What would you do if you woke up one morning and saw this as the headline in all the radio trades? Have you ever considered the possibility of this happening? Well lots of people woke recently to this headline “Angie’s List is now free: What this means for your business.”
Call it a subscription, a membership fee or a paywall, what happens when they are eliminated? In Angie’s List’s case, less than one percent of Americans were members at the $40/month fee that had been in place. Paying that fee let people see the reviews of other members that had experienced certain businesses or services they had used. Now everyone can see those reviews. Angie’s List had developed a reputation for its members writing rather substantial reviews as well as being a website that is strong, trusted and contains valuable content.
Why Did Angie’s List Tear Down Their Paywall?
Angie’s list is a publicly traded company. Their stock is down seventy-five percent from three years ago. Management is under pressure. Tearing down their paywall means increased page views. When page views go up, revenue goes up. See the strategy?
Could SiriusXM Follow Suit?
Satellite radio currently captures about ten percent of radio listening and mostly in vehicles. The new digital dashboard entertainment centers will be a gateway to Pandora, Spotify, Apple, YouTube and more. Having an XM button on my Honda Accord, I know that my access can be selectively turned on or off by SiriusXM. When they do one of their free listen promotions, they don’t turn on all the channels, just the ones they think will hook me to listen. So, I would imagine, they could create a group of channels that could be on all the time and carry a limited commercial inventory attractive to national advertisers. Like the most popular musical venues, such as adult contemporary. Even if they only turned on the top five music formats, it would mean drivers could listen to them wherever they drove across America, plus SiriusXM would have the ability to pop in promos for their other channels that remained behind a paywall. It’s almost too scary to consider the possibility.
Teens Love Streaming
Teens love streaming audio and their smartphones. According to the Music Business Association and their data partner LOOP, teens spent 51% of their listening time on a typical day streaming their music versus only 12% of their time with AM/FM radio. This is a media usage habit being formed in the next generation. It not only affects traditional AM/FM broadcasters but satellite radio as well. This is a problem that needs to be addressed.
NextRadio App
Thanks to Jeff Smulyan and Emmis, the NextRadio App is the way FM broadcasters can get their audio into those smartphones, without running up a user’s data plan. However, Sprint has already removed many audio streaming services from running up their data plans by letting their customers listen as much as they want at no extra charge. Since teens avoid paying any fees whenever possible, free is always an attraction.
Less Than 1% of World Pays For Streaming Audio
AM/FM radio has been built on free. That’s an advantage that too often gets taken for granted. According to Nielsen 61% of people find out about new music via their AM/FM/satellite radio.
Price is the number one reason more people don’t pay for streaming audio. Out of a worldwide population of over seven billion people, about forty-one million buy some form of audio streaming; 0.58% of the world’s population. That percentage turns out to be lower than the total number of people who have a Netflix subscription around the planet.
23,870 AM/FM Radio Signals On-The-Air
The FCC just published their latest numbers for broadcast stations as of June 30, 2016. We are approaching 24,000 signals for radio in America. 19,194 of those signals are FM and 4,676 are AM. Plus we have two satellite radio signals, Sirius & XM, which are now under a single owner.
Pay & Free
It doesn’t take a whole lot of imagination to see satellite radio one day deciding to have the best of both worlds. Offer premium pay channels to those willing to pay for them and at the same time create a free tier of channels that could be ad supported by national advertisers.
What history shows us are things that happen in other industries and services eventually make their way around to virtually all of them. It’s only a matter of time.
DickTaylorBlog 
Sirius must generate revenue (with a subscription model) and has extensive overhead. A free option is not viable (an occasional free preview is). Angie’s list is a whole different business model. I don’t see John Malone giving his product away for free. He is a genius when developing revenue on a subscription model (He sold TCI the largest cable operator at the time) for big bucks. Sirius will continue to rake it revenue with sports, news, Howard Stern, Margaritaville, Willie, Fox, and other selected channels. Channels that won’t be available for free. Most subscribers that I have spoken to subscribe because of the specialty channels. National advertisers would need to shell out a bunch of money to support a free channel, and I don’t see that happening at this time. Sirius has has stayed in the 25-28 million sub range, and that is decent enough to generate revenue with a successful subscription model.
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Where the game could change is when people can stream into their automobiles with no cost to their data plans. The FCC spectrum auction is going to create a lot of new opportunities for streaming. Just trying to think ahead at what might come to be in this new communication world.
Thank You Damon for weighing in with your thoughts.
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SiriusXM has two advantages over commercial terrestrial radio. The first is its commercial-free nature (for music, but not all other channels). The second is its nationwide coverage; drive from New York to Los Angeles, and you can listen to your favorite channel the entire trip.
The solution is simple to define, but not easy to implement: increased creativity and variety. Local stations need to produce both programming and commercials that people want to listen to.
