Is Commercial-Free Subscription Radio What’s Next?

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RBR+TVBR WEEKLY TECH ROUNDUP


Six years ago, the co-founder of pioneering streaming audio tech firm Triton Media joined a newly formed Boulder, Colo.-based entity devoted to streaming-focused mobile and web applications.

Today, Bill Freund is the EVP and Chief Business Development Officer of Clip Interactive — a company poised to get the industry’s attention for a revenue and audience-growing opportunity he says is 15 years overdue.

So, why should radio broadcasting companies — and listeners — care now?

That’s an answer Freund hopes many NAB Show attendees will gain from their attendance at a sponsored session scheduled for Wednesday, April 10 from 2pm-3:20pm Pacific Time. Here, in the North Hall of the sprawling Las Vegas Convention Center, Freund — along with company CEO Michael Lawless, CTO Peter Shoebridge and founder and chairman Jeff Thramann — will do their best to offer a truly differentiated solution for broadcast radio.

It is their belief that consumers will pay a monthly subscription for commercial-free radio, and also pay for a platform providing them with access to every radio station in the U.S.

The sponsored session also serves as an important venue for attracting further investors, as Freund notes a potential initial public offering of Clip Interactive stock is in the works for late May.

From his arrival in February 2013, working from Los Angeles, through 2018, Clip Interactive’s focus was on developing better mobile user interfaces for streaming and website audio. Among the 19 clients on the Clip Interactive roster during that time are Urban One, Beasley Media Group, Salem Media Group, Entravision Communications, Alpha Media, Bonneville International Corp. and Entercom.

Over those years, Clip Interactive saw something worthy of further investigation: broadcasters had not effectively monetized their streaming audio capabilities while at the same time Pandora and Spotify grew exponentially.

The conclusion, as Freund puts it: “Radio 15 years ago should have gotten into the subscription space.” It still can. That’s where Clip comes in.

Clip believes it has a platform that will allow all local commercial radio stations to be commercial free, giving listeners an opportunity to enjoy programming that doesn’t involve a 15-minute clutter-filled commercial-laden stopset.

The catch? The consumer would pay $4.99, or up to $7.99 a month, for the privilege to enjoy their local radio stations, minus those pesky commercials.

It’s an intriguing value proposition. First, it would require the radio broadcasters to admit, in a way, that long commercial breaks are a problem. Second, it would possibly send a message to any potential advertiser that their media buy isn’t as important as it used to be, since the station is increasing its efforts to have listeners not hear their spot.

Of course, that’s already a factor with audio streaming, something on the increase thanks to the growing presence of smart speakers in the home. So … rather than have those annoying PSAs or remnant spots, absent strong metrics that could bring programmatic dollars, radio could theoretically make money with a pay-for-premium platform.

For Freund, that’s exactly what Pandora and Spotify do, with their ad-free versus limited ad platforms.

The Clip platform “Magic” would bring radio companies this product, which Freund repeatedly noted in an interview with RBR+TVBR is a solution to the ad load seen across broadcast radio stations.

Two options are available, depending on company reaction and willingness to participate. The first would see a company take all of their stations and bundle them in to a single platform where a commercial-free listening option, for a price, is offered.

The second, for that higher monthly fee, would create the “aggregation app” — one where a consumer could listen to “almost every station in the U.S.” without commercials, assuming the company says yes to inclusion. “We would be the technical solution, but would be within their app,” Clip says.

Unlike nations such as Canada and the U.S., where the Radioplayer app is a one-stop shop for all over-the-air stations’ streams, radio broadcasting companies stateside have moved toward a siloed approach — namely for advertising and revenue enhancement.

But, this involved companies such as Entercom abandoning TuneIn and did not include a conversation about commercial deletion. “If they could create subscribers under their brand and create revenue, there’s a lot of revenue there,” Freund insists.

Freund believes the aggregated platform could happen someday. He’s hedging his bets on the branded platform.

