While Radio Says "What, Me Worry?"

Like the iconic heart and soul of Mad Magazine, Alfred E. Neuman, the radio industry is being run by many radio CEOs who have taken Neuman's motto to heart: "what, me worry"?

I don't believe -- no, can't believe, that radio CEOs are concerned about the digital future vis-a-vis their radio stations.

They certainly do worry about quarterly earnings.

They worry about share price.

They worry about the next play.

The digital future? It doesn't seem like our radio leaders have a care in the world.

All one needs to do is take a look at the amount of money terrestrial radio companies have committed to the Internet, streaming, alternative delivery systems or the mobile space. Or should I have said none committed to the future. And if that's not enough proof for you, look at how many of them live in a world that basically says "radio is still the greatest business in the world". This is tantamount to the owner of the baseball team giving a vote of confidence to his embattled manager -- before he gets fired.

I can say a lot of good things about radio. It's everywhere. It's the mobile choice for entertainment. From a business standpoint radio stations are free cash flow moneymakers.
Some stations actually still serve their communities.

On the other hand, radio executives admit to losing the next generation of listeners. They have shot themselves in the foot with consolidation. Not enough money invested in programming, program directors, marketing and audience promotion (these are the things cutbacks are made of). What's more troubling is that while radio was out consolidating, Apple was consolidating its power. It has neutered the record business, defined the delivery system of the future (iPod) and now with the iPhone promises to hit radio where radio really lives -- the car.

Can you imagine radio without its mobile audience -- that is, only broadcasting to homes or businesses via a tabletop radio but not in the car or even on a Walkman? According to an outstanding article on the front page of The Wall Street Journal Monday by Sarah McBride Internet radio listenership in the U.S. has risen to 29 million a week -- up from 20 million three years ago (Arbitron/Edison).

This growth is remarkable for Internet radio because it has largely been accomplished without mobile listening. In other words, the increases are due to listening on line, on the laptop or desktop computer tethered to an Internet service provider or within 300 feet of a wireless signal.

You want something to worry about?

What happens when WiFi or WiMax coverage becomes more widespread -- and eventually universal? Sprint is presently looking for funding to build such networks.

It then won't be too many years before consumers can buy cars with built-in Internet streaming availability. Would these radio titans who continue to take their eyes off the prize worry then?

Pandora, the programmable "radio station" built by pioneer Tim Westergren is making his popular service available through Sprint Nextel via the mobile phone -- albeit a stretch, but a breakthrough nonetheless. Unlike radio's over-complimented "Jack" format that brags about playing what they want, Pandora tries to play what the audience really likes based on its taste as captured through Pandora software. It's truly a programmable radio station.

CBS -- the smartest terrestrial radio company out there lately -- just paid $280 million to acquire Pandora's British competitor Last.FM. They are smart enough to hedge their bets.

Slacker is supposedly going to hit the consumer market this summer and then it will make music available through satellite channels it is renting. In essence their new devices should be able to pick up Slacker's stream via satellite. Again a personalized radio station that, according to its principals, can be heard on the fly.

Eventually one or more of these mobile, customizable radio stations will have to either charge listeners for the service or carry ads to subsidize the expense and make a profit. That's Slackers plan down the line. I'm not sure either one of those models work. (Hey, it's not going to be easy for an Internet pioneer either because the young audience is fickle and demanding).

There is a lot to worry about.

Many of my readers are atypical so they do know the challenges and opportunities that face terrestrial radio. Satellite radio has the same problem as its technology has never ignited with the youth demographic.

And HD Radio, forget about it!

Do you ever hear anyone (even older consumers) clamoring for high definition radio (whatever that is)? I think not.

The future is Internet streaming. Mobile delivery.

Furthermore, the way programming will be assembled will be strikingly different (i.e., morning drive no longer has to be four or five hours live -- it may be just whatever the average morning commute time is -- and the programming delivered to a device for use in the car, bus or train.)

The thing that keeps me optimistic about radio is not that it has any solutions for a digital/mobile convergence. It has few answers as far as I'm concerned.

It's that radio has all the talent -- all the content people. True, they've been under consolidated anesthesia for the past ten years and with a few courageous leaders to wake them up they could be back on track in time to be part of this exciting next phase of "radio".

That's what bugs me about radio CEOs. They know all this better than you and I do and the only reason their actions and words sound like Alfred E. Neuman is because they are not worried.

That's right -- they are not worried.

Why should they be.

Their end game is investment and acquisition while your end game may be development and operation. They have all the power and they win that game.

Or should I say, they lose that game because in my view it is very unlikely that terrestrial radio companies will have a major part in the Internet streaming and mobile revolution. And that's a sin because the radio industry and its people are uniquely qualified to develop the next thing.

It's ironic that the Alfred E. Neuman I have been referring to appears in every issue of Mad Magazine.

Mad, indeed.

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