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Jerry Lee: "Streaming Your Station Is A Bad Business Model"

Jerry Lee may go down in history as one of the most successful independent broadcasters in the history of radio. Operating in the 7th largest market in the country, Lee's WBEB dominates. He credits a lot of his success to spending tons of money or research. Lee will research and test anything that moves to get a real time feel for whether or not something will work. How many radio stations can say they test morning show bits before putting them on the air? What Lee does not care too much for is streaming. He says his view on whether stations should stream is different than everybody else.

WBEB stopped streaming its signal over two years ago, according to Lee. "First of all we are one of the few stations in the country that doesnt stream. The reason we stopped streaming is that its a bad business model."  Lee says eventually royalties will kill streaming. "Right now its a bad model without that.  If you take the combination of the cost of streaming and the royalties you are paying now, it is a stiff dollar.  You are paying a lot of money versus, roughly, 3% on terrestrial radio to BMI and ASCAP. The problem is going to get worse, because the royalty tribunal, has no incentive to do anything but raise rates.  They can do anything they want.  As an industry, we have absolutely no negotiating power.  Theoretically, you get to the point where they want 90% of the money.  Why go that direction?  Its bad now, its only going to get worse."

Lee says "the chip" in the phone - and elsewhere - is the next big thing, not streaming your over-the-air signal. "One of the things that is going to happen to streaming, is a company called SiPort, who has developed an HD chip that is incredibly small, that will fit into a smart phone or a car radio or anything else. It will sell to the manufacturer for about $2.  You will have HD on it.  With HD you will be able to do things like couponing and you will have interaction between the listener and the station. The beautiful thing about this is, its not taking up any bandwidth.  All of the major carriers are doing away with bandwidth or they are starting to charge for bandwidth. Thats where its going to go.  In my opinion, streaming is going to fade out.  There will still be some niches like the Pandoras of the world. I dont think terrestrial radio, in the long run, will continue to embrace streaming, when they can have this great signal on their cell phone with HD radio."

Lee goes on to say that radio stations should focus on selling over-the-air advertising. "The other thing about digital is that you should use your website in combination with your advertising to make everything you do at your station more valuable.  For me to go out and sell digital, my website, etc, is playing with pennies against the dollars I could make by becoming sharper at selling my product.  The money comes from selling commercials. Put all of your energy there. The Internet does not create desire. Radio and television create a desire. The internet is a great fulfillment mechanism. The Internet is a great information mechanism, to get more data on what you want to buy.  It performs a great role.  It does not create a desire for the product.  We work very closely with the advertiser to help them take advantage of our website to move product."

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