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Summary:

Internet radio stream aggregator TuneIn took $16 million investment this summer. Why does it need the money? To improve discovery and build out an ad-supported Netflix of radio, CEO John Donham tells paidContent.

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The online radio service TuneIn wants to insert pre-roll audio ads before broadcasters’ streams and is planning to improve discovery with personalization features, after taking $16 million investment this summer.

Audio ads

The outfit, which aggregates metadata and streams for 70,000 stations, has 40 million active users and serves iAd and AdMob display ads through its mobile apps. These visual ads are all well and good and yield “okay” click-through rates, but TuneIn is an audio service. CEO John Donham tells paidContent:

We’re going to do audio adverts before the stream and have a companion display ad associated with them. We’ll be starting that shortly as a test, to make sure it doesn’t have a negative impact on the user experience.”

Of course, most of the radio stations on which TuneIn depends already sell their own ads in their streams. In TV, the practise by which live aggregators like FilmOn and TVCatchUp insert their own video pre-rolls before channel streams has riled some broadcasters. But Donham says TuneIn won’t trample on owners, citing existing partnerships with broadcasters including CBS, NPR, Entercom and TalkSport…

“We don’t touch any broadcaster streams. If a broadcaster has a pre-roll in front of the stream, we won’t stomp over that. It would be a double-negative to user experience if you got multiple pre-rolls before the content. We would look to avoid that as well.”

Discovery

TuneIn took $16 million this June, led by General Catalyst Partners and including Jafco Ventures, Google Ventures and Sequoia Capital. Why? Donham explains:

“Discovery is a hard problem to solve. We want to hire the best people to help us do that. For us, it’s harder, because how do you know what’s playing at any given time?

“We have a lot of really exciting challenges ahead of us. Google, Sequoia – these places are full of entrepreneurs who have tried to solve similar problems.”

Personalized radio

Donham is coy, but one of the key approaches to enhancing discovery will see TuneIn presenting radio options based on listeners’ habits:

“A lot today is browse-by-location. There’s much more we can do. How do we create an additional user interface that surfaces the awesome stuff right now and more awesome stuff based on what you listen to?”

The additions are yet to be announced.

Netflix for radio?

TuneIn began life a decade ago as RadioTime, the online radio metadata service which sells its guide service to third-party audio brands. But, having rebranded to become a direct-to-consumer business, TuneIn will soon have no white-label customers left – the last remaining, BMW’s Mini, will soon carry TuneIn’s own-brand service. Donham says:

“We see this as such a big opportunity. Radio is the last mass-market medium to move online – the final frontier. As Amazon is for books, iTunes is for CDs, Netflix is for movies, so TuneIn is for radio. The more we can create a consumer brand that people recognise, the more successful we will be become.”

TuneIn’s backers are all institutional investors rather than strategically-placed radio industry players on which it could have drawn for advice, but Donham says: “As we continue to grow, the options for more strategic relationships make sense.”

Free, not paid

TuneIn’s apps, which have become its core consumption method, come in two flavors – free with display ads, or at a small fee for a built-in recording feature.

It is a rare CEO that asks you not to pay, but Donham surprised me by saying:

“The number one way we monetise is advertising on the free app. The paid app is a legacy. We would rather you listen to the free app than the paid. We would urge you to switch.”

I trust that a cheque refunding my earlier £0.69 outlay is in the post. But this is an indication of where TuneIn wants its model to go. A Netflix for radio, perhaps – but not with Netflix- or XM-like subscription fees.

“One of the cool things about radio is, it’s free,” Donham says. “For us, we see a really big opportunity in addressing the largest market possible.

“There are literally billions of people who consume radio every month. What a gigantic opportunity – we’re not going to get them all to subscribe to something – we’re going to get them to listen for free and monetise that.”

  1. You can skip the test on me. Pre-roll adverts are going to create a negative user experience.

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    1. I’m a broadcaster for http://thelegacyfm.tk which plays Progressive Rock and Classic rock. We are on iTunes, RadioLoyalty (which already does pre roll ads) and TuneIn. I feel this is the future of Internet Radio in order to make it a lucrative business especially due to the rising cost of licensing. To never have ads these days is not realistic if you want to have your Station or Internet Radio Service continue to exist. Heck I suspect AOL to do the same thing with its Shoutcast directory in the future.

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