The evolution of AOL Radio

Kevin Conroy

One year ago, our AOL Radio product faced a challenging future. Although we had one the largest and most devoted audiences, we faced some real business challenges -- royalty rates, climbing infrastructure costs, a lack of a compelling product beyond the desktop, and our inability to effectively capture local ad dollars.
 
At the same time, CBS Radio had its own set of challenges. It had a large and thriving terrestrial radio audience, with top-rated programming. But it was wrestling with how best to create a multiplatform play.
 
Early this year, AOL Radio and CBS Radio realized that by joining forces, we could not only address each other’s business challenges, but also create some real opportunities. An opportunity to deliver a far better consumer experience. An opportunity to expand Internet radio beyond the desktop to the most popular mobile device ever – the iPhone – with an application that has already been downloaded more than 1.5 million times. And an opportunity to better monetize the listening audience.
 
By taking these steps, we’ve ensured that AOL will be able to continue to deliver a great experience for our audience for years to come, and enabled CBS Radio to take a clear leadership position in its industry.
 
We together established a new business model for the online radio marketplace, one that is now being extended further by the recent announcement between CBS and Yahoo.
 
How did it happen?
 
Last year when the Radio team looked into future of online radio, they realized that on our own we likely wouldn’t be able to effectively meet the challenges ahead. The team determined that we needed to look externally to partner with someone who had both a core competency in traditional radio and the desire to extend its terrestrial success into the online world. We found that partner in CBS Radio, with whom we already had a longstanding relationship. 
 
The agreement we signed back in March 2008 plays to both AOL’s and CBS Radio’s strengths, and fills needs better than either side could have on their own.
 
For CBS Radio, the partnership offered it access to AOL’s substantial online listener base, and allowed it to connect with the AOL Network, which reaches more than 110 million unique visitors a month. And it let them combine all their stations with AOL’s stations, expanding the reach of its radio network.
 
For AOL, we were able to offer our listeners 150 local CBS Radio stations, including top-rated news, talk and sports stations, in addition to the 250 AOL-programmed music stations, which include themed offerings like the 10+ holiday stations currently available. All free and available to anyone. 
 
We were also able to provide our listeners an improved player, built by CBS Radio, that lets them skip and pause songs, pre-set an unlimited number of stations, easily buy songs they like, and share stations with friends via integration with AOL’s instant messaging service, AIM. Better still, the player works on both PCs and Macs, expanding its reach and eliminating one of the chief frustrations we’d heard from our listeners.
 
Consumers clearly saw the benefits, making the combined AOL Radio and CBS online Radio networks No. 1 in the Arbitron ratings for online radio.
 
Plus, because of this agreement, AOL was finally able to tap into local market advertisers, as well as regional advertising, which makes us part of the largest online radio ad network.
 
There was an additional benefit for us as well. Partnering with CBS Radio freed our radio team to start innovating around ways to expand the reach of our service. As a result, consumers can now snag the AOL Radio widget and embed it on their social network pages, or put it on their own webpage. An AOL Radio toolbar lets them easily access AOL Radio, wherever they are on the Web.
 
One of the biggest benefits, though, came this summer. Working with CBS Radio, our team built a truly breakthrough app for the iPhone and iPod Touch. The AOL Radio app is the third most popular music app, according to Apple. And it continues to get rave reviews. The influential Gizmodo site included the AOL Radio app on its list of 20 essential iPhone apps. And consumer comments are overwhelmingly positive. As one said: “I can finally use my iPhone like satellite radio. And for free.”
 
The lesson here for everyone is that by carefully watching market trends, being willing to rethink your business, focusing on your core competencies, and delivering what consumers want most, you can achieve a remarkable turnaround against seemingly insurmountable odds. If you don’t think so, just ask the millions who continue to enjoy AOL Radio on their PCs, on their Macs and on the road. 
 
This has been a groundbreaking year for AOL Radio, CBS Radio and online radio in general. And we’re going to continue innovating in the years to come to give listeners the best online radio experience anywhere.
 
Kevin Conroy is executive vice president of AOL.

Tweet