Where We Can’t Compete

I Heart Radio

I’m on the road, which usually gives me extra chances to speak to “ordinary” people about radio.

Earlier this week, a guy was telling me how he loves Pandora, how he listens in his truck as he commutes to the retirement home he is building 2 hours from Portland, Oregon.

He’s a Pandora evangelist, and he’s hoping to convert me.

He admits his listening preferences “remain stuck,” as he puts it, in the 70s and says he can’t hear that music on commercial radio on his drive.

He loves the fact that he can identify one core artist he loves, and then Pandora does the heavy lifting of choosing like-sounding artists and songs to the ones he really enjoys. He says he then hears something from that favorite artist about every 10 songs.

But as I probe for specifics, he admits that he’s not crazy about most of the other songs Pandora chooses for him. He says “…every once in a while, they pick something that I just love, and didn’t really know, but most of it isn’t stuff I would ever choose to hear, really.”

Then, the payoff: “The best part of Pandora is it’s music without any commercials or talk.”

And that makes this interview with Bob Pittman, CEO of Clear Channel, worth your time.

I love Bob’s strong defense of radio and its nearly universal daily usage. I love his optimism and acceptance of the reality that “radio” has to be available on a variety of platforms, including mobile phones — which is why CC developed the IHeartRadio app.

It’s encouraging to hear that most users stream broadcast signals rather than the “personalized radio” option created to compete with Pandora and Spotify.

But even Pittman says listeners don’t want to hear ads on that kind of “station.”

We might be able to out-Pandora Pandora if we really tried, but to what end?

Most owners, including Bain Capital, aren’t satisfied with 30% – 40% margins that Radio, ridiculously, still provides. Pandora will be ecstatic if they can do 5% at this point. See articles HERE and HERE.

Trying to maintain those margins is bleeding the creative life out of our business. And the more we suffer creatively — and real creativity is always expensive — the more we level the competitive arena with services like Pandora.

We need to do the exact opposite.

We need to spotlight the entertainment we can provide between all those great, free, songs and move as far away as we can get from where we can’t compete.

And that will take more than an investment in Ryan Seacrest and Elvis Duran.