This, hypothetically, could see a Radio.com-type platform offer a commercial-free platform, with Entercom reaping the profits.

While Magic is selling itself as a totally commercial free money-making play, Clip Interactive is also ready to have a discussion about a “white label” audio streaming platform dubbed “Plaze.”

Here, a radio station’s website could offer enhanced value by adding what is now a music-only solution but is soon evolving to talk — again, putting radio on the same value plane as a Spotify or Pandora.

Freund says, “Spotify is growing based on subscription. Sirius XM is subscription-based. Two things can happen. Radio can transfer 10% to 15% of its listening to subscriptions, and that will not reduce the advertiser’s spend on ad-driven radio.”

He also says PPM-based ratings wouldn’t be impacted, given the “small” conversion rate from over-the-air to paid listening.

For the radio company, average radio revenue per listener, currently $4 to $5 per month in the ad space, would grow. “If we could be getting $5 to $8 per listener, there’s a bigger upside,” he says. “The reality is that people like local content and local shows, but don’t necessary want to hear all of those commercials.”

If that’s the case, why doesn’t radio simply cut the spot load, raise rates, and re-introduce such innovative opportunities as the sponsored morning show? This was done by Bonneville at the former WWVZ & WWZZ (Z104) in Washington, D.C., in the days before the 9-11 terrorist attacks.

In early September 2001, Z104 signed a two-year deal with McDonald’s that renamed the station’s morning show in a co-branding arrangement that included a morning show vehicle, on-air promos and morning show merchandise.

Freund knows all too well about early attempts to tackle spot load issues. From February 1998 to September 1999, he was SVP of Western Regional National Sales at AMFM Inc., which was sold to iHeartMedia predecessor Clear Channel. By 2004 he was at Westwood One, as SVP/Western Region.

In that year, Clear Channel embarked on a “Less Is More” initiative designed to generate more revenue through the sale of shorter ads at a price premium. The reduced stop sets, in turn, would theoretically drive ratings upward. It didn’t work. By February 2018, then-CEO John Hogan said it “served its purpose” and was “yesterday’s news.”

On March 18, RBR+TVBR detected 20 total minutes of advertisements and promos and 20 minutes of music between 9:40am and 10:20am on iHeart’s WKGR-FM in West Palm Beach, Fla.

For Freund and Clip Interactive, this is Reason One why Magic has legs: WKGR has content of desire to the market, and people would be willing to bypass the spots by paying a premium.

“The difference is there is no exclusive content on Pandora and Spotify, aside from podcasts,” he reasons. “Radio can leverage its content. It is really about radio just evolving the content.”

Why, then, didn’t radio broadcasting companies act 15 years ago? “The reality is that many of the leaders did not realize they needed to evolve quickly,” Freund says. “This new subscription solution helps radio evolve and helps to create a new revenue channel for them.”

In the 5 O’Clock hour on March 25, RBR+TVBR scanned the radio dial. Mario Lopez was pushing Best Beans in a spot on iHeart’s WHYI-FM (Y-100); a Barrett Jackson spot was on Entercom’s WMXJ-FM 102.7 “The Beach” ahead of a sponsored station ID and a short pizza spot ahead of a personal lender at a mortgage bank; a sponsored traffic report on Alpha Media’s Country WIRK-FM 103.1 started a block of commercials just as co-owned Urban AC WMBX-FM repeated the act just a few minutes later, with the same sponsor; a Home Depot commercial was on Entercom’s Alternative WSFS-FM ahead of a Radio.com plug and the start of a music sweep; and iHeart’s Classic Rock WBGG-FM was in commercials. Entercom’s Country WKIS-FM was also in commercials, as was Alpha Media’s WRMF-FM, iHeart’s Spanish Contemporary WZTU-FM, Hot AC WMIA-FM and Spanish Contemporary WRLX “Mia 92.1”.

Perhaps Clip Interactive is on to something, after all.

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