Netflix stock rose $60.48 cents when trading closed yesterday to end at $409.28.
Netflix can be a volatile stock, but there is no denying its appeal not only to consumers but also to shareholders.
The market liked that Netflix beat its estimates for new subscribers outside the U.S. and that there is a lot more upside left. Netflix is in 50 countries and it wants to operate in 190+ so you can see why the stock price jumped.
More importantly Netflix is a business the radio industry ought to seriously study.
Not too many years ago Netflix was a snail mail dependent business when digital was just beginning to come of age. They were making plenty of money renting movies to customers but the future was not assured.
Just ask Blockbuster which went down in flames at the hands of the digital revolution when it refused to blow up its old model and innovate a new one.
Netflix not only adapted and moved toward their current digital market at about the same price per month as their mail service but also disrupted the network television business and cable in ways they couldn’t see coming.
Parallels to radio would be – a traditional medium, dependent on analog listening as an infinite number of new devices became available – namely the smartphone.
Netflix moved their business to digital.
Radio moved their business to digital streaming.
So why didn’t it work?
Streaming rarely makes money and in fact allows advertisers to bargain for lower on-air rates when they buy streaming (or vice versa).
Netflix encouraged binge watching – another disruption, this time a sociological one where consumers could take control of how much, when and where they could binge on content.
Suddenly network television was so not necessary. HBO caught on when it wisely launched HBO Go. If you had a cable subscription, you got HBO Go. Now you can just get HBO Go with no cable subscription – another disruption.
Hulu Plus modeled themselves after Netflix. Even CBS had to make its programming available on an app but did not include pro football and included a time delay for programming that aired on their local affiliates – a weak proposition.
Radio became background noise for riding in a car. Station owners were more interested in cutting expenses than creating new content, which, of course, is what Netflix went and did by doing deals for original programming like House of Cards, Orange is the New Black and lately Marco Polo.
Netflix changed listening habits.
Radio allowed digital competitors and devices to change their listening habits.
The takeaway from all of this is that the radio industry can learn the path to success from Netflix.
Create content for bingeing – not just 24/7 programming.
No one does this – and they had better learn how.
Institute subscription fees for some kinds of programming.
No radio content is apparently even worth $1 a month – I can tell you people will pay for something unique.
Don’t get distracted by podcasting which is tantamount to spoken word radio repackaged for the Internet – and learn how to do storytelling, an entirely new approach to content.
These are some of the things I am going to curate at my upcoming media conference in Philadelphia in less than 2 months from now. It’s worth your time because doing the same old thing over and over again is not an answer to the digital revolution.
And now with more Millennials than Baby Boomers – some as old as 33 and smack dab in the money demo sweet spot, we can do this – and must do this.
Here are radio’s top 10 critical problems – our goal is to attack them in innovative ways.
We can make a real difference not by doing the same things, but also by drilling down with innovative thinking on these following ten problems that must be solved to have a positive outcome in 2015.
- Too Many Commercials – How spots are scheduled can make a difference. Also, the length of spots in each stop set. There is much that can be done. To proceed as is is not a solution.
- Unremarkable Programming For 70 Million Baby Boomers – All the focus is on young money demo Millennials. Baby boomers have been radio’s most loyal listeners but that’s changing now. Ignore baby boomers, target them or better yet discover what the two disparate groups have in common.
- Outdated Morning Shows – They like personalities but increasingly they don’t like much else about morning shows. Focus on three new features to replace traffic, time checks and weather. Yes, they don’t need them. But consider these three potent options to replace tired old staples of morning radio. (And you can sell them!)
- Music That Is Too Repetitive – Audiences have hated music repetition on radio for decades but they had few alternatives. Not so anymore. Two new strategies show promise. One adds more new music without watering down the hits. The better approach is to rip up the traditional playlist and present the music differently.
- No Compelling Reason To Listen Longer – Radio TSL has been down every year since the early 90’s. Under 30’s don’t even listen to any song all the way through even though music radio is built on the assumption that if you play the right songs, the audience will stay tuned in. Now, there is a way to keep listeners from straying and it isn’t longer music sweeps.
- Don’t Like the Way Stations Talk To Them – Sounds dated, insincere. Too much bragging and hype. It all sounds like radio is out of touch. Talking down to listeners whether we mean to or not. Surprising words that turn off young audiences when used on the air, in promos, sweepers, imaging and commercials. Learn them and overcome this objection.
- Radio Is Not Authentic – Demographers have discovered 5 things that Millennials crave. Do these 5 things every hour of every day and radio becomes more relevant to the 95 million members of this age group. One of the 5 things they crave is more authenticity. Learn the fastest way to master being truly authentic to Millennials but also the four other expectations that radio is currently not meeting. They are screaming this out for you to hear.
- Lack of Music Variety and Customization – Spotify, Pandora and YouTube are killing radio when it comes to variety and customization. There may be no way to compete with that, but audiences are beginning to tell us what these streaming services are lacking presenting a great opportunity for responsive radio stations to do what streaming services cannot do.
- Outdated News and Talk – Two staple radio formats are seeing audiences erode or attracting unsellable aging demographics. News stations don’t just sound like their father’s radio station – they sound like their grandfathers radio station. Droning on and on with sleepy features designed for station sales managers not for listeners to crave. Conservative talk is also over because audiences want compromise not red meat. And Progressive talk radio never really worked. It’s a no-win. But spoken word is something young Millennials like, really like – here is the spoken word station of the future (bring an open mind).
- Don’t Know Where the AM Band Is – Think about it. There’s nothing for audiences under 60 on AM. So you may be thinking that younger money demos won’t listen to an AM station, right? True, unless … well, I’ll show you a number of things you could do on two tin cans hooked together with a string that Millennials would eat up. Will you take that challenge? Because I’m going to do it and you’re going to want to brainstorm on it. Forget the FCC. AM needs to disrupt FM the way FM disrupted AM.
PLUS, What Audiences REALLY Want In Digital Content …
There is nothing worse than doing something well that doesn’t need to be done at all. Some stations are doing impressive digital initiatives that audiences simply don’t care about.
Instead, drill down on what listeners really want in digital and get a better return on your investment in time and money:
- Storytelling Instead of Podcasting
- Short-Form Video Revenue Stream
- Non-hyped Social Media Beyond Facebook and Twitter
- Content Audiences Can Binge on Just Like They Do Netflix
- Apps Not Websites (and That Includes Radio)
This is a day worth your time and investment.
A clearly defined agenda, creative and innovative solutions to apply and a forum to discuss and hitchhike on new ideas that you hear.
Independent broadcasters and digital entrepreneurs are invited to the 6th annual Media Solutions Seminar at the Hub Conference Center March 18th in Philadelphia, walking distance from Amtrak’s 30th Street Station and 20 minutes from Philadelphia International Airport.
Buffet breakfast, lunch and all breaks prepared by James Beard award-winning chef Jean-Marie Lacroix, former executive chef at The Four Seasons included.
Less than 2 months from today.
Contact Jerry about the conference and group rates here.