Angel Street Capital

iHEART RADIO FOLLOW UP

Robert J. Maccini — Mon, 30 Jan 2012 11:56:31 +0000

I have received numerous comments about the post I wrote last week entitled “What do Broadcasters’s see in iHeartRadio”. My post has been interpreted in a number of different ways. Let me first state that iHeartRadio is a great service and one that I have loaded on my iPhone. Clear Channel has markedly improved the user experience, especially on a mobile device. In order for terrestrial radio to continue to be successful I believe these elements are key:

1) Reduction in number and length of ad breaks – iHeartRadio’s decision to run no ads was a great decision. When ads are introduced hopefully the spot load will be low.

2) Customization – With its newly designed customized listening experience iHeartRadio is on the same playing field with other services such as Pandora and Spotify for the first time.

I would like to highlight one reader’s excellent point. For smaller stations that can’t afford to invest in a mobile platform iHeartRadio is a way to for their listener’s to access their streams on mobile devices. Also integration with Facebook may be beyond smaller broadcasters capabilities. Further, due to its larger scale, iHeartRadio’s potential access to in-car systems would give smaller stations in-car presence.

My intention with last week’s post was to have readers take away that stations looking for monetization should not rely on iHeartRadio’s platform to deliver meaningful revenue.

More and more audio will be consumed via the IP channel. For any station to be successful it must provide a well thought out functional interface as well as desirable content. The listening experience with Internet radio can be active in that a listener can interact with the service while audio is streaming. iHeartRadio can provide such an interface for terrestrial broadcasters who may find it difficult to compete on a sheer music jukebox basis with such services. Terrestrial radio can capitalize on its unique content such as sports, news, local information, music curation etc. so, it does have this advantage. Their challenge will be to continue to provide such content in an environment where ad revenues are declining and those dollars that are invested are increasingly going to digital media. My hope is that terrestrial radio will rise to the challenge.

WHAT DO BROADCASTERS SEE IN iHEARTRADIO?

Robert J. Maccini — Wed, 25 Jan 2012 20:34:16 +0000

Is it extension of their brands? Is it increased advertising revenue? A new distribution platform? A number of broadcasters have agreed to have their internet streams added to Clear Channel’s iHeartRadio platform. Even though I believe in added distribution channels, there simply is very little benefit for stations to join and distribute their programming via this platform. Being added just means that you are one of more and more stations/channels on this increasingly fragmented platform. While stations may get to keep their in-stream audio ad revenue I’m sure Clear Channel is keeping all pre-roll and display revenue. Will this platform result in some added ad impressions and therefore revenue? Yes but not enough to buy a cup of coffee. Of the five featured stations today, all were owned by Clear Channel.

For Clear Channel this is a beautiful thing. They get content for free to add to the offerings on their platform to the consumer and take advantage of the effects of “the long tail” (No one broadcaster will benefit dramatically but Clear Channel may in the aggregate).

It appears that this is more a feel good strategy that terrestrial radio is doing something in digital. As I have noted before, Clear Channel is tiny compared with Pandora’s audience (about 15%). Based on Triton Digital December 2011 Internet Audio ranker, even if you added all of the top 20 terrestrial stations’ audience including Clear Channel it would still only be 42% of Pandora’s audience . What’s more, Pandora’s audience is increasing rapidly while the terrestrial stations audience has not increased over time.

RADIO STATION WEBSITES

Robert J. Maccini — Fri, 13 Jan 2012 17:09:56 +0000

For the most part there is nothing compelling on radio station websites. The primary reason that most people visit is to start the station’s stream or find information about what a station is playing. In a just released survey by The Media Audit, visits to station websites declined YOY from 17.7% of U.S. adults to 17.6%. As more and more options exist for listening to a station’s stream off website (through mobile app, Facebook, etc.) traffic will continue to decline. Most stations don’t promote their website because there is no original content and when the station’s website is mentioned it’s usually due to a contest which in my view artificially drives traffic to a site. Tweets and posts show up in a listener’s stream in many cases so no need to access the website. So how can radio develop unique content? Without investing a considerable amount of funds I don’t think there is much that can be done. However, I do believe there are other opportunities to create content and develop other brands. For example, one company I am working with Inner City, has for many years put on a weekend event in New York City called Circle of Sisters where over 40,000 people attended. There is an opportunity to further develop this well known brand apart from the radio station.

