Broadcasting vs. On-Demand

Radio broadcasters are caught in a changing world that is increasingly turning to on-demand media.

Few among us do not rely on cell phones, smart phones, laptops and online communication to get us through the day.

What started out as an evolution from traditional media to new mobile content driven by the next generation has become a revolution that broadcasters must come to understand.

To put it bluntly, consumers find themselves needing less broadcasting -- that is, distributing content from one tower to many consumers 24 hours a day seven days a week.

When radio was invented, the technology dictated that the only way to get audio programming to the masses was through radio sets. Over the years, radios became more mobile (in cars, Walkman, etc) but the one thing that was a constant was you had to be listening in to get the benefit.

Today, an entire generation has been raised by getting what they want when they want it. That's not particularly a revelation but it is significant. More importantly, as the months go on, older consumers (and radio listeners) are also relying on new media devices to get their news, music, traffic, weather, stocks, Twitter feeds, Facebook and more when they want it.

This is not to say that what radio stations air is not of great value -- I'm not saying that.

It could be argued that radio isn't as good, personable or local as it was five years ago, but there are still excellent stations in every market -- some of them owned by consolidators.

That's not the issue.

If you're with me on this -- consumers are relying less on broadcasting and turning to on-demand content across all generations, then you see radio's dilemma.

Radio groups are betting that what they've always done (24/7 programming with commercials) will always be the preferred means of entertaining and informing the public. We can see evidence of their determination because most groups stream their terrestrial signals.

That is, perhaps three to four percent of all their terrestrial listening is accounted for online and very little comparably significant revenue is derived from online repetition of the terrestrial signal. That's what prompted WBEB, Philadelphia owner Jerry Lee, the number one terrestrial radio station in Philadelphia, to fold his Internet stream.

Lee took a lot of heat for this but what was he giving up?

Not money.

Not audience.

Not the future if you agree that on-demand listening trumps 24/7 broadcasting.

Lee, correctly, is investing in his terrestrial station and will likely milk that thing even when others are showing declines. But he is absolutely not confusing terrestrial radio with the Internet or for that matter on-demand content.

Again -- and I have to say this because you may get it but some radio execs refuse to cooperate with the inevitable.

On-demand is the future and it is a future radio broadcasters can dominate. But even before the recession and the huge debt that has saddled radio groups, not one radio group invested even five percent of their operating budgets in new media. In other words, they previously bet against on-demand and in favor of broadcasting in spite of the changing sociological picture.

Today, all bets are off the table because they don't have the money to ante up.

Broadcasting vs. On-Demand is the critical issue of the day for radio companies.

If stations continue to embrace traditional broadcasting without a significant on-demand model to further their brands, they will find themselves in the horse and buggy era again.

I'm also not saying that people won't listen to entertainment for longer periods of time -- Pandora is an example of a music service that gets significant time spent listening. But the music is customized using a music genome developed by Pandora and even at that, Pandora becomes one of many sources of entertainment for the next generation in a given day.

Radio is going through a tough time where consumers who know what to do can't do it because they work for companies that won't let them. And others are just trying to stay employed hoping it will all come back after the recession. That is not likely if you look at industry revenue growth rates in good times before the recession when one or two percent growth was all that could be managed.

At the recent NAB, experts on the Dickstein Shapiro panel, acknowledged the growth of new media at the expense of broadcasting. They could not say if and when that growth would subside or whether radio revenues would grow once again. I talked with a media analyst yesterday who is predicting "flat -- until they show me otherwise" for radio stations.

What's more troubling is that for companies that are betting the ranch on broadcasting and disparaging new, on-demand media, they are not even offering their best programming.

Personalities are still being cutback with more layoffs to come. Shared programming, voice tracking, less local content, virtually no news or community involvement is a curious way to invest in the future of broadcasting.

So here's Broadcasting vs. On-Demand at a glance:

1. Now is the time to put your best terrestrial programming on-the-air. Live morning shows, 80% live and local program content, better commercials in more acceptable clusters and increased community visibility and involvement. Smaller operators still do this, but obviously the major consolidators have moved toward economies of scale.

2. Radio could be a good free cash flow business for another five, seven or even ten years. This is not to say that there won't be erosion -- to think otherwise is to be in a terminal state of denial. Some Gen Yers are getting closer to 30 than 20 and they are not rabid radio listeners. They are texters, iPod users, file sharers, social networkers. But, radio isn't going to go away tomorrow unless the industry decides to continue making decisions that fly in the face of reality.

3. Stations should be developing content built around their brands -- content that does not air on its local stations as a hedge against the future. Say I am correct -- then radio operators can have a smooth evolution where 99% of their revenue once came from terrestrial to where, say, only 50 or 60% does. But trying to cram a radio station into a computer or making a smart phone a radio is not creating new source material.

4. Radio people -- managers, programmers, sales people, talent -- are the most qualified to be in the on-demand content business going forward. In fact, had Apple purchased Clear Channel (indulge me for a moment), do you think for one minute that they would fold their stations? Of course not. But do you think they would rely on only those stations for their future? What Apple would likely do -- and what radio owners should consider -- is use their brands, personalities and core skills as a starting point for also developing new and separate on-demand content.

Broadcasting served us well and continues to play a role in the lives of most people -- even young folks who may not be passionate about radio but listen when it is available.

But the future is on-demand.

Don't believe me. Look around.

Observe the next generation and see how they live and what they need. But also don't forget to look at Gen X and baby boomers -- they have changed as well.

They're on Facebook and Twitter. They have shorter attention spans (can you say TiVo?). They have other means of getting traffic and weather together -- on an iPhone at the touch of an app.

None of this is really a major problem -- it's just evolution.

What is a problem is the denial some radio people find themselves in and what that tells me is not that they aren't capable of participating in a changing communications business, but that they are afraid -- afraid of the future that demands of them personal growth, new skill sets and confidence that they are equal to the task.

In other words, the dilemma the radio industry finds itself in is not merely a consumer crisis. It's a crisis of self-confidence for those who fear the future.

(Note: yesterday I incorrectly attributed a quote about Larry Rosin's "Radio Stimulus" speech to Bob Neil, the Cox Radio President, when it should have been attributed to Bob McNeil in Sacramento. Sorry for the confusion).

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