Paul Jacobs: What Happened at CES?
Updated: May 31
Paul and Fred Jacobs start off every year by going to Consumer electronics Show in Las Vegas. It invigorates and really sets the table for the year. The show takes place the first week of January when many are still in their Christmas and New Year's stupor when many are unaware of what day it is.
In this episode, I ask Paul about what he saw at CES and discuss the dash, AI, the future of AM radio, and the future of Public Radio. We also get into the three R's which include radio, retail and recession. Paul has a very steadfast answer for that third one and I can tell you based on what I have seen with travel and the number of houses being renovated on my street - he's right.
Please take the time to check out this webinar from Jacobs Media about what Fred and Paul saw at CES. It's one hour and 7 minutes, and it is designed to show radio people where we may be headed in the future. It will cost you only your email address and you will be rewarded with a daily blog which is also useful. To get an idea of what you can expect, take a peek below at a blog Fred wrote earlier this year about the tech trends he suspected would drive CES this year.
I also was unaware that Sheri Lynch went to CES for the first time. She is a truly forward-thinking broadcaster, and shared her thoughts about what she saw in a lovely blog post on the Jacobs Media website, which you can view by clicking on her photo on the right.
And congrats Sheri on the launch of Truly Weird Stuff.
Hosted by Sheri Lynch, is a podcast about all the inexplicable but very true stories out there.
“I’ve spent my whole life struggling to NOT talk about all the weird things that fascinate me and often make other people uncomfortable, such as reincarnation, near-death experiences, aliens, or the idea that reality is a simulation,” said Lynch. “It’s hard masking so much weird. The True Weird Stuff podcast is where I can bring all the quirky, cryptic, creepy, odd, and just plain weird together in one place and share them with my listeners.”
Transcript:
Tara Sands (Voiceover) 00:00:01
The Sound Off podcast podcast about broadcast with Matt Cundill starts now.
Matt Cundill (Host) 00:00:10
This week, I welcome Paul Jacobs from Jacobs Media back to the show. He went to the Consumer Electronics Show in Vegas at the beginning of the year. It's this exciting show where the future is showcased today. You'll hear some of what happened there and get the normal dose of curious questions that I have for Paul. But if you want the full what happened at CES, there's a link to the Jacobs Media webinar in the show notes of this episode. And on the episode page, it's got, like, pictures and everything. All right, let's get into it. Paul Jacobs joins me from Jacobs Media headquarters in Bingham Falls, Michigan, where I start with the oh so obvious question one. What did I miss at CES?
Paul Jacobs (Guest) 00:00:54
Reinvigoration of energy that we haven't seen since before COVID CES precovid was huge. Over stuffed, but energetic and fun. And then COVID put the brakes on. And then last year, it was about a quarter of what it normally is. And this year was a real bounce back. And one of the biggest lessons was, while we were all home hiding from COVID technology didn't stop and they were not asleep. And there is a significant amount of innovation that's ready to hit the market, and it's going to be a real splash. There's a lot going on.
Matt Cundill (Host) 00:01:32
So I think back to some of the earlier CES expeditions that you've done, and there was a lot of Amazon and a lot of discussion about the smart speakers and how it was going to really take over. And boy, how a few years has changed. And there's not nearly as much presence.
Paul Jacobs (Guest) 00:01:49
And it's even bigger than it has to do with radio. Amazon is in the buy merchandise business and not in the content distribution business. And Alexa, I believe, was originally designed to get a foothold in the home and then convert to kind of an audio shopping experience. And it appears to have stalled out. Our data and tech survey for the past couple of years has shown a flattening. And yet for radio, it's been great. They're making a big pivot. I mean, obviously, Amazon is undergoing a lot of layoffs, like most mega tech companies. But what we saw at CES was a big shift from the Alexa that we're used to to Alexa software in the car. And they had a huge display. And you can kind of tell how serious people are at CES by the size of their display. Size does matter. And they had a huge display, and it was all about cars. And so between audio navigation, but audio connectivity, to devices in your home, to audio content, to shopping in the car, to Alexa, where's the closest Starbucks, you can see how they're trying to pivot that technology aggressively into vehicles.
