Radio's Internet Future Is Not What You Think It Is

The radio industry is beginning to get the idea that its future is on the Internet.

The best way to deliver that message is when it comes at a financial conference such as the Kagan event in New York City. (For some reason programmers and creative people who have been saying this for years have previously been ignored).

Kurt Hanson and Paul Maloney who write Radio And Internet Newsletter provide some context:

TargetSpot CEO Doug Perlson said on a panel, “Advertisers are embracing online radio faster than anyone ever thought they would… The ability to respond to an ad immediately makes local advertising very appealing because you can target-specific ZIP codes and demographics.” He added, “Advertisers are looking to hyper-target — not just to match up geographically, but match up by demographics.” Bill Figenshu is president and CEO of FigMedia. He agreed that it’s imperative to be local. “If you have 100 stations, then you need to think local 100 different ways. If you get 80% of your revenues from local sales, then how can you not have local content?" He insisted that building the content-rich Internet extension of the station “is not an option, it’s a necessity.”

Perlson and Fig are right. As with almost every other area, radio is being dragged into the future by advertisers who are already there.

Connectivity instantly between listeners and clients is very attractive to online advertisers. After all, for decades radio has been the immediate on-air response tool for clients. We know a little about getting results for our advertisers.

And Figenshu reminds us that local is the footprint for radio's digital future -- a timely reminder as we see radio CEOs abandon local and immediate for national and canned programming.

But I'd like to hitchhike for a moment with my view of radio's digital future. In many ways I concur, but in others I see a difficult generational divide ahead which leads me to conclude that the radio industry should proceed with great caution.

Here are some of my principles:

1. Without understanding the next generation -- the "change makers" who first embraced the iPod, smart phones, music downloading, podcasting and social networking -- any Internet blueprint is probably already flawed. And radio people do not spend any time or money learning about the generation they let get away while they were consolidating. If this doesn't change, they'll be shooting in the dark with someone's investment money.

2. Online streaming of terrestrial radio stations is not the digital future. Broadcasters for some reason think that offering their on-air programming as an Internet stream is Internet radio. It is not -- in my view. Terrestrial radio on the Internet is simply radio delivered on a computer or mobile device and will be rejected by the 80 million Gen Yers who are necessary to provide the growth for Internet radio.

3. Companies using on-air radio talent to do Internet streams will be sadly disappointed with the results and they'll be disappointed because advertisers will be disappointed.

4. Repurposed content from on-air radio is also not a digital stream that will be embraced by a new generation.

5. Radio commercials on whatever unique Internet streams radio people can put together will not deliver the kind of instant in-touch response that will be demanded by the growing legion of online advertisers. CBS Radio President Dan Mason has a sound idea to expand the use of live-read commercials for online streams. My experience with the next generation bodes well for such an approach because the production-laden commercials of radio will not work on the Internet. But many young people seem to like the personal in-your-ear approach.

6. Time spent listening may have been a big thing in radio for decades, but time spent not listening is more important for the digital future of radio. By that I mean generational media analysis shows that Gen Y has a shorter attention span than other generations. In many ways, the media have fed this deficit. However, they are bright and responsive and will not sit still for broadcasting as usual (that we may want to do) on their mobile devices. Therefore, serious consideration should be given to the fact that they have been raised with their finger on start, stop, delete -- they are used to time delay. They multitask. Therefore, I question whether 24-hour streams will be necessary or for that matter accepted on a wide scale by the next generation.

7. Internet radio will be redefined to be a daily infusion of options for listeners who may breeze in and out of such streams. The content would have to be compelling and should not in any way resemble radio. That's the biggest mistake I see broadcasters making -- shifting terrestrial radio over to the Internet. I'm on record as saying this will fail. Still, I think many in the radio industry will kill themselves trying.

8. In-demand content will be eclectic and require expertise in the subject matter or musical approach radio operators would like to take. Djs will not be necessary although personalities will always have a place. More important, smarts will be a requirement.

9. The talk station of the future may be a stream that a radio owner throws up there when something major happens locally. Disaster in town? The news brand from that city's terrestrial world may put up an instant stream that stays up until the event has concluded. The radio brand may be back later with a new stream on something else. This has lots of potential if you still own a local radio brand in, say -- news or information.

10. A glimpse of how compelling you can make these streams comes from thinking of putting together a stream that you assume most folks will waltz in and out of, but you make it unpredictable and addictive. That is, a five-minute show and two-hour show and 23-minute show and it forces the online listener of tomorrow to have to check your stream the way they check their Facebook page. You'll have to name it different things. Not like radio stations. Lots of changes ahead.

11. And speaking of Facebook, an Internet stream without a real social networking concept is not worth launching. I am encouraged to see on-air stations begin to embrace Twitter and Facebook, but I would like to see them have a better understanding of how these social tools can be used. In other words, don't use them in an insignificant way.

Going forward, the entrepreneurial company that avoids creating sound-alike terrestrial radio stations is likely to have the seed of a great idea.

Additionally, there are new uses for Internet streams that radio operators can provide for their clients. I am monitoring one such program now and hope to tell you about it in the near future. Imagine, delivering big revenue streams from ancillary ways and not having to rely on only terrestrial audiences.

Most of the financial figures for terrestrial radio are not encouraging through 2013 -- and in that four-year period a lot can happened. After all, four years ago very few of us knew what Facebook was. Twitter was a gleam in the eye of its maker. Smart phones were not available to the masses (only Blackberries for business people). Radio was still rolling along with not a worry in the world.

In only four years.

Some encouraging signs:

• Radio people are at least looking beyond just terrestrial radio in a more serious way than ever before.

• And, radio stations are ready-made production, creative, sales and marketing factories for developing lots of diverse local streams. (Notice I said factories not sweat shops). They are cost-efficient even fully staffed. They will work best separate from the terrestrial side.

Internet radio is here.

But Internet radio is not going to be what you think it is.

Knowing the difference -- priceless!

In the meantime, attend Kurt's RAIN Internet Radio Summit in Las Vegas April 20th.

Let's get this right. There is too much at stake.

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