Hybrid Radio

Prius, the part electric, part gas powered automobile, has been a successful model for Toyota in a changing world of high gasoline prices and concerns about the environment.

Other companies have responded to Toyota’s success by trying to deliver to consumers cleaner emissions and better mileage.

Not all of them have done it with an electric component – Mercedes Benz, for example, is pushing clean diesel engines as their “hybrid” solution.

Significantly, Detroit was caught selling gas guzzlers and polluting alternatives at the time of the recession. That’s why General Motors and Chrysler took gas – so to speak – and Ford escaped (pun intended) on the strength of their cash reserves.

Suffice it to say that no American automaker was prepared for the recession or perhaps more importantly for the green future.

This reminds me of radio.

A business that had done so well as a “gasoline powered” industry finds itself in need of a new direction – perhaps a hybrid between traditional and new media.

The problem in radio is the same as the one in the Motor City – when your business is spiraling downward, you don’t necessarily want to go off in a radical new direction. You want to stop the bleeding.

Toyota has its own problems in Japan these days with the economy but the Prius was on the drawing board – in fact, in the marketplace well before the world recession hit – to their credit.

The radio industry doesn’t even have a drawing board. A boardroom, maybe – filled mostly with older white men wearing suits. Certainly not a hot bed for new initiatives and new ideas from a diverse group of people.

Now there is little choice.

All during this recession some companies have defied the economy by making a profit.

The new media segment of the advertising market, for example, is one of the few that has shown growth in spite of the downturn. And while some forecasts say expansion is over for new media (that is, only a four percent growth rate), I don’t believe it – not that radio wouldn’t love to have a four percent growth rate again.

It’s not like anyone is saying stop broadcasting and start doing webcasts – that’s not even possible based on other hurdles such as unfavorable royalty rates. The idea is not to abandon all that free cash flow that stations still pump out, but how to find alternative sources of revenue that cooperate with changing technology and sociology at the same time.

So, how to do it.

How to change radio from a Hummer of an industry into a hybrid Prius

1. Immediately appropriate 15% minimum operating budgets in radio to new media initiatives for the year 2010 and 25% for 2011. More in subsequent years. Do you think Toyota developed the Prius without investing money?

2. Don’t design radio’s digital future from the boardroom. Engineers and concept designers built the new green hybrids that are popular in the world today. Management enables. Then stands out of the way and watches the skunk works innovate. The way radio is configured Lew Dickey would use some college course or a book that he read to dictate innovation in any Cumulus initiative. Even Steve Jobs, the Apple CEO and resident control freak knows he can challenge innovation but that he cannot bring it – his experts can. A major difference.

3. Make terrestrial stations more “fuel efficient” (right sized and rightly programmed) while this new innovation is taking place. If radio CEOs had been in charge of running Toyota while developing the Prius, they conceivably could have ordered all back seats taken out of gasoline driven Toyota's and Lexus models to help save money to post a profit and develop the Prius. Radio took local programming off the air which certainly does not make a better product.

4. Remember the 80/20 rule applies to Hybrid radio – 80 percent of your audience, advertising and revenue will come from terrestrial radio stations and 20 percent from digital media. In radio right now it’s more like 95/5 – not good enough.

5. Sit down for this one – because radio CEOs are already moving in the wrong direction on this. One sales staff of well-trained media experts is needed to sell terrestrial and digital content. Same advertisers. Same salespeople. Several ad solutions that sometime cross over and sometimes do not. Radio is neutering account execs currently and making them into robots. What they need to do to create a hybrid production line is train account execs to sell both platforms intelligently. The rule of thumb: offer both, help the client use the ones that work best for their goals.

6. Empower the radio workforce. You don’t put the IT person in the back room – if you have an IT person (or for that matter if you still have a back room). Digital and terrestrial are not separate – they are one. It is a mistake to segregate them because radio CEOs are not comfortable with change.

7. Hire back the talented people who were let go while radio was “bonehead sizing” – that is kicking out the people who could help them the most. If a surgeon could help you return to health, would you walk into her office, abuse her, insult her, take away her x-ray machines and nurses and then say “return me to good health”? But that’s exactly what radio CEOs have done to the very people who could have saved them.

At my upcoming Media Solutions Seminar, we are going to work together to isolate the skills that are necessary to outperform the market – like Apple does and Caterpillar. These skills are critical to reinventing radio and creating a hybrid. They are also critical to anyone who wants to succeed in generational media.

In the 60’s radio was all-powerful and sounded great coming out of the speakers of a candy apple red Mustang.

But today, the radio industry has turned itself into the same potential dinosaur that the American auto industry has become because it has failed to respond to the needs and wants of the consumer.

In the case of Detroit, fuel efficient, clean and green – affordable cars.

For radio, professional content for iPods, smart phones and the Internet.

And instead of choosing one or the other, how about both on a phased in basis?

Terrestrial radio while the market still exists and new media as digital continues to grow.

That’s Hybrid Radio.

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