Matt Cundill (Host) 00:03:10
Is that a moment where you and Fred would look at each other and say, maybe it's about time we had another Dash conference.
Paul Jacobs (Guest) 00:03:18
Yeah, we kind of say that every time we have those two glasses of wine you were talking about. Now we think that the whole concept of the industry in Dash has probably grown beyond us. Our job was to start the boulder rolling downhill and see if it picked up steam, particularly in our industry. In some ways it has. Dash did its job and NAB really picked it up. There's still an NAB committee but it's not as aggressive. And part of the problem, and I'm happy to get into this, is the OEMs. The car companies are moving to different models and that might not favor radio moving forward. So the import of the issue actually might be larger than ever as they are pivoting very quickly.
Matt Cundill (Host) 00:04:09
So the first thing that comes to mind when I hear about Amazon pivoting if I were a radio owner, I might be a little bit worried that they might not want to include me anymore because there's no money to be made from me necessarily.
Paul Jacobs (Guest) 00:04:22
We went through this with Apple and our app company many years ago. Apple announced they didn't want to do individual radio station mobile apps. They wanted just I heart and things like that. And we really worked them hard. And part of it was you want a radio station with a 300,000 cube telling people to download their mobile app, which means go buy an Apple iPhone. And we were able to get through to them and I think Amazon recognizes that. I'm not hearing any barking coming from Seattle about audio. And in fact, when you look at the way at the most used features on Alexa, audio consumption is at or near the top all the time, whether it's radio stations or Spotify, Pandora and things like that. So I think we provide them with a ton of free content. Now if I was Amazon and this is going to tick off every radio person listening sorry, if I was Amazon I'd own the pre roll and in that preroll, before every radio station stream starts, I promote products you can buy on Amazon. But hey, that's me. And they don't pay me to consult them.
Matt Cundill (Host) 00:05:30
That's actually the podcaster's worst nightmare is that Spotify would do that for people who don't have subscriptions. Same with Apple. They could do that if they felt like it. I don't think there's enough money in it for them to care about that.
Paul Jacobs (Guest) 00:05:43
Maybe not, but Spotify just laid off what, 5000 people? Some huge amount. So every $22 cost per 1000 might be worth it.
Matt Cundill (Host) 00:05:53
So back to the car which you touched on and how they're including radio in the car. That would be really the sticking point for the future. The Dash and I look at electric cars, for instance and I'm not sure that exactly jibes with an Am radio.
Paul Jacobs (Guest) 00:06:08
Oh boy, that is such a layered question. First of all, there's a future where you can access a radio station multiple ways in the car. So through, like, the Ford sync system or through Bluetooth or through Alexa or through apple CarPlay or Android Auto. And the OEMs don't care, frankly. Their job is to just provide you what you want. Now, Am radio, electric cars and everything else opens up a whole new discussion. We think that Am and electrification is really BS. That if the car companies wanted to do what they would. It's an expense, though, because it requires an antenna and they certainly don't want to whip antenna. It doesn't look good. And again, it's expense. But I think on the broadcaster side, and I'm going to speak for the states here and not Canada, the quality of content on Am radio has declined so much that it's hard for broadcasters to make a real case to keep Am radio without investing in the content that makes it compelling for consumers. And there are many exceptions. I mean, there's some really great Am radio stations out there, but the fact is that a lot of Am programming is incredibly niche, incredibly political, and in most cases, incredibly small. So if we want to make the case to keep Am in the car, we need to make the case that the content is worth it.
Matt Cundill (Host) 00:07:37
Just for the record, I was not making a case for it.
Paul Jacobs (Guest) 00:07:39
Good.
Matt Cundill (Host) 00:07:41
I was actually cheering when finally a news talk station flipped over from Am Calgary over to FM because the markets are over saturated with music and we don't have any blah blah talk radio on FM in Canada outside of 98, five in Montreal, and I think a station in Halifax.
