively take over Yahoo!'s Launchcast internet radio services from early 2009, much like its deal announced earlier this year to run AOL's internet radio. For us in the UK, it might be easy to ignore the fact that a 'turf war' is taking place in the US between CBS Radio and Clear Channel to own the internet streaming space. As David Goodman of CBS Radio said today: "This announcement, along with our relationship with Last.fm and other distribution partnerships, reinforces our company's position as the number one internet radio company in the world". That last phrase ("the world") emphasises that, although these two media giants are initially focusing their efforts on the monetisation of the US market for IP-delivered radio, it will eventually prove effective to extend their businesses into other territories at low marginal cost. For us in the UK, I think the days will soon be gone when we listened almost exclusively to UK-owned commercial radio, and when foreign involvement was restricted to occasional forays by Australian, Canadian and Luxembourgian (?) investors. AM licences and FM licences and the regulator and the ownership laws might have been able to keep those pesky foreigners from contaminating our radio industry in the past, but now there is nothing (except music copyright agreements) that will be able to stop either CBS Radio or Clear Channel from streaming their radio stations into every home in the UK with broadband access. I wrote about this phenomenon a few months ago and, if anything, the current advertising downturn will only serve to accelerate the process. Let's be clear here - I am not talking about us in the UK having to make do with a simulcast of WCBS that is five hours out of sync and is telling us about pile-ups on the New Jersey turnpike. Content is content is content and CBS knows that, whilst music is a global lingua franca, talk is strictly local. But they also realise that talk is expensive, whilst music (despite the higher online royalty rates) still comes relatively cheap. And here is the nub. Many UK commercial radio stations have reduced their speech content, reduced their local content and increased their usage of music over the last decade because, simply, music is cheaper. Their actions have now rendered them particularly vulnerable to competition from the likes of CBS Radio and Clear Channel who, at present, are only marginalised because they have no access to the AM/FM broadcast channel in the UK. If the pendulum were to swing towards IP-delivered radio, UK commercial radio would no longer just be in a 'bun fight' with the BBC for listeners. The sector would be fighting for its very economic existence. If you think this overstates the issue, then revisit what happened to the 'great' British car industry or those 'great' British record companies (now reduced to a dismal EMI). When markets open up to competition, players either evolve, adapt or die. The question now is whether the UK's largest commercial radio group, Global Radio, can itself struggle to survive long enough to face imminent competition from the emerging, heavyweight players in global radio - CBS Radio, Clear Channel and their ilk - whose deals such as today's are determining right now what we in the UK will be listening to on the radio tomorrow.

4 comments:

George Woods said...

Grant,

I read your comments with great interest but with somewhat of a note of skepticism, because of what I call the "ubiquity Factor," and also my experience to date with Radio George.

The ubiquity factor refers to what I foresee as the inevitable universal availability of wireless Internet access. Here in the U.S., more and more cities are mandating wi-fi to be provided free as a public service. President-elect Obama's coments last week hint that he favors development of what appears to be what could be called "national" wi-fi access.

One of the leading carmakers has already announced that a 2009 model car will have an Internet-ready radio available as an option.

Small digression: I knew this 2 years ago when I need to have a computer/audio expert help me set up a rather complicated configuration and he told me that he was one of over a dozen engineers that had been tasked to cevelop a prototype Internet radio for one of the big three auto companies!

Assuming that border-to-border wi-fi access that is free of charge becomes a reality, it will be CBS, Clear Channel, and others of their ilk who will have to be afraid.
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Why?

The YouTube factor. There are already more than 3,000 Internet radio stations broadcasting around the world. Right now, anyone can become an Internet broadcaster, using one of a number of free or very low-cost approaches.

But there's relatively little incentive to do so. With what will certainly become affordable stand-alone Internet radios picking up broadcasts anywhere thanks to ubiquitous wi-fi, the picture changes. And the most important change will be the awareness that you can reach an audience anywhere, anytime on a device that works like an AM or FM radio, but with better quality, and which is in your car or pocket.

