Killer App?

As much as I try and stop myself I just can't help thinking about the iPhone 3G. I will try some sort of twelve step program from today to cure me of my addiction. I don't even have one of the blasted things yet - I'm waiting for the 32Gb version by the way, with video.

Who buys a version one product anyway? Oh what's that you say? One million people in the first weekend it was on sale. Ah, I see.

Anyway, here are some further thoughts on Mark Pesce's view of radio as the killer application for 3G. These thoughts are courtesy of Neil Shoebridge and the July 14 edition of the Australian Financial Review - the full article is available here for subscribers only. I've quoted the best bits below;

"Glenn Wheatley is back in business, bankrolled by an eclectic collection of investors including former Allco Finance Group chairman David Coe, Sydney radio announcer Alan Jones, fashion designer Collette Dinnigan and eBay Australia vice-president Simon Smith.

The investors have sunk $4 million into… Stripe which will launch 25 radio stations on the Optus 3G network on July 29. The company is also in talks with Telstra about carrying its stations.

Stripe is a subscription based service with stations devoted to music genres such as heavy metal, hip hop, country and classic rock. Some of the stations use content licensed from the ABC, the BBC and British radio company Kerrang!

Optus will charge $8 a month for subscriptions to the service, splitting the revenue with Stripe… which is run by Iain Bartram, a former Chief financial Officer of listed technology company ConnXion. Stripe’s directors include investment bankers, Gary Jones and Nicholas Goh, both of whom have worked with Mr. Coe.

Mr Bartram predicted stripe would turn over about $4 million in its first year. He said it would break even if about 1 per cent of Australians, or 210,000 people, subscribed and was aiming to sign about 1 million subscribers within five years.

Mr Coe and Mr Jones own 65% of Stripe which employs 20 people. Mr Goh and Mr Bartram own 8 per cent and 4 per cent respectively, while TalentWorks – the management company owned by Wheatley and his wife Gaynor – owns 12 per cent.

Richard East, the Australian theatre producer who owns part of the musical ‘Mamma Mia’ owns 2 per cent. Other shareholders include veteran radio industry executive Brad March, Nine Network presenter Richard Wilkins, comedian Billy Birmingham and singer Glenn Shorrock.

The list of shareholders also includes brothers Andrew and Colin Cookes who once owned the retailer Venture Stores, David Whittle from ad agency M&C Saatchi’s Mark digital marketing division (Mark devised the Stripe name and logo), investment banker Phillippe Sung and telecommunications industry executive Christopher Eyles.

Over the past year … Stripe has signed licensing deals with music companies Sony BMG, Warner Music, EMI, Universal and Shock Records, plus smaller specialist firms such as Ministry of Sound and Central Station.

The 25 Stripe stations… have been put together by the company’s program director Jarrod Graetz, and Pollack Media, a Los Angeles-based radio consulting firm Wheatley worked with in the 1970s when he was one of the people who launched Australia’s first FM radio station – EON – in Melbourne (EON later became Triple M).

Wheatley said Stripe would be producing 40 stations by the end of 2008 and about 100 by late 2009. “The key to Stripes success or failure is the quality of the content” he said.

Stripe is negotiating deals to include sport and news content in its stations. None of its stations will carry advertising. “At some point we might include some ads, but only if they are directly related to the content of the station,” Mr Bartram said. “Commercial radio listeners complain about the ads all the time. The Stripe stations will never have huge blocks of ads.”

I think they may have a point.

-sean

Comments:

The whole thing strikes me as quite misguided. Misguided actually is the wrong word, that sounds condescending, but I struggle to see the business logic behind it, at least a logic that leverages the changes in media that are currently occurring. A service such as this relies on early adopter up-take and strong word of mouth. The people who are part of that market predominantly do not listen to radio anymore, so hitting them up $10 a month for access to a service they don't want free just does not make sense. My favourite quote though comes from Umair Haque, and while he was not writing about Stripe, it is as applicable: "It betrays just how deeply bereft of real strategic insight media is - and how sorely the media industry needs fresh DNA, instead of old dudes with the same old lame ideas." Radio is 3G's killer app? The internet is 3G's killer app people. Charging for services that are no longer wanted is not a killer app.

Posted by David Gillespie on August 02, 2008 at 10:19 AM PDT #

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