A few weeks ago I was driving in my car listening to NPR during a pledge drive. As I listened to the announcer hawk mugs and even special solar/crank powered radios in exchange for signing up for a monthly “pledge” and heard him referring to donors as members, I realized that public radio is actually selling subscriptions, but calling it something else.
As we know, NPR is an audio service supported by its members (as well as some other revenue sources). In 2011, which was the most recent year I could find info for – NPR received an average weekly donation of just under ten bucks per listener per week. (That’s the total $ amount of pledges divided by listeners and weeks.)
While Pandora One and Spotify struggle to get users to pay less than $10 a month for their service, NPR manages just fine, netting 4 times that per listener.
Why is NPR is so successful at getting listeners to pay for programming? For one thing, they don’t call them subscription fees. Instead, they call them pledges – a far more honorable term, and they make every listener who donates a member, and send them a hat or a mug. It’s a clever marketing approach!
What else are they doing that online audio subscription services can do as well? Well, for one, they hold annoying on-air pledge drives, where they stop the programming, not for a few short commercials, but for highly intrusive on-air begging by personalities. It’s really obnoxious, and it works. Listeners respond.
Other tactics that NPR uses to extract donations – err, I mean pledges – from its listeners include bribery (as in the mug, hat, or solar powered radio mentioned above), flattery (our listeners like you are so smart), making listeners feel guilty, and – this is the best one – threatening to continue the on-air fundraising tirade unless everyone calls in with pledges right away.
So what can subscription services learn from NPR? I think the membership approach is a good one – remember the old American Express campaign “Membership has its privileges?” Creating a strong brand that people want to associate themselves with, and then selling that association – that seems to be a formula that works for public radio and a strategy subscription services may want to go to school on…
Yesterday Amazon announced a new feature that allows Twitter users to add something to their Amazon shopping cart by replying to a tweet with the hashtag #amazoncart. After connecting their Twitter and Amazon accounts, they can reply to a tweet for a product that has an amazon link and the product will be placed into their shopping cart for purchase. Later, they can visit their shopping cart and complete the sale.
“Add it now, buy it later” is the slogan used in the promo video by Amazon.
This is a pretty innovative strategy on the part of Amazon. Think about it — it encourages everyone who is selling anything to create a link for that product in Amazon and tweet about it. What’s more, if you actually take a little more sophisticated approach, you create your own little Amazon store, tweet the links to products in there, and enjoy some revenue sharing on the deal.
Amazon has more than 200 million registered users, all with credit cards associated with them. They have one of the easiest shopping cart platforms, with their proprietary 1-click purchasing. And they sell just about everything.
With their new “add it now, buy it later” promotion, consumers can easily react to a product they see tweeted, place it in their shopping cart, and purchase immediately or later. Either way, Amazon has placed itself in the middle of the transaction, making it easier for both the buyer and seller.
There are simply tons of ways that this can be used to make advertising more effective. For example, stations with a strong Twitter following can put their Twitter feeds to work. With advertiser permission, stations can tweet product links and run a coordinated ad campaign on their station and Twitter, extending the reach and impact of the ad campaign – and the bond with the advertiser. (Of course, this is for brand and product campaigns, not brick and mortar campaigns.)
Exciting possibilities exist with both iTunes and Amazon, who have so many registered users’ credit cards and make it so easy to buy. Now Amazon has figured out a great way to make it easy and attractive for everyone to want to use their platform to conduct business, and to encourage anyone with a Twitter following to promote Amazon links.
The announcement that Winamp would shut down before the end of the year didn’t surprise me given that AOL had already abandoned its online radio platform, but it did make me pause. There have been several times this year that I have stopped and thought that surely this event is one of the signals that online audio has left the “niche” stage of its development and entered the reality of being a full blown mass appeal marketplace. One that a product like Winamp, free downloadable software that began as a tool to enable people to play all those songs they downloaded from Napster, couldn’t survive in.