YouTube enabled creative kids in basements and bedrooms around the world to come up with videos that were seen more times in one week than a network television show was viewed! The same creativity combined with the easier production of an audio-only product and worldwide access without having to use a computer per se will likely open the doors to a huge and amazing variety of Internet radio.

I can see local displaced professional broadcasters setting up stations with a vengeance to try to even the score with former employers. I can see off-the-wall programming that serves niches, and on a worldwide basis, niches that could number more listeners than entire local radio markets.

Radio George: as a displaced broadcaster myselfabout 18 months ago, I decided to start an Internet radio station to fill the holes in the Kansas City market, a Smooth Jazz format, and a Real Oldies format ("Real" = 1955-1975). Radio George launched officially in February, 2008.

I used a geo-targeted Google AdWords campaign and FaceBook ads to spread the word. I was disappointed at the relative lack of response from Kansas City. But I was astounded to see the response from the rest of the world. Today, Radio George has listeners in over 1,700 different cities in more than 60 countries.

Kansas City usually checks in on the "ratings," the list of cities with most listeners around 15th to 20th. The top U.S. cities include Los Angeles, New York, Atlanta, Denver, Philadelphia, as well as other large traditional radio markets.

The Radio George effort now numbers over 40 different channels, all free, and on-demand as opposed to streaming. I suppose that technically, the argument can be made that if it's not streaming, it's not radio...but it seems to me this is a technicality that listeners really don't care about as long as they have programming they want to hear.

I can almost hear someone thinking "Yeah, but are you making any money?" The answer is a smiling "YES!" Radio George started turning a profit five months after launch and revenue has grown steadily even in spite of the drastic tightening of the economy here n the U.S. At the request of listeners, I opened three logo stores online this month and they started generating orders from the first day.

So I say don't be afraid of CBS and Clear Channel and their gang. In Cyberspace, the little guy CAN compete with the Big Guys.

Now, as for the nuances of exactly how that's done, or how it's working for me.....well, let's let the CBS gang figure them out for themselves.

Terry Purvis said...

I'm sorry Grant, but you are way off here. The thrust of your argument is dependant on the assumption that a music station need not be synchronised to the local time of the target listener. That assumption is completely wrong.

Knowing the exact time of day of the intended listener and programming a station around it, is the most basic element of what makes radio work. Just because some people think it doesn't matter doesn't make them right.

In fact music radio is more time of day sensitive than talk radio.

Even a modern jukebox played behind bars in pubs, clubs and café's and restaurants these days has filters to differentiate the music for the appropriate time of the day.

If it matters for commercial advertisers too, and it does, then it matters for the programmers.

Also you seem to think that the stations in the US are offering better programming (content) than that served up in the UK. It isn't. The 'content' from the US is just like that in the UK. Third rate and trivial.

The secret to being successful on the Internet is to be global and local at the same time. Whoever develops a way to do that with great sounding radio on the Internet will own the world - and it won't be Clear Channel, CBS, Global or any like them. Wait and see, perhaps someone already has.

Grant Goddard said...

Concerning Grant Goddard’s blog article, three points must be made: (1) CBS already streams the vast majority of its stations (as well as its HD2 channels) worldwide so if there is any damage it has already been done; (2) Clear Channel, because of copyright and union rules, discontinued worldwide streaming last year, and I have as yet to hear of any plans for the company to begin streaming worldwide again anytime soon (the stations’ streams can still be heard in the U.S. and its territories); and (3) many of the British commercial stations Mr. Goddard is talking about have streamed worldwide in the past and are awaiting for the same thing I think Clear Channel is—an international copyrights agreement!

— ted chittenden · Dec 9, 07:34 AM · #

[NB from Grant: I've taken the liberty to cut & paste Ted's response from the RAIN Newsletter where he originally posted it http://textpattern.kurthanson.com/articles/547/rain-128-uk-radio-expert-warns-the-yanks-are-coming-via-internet-radio ]

Christina said...

Hi, so CBS is taking over a great self selected music station based on my preferences and it is commercial free, so the question is....where can i find a similar station?

I like that it is commercial free, based on my likes and dislikes of previous music played, basically narrowing it down to tempo beats artists styles etc...

Can someone help me find a comparable Yahoo Launchcast Music?