CBS And AOL Team To Make Powerhouse In Audio Entertainment
- CBS Radio has indicated that streaming radio is a “HIGH-GROWTH” field.
- Partnering with AOL has provided CBS the ability to reach goals in streaming content.
- CBS has spent years building out their content streaming operations.
- CBS Radio feels that the deal will instantly make them the on-line leader in streaming audio content.
- A combined AOL/CBS operation affords CBS a greater ability to scale (CBS termed it a vastly improved ability to scale).
- The deal gives CBS “massive” exposure for their brand.
The streaming radio business has seen $1.6 billion in revenues in 2007. Ironically, this event demonstrates that there is crossover in the audio entertainment market and that consumers are indeed listening to music in many differing ways. While Sirius and XM struggle to gain merger approval, CBS and AOL have come together to form what they term as a leadership position with massive distribution abilities.
Position – Long Sirius, XM. No Position AOL, CBS.
This is a laugh.
AOL was supposed to give XM “massive” exposure for its brand. We see how that went.
A more realistic take: XM got tired of paying AOL to run its content to get the massive “exposure” (ROTFLMAO), and said, “We’re cutting costs, and we’re done” and AOL said, “fine, we’ll get CBS’s channels that have 1/3 commercials”.
Let me add that CBS and AOL have had a significant advertising/marketing relationship with each other for about 4 years or so. AOL made a significant annual ad placement with CBS, that was distributed throughout the CBS radio stations — and in return, AOL received significant ad placement across all CBS properties… of varying degrees. One of these was that AOL offered streaming of a handful of CBS stations.
I don’t know what XM and AOL’s deal was — and frankly won’t speculate, because I don’t like what I come up with — knowing what XM has done in the past.
But with that said, this move by CBS does not surprise me. I frankly believe that CBS may have bumped XM from AOL. CBS has been extremely active in moving in the direction of technology — they have been advancing and pushing their on-line and HD offerings and constantly push it on their O&O stations to talk about them.
I will also add that “off-air” advertising — which used to be called “non-spot” advertising and “non-traditional” advertising before that — has grown significantly over the years. As you noted, it grew 10% in 2007 — and is showing signs of topping $2 billion for 2008. The increase in this portion of revenue is making up for a signicant amount of the loss at local/national advertising.
I am just glad to see XMSR cutting cost Starbucks now this, good for them.