Leaping The Digital Divide (08/04/08)
In just two short years, Triton Media has emerged as a formidable force in the radio business. With a focus on maximizing the cross-promotional opportunities between broadcast and digital, the company since its August 2006 founding has built a broad, multi-faceted stable of assets. In June, their acquisition of Jones Media caught the industry’s attention, adding a high-profile talk programming slate to the wide variety of music content provided by the Triton Radio Network.
On the heels of the Jones deal, Triton announced the acquisition of Radio Companion, which provides to radio stations web applications and tools aimed at generating new local revenue. The back-to-back timing of the two deals is indicative of the company’s two-pronged approach, as CEO Neal Schore and COO Mike Agovino both believe deeply in the synergistic opportunities between radio and digital. This belief can be seen across the rest of the company, which also includes ownership of MJI Interactive and Fusion Innovative Marketing and partnerships and ownership stakes in StreamTheWorld, MusicToGo Media, and Mass2One Media.
“We believe that bridging on air and online into an easy-to-use, easy-to-execute engagement platform for the listener will make it a fantastic time to be in radio,” says Schore. “Broadcasters do a great job working on local content over the air. We’d like to help them with the expansion of that local content into some digital applications and digital opportunities.”
Agovino adds, “Companies are coming in and out of this space every day with products, services, content plays that they think bring a value proposition back to local media. If they’ve got something we think is great, we’ll figure out how to productize it and take it back to the radio medium, and we’ll figure out how to do that efficiently.”
With a determined focus and backing from Oaktree Capital, this management team is aiming to revolutionize how radio does business. And they believe the timing is right.
Says Agovino, “This is the year radio has awakened.”
RI: How is the industry doing on taking radio into the digital age?
Neal Schore: We believe that bridging on-air and online into an easy-to-use, easy-to-execute engagement platform for the listener will make it a fantastic time to be in radio. Broadcasters do a great job working on local content over the air. We’d like to help them with the expansion of that local content into some digital applications and digital opportunities. There is a great opportunity to insert the visual aspect of the medium that radio broadcasters may not be looking at or focusing on now.
Mike Agovino: When you’re taking 2 percent or less out of the local Internet pie, you’re not doing very well. I would qualify that, though: The first wave — the 1.0 of local Internet spend — has been built around classifieds, which were naturally going to be taken by directories and newspaper. When you see that $12 billion projected spend for 2008 and radio is taking less than 2 percent of it, but such a huge chunk of it is classifieds, it throws the whole thing out of kilter.
This is the year radio has awakened. For example, what happens when oil hits $150 a barrel? How does that trickle down to the radio business? That perfect storm has done some good things for radio. It has caused enough disturbance to get people to understand that they no longer have a choice: They have to focus on how to get their content to different distribution platforms. They have to focus on how to drive page views to their website, how to get content out there virally, how to add a dimension of video to everything they do, how to make their content available from anywhere, at anytime.
MJI Interactive President Margaret Shiverick invented the word revenize. Attention moves before advertising dollars move, but once the attention gets driven, you have the opportunity to “revenize” that attention. As we drive more traffic and deliver our content in different ways, we develop more opportunities to revenize it. We’re seeing some pretty significant revenization of our content and our services.
RI: How do you focus listeners’ attention on a station or its website? What calls to action get someone in a car to go to a website when they get home or to the office?
MA: With our clients, we use the language of “taking back the first click.” How has Google, that monster of a business, been built in half a decade? Through radio, television, newspaper, word of mouth, people become aware of a company, a story, a person, and the first thing they do is go to Google and click. We talk to client stations about taking back that first click.
At the end of every advertisement, we encourage advertisers to attach some keywords. A tire advertiser would just say “tires,” with an online promotion that ties back to that campaign. The kinds of things that drive people back to the station site to find out more.
There’s a blurring of the lines between search and discovery right now, and radio is in a great position to take advantage of that. When listeners hear a song on our radio station, instead of going to AOL Music or ArtistDirect or LaunchCast, they can go to the station site to discover that song or artist, to buy the download, buy a ringtone or wallpaper, look at a photo, read a biography, read the song lyrics. We need to be the place our content comes to life, rather than going to Google to dig deep.
