Wake Up and Smell the Starbucks
eRadio Magazine, September, 1999

By John Silliman Dodge

We're in the trend-spotting business. Ratings, perceptions, musical fashion, media buzz. We get handsomely rewarded for seeing the Next Big Things and positioning our companies to take early advantage. Of course, some trends are easier to spot than others. This one for instance:

1999 will go down as the year that music, Radio and the Web came together to create the Big Bang. To our industry's credit, most Radio managers understand that the Internet is not an Extinction-level event. The Web won't do to Radio what CD's did to vinyl. But let's take a moment to realize just how large the upside of this phenomenon is. We're clearly at the beginning of a pivotal new chapter in our industry. The merger of Radio and the Web provides a valuable two-way communication link with our audience. Finally, Radio can play the direct, accountable matchmaker between our audience and our advertisers. Now we can move beyond irregular, anecdotal, biased input and have real-time, daily dialog. We can document listener feedback. We can use it to create continuous improvement.

Now it's gonna get good.

Let's say you run the dominant CHR in a top ten market. Or you've been charged with leading your group's Internet marketing efforts. Your site is live, or at least in the planning stages. You're looking for the best possible competitive edge. What do you do to take your Web to the next level? Not just stream your air signal. You're probably already doing that. In fact, if you're not streaming today, you're not going to be competitive tomorrow. It's time to consider Webcasting-complimentary, Web-based music channels on your site that stream alongside the broadcast channel and serve niches that your air signal can't target. Here' how it might work:

Rather than spread your mainstream CHR music mix over too broad an age/sex range, consider two additional Web channels. Channel One becomes the Alternative/CHR mix that skews younger and more male. Channel Two becomes the Adult-leaning CHR that keeps your 30+ listeners from being picked off by a new young AC. It's a self-directed preemptive strike; you "attack" yourself before a competitor can. The benefits are obvious: your flanks get protection, the brand stays in tact, marketing and database-building opportunities increase, more targeted ads run in more space, and you offer more incentives for listeners to stay in the family.

Observe Toyota's cluster tactics. They make sure that nobody has to leave their brand by programming the Camry straight down the middle of the road. The Tercel and Corolla appeal to the younger demos and Avalon and Lexis to the upscale audience. Five formats, one channel. Everyone's needs get met.

And meeting listener's needs has never been more important. Industries that have never been on our side of the dial are jumping into this space at a dizzying rate. Who can blame them? There's no FCC to deal with, the technology is freely available and anyone with operating capital can launch his own channel.

Let's take a look at the new competition:

Some of these marketing budgets are bigger than yours. Some of this brand power is going to sting you. It's time to do some scenario planning, some SWOT analysis (strengths, weaknesses, opportunities, threats). Time to recognize what Radio has that pure Web plays don't have: Relationships.

I chatted with Steve Dinardo, VP/GM of CBS-owned KLLC-FM, San Francisco better known as Alice@97.3. "If you look at why Radio is vibrant and healthy, it's about more than just the records. Relationships have always been Radio's strong suit. People look to stations to bring them services, to help them make choices. Radio has created a bond, a trust with the consumer in a way the Web can't. Having already established the relationship gives us a huge advantage. So for us the Internet becomes another stick, another channel to further our relationship with the consumer. And if through the Web, Radio can help listeners quickly learn more about goods and services from our advertisers, then everybody wins."

Alice isn't streaming yet but they do publish their playlist on the Web, the result of a partnership with San Jose-based GetMedia. Go to www.radioalice.com (I site which I helped design, by the way) and you can view the last ten artists and song titles. Scrolling across this list brings up the CD cover art, the ability to hear more song samples from each CD and the option to purchase. GetMedia is responsible for fulfillment while Alice takes a percentage of each sale.

Alice partnered with another Web services concern, Xoom.com to create a listener's club called "Alice's Click." When listeners join, Alice logs their E-mail addresses and preferences. In exchange they get free email, chat, and free Web hosting for their personal sites through the Zoom domain. And Alice gets the opportunity to market back to core listeners. The site gets updated daily with morning show news, new promotions, new editorial and the real time playlist. They're looking for more content such as movie and restaurant reviews to support listeners' lifestyles and provide even more reasons to use the Alice Web as a daily resource.

Dinardo's aim is to capture the E-mail addresses from all points of audience contact, creating a massive listener database that tracks preferences and histories. "Sending the right message of interest to the right person at the right time. That's the goal."
What's next? "We want to start programming our Web with as much care as we program the station." After streaming, Alice wants to Webcast separate channels for new music, 80's Alice and the Greatest Bits of the Alice morning show. Dinardo envisions a branded music portal that covers the entire spectrum, 360 degrees of Alice. Clearly they're doing something right with their relationships. In the hot San Francisco Radio market, Alice is even hotter-up 38.4 percent year to date.

