How Much New Media Must Radio Do

At first, Bruce Reese’s comments made at Kurt Hanson’s RAIN Summit in Washington, DC this week startled me.

According to press accounts, Reese, the Bonnevile CEO, said, “I’m not sure I see streaming as a big revenue source, at least for our company”.


Bonneville is the one radio company actually making significant money from new media.

Even at this very moment – after years of recession – some 6% of Bonneville’s year-to-date net revenue and 8% of its net operating income are a direct result of digital endeavors.

Insiders at Bonneville say that the corporate edict is to grow those numbers in the year ahead while spending next to nothing to do it. In other words, Bonneville is just like other radio groups in that when it comes to new media, it throws nickels around like manhole covers.

I am a great admirer of the way Reese runs Bonneville, arguably the most employee-friendly company in radio. And while I don’t agree on his choice for NAB CEO, Reese is a smart radio guy who gets it.

That’s why I am wondering aloud why Reese is publicly throwing cold water on the notion that digital media is going to be a huge part of radio’s future prosperity.

If you consider new media advertising, you’ll note that during the almost three year economic downturn radio has lumbered through, only new media posted growth numbers in ad revenue. I believe when a full recovery is felt, new media ad sales will continue to outperform traditional advertiser options even as others recover.

So what is Bruce Reese up to when he talks about streaming as more of a promotional than revenue generator?

In fact, here’s five things Reese knows that I don’t think he’s sharing with his competitors:

1. New media as a promotional vehicle for stations – as Reese claims – is a dud. An out and out loser. Streaming cannot effectively drive users to terrestrial radio because they are different animals. The widely held belief on the part of radio novices to streaming is that it will increase listenership and revenue. As far as listenership, most experts agree a 3% audience spike is about the most that can be hoped for. As far as major radio stations streaming revenue, forget it. It just hasn’t developed.

2. New media’s future is not streaming. Young people do not have the attention span for radio online. Even Pandora is enjoyed with active participation and on-demand elements that keep its 50 million plus coming back again and again. But radio stations from several decades ago garnered better “average quarter hour” so to speak than Pandora does today.

3. Until a royalty deal – a fair and inexpensive one – can be worked out for radio broadcasters wishing to use new music in short on-demand mobile programs, the music option is dead. And with the guy Reese put in as CEO of the NAB (Gordon Smith), the radio industry is not getting any great discounts for new media royalties in return for $1 billion in additional annual terrestrial radio taxes.

4. Reese says Bonneville’s KSL, Salt Lake City was making money off classified ads before Craigslist. That’s good. But only a small component of what radio must do in its coming digital future.

5. Reese said if digital media is going to work, it is going to work fast. Partially true. This area is red hot but radio people don’t have much of a touch because they don’t understand it. To be candid, they think new media is a promotional tool for radio. Oops.

Let me reiterate, streaming, mobile content, social networking and other new media initiatives are not promotional tools for radio.

That’s exactly what is wrong with radio thinking when it comes to new media.

We want to cram radio into cellphones and iPads. But the audience has changed. Listener attention spans have declined. New mobile consumer products are being purchased as fast as they can be manufactured.

Even in a recession.

Recently I cited a study that showed today’s young consumers would rather buy electronic devices than clothes.

But radio remains the same and its top executives actually think that this red hot world of new media is its promotional tool.

Now here’s the clincher.

I don’t think Bruce Reese actually believes this for one minute.

I do believe the part where he says he doesn’t want to spend much money on new media, but then again – what’s new about that?

As far as the future of the radio industry, let me be blunt.

There is no future if radio continues to insist that the only major option going forward is some form of terrestrial 24/7 programming alone.

I’m sorry. It hurts.

But, 70 million young people have been raised on iPods and the Internet. They are getting along just fine without hit radio and the other goodies we can offer them.

Reese is shrewd. He’s already outpaced his brethren by working under the radar to advance new media. WTOP in Washington, the number two billing news brand in the country, is perhaps the best example of integrating new media with terrestrial radio that I can name and I expect that it will grow even bigger.

You see, in actuality, Bonneville is not betting the future on WTOP’s radio signals alone.

They are protecting their brands.

Putting content – separate and apart from the terrestrial signal – where consumers live today on mobile devices and online.

I don't blame Reese for not giving company secrets away to competitors.

So, after careful consideration of my friend Bruce Reese’s comments, I have concluded – if radio wants a robust revenue future, don’t do as he says.

Do as he does.

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