||Radio to Daze the Net
Commercial radio was once synonymous with consolidation, cost-cutting, ads that go on forever and the same old playlists.
But fast-forward to today, and a number of private-equity players are making bets that radio is ripe for transformation, thanks to the growth of the mobile and huge interest in digital music platforms.
Measurement firm Arbitron reports that the weekly online radio audience has doubled every five years since 2001, to 57 million in 2011. While 81 percent of listeners still dial into AM/FM radio, 11 percent now only listen online.
Arbitron's Paul Krasinski, whose specialty is digital media, told the New York Post, "The total terrestrial market is $16 billion, and streaming is around $500 million. It is a budding industry starting to grow."
But while Pandora, Rhapsody and Slacker are on the march -- the publicly listed Pandora has 100 million members -- the biggest traditional-radio giant, Clear Channel, backed by T.H. Lee and Bain Capital, is not staying on the sidelines.
Clear Channel, headed by former AOL boss Bob Pittman, recently relaunched its platform iHeart Radio, offering its hundreds of stations to anyone to tune in across multiple platforms. It also nabbed tech firm Thumbplay to offer more Pandora-like custom features.
"If you listen on satellite, we're there, or HD, we're there, or online or on mobile," Pittman says of iHeart. "What's exciting is more people are listening to radio."
Indeed, September figures show an additional 1.7 million people tuned in to traditional radio versus the year-ago period. Total audience was 241.4 million.
The idea is to put a stake in the ground and combat the startups before any one gets too big. "I've been at startups; thank God I'm not now," says Pittman, who adds that he'd rather have the backing of a giant media company then deal with the pressures of being a radio newbie.
Clear Channel radio revenue was $32 million, up 4 percent, thanks in part to its acquisition of Westwood One traffic.
Jim Cady, CEO at Slacker, says: "What's happening is, you're seeing a change. Consumers require more control, and the challenge is that traditional radio doesn't provide it. Look at TV and time-shifting -- all those things are now reinventing radio. You can ask it to play what you want."
And of course all the change has implications for the music labels, which also want to reap the gains of the digital-music boom.
"We hate Pandora," said one high-level music executive. "We prefer Spotify because it is a subscription service." Then there are rights issues: Digital radio requires very small rights payments, but the moment music is tailored to a specific need, then a greater level of fees are due.
One music-label lawyer told The Post that there are a lot of people close to the legal line with their service.
Slacker is backed by four firms: Rho Ventures, Columbia Capital, Centennial Ventures and Mission Ventures.
While streaming-radio revenue is tiny, the big marketers are clearly interested in following listeners -- wherever they tune in.
(Source: New York Post, 10/23/11)
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