In fact, I’ve wondered a lot over the years, why AOL kept updating it at all – given that the business model – getting users to pay for an improved upgrade to the player – was so weak. In fact, AOL didn’t just continue to update and distribute Winamp when it purchased Nullsoft in 1999 for $400 million, it also kept Shoutcast running all this time as well. And that was an even stranger conundrum, given that many of the biggest stations on Shoutcast were getting free bandwidth (at least a few years back they were). The deal was, at least back in the early 2000s, that you couldn’t run any ads if you wanted the free bandwidth. I never could figure out why that was. Didn’t that hurt AOL’s own Internet radio platform?
In any event, although Winamp and Shoutcast operated independently at AOL for lots of years, it seems that someone has finally noticed the lack of a business model in that department. Winamp will shut down later this month, although there is word that Microsoft may purchase the intellectual property. The end of an era that also signifies the arrival of a new one – the mature online audio marketplace, where you have to have a business model to compete…
With more than 200 million registered users, Pandora’s collection of user data is substantial. Now they are beginning to use that data to create marketable audience segments that advertisers can use to target their campaigns.
The first of these “proprietary audience segments” created by Pandora are Hispanic and Spanish speaking users of the service. To create these segments, Pandora cross referenced their registered users with zip codes that have a high population of Hispanic and Spanish speaking listeners, using publicly available census data. It’s still inference based targeting, meaning that the buyer has to agree to make assumptions about the consumer based on where they live, but it’s an improvement over cookie-based technology, which makes inference based assumptions as well – usually assuming that someone visiting a certain site matches a certain set of established criteria.
Critics will argue that users often give false registration data as well, and that is certainly a factor, but probably not a significant deterrent for buyers who are looking for any improved ways of reaching more of the people they want to reach, fewer of those they don’t.
Studies have shown that listeners are quite tolerant of targeted ads online, especially when they are targeted to offer products that the listener might find useful.
In fact, Pandora’s capable of slicing up their audience by market, zip code, age or gender, or the kind of music they listen to, and has been doing that for a long time. These new customer segments are available in media buying software that makes it very simple for agencies to identify, price and purchase. It’s a smart way to market their large audience to advertisers and showcase their targeting capabilities. This video features Heidi Browning, Pandora SVP of strategic solutions, discussing the streaming service’s targeting capabilities.
The big boys have arrived. Last week brought the news that YouTube’s subscription based streaming music service will launch before the end of the year, adding another massive player to the standing room only arena of streaming audio platforms. According to Billboard, there will be a free tier to the service as well, although it’s hard to imagine exactly how that will be delineated significantly from YouTube’s current free and on-demand offering of just about any music video. The subscription tier will add the ability to play full albums and cache music for offline listening, and probably playlist building as well.
YouTube has been the dominant on-demand streaming music platform in the land for a long time, although many folks didn’t think of them that way. The powers to be at Google have likely decided that the size of ad revenues and level of interest from advertisers in the streaming audio space have gotten big enough that it’s time to get serious about branding their service as a player.
The launch of iTunes Radio probably had something to do with the imminent rebranding of YouTube as well. Last week, Apple announced that their months old streaming service had 20 million users and 11 million uniques in 5 weeks. Of course, this is another service that’s self-reporting their own numbers, which to date are unchecked by third party measurement. But who expected less from an Apple launch that was well timed to sync with an OS upgrade that put the service front and center on everyone’s iPhones and iPads? The real data comes a little later when we start to see and hear metrics coming from other sources on the traction of iTunes Radio with consumers.
Meanwhile, we’re still waiting for the much discussed Beats streaming service to launch, and keeping an eye on Microsoft’s Xbox Music, not to mention Pandora, Spotify and other significant players. One thing is for sure – the consumer has plenty of choices at this point. With minor distinctions between each one, branding has become the key factor in the streaming music game…
Amid all the iTunes Radio hype in September came an announcement from Songza that they have secured $4.7 million in funding. Among the investors was Amazon.com, which bought Amie Street, founded by Songza founder Elias Roman, in 2010.
