Interesting news out of Saga Communications, a broadcast conglomerate with more than 100 stations in nearly 30 markets. Saga has decided to limit its online-streaming presence to the stations it owns in the top 100 markets.
For those stations that will stream, Saga plans to cap listening geographically, limiting online access to those who actually reside in the stations’ on-air coverage area. In addition, Saga may implement a 90-minute time limit for online listening: listeners will be prompted to click something to continue the stream after the initial session. If they don’t respond, they’re done.
Considering that the majority of Saga’s stations are outside the top 100 markets, this is a significant diminution of the company’s online streaming presence. Saga claims the cost of streaming is prohibitive, as it spends $800,000 per month to provide station streams, while the revenue it generates from them is paltry. Most of this money goes to pay performance royalties on the music it streams.
Contrast this with the actions of radio’s biggest player, Clear Channel, over the last year. Clear Channel’s building what it hopes to be the go-to portal for streaming broadcast radio stations in iHeartRadio.com. Not only has it repositioned its broadcast properties to act essentially as billboards for the company’s online presence, but it’s entered into several agreements with other broadcasters (both commercial and noncommercial) to aggregate their streams exclusively through its portal.
Clear Channel is also taking steps to attempt to control the cost of streaming royalties. Earlier this month, the company broke from the rest of the radio industry, striking a deal with the Big Machine Label Group to pay the first-ever performance royalties for broadcast airplay. In exchange, the company gets a discounted rate for streaming royalty payments to the label.
The reaction to Saga’s decision has been muted but critical. Broadcast consultant Fred Jacobs thinks broadcasters are being short-sighted by boiling the streaming issue down to the bottom line. “There are some activities that inherently generate revenue while contributing to the brand,” writes Jacobs. “There are other endeavors and investments that simply aren’t going to make money – at least in the near term. Not every strategy and tactic pays off in dollars….But if radio is going to continue to promote [its ubiquity], the cost of playing is getting higher.”
The bigger picture suggests that broadcasters still fail to see the Internet as an integral part of their future. As of 2009, less than half of all radio stations in the United States even had online streams, and there hasn’t been much growth since then. Arbitron data released last year puts streaming penetration among broadcasters at a whopping 56%.
It’s surprising just how reticent radio broadcasters remain to the convergence phenomenon. Navigating digitalization via HD Radio is proving to be a rocky road at best. There’s increasing evidence that the internet is just the first iteration of what is likely to be a universal communications platform on which most (if not all) future media reside. The longer it takes traditional broadcasters to realize this, the less promising and distinctive their own future appears to be.
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