Paul Jacobs (Guest) 00:08:00
There you go. I mean, look, the consumers have spoken. They're there. So the future of Am in the car is up for grabs. I mean, you're already seeing it and now you could see it become a paid option. You know, if you want to talk about one of the big things we saw at CES is this shift from gadget and hardware companies like Samsung or General Motors moving from selling a hunk of metal and code to subscription models. We saw Samsung, which is the gadget company of all time, at CES, showcasing subscription models as a service that connect to all their devices. Of course, they're talking about $15 a month subscriptions for health information. The car companies are looking at it the same way. And this whole aspect of microtransactions paying for things that you already get is it hasn't hit the beach yet. But it's coming really close. Matt and radio could get caught up in that. I'm happy to expand if you want.
Matt Cundill (Host) 00:09:05
Yeah, go ahead. By the way, and I have seen Fred's interview and discussion at what was Canadian Music Week, which will now become Radio Days North America, where we spent about 45 minutes talking about subscription radio with Caroline Beasley and what are the possibilities and will it come.
Paul Jacobs (Guest) 00:09:20
And you were ahead of the curve because, you know, BMW now has they call it as if you've heard of SaaS Software as a service. It's fast, it's features as a service. And BMW in Europe is starting to charge a monthly fee for features that you currently get for free. They started with heated seats. Now they're looking at mapping, and they're looking at the quality of the audio. Then you pay extra to get those features. So when you pull back and look at the business model of car makers, once the car leaves the factory and it is sold, it is not sold to a consumer. It's sold to a dealer. So the manufacturer gets no more money at that moment. That's it. They get the check, goes to the dealer. Done. And the car companies are looking at this, going, well, wait a minute, we're getting nothing out of these millions and millions of customers. And along comes SiriusXM, which is a feature as a service, okay? You pay them a monthly fee, and SiriusXM writes a check every month to the car companies that comes out of the subscriptions. So if you're a car company and you're looking at SiriusXM, and then you look at good old Am and FM Radio, who's getting a free ride, you're going, Wait a minute, it's just audio. Why are we getting money from these guys and not money from these guys? And you don't have to connect too many dots to see them moving into that model. Possibly with Am first, you never know. But to radio overall, to me, this is a potentially huge battle on the horizon for our industry, and it's going to suck.
Matt Cundill (Host) 00:10:53
So I'm thinking back to your presentation, the 2019 here's, what happened at CES and Paul, bad news. I keep notes of all this stuff, but I remember we were talking a lot about 5G. We were talking about Indianapolis being a place where they were going to be testing out a lot of 5G stuff. A lot of it was going to be the cars that would drive themselves. And you and I would sit there, and we'd probably be watching video and a little bit less audio. So the video has exploded a little bit. But the way you were just speaking about cars makes me believe that I will not be getting rid of my vehicle, and nor will you anytime soon. We love our vehicles. We love to personalize them with our car play and our audio ecosystems, and now that will be monetized a bit, but I don't think we're going to be getting into a shared drive yourself, Tesla anytime.
Paul Jacobs (Guest) 00:11:45
No, not at all. And one of the things to understand about CES is I'm always asked, what was the hot new thing you saw? And I reflect on the 14 CES I've gone to, and there have been about 30 hot new things, of which maybe three in their original form, and concept came to market. Take autonomous driving. I don't think we're going to be laying back, taking a nap in our cars through downtown Toronto or Detroit or whatever anytime soon, but the technology behind it is already being utilized in different forms and functions. So, for example, I live in Birmingham, Michigan, nice small town suburb thing, downtown thing. There's a pizza company called Brooklyn Pizza. And I'm driving down Woodward Avenue the other day and I'm in the center lane and in the left turn lane pulls up next to me an autonomous pizza delivery vehicle, which is essentially a pizza oven designed to keep the pizza warm, that is autonomous and is driving on the streets to deliver a pizza to somebody's house. And so you're going to see more and more and more of that kind of use of that technology. So it isn't what we thought was always going to happen in the form that we expected it to, but that technology is going to be found in different areas now. 5g, we didn't quite understand it in 2019, and here we are in 23 and I still don't understand it. I know that on my iPhone in the upper right hand side, it says I have 5G, but it doesn't load any faster and the calls are just as muddy. It hasn't exactly changed my life, like they said. So to be determined again, that memory I have.
