Russ: This is the BusinessMakers Show heard here and seen online at TheBusinessMakers.com. It's guest time and for those of you that are watching on video, you can tell, we're not in our studio but we are in a studio because my guest this morning is Pat Fant, cofounder of RFC Media. Pat, welcome to The BusinessMakers Show.
Pat: Thanks, Russ. Thanks for having me.
Russ: You bet. Well let's start with you telling us about RFC Media.
Pat: Well RFC Media was formed about a year and a half ago, little over now, by my partner and I. He is a man, Russ, who has ascended to the distinctive level of one name.
Russ: Oh my goodness.
Pat: And there aren't many.
Russ: Sort of like Prince and -
Pat: Well, Cruze.
Russ: Yeah?
Pat: Cruze is the most brilliant radio programming guy I've ever been around.
Russ: Okay.
Pat: And my radio background goes back - let's not say how long but I've been running radio stations in Top Ten markets for three decades.
Russ: Great.
Pat: So Cruze was our program director when we put a radio station on here in Houston, actually, in 1995 called The Buzz. The Buzz turned out to be a great little radio station that even today just dominates in its market space and Cruze was the responsible party for the great music and all the cool programming and together we gave that station a terrific personality that has survived so much and today it's just a great radio station and Cruze just gets all the credit for it.
Russ: Okay. And that's where the two of you got together.
Pat: We met then.
Russ: Which, ultimately has led to this.
Pat: It's led to form a new comp- I mean I hired him at that time to be the program director 15 years ago, now -
Russ: Right.
Pat: We've maintained a great professional relationship and decided we would start RFC Media to produce custom Internet radio stations, for live online streaming, for high profile brands.
Russ: Okay.
Pat: And we haven't talked about this too much. We haven't gone out and taken out newspaper ads and called our friends in the industry trades to do stories about us.
Russ: Right.
Pat: Because we really didn't want this to get out.
Russ: Right.
Pat: And I think we have, we have found where things are going and not where they've been. We have found an opportunity to say that there's a way to make Internet radio work beautifully. Yes, there are thousands of Internet radio stations but one of those might be in your basement that you and your friends and your mom listen to -
Russ: Right.
Pat: - and that's it.
Russ: Right.
Pat: We decided that we would build a radio station for a brand and the brand would promote the radio station through all the various means that they have to do so.
Russ: Okay and what's an example of that?
Pat: Well we've been talking to Harley Davidson, for example.
Russ: Okay.
Pat: It's one of the examples that you can immediately understand what we're talking' about.
Russ: Okay.
Pat: When we say to Harley Davidson, "I'm going to build you a custom online radio station that represents the Harley vibe -
Russ: Right.
Pat: - and the Harley brand."
Russ: Right.
Pat: Instantly, you can hear it in your head.
Russ: Absolutely.
Pat: You know that's a rock station.
Russ: Right.
Pat: I get that.
Russ: Right.
Pat: That's why we say brandcasting not broadcasting because the brand Harley Davidson means more to rock fans than any set of radio call letters anywhere in the country.
Russ: Sure.
Pat: I mean you know what that's going to be.
Russ: Okay.
Pat: So you would access the radio station through their website or the partner websites that they would authorize.
Russ: Okay.
Pat: So all that makes sense and then it could be - you can take it a step further. It can be heard in stores, you know, locations of theirs or not. It may or may not have a retail component.
Russ: Okay.
Pat: But the economy went south.
Russ: Okay.
Pat: And people had a very difficult time, still are it's worse, trying to get a loan for a $25,000.00 toy.
Russ: Right.
Pat: All that with, in particular Harley Davidson, is still being talked about because their business is not what it used to be two years ago.
Russ: Okay, okay. Now even though you haven't talked about what the whole mission of RFC Media is out in the public very much, you are on the air right now with -
Pat: We are. We are.
Russ: - multiple, multiple stations, correct?
