I fully intended to lay off blogging about this when I read about it earlier this morning in Doug Kaye’s wiki. Earlier, I sent Doug a private email with my suggestions and recommendations in detail about IT Conversation’s dilemma. However, my mind changed on the blogging issue when I saw Scoble point to it and then Rob from WebTalk Radio also:

Doug Kay, the creator of IT Conversations has posted his business model dilemma publicly and he is getting feedback from his listeners. This is an important discussion as it is currently difficult to keep and online radio show funded and operating. I am interested in hearing any of your thoughts on the topic of podcasters making money to pay for the bandwidth and content production time. Dana and I are generally covering our time and costs, but that forces us to host other websites and streams to pay for our 5 web servers and bandwidth.

I briefly met WebTalk Rob at the last Seattle meetup, but he was engrossed in other conversations so I couldn’t really spend any time with him beyond a brief introduction. Hopefully that will change at a future event because we are only 15 or 20 minutes away from each other.

IMO, the problem with most audio commercials is that they suck. Most of them sound the same (NASCAR and wrestling-like over-produced and over-polished pitches: Shouting! Special! Messages! [insert cool or weird sound] That! Folks! Need! To! Hear!) and ultimately aren’t creative, interesting and/or useful to listeners. All too familiar audio pitches without any real soul and nobody wants to be pitched in the middle of listening to an interesting content program. It’s an interruption, it’s the phone call in the middle of something important, the mosquitoes at the picnic; a nuisance. TiVO had this right, but now even TiVO wants to screw with commercial skipping.

Here’s a thought: what if a show (or station) switches gears and tries to entertain listeners through the commercials — especially in a niche audience — for an intermission from the content … well, now you have a model that can and does work.

This is what we’ve done with our web-based radio show that is and has been profitable for nearly five years now. We haven’t tried to go ego crazy and be the show with the most listeners, or the most professional setup or have the best guests (though we’ve definitely had some notable guests) or blah, blah, blah, we have primarily focused on providing good, relative content to an influential and active target niche audience. This makes selling advertising much, much easier. Advertisers don’t care about huge numbers if those huge numbers don’t convert. It may sound good to say: we have 50,000 listeners a day, but if 0 listeners a day actually are conducting any business, then what value is that to advertisers?

Ask the advertiser who they really want to advertise to and they will all say the same thing: the people most likely to buy their products and/or services. Bingo.

The problem with podcasting is that anybody can download, including machines and machines burning bandwith for shows that don’t guarantee actual human listeners is a waste of bandwith. The auto-download concept is flawed because of this. You are hoping that subscribers will actually listen to your downloads, but like the overweight kid in the Willy Wonka movie, it’s much too easy to over-indulge. If there was some way to force listening of files before downloading more files from the source, then that would make this more attractive for advertisers inside podcasts. Until then, it’s almost like piling up material in a closet for a rainy day that never comes. Advertisers collecting dust on hard drives.

We’ve done very few downloads, mostly streaming as Rob described was better for advertising for their show. However, we are now experimenting with podcasting and downloads with our newest web radio show (which contrary to our established show, is definitely not profitable yet, just like the situation IT Conversations is facing, it seems). Our newest show is currently commercial free, though we do have some ideas where an audience is shaping and how we can turn this show into a money-making enterprise. But our focus at the moment is establishing our target audience and refining the content of the program. We couldn’t do this new show if we didn’t have other ventures (including our established radio show) that do make money. Just like Rob said that WebTalk relied on other ventures to help support the podcast stuff, we’re in the same boat.

I found Scoble’s comments about Microsoft, a company with billions in its coffers, particularly interesting:

I am a HUGE fan of Doug’s. His stuff is first rate. I don’t have any good answers for him either. It’s hard to get sponsorship money for anything out of groups at Microsoft. Particularly for something that’s new like blogging or podcasting or streaming audio shows.

If Microsoft isn’t at the forefront actively supporting audio like this through spending advertising dollars marketing in these areas, despite the fact that they have Windows Media Player and that they do sponsor some shows like .NET Rocks (do they support WebTalk Radio too?), then this could be sending a discouraging message for tech-related radio shows trying to get advertiser support for their respective audiences. Then again, how much more advertising does Microsoft need?

Anyway, I’ve gotten away from the point I was trying to make about audo commercial creativity. More creativity can change listener or viewer interest, just look at the SuperBowl — the ads are part of the tradition instead of separate from the event.

For audio commercials to work effectively for the advertisers, then they need to strive to become a part of the program. That’s how radio and TV advertising used to work anyway, product-placed advertising. It does work.

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