Songza’s not the biggest streaming service, but they’ve been quietly innovative in the past few years, catching my attention a few times. Eric Davich, the other co-founder of Songza, recently joined the Streaming Music Trends panel at RAIN Summit Orlando and turned out to be a great addition, smart and spunky, with plenty of opinions.
Songza will use the new funding to develop its native advertising solution. “With this funding, we’re scaling our native advertising solution to make brand-to-customer interactions more engaging for customers and more successful for brands,” said Elias Roman, co-founder and CEO of Songza.
Songza’s approach to streaming music is to offer music based not on genre or artist, but on activity or mood instead. Going for a run, getting ready for a date, having a party, Songza’s got options for all of those and a lot more. The plan is to develop high impact 7 second ads that work well for both listeners and advertisers within the context of the programming.
Recent info says that Songza has 4.8 million active users. They have 24 million songs in their database, as well as a slick interface and a unique approach. And they’re concentrating on monetizing their audience in a way that benefits advertisers and listeners. All that makes Songza one to keep an eye on. For more, check out an interview that co-founder Elias Roman did on CNBC not too long ago..
Classic Rock tops the list of most popular genres in a survey of people who listen to online radio at work. Followed closely by Rock and Country music, Classic Rock songs are the ones that more than 1000 respondents said they listen to online and at work. The new info is part of an at work study done by Radionomy and Edison Research and released today. Based in Brussels, Belgium and San Francisco, Radionomy is one of the largest user-generated radio station platforms for producers, listeners and broadcasters around the world. This new study was designed to encourage producers of Internet radio stations on their platform by providing them with more information on what users want to hear.
The study finds that most people listen to Internet radio to hear songs they know – 86% tune in for that reason. But they also like to discover new music, as 72% pick that as a reason to listen as well. Fewer folks said they tuned in to hear DJs and local news online. More than half listen to 2 or 3 Internet radio stations a week, and more than three-quarters listen in other places outside of work as well.
“The desire on the part of listeners to simultaneously hear their favorite music and also be exposed to songs that they haven’t heard before but still appeal to their tastes creates an interesting opportunity for producers,” said Radionomy’s Thierry Ascarez. “We believe that those who can achieve a balance of giving people what they already want, and also new things that will appeal to them based on their established tastes, will more meaningfully connect with their audiences.”
You’ll be able to hear more about this survey at the Radio Show in Orlando next week. And you’ll be able to get a lot of very useful information about online radio and digital audio at RAIN Summit Orlando on Tuesday September 17th at the start of the show. For more info on RAIN Summit Orlando, or to register, click here. To save a few bucks use the promo code Audio4cast (you have to register before you get there to get the discount). Hope to see you there!
Driving is down in the US, according to an AP article that I read in my local paper over the weekend, causing folks that study that kind of behavior to conclude that our love affair with cars here in the US is coming to an end. The average number of miles drivers individually rack up peaked in July 2004 at just over 900 per month. Since then it’s been dropping, off 9% by last year at 820, and down again for the first half of this year.
Apparently, many factors are contributing to this trend, including the high cost of buying a car, the high price of gas, and the increased ability to purchase things online and even socialize online. Job losses due to the recent recession are a factor as well.
Which leaves me thinking about the impact that decreased driving is having on radio. Is the actual decline in driving one of the factors in radio’s declining AQH? The fact is that for the past decade, broadcast radio’s time cume has remained fairly steady at around 92% of the 12+ population, while it’s AQH keeps dropping. Some of this is due to younger generations preferring to listen on other platforms, like streaming.
But I’ve never heard anyone mention that the drop in time spent listening to AM/FM radio is tied to an overall drop in time spent driving in the car. And not only that, but this trend may be more closely tied to younger generations choosing other listening platforms over broadcast radio as well. Twenty years ago, two thirds of 18 year olds had their license. Today fewer than half of teenagers get their license in the first year they are eligible. That’s got to be having an impact on their time spent with radio.
Radio’s dominance over drive time has long been its mainstay. The waning of the time that folks spend in the cars is surely having a significant impact on the amount of time they are spending listening to their favorite drive time media…
How does this trend impact the future of radio and streaming? Don’t miss a great panel discussion on the topic at RAIN Summit Orlando featuring execs from Pandora, Ford, Pioneer Electronics, Slacker and others. You can see the full agenda and register here. Use the code Audio4cast to save a few bucks. See you there!
