Radio. When was the last time a terrestrial radio was your destination? I mean, when was the last time you sat down with the express intent to listen to your favourite show on the radio? In real time? Excluding sporting events? Right. I was thinking back to my “radio days” and it was particularly amazing around this time of the year (Christmas if you aren’t sure when this was written): Carols over the airwaves, my local talk radio station did calls with Santa for the kids, they also counted down the top 100 songs of the year. Ahh, radio.
Today is completely different. Your dedicated radio time is probably limited to the time of your commute and you listen to important news thru podcasts or other digital-era mechanisms. Perhaps that is just me but I am a “desirable” demographic and I don’t read the newspaper, watch a lot of television or listen to the radio – ever. I don’t think I’m alone on any or all of this so it begs the question: How do advertisers reach me? How o how will I know what to spend my money on?
Well, thankfully for them there is a company that can help and this is the focus of this episode. The company’s name is Triton Digital, the guest is their Chief Strategy Officer Patrick Reynolds and the conversation is insightful and wide-ranging. We talk about the difference a year makes in this industry (since our last episode), the state of spend from agencies, the state of digital radio, the state of terrestrial radio and even dive into the newspaper and television industry.
Key takeaways from this episode. Click on the link and the video will take you to that clip
Rob: Hello everybody, and welcome to Untether.TV. I am your host and founder, Rob Woodridge. Well, our guest today joins an elite group. I tell you, an elite group. There are only four other people that have actually been on the show three times in three consecutive years. That’s how long I’ve been doing this, which is a remarkable thing to begin with. Our guest today is Patrick Reynolds. He is the chief strategy officer for a company called Triton Digital, and we are going to talk about mobile radio. Every year this topic gets more and more important as more and more companies are emerging from this. And now it’s iTunes. It’s Apple getting involved. And last year it was just [inaudible 00:57], and there was still a mess, and there’s all this legal crap going on around this industry. We’re going to get it straight here from Patrick. I’m going to bring him in right now. Patrick, I can’t believe this will be your third episode. Welcome.
Patrick: Thank you very much. I hope I don’t crater your ratings, and I’d like to particularly thank you for having me on in November. Once again, when you get the privilege of seeing my sickly anemic mustache for November.
Rob: Nice. The last time you were on was towards the end of last November 2012, and it was a little thicker, a little less cheesy. Can I say that without you getting offended?
Patrick: I’m not easily offended. Yes, it’s cheesy. That’s the kindest thing you could say, it’s cheesy.
Rob: I love it.
Patrick: Unsettling or upsetting are two other common ones.
Rob: Unsettling and upsetting? Is that what you said?
Rob: Yes. Well, mustaches just, in general. There’s only a couple of guys that I know that can carry on a mustache out of the whole planet. So good luck with that.
Patrick: Tom Selleck, I ain’t.
Rob: And he’s one of them. I never, actually, so there’s three guys that I know. Yeah. So, listen. There is a lot to talk about around this, because this space is now emerging. I think you guys have been waiting for this slow steam train to accelerate and now we start to see this, because the big players are now into this and the big digital companies are getting involved in this. And the big players in the terrestrial world are looking at it as a threat now and dropping lawsuits all over the place and trying to come up with their own strategy, and investing in other companies. So I think that now’s a great time to get a recap of what happened in the last year. Granted, we only have a little bit of time; but also to talk about some of the most important things that have happened, as well as what’s going to happen in the future, and get a little bit of an update. But before we do all that, all right, Patrick, tell me about what Triton is.
Patrick: We are a mid-stage. We’re about seven years old. We’re an ad- tech company and we are focused on the audio vertical. So we work with companies that are trying to take audio based content primarily and distribute it through mobile and desktop listening. And we work with companies like Pandora and Slacker and CBS and Clear channel, and ESPN, and you name it, several companies throughout the U.S., and Canada, as well as international.
Rob: And you guys have been around for how long? Like, since the dawn of time in this industry, pretty much.
Patrick: Yeah, the paleolithic age of audio. So it’s about seven years.
Rob: Seven years? That is incredible. This industry hasn’t really been around for seven years. You have been waiting on this to happen. So this must be at least a little bit of reassurance that things are actually happening.