Humorous commercials grab and hold listener interest, at least until you run them into the ground. Local bands might be willing to record jingles in exchange for having their names mentioned: think of those Coca-Cola jingles from the 1960s featuring various Top-40 acts. When the advertiser allows, encourage talent to semi-ad-lib the live commercial copy. But keep your spots tasteful, that’s part of the overall image you want for your station.
Music-format stations can add variety simply by expanding the playlist! If the competition is playing the top 20 current songs, increase your own currents to thirty or more — perhaps including recordings by popular local and regional bands. Add recurrents and oldies; they are all proven former hits that are still popular with the audience even if they aren’t brand-new.
On talk stations, have the local hosts focus primarily on local topics and issues — Rush Limbaugh and Mark Levin will cover the big national stories. Obviously, breaking news demands local attention too, but look for local tie-ins and perspectives.
There are plenty of other ways to set your station apart from the pack and offer the sort of creativity and variety listeners enjoy. And you can always deliver the things satellite radio and syndication can’t — local news, weather reports (with temperatures!), even the time. Promote the station heavily in whatever ways you can afford: TV spots, billboards, ads on buses, even T-shirts and bumper stickers. Attract local listeners and hang onto them, and you might even get people passing through to listen as well.
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The concept of counter-programming, plus being fully engaged in your listening area has always been a winner.
Thank You Walter for adding to the discussion.
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Frank Saxe wrote on LinkedIn Pulse back in December 2015 that the satellite folks were considering just such a concept. Frank dropped me a note with a link to his article after he read my post. You can read Frank’s article here. https://www.linkedin.com/pulse/siriusxm-weighs-new-free-satellite-radio-service-frank-saxe?trk=mp-author-card
Hat Tip to Frank Saxe for sharing his reporting on this story.
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Prof. DT, Always insightful and thought stimulating. It all comes down to the repeat mantra of compelling content connection aka Best Show Wins. Radio will outlast all because of reception. Count the number of available easy, free receivers with those FCC stats. Why did Betamax, AM Stereo and now on the verge, HD fail? Free, easily connected RECEIVERS. XM is great but ain’t local. Love your suggestion. Wish others thought of conductivity and more investment into the product, as well. Thanks and here’s to a bog week, Clark http://www.broadcastideas.com Looking forward to the next 50 years in radio.
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Very informative article. And I agree with Clark’s comment. HD radio is a bust. Most people don’t even know what it is or even care.
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HD Radio lives to feed FM translators Curt.
However, as more cars become equipped with HD Radios there could come a transition by listeners to the originating HD channel.
It will really come down to creating programming that people want to hear and are afraid of missing.
Thank You for contributing to the discussion.
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Most SiriusXM channels are commercial free all the time, but a few simulcast programming from outside sources that do have commercial breaks. Someone is selling spots to fill those “local avails”, so apparently SiriusXM has at least a small sales department.
With SiriusXM receivers factory-installed in so many new cars, it’s entirely possible that the company could decide to offer a few channels to non-subscribers, either with or without commercials. I still prefer listening to good local stations when I can find them; but the satellite alternative is an established fact, and SiriusXM can put major-market quality programming into car radioss in every city and town. The locals can still beat them, but it’s going to take serious effort by dedicated broadcasters — and unfortunately, too many stations today are run by corporate bean-counters who don’t really understand broadcasting.
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It’s an interesting idea, but I’m wondering how it would work with Sirius/XM’s business model. My wife and I rented a car a couple of weekends ago but we only could get the preview channel. I’d have loved to have had Soul Town and Decades for the weekend. I’m still not convinced that I drive enough to want to purchase a subscription. I certainly would if I was in the car a lot more.
The problem I would see is an audience that mostly listens to the popular formats, rather than deep cut and specialty channels. I’m not sure the free channels would hook that audience into buying a subscription.
There are no easy answers for terrestrial. Creativity and localism are good things. We don’t, however live in isolated enclaves where we don’t care about the world outside. What’s being talked about around the water cooler in Des Moines is substantially the same as what’s being talked about in Charlotte, absent a big local story.
The answers remain to be found.
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They may not have coverage to every outhouse out yonder yet but uh — http://www.t-mobile.com/offer/free-music-streaming.html
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I don’t think HD Radio is a bust at all. As Dick Taylor pointed out, HD Radio is being used to feed translators(and a lot of translators at that). Considering how many HD fed translators there are now, I bet that money is being made off of them. I would guess at least in most cases that the HD signal matches the translator signal if not beats it in some cases, and I feel like companies like I Heart might could get more people to buy HD radios if they advertised this “our translator signal is only so big, listen to this station in HD on (fill in the call letters of the HD parent signal)-HD(fill in HD 2, HD 3, or HD 4 depending on which signal is being used as the parent). I do not think HD Radio is a fail. Besides, look at how many years HD radio hasn’t busted. Sorry if I got off topic.