Matt Cundill (Host) 00:13:35
You promised me that I could get a movie downloaded on my phone in 2.5 seconds.
Paul Jacobs (Guest) 00:13:42
Okay, I lied. Come on, man, cut a dude a break. So, yeah, this also tells you just how extraordinarily complex, especially these ecosystems, like five gr and look, you're talking mega companies like Bell and Rogers and at and T and everybody else putting up billions and billions of dollars in towers and technology, and here we are. We still don't know what the hell it is right now. It just feels like marketing hype.
Matt Cundill (Host) 00:14:13
So the time of year when CES takes place is always this very odd first week of January. We haven't even hit the 12th day of Christmas, and a lot of people are sort of they're not really with it, right? And they're coming off Christmas, they're likely coming off New Year's, and before you know it, somebody wakes up on the 3 January and people have gone to CES and they're very excited about it. And you and Fred always say it's the great refresher, or it really sets the table for the whole year. And I see people there who are coming to take your tours and they're excited and they're ready to go too, but I feel like I'm still in the starting block. So what am I missing and why do I need to go?
Paul Jacobs (Guest) 00:14:49
Well, and this year particularly sucked because we had to fly out to Las Vegas on January 2. You're barely over the hump of the holiday at that point, and it was just the way the calendar laid out. What are you missing? Look, I've gone to hundreds of broadcasting conferences and maybe I'm just so used to them and everything else, but look, broadcasting has its challenges and honestly, it's not the most innovative industry ever. And we go to these conferences and they're all about survival and pivoting and things like that. That is the antithesis of CES. The thing I love about CES, first of all, the international aspect. Over 100,000 people are brought together and so many of them are ideas people. These are people who wake up at two in the morning with the notepad next to their bed and they're writing down ideas. And so the energy and perspective of the collective is really amazing and it is unbelievably collegial. Fred and I will meet people from around the world because we sat next to them at a diner and you find out these common threads that you have. It's funny when we see CES on TV, you see the big displays and the TV cameras and the bright lights. It's really not about that. It is just this energy of innovation unparalleled in any other venue I've been to. It's impossible to describe. And just as an aside, so this is like our 14th year. Fred brought his wife this year and she wanted to come because frankly, I think she was sick of hearing him talk about it and said, I got to check this out. And she wanted to stay two extra days and she has nothing to do with her business. She did not want to leave because there was more to see. So there you go. Somebody who just got caught up in this environment. So it's kind of obtuse answer, but that's really what it's about.
Matt Cundill (Host) 00:16:53
When I see someone like John Garabedian, who I grew up listening to with Open House Party, and he's now sort of evolved himself into a radio owner. And he's always I mean, here's somebody who did the Saturday night thing out of his basement, up to the satellite calls around North America. Innovative. And he did his first trip to CES and I'd love to hear what he thought about it.
Paul Jacobs (Guest) 00:17:15
He loved it. Been in the business forever. I had never talked to John. He came out of the blue and reached out to us and he was like Fred's wife. I mean, he was overwhelmed and it's exhausting. You're walking miles a day, it's crowded, it's inconvenient in every way, shape or form. But his head exploded and he said to me, I got to come back next year because I got to see what I missed. That kind of thing. And we talk about this always in our post webinar. Jerry Lee, the former owner of WBEB in Philadelphia, and Jerry's got to be in his mid 80s, sold the station, retired. This was like his 52nd CES. And getting around isn't easy for Jerry, and he is just so into figuring out what's next. Even at that age, with everything he's done, that kind of is the embodiment of what CES is. If you're satisfied with the way things are, don't go, okay? But if you want to try to figure out not only where we're at, but where we're heading and you want to be challenged, then you absolutely have.