Patrick: Yeah, this whole thing has been a labor of love, but it’s been a testimony to endurance and patience. And even in just the last five months, things have taken off and changed so markedly, that that for which we have been waiting has finally happened. And it’s exciting and gratifying for all of us, but it’s been a testament to patience, for sure.
Rob: What has it been over the last five months that you’ve seen? Is this because, since the last time we talked, obviously, there’s been so much that has happened around in the industry, but over the last five months, you’ve drawn that out. Is it because of iTunes radio? What is it about that the last five months that has really excited you guys?
Patrick: Yeah, I think there has been two big events that have really caused a series of cascading events downstream. So, the first is, Pandora, after their I.P.O. Their numbers just keep building month upon month, and it’s just no longer a fad. It is a phenomena and that it’s just not going to go away, and no one in their right mind can look at their audience members and feel that there’s anything other than a lot of growth ahead of them. So I think that’s the one thing. There’s that certified star in the space now and that is Pandora in the US. And they’re gonna move throughout the world, I’m told, in the not-too-distant future.
Rob: Come to Canada, Pandora. My God.
Patrick: Careful what you wish for, it just may happen. The second thing, of course, is Apple entering the market with iTunes radio.
Rob: And that had an impact, obviously?
Patrick: Well, it has not so much, from my perspective, had a business impact yet. It hasn’t completely shaken the snow globe of the advertising landscape, as an example. But their self-reported audience numbers certainly give one pause. And the fact that my datebook has been really filled with people on the advertising side, on the marketing side, on the traditional publisher side, wanting to have a sit-down and really, thoroughly understand what is going on in the space in earnest for the first time because Apple does not go into most of the spaces it enters in a small way. They go in as a disruptor and everyone who is in that space needs to understand what the space is all about and what their options are.
Rob: It’s funny because that is so true. We were talking about this last year and you were saying “Is it gonna take an Apple to do this?” and you said it might be an XBox thing because it’s already in everybody’s living room. Obviously it takes a company like that, not an upstart, but somebody with an established base, and an established huge base, that enters this market for people to take it seriously. Why is that, when all the other signs, like Pandora’s growth, showcase that this is an industry that they should be focused on or aware of?
Patrick: Well, I think if you take a traditional mindset, the incumbents seldom see the insurgents as being a real challenge to them until their head is on a pike. Do you know what I mean? If you look back through history, it’s generally too late when you realize, “Ooh, that gate could fall.” So that’s the first thing. When you have a titan of industry that says “I’m gonna get in,” and not in a toe-in-the-water kind of a way, but in a very significant kind of a way, when we have the Tim Hooks of the world speaking about iTunes Radio as a strategic imperative at their developer conference, when they talk about having a vision and designs on the car automotive dashboard, people need to take account of that. And when you just simply do the math, even if you are doing math at a 6th-grade level, when you look at iTunes penetration and handset penetration, not just in the US but on a global basis, when you look at the relationships that Apple has built over time through iTunes with various record labels and how that could be leveraged and parleyed into an iTunes radio offering, it’s not going to be here today, gone tomorrow. This is in it for the long haul and the world has changed.
Rob: You think from Apple’s perspective, do they see revenue opportunities here? I mean, they’re offering iTunes Radio for free right now. Do you have any idea about how they want to turn this into revenue?
Patrick: So I have had no direct conversations with them, but I have used the product, along with X number of dozens of millions of other people in the US in the first couple of months.
Rob: That’s crazy.
Patrick: And there’s advertising on it. So I don’t see this as being a straight-up subscription basis. It could have a freemium model perhaps downstream but right now it’s free and it is being supported through advertising. And if you really connect some of the dots between what an Apple would know about you as a user of iTunes radio based on things like your iTunes library, and other data sets that Apple would have on you, they can give you highly tailored advertising that would be very appropriate. That would probably be very palatable for most people, as opposed to a spray and pray kind of attempt that other folks make. So, I think advertising will be a big part of the equation for them, just my guess, I have no direct knowledge of this, but I think with that audience size, with the Apple panache and brand, there will be a lot of advertisers that will want to do business with them.
