Paid Radio

When I heard recently that KPIG, the west coast alternative station, was going to give up its advertising platform in favor of paid subscriptions, I said, “you go girl!”

And I didn’t even know the gender of the pig.

From all reports, in the first week the sale of subscriptions exceeded the previous advertising revenue.

This may come as a surprise to some, but probably not to my readers. After all, I am an advocate of the paid Internet.

The Internet of the future.

The one that will allow businesses and entrepreneurs to actually earn a living.

A hoax has been foisted upon the Internet by a generation of cool kids who want what they want for free and by Google, the “Evil Empire” of new media comparable to that of the enemy we know all too well as Clear Channel.

On one hand, very smart business people are making dumb decisions based in part on these two considerations.

For example.

Google has everyone thinking paid search and targeted banner ads are it – the one way to monetize the Internet.

I ask, when have you clicked on a link lately? Click rates for banner ads are notoriously very low.

When have you watched a pre-roll video ad all the way through? Or at all?

Better yet, when did you actually buy something from so-called targeted search or advertising models?

Google gets rich and everyone else sits there saying, “freemium is the way to go”.

My other example is the hoax that has been foisted upon baby boomer CEOs by a very foxy young generation that these media executives cannot begin to understand. This generation wants what they want when they want it.

But who doesn’t?

Gen Y has just institutionalized it.

“Don’t take away my free Internet” --- we hear. And consumers will never pay for something they can get for free. There are studies out there all the time saying consumers will reject having to pay for content.


Public Television.

Public Radio.

Free -- and the content is so compelling that they don’t even need pay walls in place to get donors to make contributions. That's a model from which to start.

And don't forget Pandora, the biggest Internet entertainment success with 40 million faithful willing to do the unthinkable to keep the content coming -- pay. There are other examples.

My view is that the Internet will, of course, be the crossroads of lots of free information, ideas and entertainment. And that advertising will certainly monetize these ventures for the owners of the content.

But we’re entering a new age. You know that, but oddly enough, media CEOs don’t seem to get it. The first decade of this century was devoted to the Internet coming of age. The next ten years will see the maturation of the mobile Internet.

That means, content everywhere.

Cell phones, cars, airports, laptops, iPads and God knows what else will come to market in the years ahead.

So pay radio is an option.

Increasingly, terrestrial free radio is often worth exactly what listeners are paying for it – nothing.

Live local radio works best and I believe, assuming these stations grow their rates instead of fold them under pressure, that advertising (local and national) will continue to make local radio a good business.

But local radio the way I define it is not just limited to a terrestrial signal. If radio operators don't have content on podcasting, webcasting, blogging, applications and other mobile platforms then I am not optimistic about radio as a growth business.

Open your eyes and what do you see – an entire world listening to radio.

No … sorry, I got carried away with happy talk.

What do you really see?

Radio is the last thing that increasing numbers of consumers want whether it's 24/7 terrestrial signals or rehashed content online from morning shows.

Jerry Lee wisely pulled the plug on his WBEB (B-101) stream from Philadelphia citing royalty expenses. But what he needs to do is develop new and different content aimed at the B-101 audience base that he already owns. And "content" does not always mean music.

Radio must be multi-platform and multi-platform does not mean cramming a radio signal onto the Internet. In fact, fewer than 3 percent of all listening comes to owners who stream their terrestrial signal.

KPIG could be a whopping success.

Those same young people who tell you it's free or they’ll flee are the ones who are also making Steve Jobs richer by buying apps – the majority of which they don’t even use after they install them.

Record labels, like radio stations, are off in their own world thinking the market will once again come to them instead of them going to the market. You see how that is working out.

Citadel, Clear Channel and Cumulus are in the process of shutting down local radio as we know it works best to own a network of repeater signals with all ad sales eventually coming to them as advertisers bid on this commodity.

Google is smiling. Hey, that’s their idea. Use somebody elses content and make money.

The KPIG model is priced at $5 a month, $25 for six months, $50 for a year.

You’ll notice that KPIG’s system is rightly a true subscription not a metered approach.

It doesn’t punish fans for listening longer by costing more. That’s the concept The New York Times will fall on its face with next year when it switches to metered subscriptions. The more you read, the more you pay.

How idiotic!

KPIG has over 10,000 listeners a month. If 1,000 of them subscribe, they generate $50,000 with no cost of acquisition. Grow the brand through viral social networking and the money increases.

I’ve shared with you that I am turning this space into a paid subscription site this summer. It’s $99 a year or $9.99 a month. We’re blessed to have many readers now and hopefully lots of them will stick around. If they do, I have unique content as a business model.

What is exciting is that there is no longer one way to monetization in radio, television or print.

Free works with advertising (less so with bidding for ads).

Paid works where content is unique and compelling.

The product had better be good if consumers are being asked to pay for it.

Imagine if listeners were supporting radio stations with their subscriptions before consolidators came along. Once their personalities were fired, cheap programming installed and voice tracking implemented, listeners would stop listening and paying).

The arrogant sobs sitting at the head of media companies (see, I couldn’t say that if I had advertisers), are about to miss the Internet playoffs.

They were never in the game in the first place.

Many of my young students who are coming of age and paying for things online could well be the beneficiaries.

They get it.

Of course, the Internet is free.

But it isn’t only just free.

Now there are lots of new opportunities on the horizon.

For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.