Pat: We have speed to market is what we've been focused on.
Russ: Okay.
Pat: We started with one of the greatest brands in the State of Texas and that is Spec's -
Russ: Okay.
Pat: S-P-E-C-S Wine, Spirits and Finer Foods. Seventy locations in Texas and Spec's was the number one wine retailer in 2009 in America.
Russ: In America, okay.
Pat: It's just a beautifully operated business. You walk into a Spec's, now in Houston, Austin, San Antonio, Beaumont, Corpus, Victoria, so many places - and it's like Disneyland for big people.
Russ: Okay, right.
Pat: In a Spec's. I mean it's just a fabulous operation. We do Spec's Radio.
Russ: Okay.
Pat: The difference is Spec's Radio is backed up on their website so when you walk into a Spec's and you hear Spec's Radio, that same programming - it's a real, living, breathing radio station - is actually on their website at the same time. So if you enjoy the great music in Spec's - and we tell people this all the time - enjoy it. Leave it on at home all weekend. Leave it on at work, if you enjoy the mix of music, and it is quite different.
Russ: Okay.
Pat: So the other thing is that we built a custom iPhone application for Spec's Radio so -
Russ: Cool.
Pat: - the visitors to their website download the custom iPhone app. They can listen to Spec's Radio on their iPhone anytime, anywhere. So it's very convenient.
Russ: And the format would be specific music that you picked out, I guess in conjunction with Spec's -
Pat: Right.
Russ: - and what else besides music?
Pat: Music is the glue that holds it all together but in the case of Spec's, because they are all different, there's so much information about the wine dinners that you can register for at Spec's -
Russ: Right.
Pat: - the special products, the special services that they have.
Russ: Right.
Pat: All the reasons why you love, as a customer, you love the experience of shopping at a Spec's.
Russ: Okay.
Pat: So we pay all that off for both the customers that are standing right there on aisle three trying to make their decision of what do I want to go home with.
Russ: Right, right.
Pat: But also people to just enjoy this unique blend of music because we're not limited to play the same ratings game that average radio stations, terrestrial radio stations have to do.
Russ: Right.
Pat: We don't have to do any of that so our music can be as interesting as we want it to be and this is where Cruze's ability to program that right blend so that we never take you too far from the center of something that you know and you like, we're going to take you out and experiment with you for a song or two and bring you back.
Russ: Okay.
Pat: Take you out and bring you back.
Russ: Okay, real cool. Now, I know your background in a lot of terrestrial radio had a lot to do with music format stations but, boy this is something very unique and different but from what I understand, too, today, even, this company, RFC Media, has a all music station as well.
Pat: Radio Free Cruze, RFC -
Russ: Okay.
Pat: - is the radio station the Cruze began almost three years ago.
Russ: Okay.
Pat: Today, it is the number one new rock alternative station on the Internet.
Russ: Okay. Well it seems like you must be hitchhiking, sort of, off of the whole change in the music industry - this long tail aspect where there's so many more talented musical groups that normally wouldn't have gotten played back the beginning of FM radio but today if they're good, they can get airtime on a show that has a good ear for the music, right?
Pat: Well, let me say it this way. The last time a on-air music station host, a disc jockey -
Russ: Right, right.
Pat: - we used to say - actually got to pick the records -
Russ: Right.
Pat: -unless his mother owned the radio station -
Russ: Okay.
Pat: -or he's working in a town where there's 900 people -
Russ: Okay.
Pat: - The last time he got to pick the records was 25 years ago, maybe - and I'm being kind.
Russ: Right.
Pat: Maybe 30 years ago.
Russ: So none of that was decided by these on-air personalities -
Pat: Well, no. No.
Russ: - that we love, too. So it's the music director -
Pat: Those decisions are made from someone in another state who's probably not even been to your market.
Russ: Right.
Pat: So radio, I think, in the future, is going to do very, very well in talk. Talk radio, I think, has got a great stable future.
