June 30, 2011
When Slacker starts powering AOL Radio in September the company expects to see its listeners double thanks to what AOL brings to the table in terms of listeners. And as everyone knows by now more listeners in the online radio game means more money paid to play that music. In the AOL/Slacker deal that's a cost being picked up entirely by Slacker. That was another one of the reasons, we are told, AOL went with Slacker. For others in the discussion, it was a hard pill to swallow if you have to pay the music fees and not get to keep 100% of the revenue. But Slacker's Jim Cady is convinced his model will work, picking up those fees, and he took the deal with AOL.
The head of AOL Radio Lisa Namerow wouldn't talk about the specifics of the deal, "We don?t really disclose what the business terms are. That?s kind of nitty gritty and we don?t disclose the nitty gritty?s." SVP of marketing at Slacker Jonathan Sasse says Slacker will be footing the entire bill. "The expense and the monetization are our responsibility? with Slacker ? each new and returning listener is a net positive and given the infrastructure ? this should continue to scale with AOL."
Namerow has a tough job at AOL Radio. While slightly wounded, AOL is still a huge brand name, yet you don't often hear AOL Radio mentioned as much as the other online radio players like iHeartradio, Pandora, Lastfm or Slacker. It's Namerow's job to get the word out about AOL Radio, which has been around now for a decade and has gone through several name changes (do you remember Spinner radio?). "I do think AOL Radio is a very important part of the overall AOL Music strategy. I think when you have a company with a lot of different brands, it's like having a lot of children. It's about balancing the brands and giving everybody as much attention and enough marketing to create awareness. There is only so much to spread around, whereas someone like a Pandora, or a Clear Channel , that?s their core business. That?s what they do 24/7. Everyone who works there, they work on radio. We are lucky to be associated with a lot of strong brands at AOL. We all kind of have to share the spotlight."
Namerow says AOL Radio has about 3 to 4 million listeners per month, depending on the month. "It?s very cyclical. You'll see December is our biggest month and then it falls off a little bit during the summer time. We haven?t moved to Slacker yet, but that?s really what the audience rate is, anywhere between 3 to 4 million depending on the month."
As AOL switches over to Slacker from CBS it's touting fewer commercials, which even the online world is learning turns off listeners. Namerow says she was getting a lot of complaints about the amount of commercials being played. She and her staff go through and respond to every e-mail from listeners. "I think, what we like to call the ?secret sauce? in radio, is the emphasis that we have on our listeners. We are listening to what they have to say, specifically the feedback that they send us. We get feedback everyday. Myself, along with my team, we actually read the feedback every single day so we can respond to the comments and questions they have. We do that in real time. Usually we do that within 24 hours. One of the things that they have noticed as time has progressed is the increase of ads. They told us they don?t like ads. But have you ever heard a listener say they like ads? You have to do what you have to do to pay bills. That?s what we told them. We said to them, ?We are sorry that you are unhappy, but we have to pay the bills. Every time we play a song, we pay for that song.? We were just very transparent and open with them, as we have always been. Have we gotten complaints? Yes, but I think you could ask that question to any radio operator who plays commercials and they will get complaints about commercials."
Namerow describes the three tiers to be offered to listeners when the change is made from CBS to Slacker. "The first tier is the basic free tier, which allows you to skip a certain amount of songs per hour. It also allows you to create personalized radio stations. You can set pre-sets. Very much what we have today plus the personalized radio. You have the second tier, which is a paid tier ($3.99 per month), which is Radio Plus, which is basically, ad-free radio. You get all of those features you get from the free product but it's ad-free. You get unlimited skips, you get complete song lyrics. Then you move to the third tier, which is Premium Radio ($9.99 per month). Premium Radio is everything you get with Radio Plus, but you also have an on-demand feature, which is super cool. It allows you to play an artist, songs, or albums on demand. Let?s say you are listening to a radio station and you were listening to the new Britney album, or any Britney song that?s on a top pop station, you could actually click on either the album name and listen to the entire album, or you could click on Britney and see the full catalog of Britney and you could listen to all of her tracks. That?s what we call the On Demand feature in the Premium Radio, the third tier. Also, in that third tier, you can create custom play lists. It is pretty comprehensive in terms of interactivity. It is something we are excited to be able to offer our listeners, the next level of a radio/music experience.
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