The last couple weeks of 2011 were a mixed bag featuring several strange days indeed for broadcast radio.  At a typically slow time of year around the holidays, it seemed like there were big events happening daily.  Like in every other business, things move in cycles, and the big story even during the supposed quiet days before Christmas revolved around Pandora.

Defining Pandora.

Measuring Pandora.

Excluding Pandora.

Explaining away Pandora.

Sadly, it feels like radio is entering the political arena – doing and saying anything it can to discredit and minimize a competitor in every way possible.  In the process, by trying to make Pandora look bad, broadcast radio may be looking bad.

Pandora is popular and has grown a great deal over the past couple years, but we know it has a dubious financial model.  And the early results of its IPO suggest that the investment community has its doubts, too.

Tim Westergren has spoken in ominous tones, but radio has not done much to address the potential threat posed by Pandora.  As we reported in this blog back in late 2009, Westergren said the following at a meet-up here in the Detroit area that I attended:

OK, he probably left that “middle class” stuff on the drawing board when he made his IPO pitch, but you “get” the magnitude of Pandora’s goals.

Here’s another Westergren quote from another time:

And he wonders why the powers that be in broadcast radio are a little bent out of shape about the rise and rise of Pandora.  You have to give him this – he’s a wartime general who tells you exactly what he’s going to do.  The question is, what does broadcast radio do?

There’s nothing new here about Pandora’s rise.  Everyone has seen the metrics, and the last several of our Techsurveys have illustrated the threat that Pandora specifically, and Internet radio in general, represents among core radio listeners.

Our company identified Pandora as a bona fide competitor, when many broadcasters ignored the early warning signals.  In 2009, I had conversations with “higher-ups” in radio, some of whom criticized me for overstating Pandora’s growth – despite data that has since reinforced our findings.  We have warned about Pandora’s local market sales efforts.  They recently announced a live video concert series sponsored by Budweiser, an event that should cause some sleeplessness for every Rock radio GSM reading this.

In short, we have used every bit of influence our company has – in our research, at industry conventions, in our blog, and in articles – to alert radio to the need to take Pandora seriously – and to act accordingly.

So what’s the best way for radio to deal with this threat – or this opportunity?

For a moment, let’s step away from radio and go “outside” for a teaching moment.  Think about the photography business.  Imagine you’re back at Kodak in the ‘80s as digital technology is emerging, and your corporate chieftains are saying something like this:

“Digital isn’t really photography.  Photography is defined as buying a roll of film, inserting it into the camera, taking pictures that exhausts the film supply, removing the film from the camera, and taking the roll of the film to a drugstore or Photomat, waiting a day or two, paying for the processing, and picking up the pictures – some of which look good but most are terrible.  That’s photography.  So you can’t say that “digital photography” is really photography because it doesn’t use film and doesn’t need to be processed.”

Except that to the consumer, digital photography was a pretty cool idea – and a major leap beyond the time-honored (expensive, inefficient, clunky) process of taking pictures using film.  It was cheaper, provided the opportunity to take more photos and evaluate them in real time, and bypass the drugstore entirely.

In short, it provided consumer value and a better way of enjoying the picture taking process.

 Kodak actually invented digital photography, but opted not to release or market it.  Their “research” (apparently among mostly professional photographers) found that digital was inferior to film.  So they sat on it, hoping that digital would never catch on.  They could have literally owned digital instead of allowing themselves to be victimized by it.  Instead, last week, Kodak filed for bankruptcy.

Is radio playing this like Kodak did?  Instead of arguing about whether Pandora is or isn’t  radio, wouldn’t it be smarter to learn what consumers are thinking, feeling, and doing – and then incorporate that learning into radio’s brands?

This week, we’ll dig deeper into radio’s reaction to Pandora, and provide suggestions about where to go from here.  But tomorrow, we’ll hear from a “Kodak Kid” with a cautionary tale for radio.

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Fred Jacobs

President & Founder at Jacobs Media

Fred Jacobs founded Jacobs Media in 1983, and quickly became known for the creation of the Classic Rock radio format.

Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.

In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.

Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.

Fred was inducted into the Radio Hall of Fame in 2018.

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