Rob: It’s almost like low-hanging fruit opportunities for companies that couldn’t afford to do anything else with Apple to be able to be a part of this ecosystem. I mean, I listen to it as well. I have a US account and I don’t get any ads up here because I’m up in Canada. So they just say “You are listening to iTunes Radio!” and it’s the perfect thing because no ads and good music. We were talking a little bit beforehand, a year ago there were songs I knew. Songs that had emerged as this darling of this place. And even before that there was this thing called Turntable FM and I always ponder what happened to these guys. They went from something that was in clear violation of copyright for music into something that, I don’t even know what they are right now but they’ve just relaunched, but, I thought, there’s no way that you’re going to get me to spend $9 or $10 bucks a month for a radio station. A radio that station that costs me, not only $9 a month for the subscription, but also I have to pay for my data connection as well when I listen to this. So, you’re getting me twice. But this evolution that is happening, I was explaining this, I started listening to the songs and I got so tired of, on all of these radio stations, I got so tired of hearing “Barracuda” by Heart. That was the song, it just kept on coming and coming. Every time I hit the gym I’d say, “Give me the gym whatever, classic rock, upbeat tempo,” hit Random, and “Barracuda” would come on every time. So they get you in that mode where I’ve got to listen to this music, I want a little diversity, and not “Barracuda,” so I’m gonna pay the $9 bucks. It’s the Barracuda Tax. Is that about right?
Patrick: It is. What you wouldn’t give for a “Magic Man” spin, right? You know, you get 12 with any of these services as opposed to many traditional radio station you have a much, much shallower playlist to draw from and it can get taxing. I think that’s why a lot of people are voting for the, as we’ve talked about last time Rob, there’s this aspect of customization, choice and control that you get in digital that you can’t get in terrestrial. Obviously when you can’t shape what you’re hearing, you get what you get. And people are responding to that. You know sometimes there’s just one “Barracuda” too many and you have to change it up, and that’s what you can do with digital that you can’t do with terrestrial.
Rob: So how important is digital? How important are these devices? How important is what iTunes are doing? How important is RDO moving into the radio stations as well that are free? And of course Pandora, but how important are these guys? Is this real? Or is this just a tulip arms race for music, the equivalent?
Patrick: Very astute reference, I like that. I think that this is unquestionably real. And I’ll tell you there’s some fairly concrete proof for instance. So the ascension and rise of audio very closely mirrors the penetration and ascension and rise of mobile as an advertising clout. So the incredible rise of mobile has coincided in some ways with the decline of display. Unlike display and video tool are to an extent, the idea of audio is somewhat native or natural to a phone. People do a lot of listening with their ears with a phone period, and an audio ad is an extension of that in certain ways. So it is highly relevant to the form factor that you have in terms of the mobile. The thing that makes the audio advertising unit robust and increasingly popular is that it is one of the precious few things, as you would know from your experience just walking on the Earth here, that it is one of the only spotlight advertising channels still in existence. And by that I mean only one audio ad ever plays at a time. You don’t get this cacophony of sound that you get a cacophony of sight where things are flashing and beeping and popups and all these things that you’re just trying to avoid and not be caught up in the web of. And advertising of audio is just one audio unit at a time. And it’s usually a 15- second unit in a digital context and it’s oftentimes very targeted to you based on some behavioral stuff that the advertiser might know about you. So it’s no big deal. It’s a very, very fair quid pro quo for largely free or very inexpensive audio content and most people will make that trade all day long.
Rob: And you’re seeing some great results with the companies, obviously, that are engaged with this kind of stuff. And, as you said before, as soon as iTunes, as soon as Apple got involved your phone started ringing. This is cursory information that they’re looking for, this the beginning of this stage? Or are you seeing companies that are jumping into this two feet, all in?
Patrick: No, I think most agencies and advertisers are well underway for their planning and budgeting for 2014 and I expect to see really, really big line items on 14. And I think they’re gonna have, before you would have a “Digital,” and under Digital you might have “Search” and “Display” and “Video,” I think there’s gonna be an “Audio” line now on virtually every big budget that you have out there. And that will be funded by taking some from the other digital things, I would say notably display is probably going to fund some of that audio line, perhaps some video too. And I think you’ll find a lot of people that are going to take things that were formally in a traditional media pocket, that is print, which there is still some, television, radio, and other more traditional media, out of home, etc., etc., and some of that will shift to fund an audio unit. Because it’s a very accountable medium. If you run an ad campaign on audio, you will know exactly how many people heard the ad. Which you can’t say, of course, with a traditional design.