NS: The local radio stations have some of the most powerful brands in their markets, so using that power, along with more tools to engage further, is a natural fit.
RI: How do stations make it cost-effective? How do they make the business case for online services when their core business is struggling?
MA: It’s about getting people to understand that the opportunity moving forward is so much greater than what they’ve got to invest today. We give stations the option of how they license services from us. All of our products are available for barter, so if a broadcaster would rather trade on-air or digital inventory, or a combination, than pay us cash, we can do that. We present a revenue model for an app service, piece of content, whatever it is, that is going to be pretty close. We know where there is big margin, and we know where it’s tighter.
Probably the most expensive thing for stations to do right now is on the streaming side. The solutions we bring are fairly reasonable, but that’s probably the toughest putt stations have in terms of justifying the spend against what the revenue is likely to be today, and that’s driven by a royalty base that is unfair.
We have been able to vet through many different companies, and we kiss a lot of frogs. Companies are coming in and out of this space every day with products, services, content plays that they think bring a value proposition back to local media. If they’ve got something we think is great, we’ll figure out how to productize it and take it back to the medium, and we’ll figure out how to do that efficiently.
Many of our clients are doing everything with us. If somebody wants to, we will build their entire digital strategy for them, around their brands, needs, etc., and if they desire to do every bit of that in barter, we could.
NS: One of the other key contributors, besides barter, is knowledge and execution. We learned early on that broadcasters need feedback and a road map for how to execute, and that’s one piece of the puzzle. It’s not just the expense side. So we’re heavily focused on making the execution, implementation, revenization, all elements of it, as simple to go to market with as possible, in a very user-friendly way.
RI: How did the Jones deal come together, and why did Triton target Jones?
NS: Our goal from the time we launched Triton was to converge on-air, online, and on location. By bringing Jones Media Group and Dial Global together, we can offer a powerful content position and a meaningful set of content tools to the affiliate base. We have a great opportunity to allow broadcasters to engage at the deepest levels with their audience, as well as providing the revenue tools. We are working closely with our producers to provide a direct relationship between over-the-air content and that content’s application online.
Dial Global’s David Landau and Ken Williams and Excelsior Radio’s Spencer Brown sat down with Mike and me to discuss how we wanted to deploy capital and resources. Through multiple talks we’d had with the Jones team over the last several years, it felt like a very natural fit. Together, Dial Global and Jones have what we believe to be the best mix of producers and the most dynamic, relevant team in network radio. Our management team determined that having all that under the Triton umbrella was a very powerful offering to the marketplace.
RI: Under the current royalty structure, is it worth it for music stations to get into streaming?
MA: Yes, and they have to. Chrysler has announced that it will make WiFi available in certain of its 2009 model-year cars. IP radio is coming to the car and to the house —everywhere — and you’ve got to distribute your content on that platform. There are many ways to monetize that content. Experiences can be created and content can be embedded in the player that engages the audience in many different ways.
If I’m streaming a song right now, I’m also seeing the lyrics. If I like the song, I’m able to get the ringtone, the wallpaper, the concert T-shirt from last year. Advertisers can integrate that into an on-demand player that combines video, audio and consumer-generated media in very cool ways. I’m using the power of the airwaves to bring the audience into the conversation.
If I were running a radio station, I would not only be streaming that brand, I’d be streaming 20 varieties of that brand. I would sub-niche my playlist into subgenres, in musical time periods, etc. I’d inject my air talent into those streams and have everything live under my base brand. People are selling more and more of that inventory every day. And the value proposition back to the advertiser through that distribution platform is so much greater because we get real-time measurement. We know exactly how many people listen, how many people click through, how many people watched the video.
We’re not dealing in a world of estimates. We’re not going three months back. We’re dealing with a distribution platform that will become primary to our revenization and our ability to engage an audience. I think that is why we’ve had such a challenge on the royalty side, because [copyright owners] see that it’s vital to radio stations to be able to do it, and they can take that unfair approach.
