He said, “It is one thing to pick apart the problems and the challenges. It is another to identify the solutions. If you could do anything you wanted to a radio station – or group – what would you do? What would your strategy be?”
Great question and timely beyond belief.
Just yesterday we learned that January’s radio billing was down over 6% from the previous year and Wall Street analysts are now re-computing radio’s expected performance for the year ahead. The latest thinking is that annual revenues will be off slightly, but that could change. It could get worse.
We know that radio is losing advertisers to the Internet and young listeners to digital devices, online and mobile phones. Arbitron's latest "American Radio Listening Trends" report which includes Fall 2007 data, shows a 3% decline in U.S. per capita radio listening over the past year - off 16% over the last nine years.
Radio may still have many decent years left but it is fast becoming a mere shadow of its former self. It is no longer a growth business by anyone's standard including Wall Street.
So the question is what can be done to save radio.
1. Start by seeing radio under a larger umbrella – Internet streaming of terrestrial stations, new Internet stations, mobile content, podcasting, social networking – even the record business (more on that later). Radio as a transmitter and tower business alone has no future. Its finest days are behind it as sad as that is to say.
2. Get into the local content business. I’d start a website with music, social networks, artist interviews and other embellishments for every college and high school in your terrestrial listening area. Radio folks would do it the other way – one website for all local colleges. Radio works best when it is local. The Internet is your friend. It enables you to reach out to markets that may not ever listen to your terrestrial stations. After that expand by interest or social group. Impossible? Costly? It’s being done all the time in the Internet world by young entrepreneurs on what even today's radio would consider chump change.
3. Stop the firing. No business can be a growth business when it is cutting back. If you want to increase revenues hire more sales people and train them better and make more content that is available to consumers who are abandoning your terrestrial signals. It’s okay to be in other entertainment and information-related businesses while owning towers and transmitters. These businesses don’t have to be linked. Radio people are the greatest providers of content on the earth – branch out beyond terrestrial radio. Take a loan. Invest don't divest when you badly need to grow.
4. Start your own Internet-based record labels. That’s right. I’d do this in a Hoboken heartbeat. The big four labels are coming after radio in an effort to repeal the performance tax exemption. If I told you that the young people I meet on campus would rather listen to independent artists in many genres, would you believe me? They want less repetition. They want more discovery. This could be easily done on Internet streams. And you don’t have to – and shouldn’t even want to – link the names to your radio stations. There is no magic in making everything you touch B-93 or whatever your brand is. And the label? You take music submitted by artists who will waive their rights fees and make it available in a stream and purchasable by download. Split the profits. Drive those greedy record labels nuts.
5. Turn to your terrestrial format now. CBS President Dan Mason is setting an example I like. Returning radio stations to the music, format and personality that available radio listeners will appreciate. I’d hire one of many seasoned and proven programmers and give them a mission statement. If they accept, I’d give them a time line. If they succeeded, I’d reward them financially and otherwise. If they failed, replace them. But I’d also have to fund their efforts and give them support unlike what the consolidators are doing today. Radio's true believers are getting the shaft. They love radio but they are not getting the personalities, the production, the excitement, the local involvement or the connection they used to get. This must be remedied.
6. Internet streaming of terrestrial radio is okay for stations that are big on in-office listening. Start new streams and make them different than what’s on the terrestrial signal. Internet radio is going to be big – real big. Once the copyright issues are resolved it will enjoy a greater period of sustained growth. I’d want to be in on that from a marketing perspective not just as a brand extension of my terrestrial signal.
7. Unplug your HD equipment and make a door stop out of it. Move your emotional and financial efforts to something that has a chance to work with the next generation. Sub-channels on a band where you have no chance of attracting the next generation makes no sense.
8. This is my favorite – and I’m thinking of getting into it with partners – develop the podcasting business. Podcasting is the new radio. It allows a generation that wants control of its content to start, stop, advance and enjoy content on demand – a prerequisite. No, I’d start 100 podcasts in a single genre that I could monetize (example: podcasts that appeal to 18-34 year old males, etc). Again, the consumers would not necessarily know I also own radio stations because starting now, I’m in the content business not the tower and transmitter business. The marketing of these podcasts to the next generation will also take some innovative thinking. Perhaps we can get into that in the future.
9. Develop personalities for all your products. Just yesterday, when I asked some of my young students to tell me one thing radio could do to win them back many said – are you sitting down? – put more personalities on-the-air like they do in the morning except have them on all day long. That’s what they said so criticize them if you must but maybe they know what they’re talking about. Radio sure doesn’t. Consolidators are firing morning talent at a record pace. Bet my students are right and the consolidators are wrong. Time will tell.
10. This one is for consolidators – you don’t need seven stations in a market to make money. Just one WLW or one WBEB or one WLTE. Just as in real life, it isn’t how big you are, it’s how long you can dominate a market. Doing one thing well instead of seven things on a shoestring is clearly better in our post-consolidation world. More cost-effective. More potential profit. (Consolidation really was a bad idea).
I could go on and on but let me spare you. Some will pick apart these ideas but I know many will hitchhike on them. That's the discussion we need to have.
Let me leave you with this sobering reason to go back up to #1 and reread these thought starters that resulted from a reader hungry for possible solutions.
One young student shared with his group yesterday this insightful comment about the radio and record business. He said it’s like they keep trying to find a new way to repackage a horse in a day when we prefer cars.
I fear that is exactly what radio has reduced itself to – trying to repackage the one thing it knows how to do in the hopes that the next generation of listeners will give up their preference for time-delayed content, new non-radio Internet streams, social networks, iPods, digital downloading, cell phones, YouTube, Pandora and on and on – and return to radio.
But they've got it backwards.
Radio must go on to the future – and with the talent in our business – it could be a new beginning just in the nick of time.
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