Pandora hosted a 2Q earnings call last week, giving investors news of increased listening and revenues, and continued disappointing profits. The highlight of the call was the news that mobile ad revenues are up 92% over last year, with Pandora now claiming to be the third largest generator of mobile ad revenues in the US, behind Google and Facebook.
Other big news included the fact that just months after a move to cap listening at 40 hours per month, Pandora is removing that cap. No doubt, this decision has to do with the impact that move had – Pandora’s numbers dipped about 10% this spring after the cap was instituted, and at least one competitor, Slacker, saw simultaneous growth. Meanwhile, it did appear that the cap spurred subscription sales as well – although whether those subscribers will stick now that the cap is lifted remains to be seen. Non-GAAP subscription and other revenue was $33.5 million for the quarter, a 153% year-over-year increase, including $4.7 million in revenue relating to our subscription return reserve which has to be held separately since they collect the fees upfront, but subscribers may cancel for a refund.
Advertising revenue was $128.5 million, a 44% year-over-year increase for the quarter.
Pandora also announced that they will for the first time be running back to back ads in listener’s streams, increasing the potential number of ads a listener can hear from about 4 per hour to 5. Since these are mainly 30 second ads, the ad minutes may climb to 3 minutes per hour.
My take on the listener hour cap and commercial units per hour tweaking is that Pandora is growing up and turning its attention more to profitability. They’re demonstrating a willingness to try different things in their attempt to make money per listener. The fact that they are connected to identified listeners gives them the ability to watch their tweaks closely, and they are obviously not afraid to change course if they don’t like what they see. And since they are a public company, these are experiments that the entire industry can watch and learn from..
Are you coming to RAIN Summit Orlando on Tuesday September 17th? Join attendees and speakers from Pandora, Slacker, iHeartRadio, TuneIn, Spotify, Univision, Greater Media and so many more for a great conference with excellent panels and networking. Click here to register, and use the code Audio4cast to save a bit.
- Pandora Shows That A Media Business Can Grow Around Mobile Ads (businessinsider.com)
- Pandora scraps 40-hour mobile limit ahead of iTunes Radio launch (digitaltrends.com)
Innovative technology for connective cars continues, this week Pioneer Electronics debuted a new line-up of in-dash receivers that offer bluetooth and usb connectivity for Androids and iPhones. These affordable, aftermarket products make it even easier for consumers to connect and listen to streaming audio in their car, featuring Siri technology for voice commands, simplified Bluetooth connectivity for hands-free calling and audio streaming, enhanced playback compatibility, and Pandora internet radio.
“The smartphone has become a part of most consumers’ lifestyles and a source of both entertainment and communication,” said Ted Cardenas, vice president of marketing for the Car Electronics Division of Pioneer Electronics (USA) Inc. “Pioneer’s new CD receivers provide various means for integrating a variety of smartphones into the vehicle.”
At prices starting at $90. That sounds like a pretty affordable price point to me.
Pandora continues to lead the pack of services that come integrated into the new offerings, they recently announced that they are now integrated with more than 100 car models and 23 manufacturers. That doesn’t mean other services are unavailable – just that Pandora is front and center as the featured service in the car. Mazda recently integrated Pandora into its 2014 Mazda6, incorporating voice commands that make listening while driving very easy and fun.
Pioneer Electronics Ted Cardenas and Pandora’s Director of Automotive Business Development Geoff Snyder will join a panel discussion at RAIN Summit Orlando on Dashboard Integration. Other panelists include Ford’s Global Lead, Business Development and Partner Management Scott Burnell, Slacker SVP Steve Cotter, and TuneIn VP Kevin Straley.
RAIN Summit Orlando takes place Tuesday September 17 starting at noon and finishing with a cocktail reception in the evening. Register here, and use the code Audio4cast to save a few bucks. I hope to see you there!