At Angel Street Capital we have invested in a local news site called GoLocal Providence (www.golocalprov.net) and they are in the process of rolling this same platform out to Worcester, MA. The site has been incredibly successful in challenging the local newspaper. Initially GoLocal launched in Providence with a local radio station partner. This opportunity exists for radio companies but I would suggest partnering rather than trying to develop it internally. Radio stations have a giant megaphone to launch other brands as they have been doing for their advertisers for many years. It’s time to use this megaphone themselves to develop brands they have an equity stake in.

THE STAKES – INTERNET RADIO AUDIENCE MEASUREMENT

Robert J. Maccini — Thu, 29 Dec 2011 18:48:02 +0000

We have been watching the recent developments in Internet radio audience measurement. Here are the stakes:

- ARBITRON is trying to develop new business and generate more revenue

- PANDORA wants to have audience data to sell advertising and capture a portion of ad revenue going to radio

- ANDO/TRITON wants ARBITRON to stay out of Internet audio measurement so it will not have a giant competitor

- CLEAR CHANNEL et al don’t want Pandora to be able to compete for radio advertising.

What all parties need to consider is what advertisers want. I have to chuckle at some of the points raised recently by Arbitron. Does a moving people meter really mean someone is listening to radio? If an audio source is present near a people meter did the listener actually initiate it? Was it really their choice? I have always believed that server side data is better than an estimate. PPM methodology is an estimate based on a representative sample (many argue the sample is too small). With server side data you have actual data – use it. Ando Media currently uses server side data to prepare its Webcast Metrics Internet radio top 20 ranker. Arbitron has announced that they are going to utilize server side data as well although many of the details are still forthcoming. Arbitron is being held hostage by its existing terrestrial radio clients over measuring Internet radio only stations such as Pandora. Of course terrestrial radio companies represent the bulk of Arbitron’s current revenue.

Audience data is utilized in Internet radio as a predictor of the number of ad impressions that can be generated. Audience measurement data is not used to calculate ad impressions. When a listener starts a stream then most ad servers, including Ando, will then insert ads prior to the stream playing ( preroll) or then begin inserting audio on receiving an ad cue. You do not have to be listening for any set period of time. By its very nature, in Internet radio each impression is counted when a listener actually hears the ad. Do advertisers care that different people hear different ads? You bet but not why ARBITRON raises this issue.

Maybe what we need is an impression measurement validation firm. In any event it’s going to take some time to sort out Internet radio measurement and it’s unfortunate that there is not a larger advertiser voice? Some big dogs are in the fight.

RADIO – “CANNIBALIZE YOURSELF OR SOMEONE ELSE WILL”

Robert J. Maccini — Mon, 07 Nov 2011 20:48:03 +0000

As one of the founders of Ando Media I keenly follow developments in measuring Internet radio audience. As can be seen in the following graph, terrestrial radio’s Internet radio audience has flatlined for some time, no pulse, no signs of life.

This data is taken from Triton Digital’s monthly audience ranker (formerly Ando Media). The slight dip in July 2011 represents a summer seasonal decline as this same listening pattern happened in 2010. Of course Pandora stands out on this graph. The top 5 broadcasters include Clear Channel and CBS. They have a long way to go to catch Pandora. I am hopeful that Clear Channel will close at least some of the gap due to its elimination of all ads in its streams and new customization options announced 9/8/11. The most recent Triton Digital ranker for September is too soon so reflect any impact these moves may have.

I have just read Steve Jobs biography. He stated that “if you don’t cannibalize yourself, someone else will.” This is the position the radio industry is in. Many broadcasters are afraid that promoting their stream will result in declines in their over the air audience. Yes it may in the short term but long term it’s either offer the listener what they want or they will go elsewhere. Where did all of that Pandora listening come from?

This is the position the radio industry is in. All stations should cut back substantially on their ad units. This is one tactic that stations can take immediately and increase their audience. Sell two spots per hour make it a premium offering to advertisers. These two advertisers get audio, preroll and display opportunities. Make sure there are a number of different creatives for each ad type to avoid listener fatigue. This is only step one in what terrestrial radio stations that are streaming need to accomplish. Personalization and customization are next.