Russ: Right.
Pat: Music radio has got a lot of competition.
Russ: Right.
Pat: And realized that technology has changed the whole delivery system. So for RFC Media, we like to say that you spend a whole lot more time in front of a computer screen than you do in the car.
Russ: Right.
Pat: Now that means I've gotcha -
Russ: Right.
Pat: - because the playing field is level. When you're in front of that computer -
Russ: Right.
Pat: - you're a click away from Radio Free Cruze or Spec's Radio or I have to mention K-12 Radio Houston for the Houston Independent School District, but you can get access to any Internet radio station just as easily as any other one.
Russ: Great. Talking with Pat Fant, cofounder of RFC Media and we'll be back with more with him after this. You're listening to The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com.
[Commercial]
Russ: This is the BusinessMakers Show heard here and seen online at TheBusinessMakers.com and continuing on with Pat Fant, cofounder of RFC Media. Now, Pat, you just mentioned this K through 12 radio station, too, and we were talking about, also Radio Free Cruze, so you sort of got this brandcasting -
Pat: Right.
Russ: And then you have this real music thing with Radio Free Cruze and you're talking about public school radio stations as well?
Pat: Well, we're in a number of businesses. The delivery system is Internet radio. Live streaming of a real living, breathing radio station that's got a purpose.
Russ: Right.
Pat: It's radio built around a community that shares a common interest.
Russ: Okay.
Pat: Now here's some different forms that that takes. Number one, we talked about Radio Free Cruze, which is our leading new rock alternative station and on that, we are starting next week to begin to sell products on Radio Free Cruze.
Russ: Okay. So I wanted to get to the business part... Wow.
Pat: We're going to sell products specifically to the listeners -
Russ: Okay.
Pat: - because that's the only one that we don't have a stream of revenue from a specific sponsor.
Russ: Yeah, okay.
Pat: On that, we build up a very loyal audience that's all over the country, and actually all over the world, and we will sell and ship mail order products to this company but first you have to have an audience.
Russ: Right so that means we're not listening to commercials, standard commercials, right?
Pat: No, no - that's the advertising play.
Russ: Right.
Pat: And that's not the only use of radio.
Russ: Right.
Pat: So when you have a good, loyal audience that is with you consistently because the product is that good -
Russ: Right.
Pat: why not sell them products that they like, that they want -
Russ: Right.
Pat: - and that we can ship to them and they're willing to buy because it's something they've been looking for and if we endorse it, and we will if it's the right product -
Russ: Sure.
Pat: We all win.
Russ: Okay.
Pat: The other model, K-12 Radio Houston is how we have entered the world of public education and we went to the Houston School Board, the last summer actually in the summer of '09, and proposed that we build a custom Internet radio station for HISD which is the seventh largest school district in the country.
Russ: Right.
Pat: This can be scaled anywhere -
Russ: Right.
Pat: - and we plan to take this on the road. We are already talking to other school districts about this.
Russ: Right.
Pat: This one is a revenue share with HISD, so it is a source of new money for the district. It is a way to communicate, connect and engage the parents of the kids - this is not built for the kids -
Russ: Right.
Pat: - it's built to target the moms.
Russ: Okay.
Pat: This is the radio station for the mothers of - there's 202,000 kids here.
Russ: Okay.
Pat: And 30,000 staff. You add the moms and dads; it's relevant to a million people.
Russ: Right, okay.
Pat: So, we're talking to the moms and this is very fresh thinking and a way to engage these families and do one of the most important things, Russ, and that's get the families involved in the education of their children. Because if they do not, then the trend that we're seeing in public education, where kids are having a very difficult time graduating from high school -
Russ: Right.
Pat: - from 9th grade to 12th grade, the fall off can be half -
Russ: Right.
Pat: - and the reading skills getting out of school in 12th grade are just very, very poor.
Russ: Right.
Pat: So something's got to change.
