Moses Avalon is one of the nation’s leading music-business consultants and artists’-rights advocates and is the author of a top-selling music business reference, Confessions of a Record Producer. More of his articles can be found at www.mosesavalon.com.
Data plans will likely put a damper on Clear Channel dreams of mobile domination
If video killed the radio star, will smart phones revive him?
Announcements from Clear Channel have forced artists and their teams to seriously evaluate the position that mobile content will play in their ability to expand a fan base.
Clear Channel celebrated with a press release, indicating that they had almost completely sold out their advertising lots for mobile-radio commercial spots, ending a long dry spell for radio-advertising sales.
The significance for this is the fact that these sales are based on the perception that mobile radio is where tomorrow’s radio listener will be pointing ears for music consumption. Evan Harrison, a Clear Channel president charged with the duties of creating a unique online music experience, was quoted as saying, “Mobile is a strategic necessity for us.”
Record labels and publishers have been salivating over this development because mobile radio offers something that terrestrial radio never could — instant sales. In mobile radio, there is a “buy button” ever present. When a listener hears something he likes, he can download it. Boom! — instant sale and instant buyer data. It is a dream come true for music sellers.
And a nice dream it is, but is it a sound one? Can mobile radio revive music sales and the radio star?
Yes, Mobile Will Save the Day
Here’s what’s going through the minds of Clear Channel’s digital execs, Pandora, and other mobile-music services that mimic the old-style radio format (which, on artist and songwriter royalty statements, is called, “non-interactive streaming”):
According to Forrester Research, a market-research firm, the amount of time that consumers listen to mobile radio is rising staggeringly. The firm claims that the average user tuned in to Clear Channel’s iheartradio app. for 137 minutes a week in July. This is up from 120 minutes at the end of 2009. Conversely, the amount of time that consumers spend listening to traditional radio has decreased four hours a week from its 2005 benchmark of 10 hours.
“There’s a tremendous amount of interest,” says David Goodman, president of CBS Interactive Music Group, which powers radio apps for AOL, Yahoo!, and Last.fm.
It seems obvious from all this optimism that artists should begin doing DJ-booth tours for mobile-radio stations. (Except that there are no DJs in mobile radio. Computers make the playlist based on users’ listening habits. And there are no “stations” because it’s all done on a massive server.)
So…mobile good, right? Not so fast.
No, Mobile Don’t Mean Nuttin’
Mobile is just another sales avenue, but nothing special — at least not yet.
The problem with all this hyperactive hype that research firms are famous for is that it often doesn’t take into consideration how much new things cost the consumer. These conclusions regarding mobile are no exception.
The big problem with the theory of “more listener hours = more interest” is that these stats were gathered over 2008-2009, when people had unlimited data plans. That perk ended in June of 2010 when AT&T announced the end to such indulgences. Customers are now charged for all data that they consume.
This sets a barrier to how high the number of hours the average listener can tune into mobile radio. Most people who use smart phones for data uploads have a plan of $15 a month. This allows them about 250 megabytes, or roughly 2 hours of streamed audio content. This will not be satisfactory to those users who also need to save some data for useless things like E-mail, downloads, apps, movies, and — of course — porn.
Even those with deluxe plans of $50 will not be listening more than a few hours a month. The likelihood is that they don’t have that big data plan because they really, really love streamed music. They have it for uploading large files that they create for work to FTP servers.
But terrestrial radio is still free.
So raise your hands — who will pay $15-25 a month just to listen to Clear Channel or Spotify when they can hear the same playlist for free in their car? I’ll save you some market-research fees, fellas: no one.
For mobile radio to recapture the glory days of regular radio, AT&T and Verizon will have to sell a truck-load more smart phones and will have to give away unlimited data plans for quite some time. Or they could put mobile radio in cars and bundle the data plans sothat the consumer doesn’t feel the pinch.
Could it happen? Maybe. So far, Clear Channel has not announced plans for anything like this, and the trend seems to be going in the opposite way — in the near future, we’ll be paying more for large data plans, not less. So I’m not holding my breath that this will restore music sales or the radio star to the days of wine and roses.
Your thoughts and suggestions for Clear Channel?