ANGEL STREET CAPITAL INVESTS IN GNAX

Robert J. Maccini — Wed, 12 Oct 2011 13:26:17 +0000

Angel Street Capital recently completed an investment in GNAX through BSCP GN Holdings, LLC. With over 10 years as an industry leader in the southeast, Global Net Access (GNAX) operates two world-class data centers, AtlantaNAP and DallasNAP, offering mission-critical data center colocation and cloud services. GNAX provides superior technology solutions to a variety of organizations and industries worldwide.

Privately held with headquarters in Atlanta, GA, GNAX was founded in 1999 and has retained net income profitability since 2003.

INTERNET RADIO JUST BECAME EASIER TO USE IN-CAR

Robert J. Maccini — Wed, 05 Oct 2011 16:03:52 +0000

One of Apple’s new services announced for the iPhone 4S is Siri. Siri is a built-in application that takes voice recognition to a whole new level. Siri is going to be an incredible application to utilize in the car allowing you to be hands free. While certainly there is a broad range of services Siri can perform, the one of course that I key in on is listening to radio and in particular internet radio. I envision asking Siri to: “stream mvyradio.com”, “skip song”, “don’t play that artist”, “pause”, “raise volume”, “share this track with my friends”. The possibilities are endless and the concern over accessing content while driving and navigating through listening options is going to disappear. This also has some implications for terrestrial radio as skipping to another station just became a little easier. I have already ordered my iPhone 4S and can’t wait to try it out in the car.

ANGEL STREET CAPITAL INVESTS IN PLACESTER

Robert J. Maccini — Fri, 02 Sep 2011 16:03:16 +0000

Angel Street Capital, LLC recently participated in Placester, Inc’s Series Seed Preferred equity raise. Placester, located in Cambridge, MA, participated in the TechStars Boston 2011 program. Placester is an Ad Network for the real estate industry and it’s platform provides value to both advertisers and publishers by enabling the ordering, serving, and fulfillment of ads in the real estate vertical.

For advertisers Placester’s platform serves as a hub to plan, purchase, and monitor advertising across multiple vertical-specific and traditional publishers offering increased ROI through access and analytics. For publishers the platform is a complete solution for order management and scheduling as well as ad serving. Placester’s technology allows publishers to reduce operation costs while improving pricing through data and access.

The founders of Placester are Frederick Townes, the CTO of Mashable, and Matt Barba, a real estate veteran.

WILL ARBITRON GET INTERNET RADIO AUDIENCE MEASUREMENT RIGHT THIS TIME?

Robert J. Maccini — Thu, 28 Jul 2011 14:35:46 +0000

Arbitron has recently made clear it’s intention to measure Internet radio’s audience. This will be Arbitron’s second attempt at measuring Internet radio. Arbitron purchased Measurecast at the end of 2002 and then shut it down in 2004. Measurecast utilized server side audience measurement similar to what we eventually utilized for Ando Media’s Webcast Metrics (we sold Ando Media to Triton Digital). When it shut down Measurecast, Arbitron believed that advertisers and agencies would rely on panel based estimates which had been Arbitron’s methodology for measuring the Internet in other areas. I have always been amazed that one could even think of using an estimate when actual data is available. This data is one of the factors that has driven the meteoric increase in Internet advertising including search. Arbitron would like to be able to combine terrestrial radio listening with Internet radio listening and produce one collective audience number. This may be difficult due to different methodologies. This is one reason they may resort to utilizing an estimate again.

Arbitron will either purchase Webcast Metrics or start their own Internet radio measurement service. Whichever path they choose let’s hope they get it right this time. Arbitron’s involvement may lead to added credibility for Internet radio. However given their terrestrial radio customer base their thinking may be weighted more toward what’s good for their terrestrial radio clients who are streaming, rather than the Internet radio only services such as Pandora, Accuradio and others.

ANGEL STREET CAPITAL INVESTS IN LIVIO RADIO

Robert J. Maccini — Wed, 13 Jul 2011 19:47:59 +0000

Angel Street Capital recently completed an investment in Livio Radio. Livio Radio, a Detroit-based team of auto infotainment and digital audio veterans, has established relationships with key content providers, automotive companies and retail players and has a validated, scalable business model that addresses a large, global market. Specifically, with the car being the final frontier of the rapidly growing internet radio market, Livio Radio has developed a suite of hardware products & middleware/software solutions that enables full in-car audio experience via smartphone for nearly any car – new or old. Put simply, Livio has enable Internet radio in the car. I recently wrote a post on Livio which can be accessed here.