Patrick: You can have call to actions in there that will make phones ring, that will make connections made to your website, and you can track that back to the unit. So it’s a very accountable medium. And it’s not going to be a small thing in ’14. It’ll be a big thing.
Rob: And so what happens to traditional radio stations? We touched on this a year ago. But has that changed? We’ve got Clear Channel, I think that’s the US’s biggest owner of radio stations.
Rob: And we’re seeing it up here as well. This consolidation of all media into an uber media company that controls the airwaves. But these guys are getting involved, aren’t they? And what does that signify?
Patrick: It signifies that the game is on. I think that the smarter and larger of the traditional broadcasters that play in the audio space will not cede it to Pandora, or to an iTunes radio, or to anybody else. So I think, perhaps very smartly and rightfully so, they were sort of sitting back a little bit, seeing how things would shake out. Now I think they know how it’s going to shake out, and so they are marshaling the resources necessary to really make a big dent in this space. So two things of note in the US. And I hate to be myopic to the US, but I’m living in . . .
Rob: Yeah. And it’s where the majority of this is happening right now, anyway, so it’s okay.
Patrick: Pardon me, Canada. I apologize, but I know what I know. I’m a simple American, as many of you can attest. But we have Clear Channel, who has started to sign deals not just with small labels to get preferred rates for streaming, but with big labels like Warner. So they’re recognizing that they’re going to have to put more attention towards their digital assets. And to do that, they have to right size the royalty equation for online to make it more media-neutral.
Patrick: So in other words, they can’t be playing things over the air terrestrially and pay no royalty for that, and then they have to pay a significant royalty online. It’s very hard for them to sit down with their investor base, I would imagine, and say, “We’re going to push people towards digital,” because that has a check associated with it that terrestrial does not. Similarly, we saw that Cumulus, which I think is the second largest traditional radio broadcaster in the US, they have done a deal and significant investment in RDO, which you referenced earlier.
Patrick: So they, too, realize that this is a space they need to get involved with intimately, deeply, and quickly, and their path has been less about just building, but to a degree, buying.
Rob: Yeah. And that’s an interesting thing. I think Pandora, they were heralded when they went public, but I wonder if that means that they shoot through the roof, they gain all this mass user base, but because they’re a public company, it becomes harder and harder and harder for a company like Clear Channel to just go and acquire them, right? Whereas RDO, they’re . . . I think everything’s in play at this moment, and an exit to Cumulus would be probably on the horizon. And I wonder, is this a good thing? Because these big guys playing in terrestrial radio, the whole idea here is that now we want choice. We want freedom of choice, and I want to choose the music I want to listen to at any point in time. And we’ve seen what happens with these big, big, big media companies, and the way that they dictate what gets played or not, or what gets burned or not, so to speak. And is this a good trend for RDO and for these companies to be playing in this space? Or do you hope that Clear Channel tries to build its own, it doesn’t work, and Pandora succeeds? Do you have any view on that?
Patrick: I have no view that I’m willing to share ever.
Patrick: Listen, I think it’s . . . here’s what I think is good. These two behemoths, the 800-pound gorillas on the terrestrial side, are getting very serious about digital.
Patrick: That is good, full stop.
Patrick: How they do it, they’re taking different paths, they’re getting there differently. And that’s great, that’s up to them, and I have no line of sight into the decision-making process in their boardroom. I think there’s merits to both. I think one of the interesting things is that Pandora, being a public company now for a couple of years, has really been a canary in a coal mine, right?
Patrick: Everything they do is public. You can look at their books and say, how many ads did you sell for how many dollars? What was the cost per thousand? How much of that was display? How much of that was mobile? How much of that was audio-based? You know how many people did you have to put on the street to achieve that kind of financial influx. So people are watching that . . .