Matt Cundill (Host) 00:18:28
To go in just a second more with Paul as we discuss public radio, the importance and lack of adequate journalism in our media, and the three R's retail radio and the recession. Paul has a take on that third R, and he's right. And by the way, if you would like to find out about everything that went on at CES, you can see the full webinar from Jacobs Media. The link is in the show notes and on the episode page, along with the transcription of this show@soundoffpodcast.com.
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Matt Cundill (Host) 00:19:26
Want to talk about the three Rs - retail, radio, and recession, which are, I think, some of the things that radio salespeople are thinking about these days. The recessions out there, nobody really wants to talk about it. Budgets are what they are. And when you're talking at Main Street America and at the retail level, what are some of the things that you're starting a brand new year that we can approach retail with in terms of engaging them with radio just a little bit more, because they've been bombed with digital for the last seven or eight years.
Paul Jacobs (Guest) 00:19:56
So I'm a unicorn on this. I don't believe we're in a recession. And here's why. And it's funny. We just got our GDP data today here in the States, and it was outstanding for fourth quarter. I live in Detroit, which is the ultimate barometer of recession. Usually six months to a year before the rest of the country goes into it. We're deep into it. I know how it feels. I know how it looks. I can't get a reservation at a restaurant. Michigan just hit the lowest unemployment rate in 50 years. The car companies are spitting out bonus checks like crazy, even though car sales are down due to supply chain prices are up. People can't hire people. I mean, there's like, no metric that I'm seeing that says recession. I could also tell you with my two businesses, which are very recession sensitive, mobile apps and consulting research, there's no recession. We'd be one of the first cuts. So my first advice to a radio salesperson is stop thinking there's a recession, because the more we think there's a recession, more people will cut back and more people will fuel it. And then guess what? We'll wind up in a recession. And I'm not saying that as a blind optimist. I'm just looking around and I don't see the evidence. At the end of the day, the best salespeople aren't providing platforms or packages. They're providing ideas and solutions. And it doesn't matter where those ideas and solutions lie. Whether it's a creative 60 or a great Facebook post or whatever, it all continues to come back to providing the right content and connecting the sponsor or advertiser with it. And I've yet to see a client look at a good idea and say no because it's on the wrong platform or whatever. So I think the radio stations and companies, if I was running one, I would be amping up my aggression and creativity right now, because I think that's going to win out, particularly as other broadcasters cut back. Oh, by the way, again, personal thing. My daughter works for Nordstrom. There is no recession, at least through her lens. So again, I'm just not seeing it.
Matt Cundill (Host) 00:22:16
So I look at something like Nordstrom's, often located in a mall, went to Dallas for podcast movement, and yes, went up to Nordstrom just to blow a few points and wind up buying a half a new wardrobe at the same time. So what about malls and how they're going to play a role? America is fairly suburban, especially once the further westy move, especially from Detroit all the way to Los Angeles.
Paul Jacobs (Guest) 00:22:39
Malls are tricky because frankly, there's such an amalgam of different businesses and we can even pull out them. I mean, the retailers who have Pivoted, smartly, and Nordstrom is clearly one of them. My daughter works in logistics and fulfillment. The Nordstrom is where she works. There are 60 people in her department who are handling online orders. They have turned the store into an online distribution center that you don't even see as a consumer. So they're growing their digital business as almost a separate unit from the retail experience, which is really brilliant. The retailers who are smart and pivoted and COVID certainly was the accelerant for things like Ecommerce are probably in okay shape. My concern about retail for radio is actually bigger than digital. It's the big box national stores that have wiped out the local guys. And at the end of the day, if radio can't build it, because Nordstrom doesn't really do radio. For example, if radio can't depend on local businesses, we're in real trouble. And if the hardware stores are closing due to Home Depot and the shoe stores are closing due to Foot Locker or whatever, much larger problem for us.
