Digital music is a numbers game: add listeners, attract advertisers for free listeners, lure paying customers and build enough scale to make the equation work.
Slacker's new partnership with AOL Music to power its radio service is all about the numbers. Announced Tuesday, the deal should more than double Slacker's current listenership, according to Jonathan Sasse, senior vice president of marketing at Slacker. "They're at least as big as we are today, if not a little bigger [in terms of] total audience and total listening sessions per month."
A larger audience means more advertising opportunities and more listeners who will potentially sign up for the Radio Plus ($3.99 per month) or Premium on-demand service ($9.99 per month). Sasse adds that Slacker will manage the entire monetization, handle all advertising on the ad-free version of the service, and share a portion of new subscription revenue.
AOL Music's radio service is currently powered by CBS Radio. The target date for the change to the Slacker-powered service is September.
As Sasse told Billboad.biz in a phone interview Wednesday, the deal returns value to both sides. AOL Music gets both a free and paid co-branded services that will help drive traffic to its editorial content.
Billboard.biz: What did AOL see in Slacker?
Jonathan Sasse: In general there are a lot of fits. They are looking for subscription coverage, which we have. They're looking for a great, interactive free service, which we have. They're looking for someone who's willing to drive users into their AOL Music editorial content, which is a fit for us. They're looking for somebody who has a similar philosophy from a curation perspective on music, which we do. And then we also have sports and news as digital content, which is something they have got used to with CBS as a partner. With our partnerships with ESPN and ABC News we're able to bring that with us as well.
Sounds like a deep partnership. Would having a partnership with AOL preclude you from doing a partnership with a similar online entity?
No. There's really nothing that would preclude us from doing a similar type of deal or relationship with another partner today.
Slacker is going to be driving the monetization of this, correct? Is there any revenue share here?
I don't have specific details to share, but there is a certain amount of revenue sharing going on. Because we'll be managing all the ad sales and subscriptions on our side, there's a revenue share back to AOL as it's coming through their property and their listeners.
It hasn't been out very long but could you give me an update on customer reaction to the on-demand level of service?
It's been pretty good. You're right - we're only three or four weeks into the launch of that - but it's been very strong. We continue to grow subscriptions very well. We're approaching the 50,000 mark. It's actually between 25,000 and 50,000 on subs - I haven't actually looked at it in the last week and half or so. But the subscriptions have been strong. In the last three to four weeks we've added tens of thousands of subscribers and it's growing fairly rapidly. We've seen some of our Radio Plus subscribers converting over to Premium and some people are coming in new. Some folks who have been free for a while are converting to Premium - that was a service they were waiting for.
It seems like there's great momentum right now in radio-type services. Obviously Pandora's IPO brought a lot of attention. Do you think that attention is rubbing on Slacker?
With Pandora's IPO and the filing leading up to that, I think it got a lot more attention on its business model than they had before. I think that got folks interested in what everybody else is doing.
We have a very different business model than they do. When people question the stability of scalability of their business model, I think a lot of times we've been getting some attention there because our model is exactly the opposite: a small percentage of our revenue and our business is built around advertising and it's primarily built on subscription revenue and an active subscriber base that renews every month. And really using free radio as a path to subscriptions, which really nobody else is doing.