Patrick: . . . doing the math, thinking about their own organizations, and saying, well, if I . . . and again, this is totally theoretical and speculative. But if I’m Culumus, I think about the sales force that I have, the relationships, both longstanding and many, that I have with advertisers locally and nationally throughout the US. I think, well, what would it mean if I had a new tool in my toolbox that would be RDO? If I’m RDO, I think, wow, what would it be like to gain access to all of these agencies and advertisers throughout the US, that would take a month of Sundays for me to get of my own accord? It makes a very . . . You could look at it as somebody’s going to win and somebody’s going to lose. And maybe they will, maybe they won’t. But you could also look at it as a perfect win/win.
Rob: I love it. Such a diplomatic answer. And you have to do that. I just always think that there’s got to be some corollary, some auxiliary industries that play into this. And all in the media space. And I always think about these poor newspapers, sitting off in the corner whimpering by themselves, realizing the time they had and reminiscing, singing Bruce Springsteen’s “Glory Days.” All those metaphors that you can think about about the poor dying newspaper industry. Why aren’t they going out there and investing in RDO? Why aren’t they going out and looking at a new channel for their content that they’re paying people to create? Why aren’t newspapers doing this?
Patrick: The simple answer is that they are. So here in Boston, the New York Times, the former owner of the Boston Globe, and maybe the current owner, but that’s a transaction that’s about to happen any day, if it hasn’t happened in the last couple of days. But they made an investment around a year ago in all of the talent of a really legendary seminal Boston FM station. An alternative rock station that was a huge phenomenon here.
Rob: Oh, that’s right.
Patrick: And they took those guys, root and branch, and made them something they call Radio BOS . . . wait, I can’t remember what they call it now, actually, Rob, but I’m sure you can find out after this.
Rob: I can, yes.
Patrick: But it is part and parcel of their web presence. So you can be reading the news on Boston.com and you can simultaneously be listening to this station. So I don’t think there’s anybody anymore, honestly, that has a big future in a one-media worldview. I just don’t think it exists. If you look at ESPN, they have magazines, they have radio stations, they have cable channels, you name it. They have restaurants, etc., etc. You look at Discovery Channel. NPR, National Public Radio, which is similar to CBC, they have an incredibly robust website that’s full of video. They obviously have over the air. They have podcasts. Everybody’s just becoming a mash-up of everything else. Now, you could argue that newspaper was last to that party in certain respects. But I think they are getting there, and I hope that the BOS experiment goes very, very well. The Boston.com experiment, that is. And we see big yield there, because I think there’s a place for that kind of journalism, if it’s augmented with things that are a little bit more interactive.
Rob: Yeah. And I think that you’ve got the vantage point of a US perspective. And I can tell you from Canada’s perspective, the big chains up here, the big media companies up here, and newspapers in particular, thought that they would just equip their reporters with a video camera and go out and record things. And the results have been absolutely horrific, right? The quality of video is fine. It’s HD. But it’s just guys panning left and right, and they don’t understand what it means to do that. And from what I’ve seen in Canada, there is little to no audio at all that’s associated with some of these big brands. Big daily newspapers across the country. And it’s a shame, right? Because they’re going to wake up and realize that . . . they always say, they sit around in their board rooms, and I’m sure this happened in the traditional radio stations, about Pandora. They just sit around and think, “Well, radio stations are reading our news every hour anyway.” And all they do is literally put out the newspaper across everybody’s desk and read the news. And that’s what they do, right? And I asked the question. It was a dumb question. I said, “Well, why don’t you do that?” And they’re like, “Why don’t we dot that?” Right? So maybe Canada’s newspaper industry is not as advanced as it is in the US. I would hope that they could think this through. But I agree. You’re . . .
Patrick: Actually, Canada’s got some legendary newspapers and news organizations.
Patrick: But I think it suffers, like everywhere else, that if you have had a lot of success as a hammer, everything tends to look like a nail. And the fact is, everything’s not nails anymore.
