"I think branding is more important than ever before," said the former Viacom chief, noting that media inflation is "out of whack," while the "downward pressure" from the top on marketing departments to produce measurable reporting and ROI is greater than ever. Karmazin said marketers can drive circulation while producing new revenue streams by developing or repurposing content through new media.
Karmazin said that one good example is a deal between Sirius and Hearst Magazines to produce the Cosmopolitan channel, a new channel for Sirius subscribers that will be a platform for Hearst to extend the reach of the Cosmopolitan brand and drive subscriptions. "Checks will be written from me to [Hearst Magazines President] Cathy Black," Karmazin said. Martha Stewart Living Omnimedia is also producing a channel for Sirius.
However, growing circulation will be easier than growing ad sales because of the sheer breadth of choices advertisers now have, Karmazin said. "Even video games are now talking ad dollars," he noted.
A thinning out of traditional media ad dollars due to more media channels has placed a greater emphasis on the need for dual revenue streams, according to Karmazin. Consumers have shown through video on demand and satellite radio that they are willing to pay to receive content that was once free.
He said that a dual revenue stream will enable Sirius to compete for licensing quality content, the cost of which is going up every year. "There's no question [that] content holders are looking for more ways to fund themselves," he said. "The ability to monetize your audience on top of $12.95 per month is pretty compelling."
Unlike some traditional media old-timers, Karmazin said he sees opportunity where many see a threat from new media. For the first time in the history of radio, he points out that radio has a "pure national footprint." Media buyers will be able to make one national purchase, without having to go to negotiate each market.
Currently there are far fewer ads on satellite radio than free radio; it remains to be seen how subscribers respond to increases in the number of ads, especially if some consumers feel their subscription charges should absolve them from having to sit through ads.