Russ: Well, yeah, well how are you going to engage them? I understand that you've probably got a real neat audience that needs to be engaged, but how are you going to do it? What sort of curriculum will you have.
Pat: Well number one, this is a music radio station.
Russ: Okay.
Pat: So it's a music radio station. First you have to get them to look.
Russ: Right.
Pat: So it's a music station that plays 5 minutes of commercials an hour, not 20 -
Russ: Right.
Pat: - and that's a big deal.
Russ: It's a huge deal.
Pat: The music is far more interesting than what they'll get on typical radio -
Russ: Right.
Pat: Because we don't have to play that same ratings game.
Russ: Right.
Pat: And yet between the songs we're able to talk to the parents in that personal way radio does so well -
Russ: Right.
Pat: - about, "You know, you need to get involved. Here's somewhere you can go tonight - there's a meeting of this organization -
Russ: Okay, okay.
Pat: - come on out, get involved. Meet the teachers. Talk to - find out what you can do to make sure that your child is really engaged and doing the best work they can possibly do."
Russ: Okay. Okay and then back to the business of it. The way that the format works in public education scenarios - there are these ads sold to -
Pat: Yes.
Russ: - to people that would want to target this group, right?
Pat: Oh, typical advertising. I'm delivering moms of families, so -
Russ: Right but it's also a benefit to the public school district -
Pat: It sure is.
Russ: - 'cause it's a revenue share with them as well.
Pat: Exactly right.
Russ: Okay. On the music station, you're selling products, on the public education, you're actually also advertising -
Pat: Selling advertising. Right.
Russ: Yeah.
Pat: And splitting that.
Russ: And then, and then on the brandcasting, how's the revenue work there?
Pat: On brandcasting, we want to be paid a fee. We are paid a monthly fee from the brand -
Russ: Okay.
Pat: - to custom produce for them their own live, streaming Internet radio station.
Russ: Okay.
Pat: And all these models are exceptionally good.
Russ: Right.
Pat: I don't know which one is going to go the farthest the fastest -
Russ: Right.
Pat: - but we really like just charging a monthly fee, we'll build you a radio station. It's yours so you tell us what you want us to talk about. We're talking to newspapers - big, metropolitan dailies -
Russ: Wow, right.
Pat: - about a side-mounted radio station that they can run on their website.
Russ: Right.
Pat: Whole new way to bundle advertising.
Russ: Right.
Pat: We're talking about let's say very well-known alcoholic beverages -
Russ: Right.
Pat: - or consumer products that have some buzz to them -
Russ: Right.
Pat: - some vibe and a fan following.
Russ: Right.
Pat: You know, this isn't going to work so well for Colgate Toothpaste -
Russ: Right.
Pat: - I'm not - nobody's going to listen to Colgate Toothpaste Radio.
Russ: Right.
Pat: But if you heard there was a radio station for Red Bull, you might be interested in hearing that.
Russ: Right, right.
Pat: Because you know it's not just going to lay there.
Russ: Well go back to this - to like a retail outlet - could that retail outlet put a radio station in, hosted by you, and also sell ads on it as well?
Pat: Absolutely. And there's a couple of good examples of that where it is vendor-supported.
Russ: Right, okay.
Pat: If you are running a chain of 100 stores and you have vendors that you work with that would love to be able to speak to your customers -
Russ: Right.
Pat: - while they're in the aisle -
Russ: Right.
Pat: - then we offer a terrific way to do that because it's a direct contact.
Russ: Right.
Pat: It's 100 percent waste-free advertising at that point.
Russ: Great, really cool. Talking with Pat Fant, cofounder of RFC Media and we'll be back with more with him after this. You're listening to The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com.
[Commercial]
Russ: This is the BusinessMakers Show heard here and seen online at TheBusinessMakers.com continuing on with Pat Fant, cofounder of RFC Media. Well, Pat, I can sort of feel your excitement and passion. This must be kind of neat after years, quite a few as a matter of fact -
Pat: Yes.