Patrick: And right now, it used to be everything was an all-or-nothing proposition, right? It was sort of a zero sum game. I need 100% of your attention or none of your attention. And right now, I think the smarter people are trading in fractional shares of attention. And the nice thing about audio is I can consume the news via audio and still do work, right? I can listen to CBC here. I can find out what’s going on with the Twitter public offering that happened this morning. I can find out what’s going on with Middle East peace processes, and all of that good stuff, not the least of which is the Florida Panthers axing their entire coaching staff in late morning. I can keep abreast of all of that, but I can still do my work. I can’t do that if I’m reading the newspaper. I can’t do that if I’m watching video of TSN.ca. I can’t do it. But I can do it with audio. It’s a very giving medium.
Patrick: It shares attention in a way that other things don’t. And I think if I’m a news organization, I would think about that.
Rob: What about . . . we’re starting to see a resurgence of podcasts. In the last year since we’ve spoken, some huge celebrities have gotten in and started creating their own content in a podcast format, whether it’s video or audio, but mostly audio still. There are very few video podcasts that are of celebrity quality. So how does that play into this as these things start to emerge? The resurgence of the podcast.
Patrick: It’s something that we’ve seen as well. We talk about it a lot. Our plate is relatively full with the more traditional live and music-based world that we live in. But it’s something that we need to address, because it really plays into . . . much as media channels are blending, where video is starting to sound a lot like radio, which is starting to look a lot like newspaper, and these thing are all kind of coming together. Now, within audio, I’m not sure that a listener makes a huge distinction between a live broadcast, a playlist on Spotify, and a podcast from HowStuffWorks.
Patrick: I think they just think it’s all audio and it gets delivered through here.
Patrick: And I think audio people are starting to wake up. And you have services like TuneIn, and there’s a few other apps, that allow you to mix and match your audio feeds between live and on-demand and podcast in a way that works for people.
Rob: Yeah. And I use TuneIn radio and I love it for that reason, right? But I’m a podcast guy. I consume these things. It’s what’s in my car. I don’t move without listening to a podcast. And sometimes I run out, and I’m like, “What do I do? I wish there was some audio on demand that I could listen to that I could actually get spoken word and catch up on the news. I guess I’ll drive in silence.”
Patrick: Yeah. Audio and radio . . . it started with radio.
Patrick: And audio has continued this legacy, and it’s a critical one, of it is a trusted companion. It can always be by your side.
Patrick: And that’s only been further enabled through mobile devices. You can never be out of earshot, literally and figuratively. It can be with you when you go to sleep, when you get up, at the gym, in the car. It’s always there in a way that no other medium can.
Rob: It’s so true, and I love it for it. Seriously. I don’t listen to the radio, but I love it digitally anyway. When you were on last year, we talked about this royalty fairness act, and you had some choice words. Has anything happened to this? Is it still sitting in the courts? Is it still punitive? Is it still top of mind for a lot of companies?
Patrick: Certainly top of mind for anybody in the space, for sure. And it looks like there’s some traction on it. There’s been a change of heart in the last few months, I’ve seen, where that was some legislation that would, again, put forward something that is what I would call media-neutral for royalties, where a royalty for listening to an arcade fire on terrestrial radio would not be different than if you listened to it on RDO or Pandora or Spotify or anything else. So it really should not matter. And publishers and rights holders and artists should be paid fairly, if not equally. And that’s a distinction that I’ll leave to smarter people than I. Based on the fact that it should be smarter people than me, and I just proved that.
Rob: That’s okay. No language police here.
Patrick: I’ll let them decide what that should be. But there’s a movement into that reality, that this is an antiquated system that does not make any sense. It makes no sense for artists. It makes no sense for listeners. It makes no sense for publishers. It makes no sense for advertisers. Let’s get this right.
Rob: Now, is that because guys like Clear Channel and Cumulus are starting to look at this space, and they’re looking at it and saying, “Hey, wait a second. Now if we get into this space, or if we do this, we’re lumping ourselves in with Pandora and all the other guys, and it is punitive.
Patrick: Who am I to judge, Rob?
Rob: Okay. I’m just saying. There’s a little nepotism there.
Patrick: That may be a part of it.
Rob: I don’t know. We’ll leave the listener, the viewer, to their own conclusions abut that.
Patrick: Exactly right.
