CBS Corp. this week merged its music-related businesses into a new unit, called the CBS Interactive Music group. It consists of the on-demand streaming music service Last.fm along with the interactive websites of every CBS radio station that offers online streaming.
The new group’s president, David Goodman, spoke with Billboard recently about the change, and what it means for all concerned.
What was the behind the decision to create the new division?
On parallel paths, there were a lot of great things going on at CBS, specifically around music-related digital experiences: the success of Last.fm; a number of things we’re doing on radio, such as powering Yahoo and AOL radio. So harnessing all those assets and opportunities together and aggregating them under an umbrella in order to hopefully drive more audience to each of our individual businesses and also to make it easier for advertisers to work with us.
So what effect do you hope it will have on the advertising end?
The result is more reach and more ability to engage. We have the ability to integrate and aggregate our assets to make it easier for advertisers to work with us, whether it's online, contests and promotions, events, touring. We really have the ability to message a variety of ways. We can work with them globally, nationally, and unlike any other company in the music industry, we have the ability to execute on the ground level in individual markets.
What can you offer advertisers now, under the auspices of the new division, that you couldn’t before?
We’re going to be focusing on being able to do things horizontally in a way we weren’t able to do before. Maybe Last.fm and CBS Radio were working on parallel paths. It might have been more difficult for an advertiser to integrate on CBS Radio’s digital assets as well as Last.fm on a one-stop basis. Now we’re kind of a one-stop for any advertiser and service advertising across all our platforms. Or, if they’re interested in specific segments, we can also serve those ads vertically by passion and by format.
In other words, there’s one sales guy now for all.
There’ll be a variety of ways to work with us. The other thing is that we’ll be able to integrate Last.fm into our local sales packages. We haven’t brought Last.fm to life locally around the sponsors we work with. We’ve done a really good job locally of integrating our ad sells and reselling AOL and Yahoo radio, but we haven’t done that previously with Last.fm. We’ll look to our local sellers to be part of this initiative. It’s really a combined sales initiative as well as a combined audience initiative.
What impact has the higher royalty rates for Internet radio had on your services, and was it in any way a motivation for creating this new division?
We’re bullish on the Internet radio marketplace. We stream more media than any company in the world other than YouTube. We want to continue to increase our reach and our effectiveness. Bringing these two organizations together has an even greater impact for advertisers.
So the licensing rates don’t really play a role here?
We have great assets, and we weren’t harnessing their full potential. By bringing them together and leveraging those audiences and sales opportunities under one umbrella… it was just logical. It benefits the radio group, because like that Verizon commercial, it now has 3,000 people at its back with CBS Interactive working together.
What does this mean for partners like AOL and Yahoo?
It’s business as usual, but hopefully we become an even more important part of the advertising business. We have a great relationship with both AOL and Yahoo.
What about users? Will they see any new services or capabilities?
Clearly we’ll see a lot more integration of Last.fm in a number of things we’re doing with our music sites across the country. Last.fm really creates unbelievable experience for people who care about music. Tapping into that will be one of the things that will be able to differentiate our sites from other players in the local market. You’ll start seeing more distribution of our content that our radio stations produce every day. And one of the things we’ll start to do is in a deeper way draft off a lot of the things we produce locally every day and figure out ways to surface regionally, nationally and internationally.
In terms of record labels and the music industry, what new opportunities might there be?
When you look at the variety of way we can generate awareness, we have about 320,000 concurrent listeners at peak for our streaming radio platform in the U.S. That’s bigger than any cable network. We’ve had more than 4 million people download the AOL for radio iPhone app, plus more that’s downloaded all the Last.fm apps. We have huge site traffic when you combine Last.fm’s audience and our audience. For the music industry, it’s an incredible opportunity to work together and service a substantial amount of awareness together than we might have been able to do separately.
Are you talking about custom promotional opportunities, or an expansion of more general of standardized programs?
There’ll be both. There will be programs and events. There are certain things where you want to create an expectation that’s delivered on a daily basis, but sometimes you kind of want to supersize with special events. We have the ability to do a number of different things. Plus, we create at radio thousands of concerts a year, so that ability to leverage those live experiences and bring them to life through all the assets of the group is a special opportunity that any pure-play music company just doesn’t have the ability to do.
What’s the mobile opportunity?
I’ll have to get the figures for Last.fm, but at CBS Radio, about 7% of our audience is now streamed through an iPhone. We’ve had more than 4 million people downloading the app, and we just released the Yahoo app. We’ll be launching more apps for virtually every device over the next couple of months. The more ways that people have to engage in our media, it’s all good. We’ve invested a lot of time, energy and money around the ad-serving element as well. We’ve been thinking for a long time about how we potentially parse inventory and messaging through not only geo-targeting, but also by device as well. So delivering certain ads to certain devices. From an experience standpoint, what we’re spending a lot of time thinking about is creating and amplifying experiences and triggers and engagement and other opportunities. It could be e-commerce things like ticketing into various apps, as well as deeper content engagement opportunities built into the apps themselves in terms of streaming audio. We’re seeing huge adoption of steaming media through mobile devices. We’re seeing huge usage as a result of people downloading our apps. We think this is a huge growth area.
Any plans to offer more on-demand streaming services, either through development or acquisition?
We’re interested in offering a suite of services that facilitate the needs of people who are passionate about music, and there’s a continuum there from passive to active. The kinds of services that a passive audience wants will be different than what an active audience demands. We’re committed to delivering an entire suite of services and experiences to the most passive to the most active music fan.