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Friday, December 20, 2013

(DASH) How Radio Competes On The Dash

12-16-2013

Access to capital is a primary growth driver for entrepreneurs in every type of business. In radio, there are two distinct classes of operators: those big enough to tap Wall Street, and the rest of us. Since launching my company?s first radio station nearly 30 years ago, I have been active in the capital markets as both an entrepreneur and a consultant. The onset of the 2008 recession prompted many venture capital firms to ?cash out? their equity in radio companies. Today, the need to attract ?new money? VCs is essential to stimulating industry growth.

Venture capitalists have recently expressed renewed interest in radio, primarily because of the ?rationalization? of station values reflected in recent purchase price multiples. Further, there is ample empirical evidence to suggest that radio-industry CAGRs represent a stable enough income to address risk-mitigation fears, at least to some extent. However, the question appears to be how investors can realize reasonable ROIs absent annual revenue growth well beyond the flat to low-single-digit annual organic growth forecasts for the foreseeable future. At best, the current forecast is ?foggy,? as one potential ?new money? VC succinctly termed it.

In this sense, the 2013 Radio Ink/Jacobs Media DASH conference, held in October, was a real eye-opener. Over the next year, at least 16 million new vehicles will replace those now on the road, with that figure projected to reach nearly 100 million by 2020. And every one of those new cars will be equipped with sophisticated in-vehicle infotainment systems that feature a user experience akin to a smartphone. Just like ISP and smartphone manufacturers, car companies aspire to become gatekeepers for a media
pipeline, in their case the digital dashboard, that allows them to mine and market metadata from the audience that content creators ? like musicians and radio stations ? bring to the table. But how do station owners make any
money after making the substantial investment that will obviously be necessary to ensure access to the Tier 1 OEMs? digital dashboards?

Answer: Focus on problem-solving. The best apps do!

The manufacturers? reps presenting at the DASH conference were clearly engaged in outreach. Why?

Well, for one thing, this summer California?s Center for Defensive Driving filed a lawsuit alleging that the MyFord Touch system in the 2013 F-150 experienced a host of problems, including ?system lockup and total system failure; periodic non-responsiveness to peripheral devices (such as MP3 players and smartphones); and periodic nonresponsiveness to voice commands.?

At least for the time being, most in-vehicle infotainment systems (like Ford?s) use proprietary software developed by third-party suppliers. But there?s nothing like a class action lawsuit to heighten awareness.

At DASH we learned that Ford has developed SmartDeviceLink, an open-source version of Ford?s AppLink mobile API, which is used for connecting mobile devices to the Microsoft-based MyFord Touch infotainment system.

This appears to be an excellent opportunity for the radio industry to partner with the automakers to form a working group focused on additional strategic partnership initiatives. Emmis? NextRadio smartphone app (with its broadband usage fee-free feature) is an excellent problem-solving app.

This working group should include radio industry affiliated software engineers to ensure that our industry is actively involved in working on the only logical solution to improving the in-vehicle infotainment system user experience: a standardized, open-source IVI operating system. GM?s Cadillac Division, Tesla, and Toyota are already rolling out these ?app-less,? HTML5-based systems.

Automakers are keenly aware of radio?s dominant share of in-car listening. Successfully leveraging radio?s reach to ensure that radio is part of the solution to the inconsistent IVI user experience would serve to preserve the industry?s dominant position in the digital dash.

Remember: Your audience refers to your station as their ?favorite.? Reinforcing that notion with unduplicatable content, community interface, attributable engagement, and aggressive marketing will put radio in an even stronger competitive position amid the tsunami of new autotainment
options available.

Paul W. Robinson is the CEO at Emerald City Media Partners. He can be reached at probinson@ecrp.com.

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