NowPublic@SXSW2008: FM 2.0 - The Future of Radio

SXSW Interactive / Tuesday, March 11, 2008

FM 2.0: The Future of Internet Radio
 

PANELISTS: 

Nancy Miller, Pop Culture Editor, Wired Magazine
Anu Kirk, Director of Prod Management, Rhapsody
Tom Conrad, CTO, Pandora.com
Anil Dewan, Director of New Media, KCRW
David Hyman, Founder/CEO of MOG.com
 

DAVID HYMAN (MOG): It's clear that with online radio there is a level diversity that can't be touched in traditional terrestrial radio. So, everyone, what do we have to look forward to?

PANDORA:  We are trying to key into this transition from radio as a broadcast medium to radio that runs on a substream or unicast model. There are 150 million Americans who listen to radio every week and radio is really going to evolve once we have wireless access that will allow you to have radio with you wherever you go.

RHAPSODY: There was a first wave of internet radio that showed growth on a massive scale; there are now infinite number of internet radio stations available, with varying degrees of interactivity.

But I think the next wave of internet radio is going to focus on things like community -- ways to connect to other people listening to the same radio program, channel, or station at the same time,  and with emphasis on location-based content, depending on where the user is.

WIRED: For us the evolution of internet radio has been an issue in that we haven't really known where to plant our flag. We trying to figure out how these things are going to come together
we haven't been jumping on it because we're curious ourselves to see how the landscape is going to evolve.

PERSONALIZATION

MOG: There has been a real move toward ways of personalizing the model for experiencing internet radio:
- Music Genome Project
- Last.fm (collaborative filtering based on usage users)
- digital signal processing, to determine similarities between songs

PANDORA: I would suggest that there are roughly 3 categories of recommendation and personalization that are at play:

1) quantitative (identifying songs w/ guitars, certain melodies, etc)
2) qualitative (identifying related bands, genre, editorial voice, etc)
3) social/collaborative/community model (where users define and determine related music and customization options.

But I think that there is an industry-wide move away from any one of those models as being the definitive one.

RHAPSODY: What about the role of actual tastemaker -- the radio DJ? A lot of people still like having someone to guide them through the music.

WIRED: Having someone curate a show is the biggest appeal of terrestrial radio, like KCRW.

KCRW:  We are embracing radio. We don't see technologies as ends in and of themselves. Our question is how do we use these technologies to do radio better? How do we use the them to present the interactivity that the user wants, and give them choice within the context of what we feel our brand is about which is, fundamentally, curation. Our brand is about separating and selecting the best of what's out there.

MOG: But with so many available internet radio options, there is a real difficulty in finding well-curated stations. We need a solution to make those easier to find.

MUSICAL DIVERSITY & DISCOVERY

WIRED: I thought that we left terrestrial radio to find diversity online. Where is that diversity?  

PANDORA: We want to be blank slate for users to explore whatever they are interested in. We think about ourselves as a radio service. Radio is very very simple, you press a single button and there is music. Repetition is an important element in any radio-like service; people respond to music that they are familiar with, but the serendipitous discovery of new music is a big part of the radio experience as well. We try to embrace all of that.

RHAPSODY: I don't know, I think your definition of radio could be fulfilled by a CD changer.

The unending Pandora or Rhapsody stream of music is one way of getting beyond the traditional terrestrial radio experience but, for some, that other human set of values is still very important. And the online services aren't doing a good job of bridging that gap between automated music selection and curation.

KCRW: We went online back in 96/97 and we were one of the first stations to embrace podcasting but then we fell a little bit behind. Now we're thinking about new ways of creating content online, user engagement strategies.

However, with respect to musical diversity, KCRW definitely does have a point of view. We have a huge huge library of music (80,000-90,000 albums and CDs) and it is really true that we don't have any playlists. Everything that we play is chosen by the DJs based on what they want to hear.

RHAPSODY: We're here with a lot of people who love music but the fact is that most people in the world, well, don't.

PANDORA: You don't think people love and want to listen to music?

RHAPSODY: No no, I think there are a lot of people who want to take the time to go find out about new music. They'll be happy to listen to the music they've grown up with and aren't as interested in a high level of musical discovery. One of the great thing about our service and Pandora is that it enables people to discover new music with very little effort, which I think is good. There's only a certain amount of effort that people are willing to put in.

