Why Are Spotify & the Record Labels Getting into Podcasting?

Go figure.

Spotify, Apple Music and the other streamers have become the new radio among in-demo listeners.

But they barely make a profit because music rights fees are so high.

The music industry is soaring.

So why are streaming services like Spotify going into podcasting, a place where Apple already resides without earning its usual profit margins.

Spotify is spending hundreds of millions to build its podcasting platform concerning the music industry.

Now the record labels are jumping in.

Two just launched podcasting deals.

Radio can’t seem to profit from this nascent business.

What do the record labels know that radio doesn’t?

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The Westwood One Dilemma

Lew Dickey didn’t spend $260 million for Westwood One only to see it wither away like this.

Mary Berner all but announced everything is for sale at Cumulus publicly (except Dallas) but she artfully stayed away from commenting on the big elephant in the room – their underperforming radio network.

No statement of support and continued ownership.

No growth plans other than previously mentioned podcasting rep deals.

No sale sign.

Yet Westwood One has two big insurmountable problems begging the question – what are the Cumulus lenders currently overseeing the company going to do with Westwood One.

Are there any interested buyers remaining?

Why is their profit shrinking faster than anticipated?

Is there a plan for shedding Westwood One entirely in a breakup?

The mixed signals as described by those behind the scenes.

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Entercom & Cumulus Outsourcing

Radio is fast adopting outsourcing as a business model.

Nothing is sacred. 

The newsroom at Entercom’s 1010 WINS for example is an expense so great that Entercom is urgently looking for ways to cut the head count down.

But now, faced with the inability to grow revenue, control costs and post a real profit that isn’t adjusted to look good, Entercom and Cumulus are ready to adopt new ways to run radio stations as if they were SiriusXM.

How programming, management and sales will be affected at these two radio groups.

Cumulus and Entercom both have ambitious outsourcing plans.

The time frame is aggressive.

Ignoring the risks they are fully aware of – one group has actually tried outsourcing experimentally and it didn’t work – how they are going through with it anyway.

The body count – first real numbers on just how many jobs will be lost in just one job description by year’s end.

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Should Radio Be Rebranded Audio

Bob Pittman’s first post-bankruptcy news release did not have the word radio in it one time in spite of the fact that terrestrial radio delivers the lion’s share of iHeartMedia’s total revenue.

Even more so since iHeart split Clear Channel Outdoor from the media platform.

Entercom’s two favorite words are Radio.com and audio presenting a somewhat split message.

And iHeart and Entercom plan to appear together to promote audio to the trade as the amazing platform of the future as a united industry searches for ways to brush away the tarnish they, among others, inflicted on radio through vicious cost cutting.

Podcasting is audio and iHeart has spent $100 million while still in bankruptcy staking out a bulkhead – perhaps that’s a clue.

But is radio right to be rebranding terrestrial radio as audio?

What are the advantages that these radio groups seek other than the obvious one?

Is there a downside risk?

And, there is a better way.

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Summit Media as a Potential Buyer

Radio buyers are hard to find these days.

Prices are going down but have yet to bottom out.

And lenders are vanishing – not high on financing radio acquisitions.

There’s EMF, Meruelo and then not too many more potential buyers available right now.

One potential buyer is Carl Parmer’s Summit Media, the company that originally bought a handful of smaller Cox market spinoffs and has been building from there.

With station prices going down, is Summit a player ready to pounce?

And what markets would they be interested in?

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