Rob: I’m totally right, here. Just Patrick doesn’t want to tell you that. All right, I’d like to take a . . . now that we’re here, we’re at this critical juncture where you’ve got terrestrial looking at this space, and you’ve got Pandora exploding, you’ve got iTunes coming out. With access to hundreds of millions of people through iOS and iTunes in established base, and their credit cards already on file, and you start to think about the way this future goes. And then you’ve got RDO moving into understanding that they have to get into radio stations as well. Free radio stations, to bring the users in or convince them, because they play “Barracuda” all the time, that they have to spend the $9 or $10 a month to get rid of “Barracuda.”
Patrick: The Wilsons are going to put a hit out on you, you know?
Rob: That’s fine.
Patrick: You’re in trouble.
Rob: Bring it. And then RDO will start doing . . . there was another one. “Eye of the Tiger.” Survivor. “Eye of the Tiger,” there. That’s all I heard for a long time. It was like, “Barracuda” and “Eye of the Tiger.” I’m like, ugh. It was cool the first time, but man.
Patrick: Sounds like hell on earth.
Rob: It is hell on earth. First world problems, right?
Rob: But with that kind of . . . we’re sitting at that spot right now. What happens in the next year? What is going on? I’m still kind of . . . I don’t believe that this is just an advertising play, because that’s a tough thing to monetize on a regular basis, and a lot of these companies will struggle. So where does this go? What happens between now and next November, when we get you back on with your ‘stache?
Patrick: You’re a glutton for punishment. I apologize in advance to your audience. I think the real proving ground, the battleground for radio, and now audio, is going to be in the car. The car has always been when the preponderance of listening has happened. You know, you get in the car and you turn on the radio. Well, in fact, I just returned from a conference in Detroit that talked about the new dashboard, and where technology and radio meet in the dash. And the good news is that they do meet. And you’re starting to see now a lot of work where, again, the “radio,” quote-unquote, will not really be a radio. It’ll just be a head unit that allows you to listen to live broadcast radio. It will allow you to listen to satellite radio, if you’re a subscriber. It will allow you to listen to your apps. And it will allow you to listen to your mobile catalogue, whether that’s iTunes or something different. And it’s going to be very intuitive and simple and elegant. Probably it’s going to be voice controlled, so that it is safe. And when those walls fall, of the car, that is when critical, critical mass arrives, and it’s very much . . . you know, advertising today in the US, I think, is a little bit over $17 billion and change in advertising. So while it may not be at its previous high water mark, it’s substantial and nothing to be trifled with. So there’s still a lot of advertising that is gravitating towards radio and audio, and I think as the car becomes an enabler of the digital portion, as opposed to the terrestrial portion, you’re going to see many more brands get involved, and ad support go up even further than it already is.
Rob: That’s a really interesting perspective. Because it’s almost like that is the last safe haven for the radio, right? Like the car is the last holdout. And we’ve seen so many technologies come in and out. Cassette players, 8-track cassette, CDs, in and out, in and out, and in and out. And now you have an ox in, right? And that’s bypass the radio altogether. So you’re right. It is that wall that’s crumbling.
Patrick: You don’t need the car. You have Bluetooth.
Patrick: You don’t even need a wire anymore. You just hit a button and you’re connected. Pow.
Rob: Yeah. And it’s done.
Patrick: And you look at the satellite business.
Patrick: The satellite business started out as pretty small. I think there’s some real parallels between it and what we’re seeing now in audio. But the satellite business started out as pretty small, and then it started with some kind of kludgy after-market products that only people that really, really did not like radio, or really, really did like Howard Stern, purchased, to where they are now doing tremendous, tremendous numbers. And it’s because it’s . . .
Patrick: Oh, yeah, and it comes baked into the radio. It usually comes with a free trial.
Patrick: And people try it, and they like it, and they keep it.
Patrick: And I think you’re going to see a lot of parallels where people maybe didn’t have Pandora, they’re going to get it, they’re going to play with it and say, “Wow, this is a really good experience. I want this.”
Rob: Yeah. And, you know, my father-in-law is a perfect example. He got it with the car for a year.
Rob: And got completely hooked on the country channel, and has never turned that channel off, ever, for the last two and a half years, right? And he just pays his yearly subscription and now he’s got a portable satellite radio unit that he brings up to his camp. You’re right, all of a sudden, we’re paying for radio. It’s such a weird thing. We’ve taken it for granted. It’s free for this time and all of a sudden we’ve now started to pay for radio, which is something that I can’t get my head around. It’s something that’s significant.