Russ: - in traditional radio. Here you are now in this digital world of Internet radio. How long, exactly, were you in traditional radio?
Pat: Well, Russ, radio's been very, very good to me for a very long time.
Russ: Okay.
Pat: I've been running radio stations in Houston or Dallas since 1983.
Russ: All right.
Pat: And I had some experience prior to that.
Russ: Okay.
Pat: So I've been doing this for a while but I have hopped the fence -
Russ: All right.
Pat: - to Internet radio because it's just where things are going. Things are headed toward digital delivery, Internet, media on demand. We do the pull side when we build a custom radio station for a brand.
Russ: Right.
Pat: I've, in my career, always done the push side where we push messages out to the masses and that works to a point but now you have too many ways that music is delivered right into the hands of the consumer and there's a model beyond just selling advertising to anyone who will listen that is really working for us. This is what we're committed to. There's a lot of growth in this. There are a lot of tricks and a lot of things you have to avoid making mistakes with doing this. One of the things that drives this principle is that people should pick records. Computers shouldn't pick records, people should and when you look at it that way, you think, "Well now, tell me about Pandora." Yes, Pandora shows that Internet radio listening is very strong. There's a lot of people that have discovered a new source of music but Pandora doesn't brand for a business like we can.
Russ: That's true. That's true.
Pat: So it's branded content.
Russ: Right.
Pat: And the business can own its own, complete 24/7 music radio station to connect with that exact audience that it wants to get and I can show them how to do that.
Russ: Right, you know, we've had Tim Westergren, the founder of Pandora, on this show -
Pat: Right.
Russ: And it's really a cool system but we always sort of question where was the business - where was he going to make money off of it and I think he's still challenged with that a bit as well.
Pat: Right.
Russ: Speaking of that, traditional radio stations and networks seem to be challenged with that and you were still in that world only, what, a year and a half ago?
Pat: Right. I was running a great Top 40 radio station here named 104 KRBE -
Russ: Right.
Pat: - about a year and a half ago.
Russ: Right.
Pat: And you know, the challenges were starting to happen. It didn't only mean that the economy went south when advertising went soft.
Russ: Right.
Pat: There were a lot of things that indicated to broadcasters that there's a lot of competition for traditional push style media -
Russ: Right.
Pat: - all the media's gone through it. Radio's taken its own special hit but music radio station is really what I'm talking about that has the challenge. I think talk radio has got a tremendous future and always will. That's probably going to be the highest and best use of broadcast radio as we know it today.
Russ: That's really interesting and it seems like most of the talk radio programs are just doing great.
Pat: They are doing great. It's vibrant -
Russ: Right.
Pat: - it's got content that I can't really duplicate.
Russ: Right, right.
Pat: But I can put a music radio station together -
Russ: Right.
Pat: - for you that will work.
Russ: Right. That's real cool. Now before I let you go, Pat, you know let's imagine that we have a young, aspiring entrepreneur tuned in right now. Kind of excited about hearing your story and -
Pat: Right.
Russ: - and what you're doing and just thinking man, they'd love to get out and do their own thing, too. What kind of general advice would you give to a young entrepreneur?
Pat: Two things. One, make sure you have the right people around you; the right partner. If you know the sales and marketing side, make sure you have someone that knows the programming and product side because the two of you together are going to be what it takes to make a whole pie and that's so important. The other thing is that when you're pretty far ahead on an idea like the one that we're on, be prepared for it to take a long time - because you're going to have to first, educate that prospect. Now why do I want a custom Internet radio station for my brand? Oh! That's what I could do. And then you start talking price, terms, and how all this is going to work but you've got to introduce that idea first.
Russ: Cool. Thanks a lot, Pat. I really appreciate you sharing your story.
Pat: You're welcome.
Russ: You've been listening to Pat Fant, cofounder of RFC Media and this is The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com.
