Sometimes we don’t realize what was so great about a traditional medium until a new one comes along and tries to take its place. Consider radio. Web-based radio has been around since the 1990s, and this year marks the 10th anniversary of the technology behind podcasting.
Yet old-fashioned broadcast radio is still a $17 billion business in the U.S., with a gigantic audience—there are at least 216 million regular listeners across the country’s 275 leading metropolitan areas, according to Arbitron.
It turns out that one of the things people love about terrestrial radio is that you can just turn it on and it’s there. You don’t have to fire up a mobile app, type a search term, pick a program from a long list, or wait while a file downloads or a live stream buffers.
“When you listen to radio it’s basically like pressing an ‘Entertain Me’ button,” says San Francisco-based serial entrepreneur Noah Shanok. And until someone makes Internet radio just as easy to use as traditional radio, Shanok thinks, its audience will probably stay relatively small.
Making Internet radio fun and easy is exactly what his company, Stitcher, is out to do. The company makes mobile and Web apps that help people access and discover on-demand Internet radio, from NPR to NASCAR—everything but music, which the startup leaves to companies like Pandora and Spotify.
Shanok hit on the idea after a stint as the host of a comedy podcast called Houndbite, which turned out to have a much more limited audience than he’d expected.
“It was clear there was no possible way we were ever going to reach as many people as we would want, because you have to do all this stuff in order to listen,” he says. “But we realized that if we could get this to be a personalized ‘press-the-entertain-me-button’ medium, we would basically have a better product than terrestrial radio.”
With $20 million in venture backing from Benchmark, NEA, New Atlantic Ventures, and notable angel investors like Ron Conway, the four-year-old startup in downtown San Francisco has probably done more than any other firm to bring talk radio and podcasting into the smartphone era. (Shanok actually prefers the term “on-demand radio,” to distinguish Stitcher’s streaming model from traditional podcast apps, where an audio file is usually downloaded in its entirety before it’s played.)
Stitcher’s Android, iPhone, and iPad apps have been downloaded 8 million times, and Apple featured it as one of the company’s five favorite news apps of 2011.
But clearly, Stitcher is still just getting started as a business. It’s in what Shanok calls the “nascent phase” of building an advertising revenue stream around banner ads and combination audio-and-display ads, à la Pandora (NYSE: [[ticker:P]]), and it’s still working on making the Stitcher app as easy to use as, say, a car radio. “We have come a tremendously long way, and we are seeing it in our growth metrics, but there are still definitely barriers,” Shanok says.
One of those is the automobile, where at least half of all radio listening occurs. To entice people away from the pre-programmed stations on their car radios, in-car listening systems need to be extremely simple. That’s why Stitcher has partnerships with Ford, GM, BMW, and other companies to make its app interoperable with in-car voice command systems such as Ford Sync.
“You can get into a Ford right now and say to it, ‘Launch Stitcher and play Radiolab’ and it will do so,” Shanok says. “So we are breaking down the steps needed to have a lean-back, ‘Entertain Me’ experience.”
Shanok is a former Wall Street bond trader whose career took a turn toward the Internet around 2000, when he became founding vice president of sales at StubHub, the online marketplace for reselling event tickets that was acquired by eBay in 2007 for