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I have been a Sirius Radio subscriber for 2 years. It is kind of hit or miss with me. I love but I hate it as well. They have ads for almost every station, and I thought the whole idea of subscriptions was to avoid this. Out of all the stations they have, I only listen to about 4 because the other stations are BORING. I am not interested in all those Canadian Talk channels, nor all the 30 sports channels which are mostly unoccupied 21 hours out of the day. What do I love about Sirius? The crystal clear reception and the US talk/news channels. BUT Sirius needs to look towards the very near future otherwise they will be out of business. Like other posters have stated, I can now link my phone to my car system and stream HD music through it, which in the end would negate the need for Sirius. The only thing keeping me with Sirius is that I can get 6 month subscriptions for like $25. If I had to pay full retail, I would drop it like a hot potato
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Thank you for sharing your satellite radio experiences and adding to the discussion Bill.
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I think your ideas about local are on target.
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Thank You Robin
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Dick, I still maintain, based on my own observation and from actually talking to young friends, relatives and coworkers (18-35 year olds) that the main reason they seem to be migrating away from radio broadcasting and toward streaming is not so much that streaming is inherently better; it’s that they say radio sucks. And I can’t argue with them. Corporate clamping down on creativity, getting rid of real, live DJs, and tightening of playlists, makes radio dreary and dull.”Rock” stations now play the same 200-300 songs from the 1970s and ’80s over and over again, and there are no “sets”, everything is interrupted to death by “imaging” racket, no one is curating the music, it’s just randomly thrown at you, and it sounds like it’s all on autopilot. Now, you can stil play the usual top 40 or CHR or whatever it’s called this week and get kids under about 14 to listen for a while, but I know when I reached about that age I discovered FM “underground” radio, or “album rock” as it was called, and that was it. Cool DJs who knew and actually picked the music, told us about who the heck the new artists were, filtered the cream from the crud, and even threw in a touch of jazz fusion or wild progressive stuff…plus occasional Firesign Theater, George Carlin, National Lampoon Radio Hour, Cheech & Chong, and other fun, entertaining stuff. You could leave the radio on the same station for days or weeks and feel like you were hanging with some really cool, fun people, and that you were getting to hear all the real neat music, not the teenybopper bubblegum junk we teenagers scoffed at. Well, now that doesn’t exist. So where do the kids go as they pass into their teens? Click click click, hunt it down themselves online. Not as convenient, or easy, or entertaining, but better that the voice-tracked, repetitive, bland Muzak being offered on most of the dial. And that, in my opinion, is what is kicking radio’s ass.
I’m seriously trying not to throw my bias in here, and I’m always tweaking my approach based on some often painful but honest comments from people I know on Facebook, and even my own kids! But I do not believe in just giving up and saying “Well, radio’s going down the tubes, all the kids today want to do is stream everything online.” I think that’s a cop-out. And if radio paid enough for me to quit my “real job” I’d go find some owner somewhere who has nothing to lose and would like to give “real radio” a try again!
(Not bragging, but I get a lot of great feedback, and actual calls from under-30s at the crazy hour of 3-6 AM during my show where I experiment with creating a show that I thing could be what would work in commercial radio in 2018 if anyone had the nerve of vision to give it a try. Check out the on-demand archive of my shows on the http://www.wwuh.org web site.)
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Serious radio listening doesn’t start till 25 anyway. 30 years ago my freinds and I spent more time listening to cassette tapes (and later CDs). About 20% of my time was spent listening to radio. As I got older, I just wanted to turn on the radio because I didn’t have time to keep up a collection, search or explore new music. If you look at the list of songs ranked at the top on the major online services, it is the usual suspects ( Africa by Toto was (is) in the top 100, so is Journey, Madonna, etc). When I hear the term “Radio Sucks” it is usually (but not always) from those who have played “Don’t Stop Believin” so many times they are tired of it, the industry passed them by, or they just can’t relate to the industry anyone. The same tight playlists have always been there, the technology has changed, and radio is now a business. Even if radio lost 50% of its reach it still would have more listeners then any other media source. 200+ million people listen to radio each week, and they are not concerned about a “tight” playlist. They just want to hear their favorite songs. Same as it ever was.
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You may be right; you mostly hear “radio sucks” from young(er) people who think nowadays it’s all for old farts or for kids. They usually gripe that they’re not interested in 1970s/80s “classic rock” or the Katy Perry/Justin Bieber/Pitbull/Kanye West top 40/pop. So they find Train/Umphrey’s McGee/Metallica/Imagine Dragons/Papa Roach/Pearl Jam/Stone Temple Pilots, etc on Spotify or Pandora or wherever. I guess programmers nowadays don’t know how to mix older rock with current rock and make it work anymore, or maybe because they own several stations in town, management would just rather chop them up into more specific slices because they don’t want to compete with themselves..
Anyone I’ve asked who’s over about 40-ish still listens to the radio at least sometimes, because it’s convenient and they’re used to it.
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Brian, you’ve given the readers of this blog lots to chew on.
Thank you for taking the time to share it. -DT
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