Patrick: But you know what, are we paying for audio, which is something that we’ve always done. If you think about it, when I was a kid I don’t know what percentage of my total disposal income went towards records, but it was sizable. As I became an adult I subscribed to these goofy things that . . .
Rob: Columbia House and all that.
Patrick: Yeah, Columbia House, and you get 10 CDs a month or what have you, and you spend hundreds and hundreds of dollars, even thousands of dollars, many of us, on CDs and all that. I think it’s actually a tremendous deal. Exactly. I think it is a tremendous value to spend a few dollars a month or year on getting a catalog of millions of millions of songs. Some which you play on demand, some which are curated, either by man or machine, and it’s a great kind of one-two punch. I think it’s the best value going. I have no qualms about recommending people pay for it, or that’s an option.
Rob: I’m with you on it. A year ago I would have said no, but audio has been the savior for me many times over. My kids watch this movie called Teen Beach Movie and there’s a sound track. It’s the equivalent to the Grease soundtrack in the 70’s. This is their Grease. They’re like, Dad, I just want to hear this song. And I’m like, fine, and I can find it in a second because it’s there and I can quiet them down. Often times you look at these things and you think, nine bucks, but you’re absolutely right. I spent, I have over 1,000 LPs sitting in my basement that I haven’t played in 20 years, maybe. And I have these CDs behind me, and I don’t even know what they are, right?
Rob: And I haven’t played them. I should get rid of them but I built this shelf behind me to keep them there and the effort would have been wasted. You’re absolutely right. For that and a little amount of money, the real question is, why aren’t you doing it, why aren’t people doing it. That’s a total departure from where I would have thought a year ago. I’m starting to come to your side. I see the light now, Patrick.
Patrick: By the way, I still think there’s a critical, absolutely vital role for advertising that, because it’s only advertisers that allow people to only pay a couple of bucks to listen to the entire globe of music. If you had to pay for those songs on a per-play basis or a per-song basis you’d be in the poor house. The people that strike the balance between a [distortion] and a subscription, that’s probably a sweet spot for a lot of people. That’s the bounce, where if you have to pay too much, it makes no sense, or if you have too many ads and it’s free but it’s junk, that’s a bad equation. Finding that kind of equilibrium, I think, will be really critical and I think a number of people have directionally found it already.
Rob: I love it. So you think that for the next year, it’s the battle for the car dashboard. I’m going to hold you to that. I’m going to bring you back in a year and we’re going to have this conversation because I agree. I can’t wait to see what happens in this. And then I also, I’m going to ask you that question again next year and we’ll see how we do, because last year you said, listen, it’s going to take somebody to get into this space to turn the tail on this industry. Lo and behold, Apple enters this space, and all of a sudden you’re starting to get those calls. Now you’ve heard it here, it’s the battle for the dashboard inside of the car. I wholeheartedly agree, I can’t wait to see what happens.
Patrick: How about we do it in October.
Rob: OK. Last day in October, clean-shaven, how’s that?
Rob: No more November. Patrick, where should we be sending people right now?
Patrick: You should send them to me if they’d like to speak. I am at Patrick dot Reynolds at triton digital dot com [SP], and I would look forward to exchanging ideas or giving any information that you might need. If not me, then I can point you in the right direction.
Rob: Very cool. So do that. Go visit triton dot, it’s triton media dot com, right?
Patrick: Triton digital.
Rob: Triton digital. Sorry about that. Tritondigital.com, and Patrick dot Reynolds at Triton digital dot com. Patrick, third time. I’m going to get you back for a fourth. You may be the only one. Thank you so much for being here. I really appreciate your time.
Patrick: It’s always fun. Thanks for having me again, Ralph.
Rob: No problem. And for you who are listening, wherever you may be listening to this. It could be in your car, or it could be just sitting at work, whatever you’re doing, gardening, at the gym hopefully. Thank you for listening. Thank you for taking the time to absorb this content. We’ll see you next time on untether.TV. Thanks, Patrick.