LOCAL FORECAST 2018 – MOBILE TO OUT BILL RADIO: Radio’s last bastion of revenue performance has been Local media. Think of the local car dealer or restaurant owner being called on by a neighborhood radio rep – those kinds of 1-1 relationships have sustained Radio during a period of overall decline for traditional media. But now Radio’s share of local media dollars is also starting to erode, and according to BIA Kelsey in attached Radio Ink link, will be surpassed by Mobile in Local US ad spending during 2018. Keep in mind we’re not talking about overall spending which includes national clients. This is just for local advertisers who make up radio broadcasters’ bread and butter client rosters. Even these guys now understand the power of mobile advertising and have solved for getting their ads on the connected devices we’re all using more and more. With this trend is it any wonder Radio is pushing so hard to get “FM Chip” technology enabled in all smartphones?
LABELS RIDING THE STREAMING GRAVY TRAIN: Yesterday Warner Music Group (WMG) announced its Q4 and full year 2017 revenue performance, for its fiscal year ending on 9/30, as reported in the attached Musically link. It was a pretty rosy picture, with overall rev growing +10% YoY. The primary growth driver was streaming royalties which increased 24% to $1.7B annually. Streaming now comprises over half of WMG’s global recorded revenue (56% to be exact), which is the first time a major label has crossed the 50% mark for a full year. I would expect Sony and Universal to tell similar stories when their full year financials come out in Q1. These stats are further proof that streaming isn’t just important to the music industry, it IS the entire future of the biz. It’s also worth noting that the labels are now clearly rolling in the green thanks to streaming, while the streamers themselves have yet to make a sustainable profit because of the same high royalty payments. Makes you wonder if a recalibration is in order for the entire music royalty system.
GM RISING TO THE TaaS CHALLENGE (guest column): On Friday I featured a doomsday-ish op-ed article from former GM product chief Bob Lutz, who predicted the end of the Auto Industry as we know it within the next 15-20 years. In response to the article I received several questions about what the EOMs are doing to meet this transformational challenge. The best insight was sent by Pandora Key Account Director Michael Follis. His research and commentary is so spot on that it makes for the perfect guest column. It’s a great read, so enjoy it in Mr. Follis’s own words . . .
“I thought you might find the below information regarding GM’s vision to ‘Redefine the Future of Personal Mobility’ interesting. I always enjoy seeing presentations built by our big clients presented by their senior leadership, and came across this presentation, which GM CEO Mary Barra recently presented to a Barclay’s investor conference. In summary, it describes GM’s vision of how they will disrupt themselves from their current core business of traditional personal vehicle ownership to the future of personal mobility, driven by electric, autonomous, shared vehicles. On slide 20 Ms. Barra refers to this as the ‘Biggest business opportunity since the creation of the internet.’ What I love about GM’s strategy is that they are thinking big, and state that they’re ‘delivering on what we say we are going to do.’ Over the past week GM made two announcements which demonstrate how they’re going all in on their strategy per the above. 1) GM Marketplace Launch: GM is putting stake in the ground in the in-car marketplace (similar to Amazon vs. Google at home…GM is establishing the first in-car eCommerce) – you can order Starbucks from your dash board! And 2) GM Will Make Money on Autonomous and Win: GM announced last Friday its plan to launch a fleet of fully autonomous vehicles in 2019…coming after Uber. Now what if you combine Marketplace + Autonomous? Your car picks you up with Starbucks already in it!”
Have a great Wednesday guys!
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