Matt Cundill (Host) 00:23:53
One of the things I miss about being in a radio station right now, I would love to know how a Gen Z seller would perform. What do they bring as a Gen Z into the radio space and how would they approach the selling? And I know Gen Z would be young, you'd be boat because I got a couple of them upstairs, 23 years old. They're not interested in selling. They'd be a little bit more interested in serving and customer service. That's just those are my kids. But what do you think Gen Z would bring to the selling world?
Paul Jacobs (Guest) 00:24:22
Okay, I'll be the cynic reluctance to sell radio because we're not exactly number one on their wheel of entertainment. So that would concern me. Now, again, though, that's a stereotype, but I think it holds up pretty good. I won't even ask if your kids listen to radio because mine don't. So I think they bring so much more comfort with digital and how it can be used than older salespeople who are trying to just put clients into a 62nd box type of thing. And so I think they're significantly more agile in their thinking, and they're not going to come up with radio solutions or Acute Radio Spot or any of the typical stuff that we did for centuries. But they're going to look at digital content in much different ways and just think about it in ways that guys my age can't. Real quick story, and we just wrote about this in the blog. Last week, I visited a high school radio station here in Detroit, suburban Detroit that has absolutely no local news coverage. The local paper closed the big newspaper for the city, and the TV stations and news radio don't cover local communities. And there's a high school radio station, it's been around 50 years WSDP the park, and they have created a local news department. And they covered the election for the communities, like the school board elections, things like that. And they just figured out that there was a need in their community, and they went out and did it. They've got, obviously, supervisors. But I met with the public affairs director and the news director, and they're both 17. And it was great. And so I would try to hire as many as I could, but I would clearly have to change my business model and expectations because they ain't going to fill it.
Matt Cundill (Host) 00:26:21
One of the things that I noticed about Gen Z is that they're really willing to put up with AI, whether it's AI software when it comes to especially with Voice, and there was some AI obviously going around. CES, what do you think radio can benefit from with AI? And the first thing that came to my mind, actually, was I was listening to a station out of Alabama. I thought, I think the weather can be delivered that way.
Paul Jacobs (Guest) 00:26:46
Oh, goodness, yes. I mean, AI is kind of sprawling, so I'm going to try to narrow it down a little bit. Pay attention to this chat GPT that Microsoft was an initial investor and I think just announced $10 billion going into it. And it works. And what it does is through AI can write articles or a story or anything if given the right frame. But, for example, I could ask it to write a Jacob blog in Fred's voice, and it would skim our blogs and mimic his writing style. And then if I gave it the topic, it would write it in his voice. This is really compelling stuff. So, for example, sometimes we want our DJs to write something. Well, if DJs were great writers, they might not be DJs. They have other skills. Here can be an interesting way for radio stations to produce digital content or newsletters or blogs or whatever in an incredibly cost efficient way without asking people to get too far out of their lane. So I thought that was pretty cool. One of the coolest things we saw was a company called Conversa. They were actually featured on 60 Minutes last year. They have video recorded the stories of Holocaust survivors, and when they pass away, they go up on the site, and family members and other people can go in and talk to them about their experience and their lifelike. I mean, it's really amazing. So at CES, they had a very similar set up with William Shatner, who looked marvelous because it's the virtual world. He didn't look 90. How's that? But, yeah, you could sit there and talk to William Shatner. So why couldn't a radio station sit down with Garth Brooks and record them and create a virtual Garth Brooks and take it out to events and have people ask Garth questions and enter it? I mean, there's some amazing possibilities here to mentionalize radio, and I've probably just scratched the surface with what I've seen.
Matt Cundill (Host) 00:29:00
You were mentioning just a minute ago about those high school students who had a yearn for some journalism and accuracy and media literacy and delivering a good story, which kind of leads me to something that you're really, really good at, and that's Public Radio. And knowing what Public Radio is up to and how they're different and what they're going through. So what do you see public radio role in 2023?
Paul Jacobs (Guest) 00:29:25
Okay, so now I have to get up a little bit on my political soapbox. Journalism in general is clearly under fire. Objective journalism is withering to a certain extent, and so the central nature of an unbiased source of content and thought has never been more important. And public radio serves that purpose, I think, most of the time, incredibly well. Of course, Fred and I get very frustrated with public radio because we always want it to be more than it is, and it's going through some real transformation right now. NPR has been this marvelous source of programs, but they haven't really produced a Monday through Friday show in couple of decades as they shift to podcasts. So it kicks open the door for public radio stations we believe to do kind of like the high school that I talked about and really focus on local. I wrote about this recently, right before the pandemic. I was at a public. Radio conference. And Dean Bec, who was the managing editor of the New York Times, was the keynote. And he took questions afterwards, and somebody said, what's the future of public radio in ten years? And he said, if you do it right, public radio will be the sole source of local news and information in every market there's a station. And it really stopped me in my tracks, because he's right that so public radio has got to choose is it going to be a satellite dish receiver of programs, or are they really going to invest in their communities? So that's number one. Number two, public radio has the same kind of challenge most legacy organizations have, and that is their audience is old, white, and dying. And that's just the fact. And those are the people who write the checks, and those are the people they cater to. There's a finite quotient to that philosophy. And so the real challenge for public radio now is how do you reinvent yourself for millennials? And Gen Z, who are becoming majority minority, who have a different form of journalism than just spoken word, who also quite likely don't listen to the radio. So what is a radio station in that world? And that's where we're really doing a lot of work with individual stations. And that's probably going to be the next few years of our work.
Matt Cundill (Host) 00:31:54
I mean, I grew up a little bit with Vermont Public Radio. 179 would beam its way into Montreal. That was really the extent of it. It really wasn't very exciting. I really didn't need it. I didn't feel I needed much from NPR until, surprisingly, 2016. And in the years after that, I got introduced to Terry Gross, and I go, oh my, she's a great interviewer. And I didn't know this. I didn't obviously spend enough time listening to VPR. And as it's evolved, NPR has a lot of the great podcasts that are up there. And podcasting has now become the number one revenue source for public radio, which seems a little bit odd, but that's what those pledge drives are all about. So we figured that out in podcasting. We've got patreon, and we talked a little bit about micro payments earlier. That's showing up now in podcasting. There's ways to solicit money from people. So what's the revenue future for public radio? How far can they take it?
Paul Jacobs (Guest) 00:32:53
That's a big problem. Oh, by the way, show me a person who likes pledge drives, and I'll show you somebody who's an accountant. And that's it. I mean, here's a dirty secret about pledge. When Fred and I got involved in public radio a little over 20 years ago, approximately 10% of kim is a donor. Today, about 10% of Kim is a donor. So there's a real problem here. Pledge is going to get you to 10%, and that's about it. So even with the existing audience, you've got a model that, in my opinion, has not scratched the surface of success. But now we start looking at this generational shift. And I mean, look, Millennials and Gen Z are willing to subscribe to content that they value. There's no question. And we've done research where it's pretty clear that local, hyper, local content that's relevant to them, they place a high value on. They can find out about Trump anywhere, any day, anytime. But to find out what's happening this weekend or what are the issues in their community is damn near impossible. Nobody's figured it out, man. But a lot of people, including us, are really doing a lot of thinking because we've got to figure out who we're targeting, what are their needs, how do we provide it for them, given the existing business model of public radio and then how do we monetize it? And those are not one of those is a small question, but they must be addressed.
Matt Cundill (Host) 00:34:20
And over on the journalism side, the important component is, well, people doing journalism, obviously, this is why the George Santos who finds his way to the front of the line and then we discover all the things that we should have been talking about before he's getting elected.