Companies are making money in streaming. You need a quality solution, quality analytics and ad insertion, and a sales force that is trained the right way. The stream is nothing to bonus with an on-air spot. It’s nothing to sell the same way that you sell on-air.
RI: Does streaming offer HD Radio a chance to gain wider consumer exposure?
MA: If the technology were widely distributed, the value proposition is there. Unfortunately, the public has voted with their pocketbooks so far, and they haven’t voted in favor of it. We’ve got 300,000 HD radios in distribution, and that’s not going to get it done.
Thirty-odd million people streamed in this country in the past 30 days. That’s 300,000 HD radios versus 30 million. I’d love to have all the promotional time that has been spent on HD Radio promoting a lot of the other services. Radio would no doubt be making a lot more money.
RI: How can radio establish itself among the existing social-networking sites?
MA: Almost any radio station website you go to will have some kind of loyalty or VIP community. We look at that as an engagement platform, the ultimate expression of the relationship between the on-air brand and the audience. It already has all the qualities of community. Add in the feature set of social utilities — the ability to upload content, to build subniche groups of friends, to be part of the conversation in every direction.
I have 19- and 20-year-old children, and MySpace and Facebook are yesterday to them. They’re very burned. I think we’ll see that the radio community is a tight-knit group sharing a lot of values, and geography almost always plays a role there. Radio has been community for years, so we absolutely believe in the ability to use the techniques and technology of social media under the brand of radio. We’ve got many stations making very significant amounts of money there.
RI: What about user-generated content? What are the necessities?
MA: The biggest challenge is that you need to have human content review. You can’t let everything that a user would post show up. There are some question marks about the expense of that content review, and so many different vendors coming with apps that have some kind of social element to them. Every radio station, from the one on the top of the ranker to the one on the bottom, has a core audience, has a high affinity score with that P1 audience and has the ability for that audience to participate in the conversation.
Think about a Little League coach who wants to post a video of what happened in last night’s championship game on a Sports radio station, or about how huge high school football is in certain parts of the country. Those are things radio has the power to pull. Then think about the ability to do promotion around that, and allow consumers to be part of the conversation online by contributing content.
The audience has always been part of the content with radio. The opportunities on the social side are huge because they’ve always been part of the conversation, and now we can make them into an ever bigger part. With our social broadcasting product, visual is part of everything radio stations do, and the audience is part of it as well. So we’re all watching what is happening in-studio, we’re all watching the street team on location or the station on an appearance.
The audience is uploading whatever kind of content they want to load. They’re chatting to each other, they’re chatting with the host, and the host is deciding what pieces of content from the audience they want to share back with everybody else in the audience. It’s incredibly interactive. The fact that we have that mouthpiece, and then can build all of that interaction around it, is a huge opportunity. I think we’ll see an explosion on that side in the next 12 months, and there are a lot of companies scurrying for that space.
RI: What’s the next big thing? What things aren’t here yet that will matter to radio?
MA: There are huge opportunities in the video content world. Take a tour of radio station websites today and you will see a lot of sameness, stuff that looks like it looked in 2006. You can expect to see an alteration of the philosophy of “I’ve got to drive as much traffic to my website as I can” to “How do I take my content to the traffic?” Websites will be modular, with all the content that exists there widgetized, so I can embed it anywhere I want to and take it with me. Think of it as a “station in a box” — there’s no reason I can’t take the content of my favorite radio station with me everywhere I go online, whether that is spoken-word content, music content, advertising content. You will see more of the Web 3.0 thinking coming to what radio has done so far.
RI: With backing from Oaktree Capital, are more acquisitions in the works?
NS: We spend a lot of time looking at different opportunities, both growth and strategic. When opportunities arise, we look in very real time to see how they strategically fit into our company, and if we see a strategic fit, then we work swiftly and quietly on a proprietary basis to get a deal done. It’s likely there will be additional acquisitions.
Take a look at each acquisition we’ve made over the last couple of years. In each and every case, there has been a very strong management team that winds up becoming our collective partners. We have a deep belief in “divide and conquer,” and that has allowed us to both grow and prosper in a relatively short period of time.
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