KCRW: People gravitate toward a certain sensibility, musically and otherwise. We cater toward a certain one but we don't really make the distinction between "lean back" and "lean forward" experiences.

PASSIVE LISTENING vs. ON-DEMAND RADIO

DEWAN:   Quick poll....how many people listen to on-demand radio (like iTunes) vs. passive radio, letting it wash over you, vs. 50/50?

Room is about  evenly split between these three options.

DEWAN: Online, music is a passive thing for me. I wonder if somewhere down the road, is personalized radio with ubiquitous broadband going to be a reality?

KCRW: Radio encompasses more than music, the universe is actually very huge. There's always a lot of talk about technology, but for us the question becomes what do we do with that technology-- such as location-based content and is there any way to play with the concept of storytelling>

DEWAN:  Wouldn't it be great to combine highly personalized radio (like Pandora) with a curated DJ'd experience (like KCRW). When you look at massive popularity of Project Playlist...through collaborative taste-sharing...am I going to want that social component involved down the road?

RHAPSODY: How important is the role of the curator and DJ in creating good radio? Couldn't an algorhythm reproduce the same process of ordering and selecting music?

AUDIENCE: But personal voice and storytelling is so important to the radio experience...

KCRW: It's not an either/or situation.

COMPETITION

AUDIENCE QUESTION: I use all of these services (praises all of them), but I want to know, as products, who are your competitors?

RHAPSODY: We talk a lot about who our competitors are -- and we talk about trying to gain "earshare". In terms of subscription services, there are only really a few competitors

PANDORA: We recently became the largest online radio station in the world, but we're still less than 1% of all radio -- and we try to compete with XM, Sirius, ClearChannel, but there's no way we're going to beat them.

KCRW: For us it's less of a concern maybe because we're a public broadcaster.  Any media site is a potential competitor but that's not what drives us, we have our content and that's where our focus is.

MOBILE RADIO

DEWAN: What's going to be the more popular format? Where is mobile radio going?

PANDORA: The best we can say about internet radio over mobile is that we have to wait another few years.

RHAPSODY:  3G is not a magic bullet. The amount of data you can push out to a mobile isn't on a level to where we'd like it to be.

MOG: We're going to have to wait until there is ubiquitious WiFi or Wimax.

KCRW: It's tough to play the technology game when everything is changing so quickly. So far radio and podcasts have been such a linear experience, it will be great to see what else we can do to experiment with those forms.

MONETIZATION

MOG: Record labels are looking at terrestrial radio, and trying to find ways to make money from all the places that are monetizing off of their content.  Can there be a proliferation of smaller online radio stations to sustain a business?

PANDORA: I think in the end, there's always going to be a challenge between the small guy who dreams of becoming the big guy, and what happens when you cross that threshold.

KCRW: We really believe that artists and labels should get royalties. But as non-commercial radio we think there should be different rates because that's not what our business model is based on. We're not in it to make money and we feel that SoundExchange needs to recognize that.

PANDORA: Does that mean that anyone who's not in it to make money should be able to play what they want and not have to pay artists or be able to have a lower rate?

KCRW: Well, we're a registered non-profit but we're saying that we are still willing to pay royalties. We want to do that. It's just a question of what that should be. What we do is very different from what ClearChannel does.

RHAPSODY: This is the difference between terrestrial radio and online radio. Terrestrial radio is very well regulated and has standardized rates, but that's not the case yet for internet radio, and I'm not sure that it should be. As it stand now, it's not clear how things will play out.

MOG: Online advertising has been so hard to monetize, so AOL can't even monetize their own radio. Question is: why is online so hard for advertisers to buy into?

PANDORA: Everyone's tried to do "audio ads" but no one wants to listen to those!

KCRW: We're trying to pitch to sponsors on the strength of our brand but if you play the advertising-by-numbers game, there's no way to win.

PANDORA: Most of the energy being spent in online advertising has been going toward video, radio just hasn't been a focus for advertisers. We've done all of our own display advertising ourselves. There hasn't been a lot of creative thinking around ways to monetize in this space.

MOG: Someone needs to create an ad-insertion system for online radio...

PANDORA: Actually Google bought a company to do just that but it's not working at all, based on what I've heard.

MOG: Note to advertisers, online radio  is an untapped market -- there is a huge opportunity here.