The Music Radio Solution

DJs are history.

Streaming services can’t attract enough subscribers.

Apple worries everyone with what they are planning to do with their anticipated “cloud” service.

Music royalties have killed Internet radio and are a constant threat to the survival of the most popular Internet radio service of all – Pandora.

Apple doesn’t believe in putting FM chips in their most popular mobile devices. And even when they do (like in iPod Nano), it doesn’t make a difference to the radio industry.

So what is really going on?

Music is the one thing that consumers can’t live without – maybe next to Starbucks – and yet the future of music delivery has never been so uncertain.

Or is it?

I am seeing a scenario that should start to unfold in the near future that, if correct, will totally redefine the radio industry, music business and other media relying on music as a core attraction.

May I take you through it?

Big bad Apple is definitely up to something with the purchase of LaLa, the streaming service that it promptly shut down. You see, Apple was after LaLa for its "cloud" technology. I don’t believe Apple wants to get into the radio business as we know it. I don’t think Apple even likes radio as a business.

What it does like is its own concept of the iTunes store with 100 million credit cards on file ready to buy music for Apple devices.

So I wouldn’t be surprised to see a Steve Jobs announcement in coming days where a new Apple streaming service will make consumers’ iTunes libraries available on the “cloud” anywhere, anytime, on any device.

It’s hard to say how Apple will price it, but Apple is good about pushing price points without breaking the consumers’ wallet (with the exception of the first iPhone when Apple promptly cut the price and rebated the overcharge).

Apple will use the "cloud" to make your iTunes library available everywhere in an instant.

And maybe – just maybe – to allow you to preview music you may want to own. The “cloud” will enable this.

But I’m not counting out an Apple music subscription service, either. With Steve Jobs predicting Apple for fun and profit is a fool’s game.

Labels love subscription plans. They would support it. Years ago Warner Music told me they wanted ISPs to charge consumers a monthly fee for all the music you could eat, but that plan was dead on arrival. Try to get ISPs to agree on anything.

The streaming service Rhapsody has gone from 800,000 subscribers to 650,000 – a 19% drop in the past year.

Spotify hasn’t gotten off the ground in the U.S. yet and while consumers seem to like it in Europe the jury is out as to whether the financial model will work in a world of free filesharing.

So, it seems inevitable that consumers will keep their music on their mobile devices and add “cloud” accessibility thus reducing the role of terrestrial and satellite radio in acting as a jukebox.

But …

If radio could reverse the self-destructive trend of eliminating personalities and “music authorities”, it could and probably would present an attractive package to even young consumers who hadn’t previously turned to radio for music discovery.

You also hear me mention the term music discovery a lot because young people tell me that music discovery is exactly what they want.

More ways to connect with more and different kinds of music and artists. Radio used to serve that purpose with the dj as the music authority. Voice tracking and syndicated voices are not the same. Ask any young music consumer.

Radio, therefore, can get a leg up on what is inevitably going to happen by hiring (or re-hiring) personalities who know music and/or employing music "authorities" in their genre as well as putting specialty programs on-air that are about discovery.

Just driving terrestrial listeners to the Internet or mobile Internet, I am sensing, will not work.

I’d also like to see the radio industry announce at the NAB Radio Show this September in Washington a new agreement where the industry would agree to pay a small performance fee in return for very favorable Internet streaming and podcasting rates.

While I don’t think it is fair for radio, the longtime drive behind music sales, should pay this fee, reality says the time might be right for a compromise and our new NAB President seems to be that kind of a guy.

Important because the mobile Internet and the Internet stream will be vital to radio’s ability to make up for inevitable lost terrestrial listening in new media. What an opportunity.

The sky isn’t falling unless we take our eyes off the consumer.

Consumers are dictating what devices they prefer, how they want to listen (in shorter segments), where (on their mobile devices) and with whom (their social networks).

This is all good for us – we’re radio, the original social network and mobile device that may have lost its way during consolidation but can find the future by looking to the early adapters of new media.

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