The new listener: young, urban, wired. Increasing numbers of us work in downtown canyons wired to high-speed T-1 lines. From 9 to 5 (or 7 to 7), today's knowledge worker is often better reached via computer than Radio. Think about it-if you had a choice between a passive box that pushed audio at you and a cool audio/visual alternative that gave you music plus interactivity and information on demand, which would you choose?

Imagine this new listener tuned to your Adult Alternative Webcast and working on a budget spreadsheet at the same time. The music is in the background, the project is in the foreground. But the moment a song, an ad, a promotion, a message of interest comes along she can instantly get all the information she needs to buy the record, visit the advertiser's Web site, get directions to your event, or provide her valuable opinion. This is action-ability at the maximum point of interest. This is instant gratification.

The other important audience. Let's talk about Advertisers. Web Radio successfully counters every traditional objection in spades. Now Radio has tangibility. You can hold Radio in your hands. You can see the pictures. You can download the details. Advertisers can finally perceive Radio as a shopping tool and not just a frequency play. You've got your ad in printable form. You've got product information, pictures, text, audio, even animation. And best of all, you've got a big fat broadcast pipe to promote it with.

Adam Klein is Greater Media's Marketing Director for two Greater Boston Radio Group stations, WBOS and a new FM Talk that they're flipping from Smooth Jazz. "Every radio station in Boston is sold out right now due to Web-related advertising. You can't go a stopset without hearing "dot com." So where do you get more inventory? "The Web. The original thinking was that we would make money. We're not quite there yet, but we're certainly learning how to use the Web as a marketing tool. We use our site as important added value on a regular basis. Promotionally, it lets us remain cleaner and more clutter free on the air. We shift a lot of advertiser detail onto the Web where it belongs."

Klein sited a familiar set of Web benefits including brand extension, imaging, an informational resource for listeners, a new channel for the radio signal. I asked him about Webcasting. "We're in the process of flipping one of our stations to FM Talk. Wouldn't it be great if we kept Smooth Jazz on the Net?" Not only great, but also smart. What about the challenges? "Frankly, today we don't have the staff that knows a lot about the Web. I think it's indicative of most of the industry. We're Radio professionals, not sophisticated technology people. Streaming audio is new for us.
Fortunately there are a lot of companies coming that can help stations into this space." All five of the group's Boston stations have a Web presence courtesy of RDG and MJI Broadcasting.

If this is such a great idea, why isn't everyone doing it? With terrestrial broadcasting, once your tower is operational there is zero incremental cost to add audience. Today Webcasting isn't so painless. Mark Cuban of broadcast.com (now part of the Yahoo family) might tell you that making money today is impossible. Just a few of the costs you have to factor: bandwidth, performance rights fees, RIAA fees, encoding, stream software and network OS for server, the hardware support per stream/servers, the network hardware to support servers, footprint (space for the gear), end-user support, hosting and site maintenance, staff, advertising...

This isn't a very encouraging picture if every line item in your budget has to be totally above water. But consider why the major media companies are spending huge sums acquiring and building properties. They're not stupid. They're investing today because they understand that to watch and wait until somebody else proves profitability means they'll be late to the party. And in the mindshare battle that's unfolding online, once you're late you may be too late.

So you have some "visioneering" to do to convince the GM that this is the most significant R&D dollar he/she's ever dedicated. If you are the GM, you know it's time to give the Web the same quality of strategic thinking that you give your broadcast channel. The industry has been riding the crest of a good economic wave. When the wave hits the beach you want to be positioned to catch the next one by having a distinct, competitive advantage. Somehow this time I don't think it's going to be"ten in a row, commercial-free." It's time to design, develop, bulletproof and execute your Web strategy.

Crawl. Walk. Run. The crawl stage is about awareness. Accept the fact that the Web is a landscape-altering new channel for Radio. It's getting cheaper and easier every quarter. Computer processor speed is up, storage and bandwidth costs are down, and both RealNetworks and Microsoft have audio software plugins (codecs) that sound pretty good. Admit that if Webcasting isn't in your plans, it needs to be. Realize that between the national media brands, the genre-specific channels and the personalized programming options that will soon be available to your listeners, if you don't protect your brand, your flanks and your valuable relationships, your future could be in jeopardy.

Walking means getting your site up, building your listener database and streaming your audio. There are good companies and consultants in this space to help you with design, storage, bandwidth, e-commerce, marketing, consultation, music, etc. There's no reason to think you have to become an overnight expert in all things Web. The reason is speed. Quickness to market has never been more important.

Running means Webcasting. Streaming multiple flavors of your format from your site. It means differentiating your office dayparts in a fundamentally new way. Flanking yourself before a competitor does. Creating a branded music, information and lifestyle Web portal that satisfies more of your listeners' needs. And frankly, it means thinking like an investor and being able to sell the long-term benefits of this currently expensive strategy to your forward-thinking associates and superiors. Remember, if it were cheap and easy...

Web Checklist. Once you';re up and running, here are six important things to remember about the medium: