Simon Cole, Chief Executive, UBC Media Group

Radio AS A Retailer

The need for a changed model

596 596

550567

621645

603588

Q1

2000

Q1

2001

Q1

2002

Q1

2003

Q1

2004

Q1

2005

Q1

2006

Q1

2007

Rev

enu

e £

'000

Source: Radio Advertising Bureau

• Revenues flat• Impact of internet

• New stations fragment existing listening

Rock and a hard place

AM/FM DAB DTV www

• Revenues flat• Impact of internet

• New stations fragment existing listening

• Costs increase• New services

• Multi platform world• FM• DAB• Streaming• DTV

New platforms, new revenue?

• Fragmented audience on new platforms challenges ad model• New services need critical

mass

• Initial sales at discount

• Ad revenue must be augmented• Website display advertising

• Music sales via website• Capital Radio 30,000

downloads per month, 1,000 every day

Where is the new value?

• New media model values ‘users’ or ‘customers’

• Radio’s ‘customer base’ is robust

• Radio is powerful at motivating listeners• This power needs to be

harnessed

• Create a new media relationship with listeners

weekly reach and average hours by listener

89.5% 90.4% 90.1% 91.1% 91.3% 90.8% 90.1% 89.7% 90.4% 90.2%

23.822.4

24.024.6 24.4 24.7

23.8 23.2 22.824.0

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30%40%

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80%90%

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The ‘connected’ radio listener

• Browser based listeners can currently• React instantly to a call to action• Instantly identify and buy music• ‘Listen Again’• Download podcasts and additional content

• This connectivity will soon be available outside the PC/Mac• Wi-Fi connected radios• Set top boxes

Value of connected radio

• Sky Gnome• Unsuccessful attempt by Sky to

create their own digital radio linked to sky box

• Orange Liveradio• Wi-Fi radio launched in

Switzerland, France and now UK

• Apple’s iTunes Tagging HD Radio• Creates iTunes customers from

digital radio in the US.

Creating radio’s own e-commerce platform

• Cliq means radio gets a buy button.• From Q3 2008 on new

‘connected’ digital radios from Pure.

• Using music to create a direct relationship with the listener• Multiple platform access of

micro payment account

The Cliq experience

• Music discovery is a massive driver of adoption

• Price is extremely sensitive

• Music is increasingly expected for free and as MP3

• Mobile phone platform is technically weak and ineffective• May be useful as a ubiquitous

fill-in

• Standards may improve over time

• Not cost effective now

100% 100%100%

61%

69%

55%

28%

34%

24%

20% 19% 19%

6% 6% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sent SMS Request App App Installed SMSPurchase

Registered

% Converted (real users) - 07/05/08

All DataBefore Promo

Since 30/04/08

0

20

40

60

80

100

120

140

160

180

200

220

240

0 4 8

30/04

/08 -

12 16 20 0 4 8

01/05

/08 -

12 16 20 0 4 8

02/05

/08 -

12 16 20 0 4 8

03/05

/08 -

12 16 20 0 4 8

04/05

/08 -

12 16 20 0 4 8

05/05

/08 -

12 16 20

Mayday Madness

• Exposed free music to 1.6m radio listeners for 24 hours

• 3,500 requests for Cliq application

• 100% increase in registered Cliq customers in 48 hours

• 65% of customers took 5 tracks or less

• Less than 20 ‘abusers’

0

20

40

60

80

100

120

140

160

180

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220

240

0 4 8

30/04

/08 -

12 16 20 0 4 8

01/05

/08 -

12 16 20 0 4 8

02/05

/08 -

12 16 20 0 4 8

03/05

/08 -

12 16 20 0 4 8

04/05

/08 -

12 16 20 0 4 8

05/05

/08 -

12 16 20

Mayday Madness

• Total cost of free music offer was less than £10,000

• Average listening time rose from 1.6 hours to 4.5 hours

• Cost per registration £18.16

The emerging model

• ‘Free’ music as a way to engage listeners• Prompt to open Cliq account

• Could be funded by advertiser

• Will have side benefit of increasing listening hours

• Listeners become customers• Able to transact directly

• Can use their value to leverage third parties

• Can use relationship to increase listener loyalty

A different relationship

• Over 5,000 songs sold

• Research of 100 customers• Most users have no portable

MP3 player

• Less than 10% use iTunes

• High usage of mobile phones to play music

• 100% of research sample would recommend service to a friend

The choice

Radio either begins to create its own interactive commercial relationship with its listeners, or it chooses to be be a portal that earns money creating customers for other.