The National Football League will be offering programming to Sprint customers this fall. It's unclear who is paying who here. My guess is Sprint is paying the NFL in order to try to stem the flow of customers off their network. That said, the revenue the NFL might be generating from Sprint is surely de minimis given the scale of advertising dollars spent around football. - How big a deal is this? We don't know anything about the money side, but let's look at it from a user perspective. Let's do some math and figure it out.
Data Points:
There are ~300 million people in the US.
There are roughly 265 million of them with cell phones.
Sprint has roughly a 20% market share.
The NFL program requires a data plan. Let's say Sprint sells a data plan to 20% of their customers.
The NFL program requires users to install a handset application.
So now let's do the math...
20% of 265 million is 53 million Sprint subscribers. The 20% of Sprint subs with data are ~ 10 million users. So under the best of circumstances the maximum audience for the Sprint/NFL program is 3.8% of the cellular market.
Now when you start to add in the handset install... Maybe you can reach 2% of the market. Is 2% a big deal? Nope, if you're talking about a mainstream application like American Football, 2% is a niche app.
The NFL would be far better off doing a distribution deal with a carrier agnostic platform such as Foneshow. We can reach better than 95% of US cellular users. We don't require a data plan. We don't require a handset install.
Saturday, May 19, 2012
The NAB and the Satellite Guys
This is an interesting article as a follow up to our recent internet radio post.
The NAB has consistently opposed every bit of new technology offering new media options to consumers, going back to satellite television in the 1980s (for which a federal appeals court called the group a "Luddite"). How does it get away with it? Simple. It has a lot of money to throw around. Not to mention influence. One NAB program, for example, lets members of Congress and their families record public service announcements in NAB studios free of charge. The commercials are then broadcast in the members districts on NAB stations, also free of charge. That's broadcast time politicians often have to pay thousands of dollars to reserve.
The NAB has consistently opposed every bit of new technology offering new media options to consumers, going back to satellite television in the 1980s (for which a federal appeals court called the group a "Luddite"). How does it get away with it? Simple. It has a lot of money to throw around. Not to mention influence. One NAB program, for example, lets members of Congress and their families record public service announcements in NAB studios free of charge. The commercials are then broadcast in the members districts on NAB stations, also free of charge. That's broadcast time politicians often have to pay thousands of dollars to reserve.
Internet Radio is in Big Trouble
Internet radio is in big trouble. The Copyright Royalty Board judges just denied to hear an appeal from web broadcasters to reconsider the new rates for internet broadcast of music.
The business model in internet radio was dodgy to begin with, as incremental listeners incur incremental expenses in a linear fashion. In traditional radio, the entire listener base offsets a large capital expenditure for the infrastructure and the FCC license. But once you have the infrastructure, 1 listener costs the more or less the same as a million listeners. Once your advertising revenue covers servicing the capital expenditures everything else is gravy. The more listeners you have, the better your margins.
In internet radio each listener incurs additional fixed expense -- server overhead, bandwidth and licensing. So if your revenue per user is lower than those expenses per user, adding users just means losing more money. Under the new license rates I can't see how rev/user ever gets higher than expenses/user.
I didn't blog about this when it first happened, but there was no shortage of coverage. I think there is a larger question here of whether there is a business model for online music at all.
Many people suggest that the RIAA was driving this (the RIAA, justifiably, is a favorite whipping boy) but if you follow the money, the NAB has much more to gain by the new rates than the RIAA.
The business model in internet radio was dodgy to begin with, as incremental listeners incur incremental expenses in a linear fashion. In traditional radio, the entire listener base offsets a large capital expenditure for the infrastructure and the FCC license. But once you have the infrastructure, 1 listener costs the more or less the same as a million listeners. Once your advertising revenue covers servicing the capital expenditures everything else is gravy. The more listeners you have, the better your margins.
In internet radio each listener incurs additional fixed expense -- server overhead, bandwidth and licensing. So if your revenue per user is lower than those expenses per user, adding users just means losing more money. Under the new license rates I can't see how rev/user ever gets higher than expenses/user.
I didn't blog about this when it first happened, but there was no shortage of coverage. I think there is a larger question here of whether there is a business model for online music at all.
Many people suggest that the RIAA was driving this (the RIAA, justifiably, is a favorite whipping boy) but if you follow the money, the NAB has much more to gain by the new rates than the RIAA.
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