Paul Jacobs (Guest) 00:34:37
If I was in journalism or I was a journalism professor, george Santos would occupy a significant amount of my thinking and not in terms of the story, but what went wrong. I think Santos exposed so many problems with journalism from the lack of local coverage, the death of newspapers, and as people have been saying, and now we see the negative impact on democracy. The fact that in early October, a local weekly in that district wrote about Santos but didn't have the Yank to have impact for people to take notice, and then he wins. And three or four weeks later, the New York Times breaks the story and gets credit for it. And then Josh Marshall writes about it and it's like, excuse me, this is in your coverage area and you missed it. And the New York Times missed it. The Daily News to Post, those big behemoth TV stations, WNYC 1010 Wins, they all missed it. And so to me, this is almost like a chicken coming home to roost. That we have been devaluing and disinvesting in local media coverage and local journalism and this is the price you pay. And to me it begs the question, how many other George Santos type of stories are out there that we are missing that are bubbling up and are going to bite us in the ass? And I think this is a clarion call, particularly for local. And you know what? At a time when radio is commoditized in many ways, you look at music, you want Taylor Swift, I don't have to wait. The local piece is what we can and should own and retrenching in that space is everything.
Matt Cundill (Host) 00:36:30
When I look at a political party who is going to recruit people to put on a ballot, I would probably a want to be afraid that the New York Times might just take a look into this. And secondly, I'd probably want to know if the person's a bit of a butthead before they land on the ballot. And if anything the midterms taught me as a political science junkie is that people are smart and they don't necessarily vote for the party. They vote for people. And people matter whether you're running a radio station and you're talking about your morning or your afternoon drive or you're putting somebody on a ballot because essentially it's the same game, right? We want people to vote for us.
Paul Jacobs (Guest) 00:37:07
Yeah. I don't know how many lies Santos has told, but let's say 20 just for the fun of it. In the old days, one of those would have nuked him, and it's kind of like pick one Jewish, the death of his mother. I mean, every one of those would kill a candidacy. Now, look, the voters also bear some responsibility here, but it is up to journalism to step up and make them give a shit. And I mean, the thing that drives me crazy about journalism today is the ramp at both sides is and again, I don't want to get too deep in the political weeds, but any objective observer could look at the Trump documents and the Biden documents and go, yeah, they're both documents, but one is a crime and one is just stupid. And at least that's what we think. So that's a whole critical thinking thing that is so lacking. And by the way, let's pivot back to youth. They're good at that. The thing that amazes me about young people is they are so much smarter at this age than we were, and that's frankly, what gives me hope. And the more we bring young people into our industry and empower them and respect them, I think the quicker we're going to get to salvation, because tweaks and cuts and riffs and the way things are currently going, we know how that's going to end up. And nobody wants to look like the newspaper industry.
Matt Cundill (Host) 00:38:34
If I own a radio station, which I had mapped out in my life, plan just hasn't come to fruition yet. What would I be most excited about in 2020, 03:00 A.m. Or FM?
Paul Jacobs (Guest) 00:38:46
Kidding that I have the ability to reach thousands and thousands of people in my community with whatever I choose to reach them with. And, you know, the cost of acquisition is like zero and a cost siri accepts them and Pandora and everybody else a ton. And I would be looking at the advantages I have and then the fact that I live in the area that I'm serving, so I can walk around and talk to people and get in touch. And then the final thing is radio pivots so quickly that if I'm in touch with my community and I'm in touch with my audience, I can continue to evolve whatever it is I'm doing or add new offerings or whatever faster than anybody else can. And so, again, you asked me earlier about the 2019 CES, and we are four years later and they're still pivoting and spending billions and billions of dollars a local radio station. If they're smart and in touch and their priorities are in the right place okay. Well funded, I think, can do amazing things in 2023, and we should never, ever lose sight of that.
Matt Cundill (Host) 00:39:57
Hey, Paul. Thanks.
Paul Jacobs (Guest) 00:39:59
You're the best. I love talking to you.
Tara Sands (Voiceover) 00:40:01
The the the Sound Off podcast written and hosted by Matt Cundill. Produced by Evan Surminski. Social Media by Courtney Krebsbach - Another great creation from the the Soundoff media company. There's always more at soundoffpodcast.com.