New Business Models for Streaming Music Services? I Choose Local Radio

By: Steve Masur

New music services seem always to try to differentiate with technology, and say that they have a totally new approach to discovery, or user acquisition.  I am so bored of hearing that, and it never makes any damn money.  I always think, why don’t these folks want to go after the ENORMOUS traditional market they are trying to disrupt; RADIO.

Terrestrial radio guys spent more than 50 years learning valuable lessons about how to sell ads on radio.  Now that more and more people are streaming, why not bring these lessons to streaming?

Local ads for car dealerships, Taco Times, and local events do well on the radio.    If you want to talk about metrics and use of data, why not apply that to local markets?  Wouldn’t that be a great way to apply the new technologies used in internet ad sales, and sold to the same shortlist of brands for the last 15 years?   Why not expand the scope of who you are selling to, and apply that to local brands, which terrestrial radio people have long known is what sells on the radio?    It’s an easy pitch to local advertisers — more and more people are using streaming services as they change diapers, fold their laundry, drive their cars around, and work at normal jobs all over the country.  Wouldn’t you like to try giving this new market of people the same ads you are giving them on terrestrial radio?   You never hear it pitched.  Instead, you hear about new technology, user acquisition, and new approaches to discovery that actually just feel like work, because you have to look at the screen and enter your preferences.

As far as VC pitches go, if you are risking millions of dollars, why not risk it on a proven market?  Hire a bunch of traditional terrestrial radio ad sales people with proven track records, instead of developers in Ukraine, DR, or Indo, and see what happens.  Watching that develop would certainly be a lot more interesting than listening to another pitch about big data metrics applied against a tiny user base, struggling with user acquisition, or the new technology your team can’t quite seem to get done on time.

Pitching tech is too noisy and confusing.  Keep it simple.  Pitch normal media people, local newspaper and radio guys, and pitch them on a business plan that is about normal local radio advertising.    This back to the future approach would actually be innovative in this market.  The only company doing anything like this is Pandora, and that’s why they are so huge.  But they are very limited, and not innovating very quickly, and they are in a huge market with plenty of room.   Why not go for that opportunity?