Despite Bleak Predictions, Radio Persists
     

Thom Callahan
I’ve been reading about the “death” of radio for far too long, and would find it all most amusing if it were not so misguided and plain wrong. Each commentary is as dire as the next. Each story is the same and all you have to do is change the decade and the latest “threat” to radio and it all goes something like this:

1. TV is killing radio. “It won’t be long now until radio is gone” (Billboard Magazine, 1960).
2. Cassettes and 8 track tapes in the car will “kill radio, why would you listen anymore?” (A music expert, 1970).
3. The Sony Walkman will “rapidly eclipse radio” (a major advertiser, 1984).
4. Betamax and VHS will “erode radio listening substantially” (local TV station, 1985).
5. The Internet will “destroy over-the-air radio listening” (various sources, 1990).
6. Consolidation will “turn off listeners in droves” (various, 2000).
7. Sirius Satellite “will soon replace traditional radio within five years” (various bloggers, 2007).
8. The iPod “will bring radio down … once and for all” (various bloggers, 2008).
9. Pandora and “pure plays will cripple radio forever” (various, 2010).
10. In dashboard, “Internet radio” in cars “signals the death of traditional radio” (various critics, 2011–2013).

Yet for all its competition, known and imagined, from its long line of “expert” critics as well as its own weak PR efforts, radio is still having explosive growth in many sections of the U.S., and especially in Southern California. In fact, I would call radio’s momentum a “rebirth” … growing and adapting in ways all these critics have somehow failed to see.

These rants against radio reflect unprofessional journalism at a high level and are not the true state of the radio industry today. Rather than just offer my opinion, I think it would best if we all look at some undeniable facts about radio and why it is more popular with listeners and advertisers than ever before.

JUST THE FACTS, MA’AM
First, there are now more licensed radio stations in the U.S than ever before: 15,300, up by 1,506 since 2004, when there were 13,794, according to FCC records from May 2004 compared to September 2013.

Radio listening for adults 12 and up in the U.S. continues growing and now reaches 243 million Americans every week in 2013. That’s a reach of 93.2 percent of all Americans, as reported by Nielsen Audio, formerly Arbitron. In 2003, radio reached 224 million Americans, while today it’s reaching 243 million, a 9 percent increase in audience in the past 10 years alone.

Listening to local radio stations through mobile/tablet devices and/or PCs is surging, with an 82 percent increase in listenership vs. a 19 percent increase for all “pure plays” like Pandora, Spotify, etc., says Triton Digital Metrics data. Radio’s online listening growth percentage over the past 12 months is now more than double the “pure play” numbers, also according to Triton Digital Metrics. That’s right, double. Online listening does not erode radio’s audience, it enhances it.

And now, to really frame this debate to its proper form, please consider the following additional facts that showcase radio’s ubiquitous strength and how difficult it will be, now or in the future, for any audio platform to overcome the evolving nature and tenacity of radio as a powerful and ever-present consumer choice:

Arbitron/Edison Research says that 84 percent of adults say they use “AM/FM radio” while driving and 58 percent say they use radio “almost all the time” in their cars. After 10 years of effort, Sirius/XM can only muster an 11 percent reach of all Americans. Radio stands at 93.2 percent and growing, according to Nielsen Audio. Pandora has stopped growing. According to Triton Digital, Pandora’s average active sessions (signing on to their site) from January through August 2013 have gone down slightly by 1 percent. A more ominous indicator is their Time Spent Listening, which has dropped during the same period from 37.8 minutes down to 35.4 minutes. This is not good news for a start-up spending more money than it brings in. Pandora will not discuss profit targets at this time.

Investment newsletter Motley Fool urged its clients in July 2013 to “stay away” from Pandora as more ads being inserted are costing them listeners and subscribers won’t even pay a $4 fee to eliminate the annoying ads. Their business model is just not sustainable long-term.

STOCK VALUE
If the “inconvenient truths” of the above facts are still not enough to turn your heads about the compelling power and business model of radio in 2013 and beyond, please consider this. As I write in late October, every major, publicly traded radio broadcast company is trading near or at its 52-week high. This clearly means that Wall Street and the investment community are coming around again to the value of the free, ad-supported business model of real time radio.

It certainly helps to have a robust digital strategy in place as well, but clearly stock values are tied to perception of an industry and intended future growth, and radio once again has that “hidden value” quality for investors.

In July, Hubbard Broadcasting bought Sandusky Broadcasting and its 10 radio stations in Phoenix and Seattle for $85.5 million. As a result of this sale, Hubbard will add 65–70 new jobs to support the two markets (Inside Radio, July 18).

Do any of these documented facts reflect a radio industry in trouble? Hardly. Indeed, the opposite is true. Radio is growing and the smart investors know it!

Oh, and one more thing: BIA/Kelsey is still projecting that total on-air and online advertising revenue for the radio industry will reach $17 billion by 2017, or a 4.8 percent growth rate over 2013’s estimated $16.2 billion total revenue.

Imagine this for just a minute ... Radio’s total revenue by 2017 still won’t equal its all-time high of $17.9 billion, set in 2007, but that was right before the great recession. Radio indeed rumbles on, and by 2017, the industry will have climbed back to within 92 percent of its all-time high, and at a time when our strategy and approach to our digital radio assets are still in their formative stages.

Does any of this remotely sound like any industry in trouble?

Even to the most casual observer, it is clear that radio — with all its extending platforms of growing online PC listeners, mobile listeners, surging in-car listening, involving and local websites, rapid and loyal social media feeds, podcasts, thousands of mobile apps and a passionate listener base of 243 million people — is the king of all audio, regardless of its platform, location, or technology.

WHAT’S IN A NAME?
And finally, have you noticed how that everyone wants to be in radio and call itself radio?

Pandora, Sirius/XM, Spotify and every other digital newcomer tags itself as “radio.” They are not radio. They are playlists, nothing more. They do not inform, they are not part of any community, they offer no help to flood or earthquake victims, they offer no charitable work, they don’t offer any news, information, chatter, personalities that interest us, and they don’t tell us why we are stuck in traffic and that we will be late getting home to our families.

Only radio is radio:Engaging, local, informative, helpful and always willing to turn over its airwaves in a crisis, providing thousands of hours of community support to their towns, cities and states. And there are no subscriber fees, set-up costs or yearlong agreements to sign. It’s been free to all our listeners and has been now for almost 80 years. Please, accept no substitutes!

I did say free, didn’t I?

Radio rumbles on, simply because it connects with humans on an intimate and consistent manner. Our strongest weakness is that we are such good friends and so easily accessible that our listeners consider radio as always being there, much like electricity. Can you imagine a day in your life without electricity or your favorite, local and free radio station?

We are in a golden age for radio, and based on all the facts listed above, a big, bold and robust future is ahead of all of us who are fortunate enough to work in this creative and compelling business.

Radio rumbles on like a sleek bullet train, powerful yet taken for granted, loaded with enormous assets and a time-tested delivery system for listeners and advertisers, and hurdling, ever forward … towards its next destination. All aboard!

Thom Callahan is president of the Southern California Broadcasters Association. He is based in Los Angeles.


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Comment List:

Excellent and well presented article!
By David Cassidy on 12/3/2013
A most excellent article Thom. Most excellent. I have to agree with Jerry as well. Thank you very much for your words of wisdom.
By Michael Payne on 12/2/2013
Bravo ! Bravo ! What a great article! I've had my First Class license for well over 30 years and been listening for 50, but this story almost made me cry. (joyfully) It's good to know that there are people who have a clear vision of what Broadcast Radio means to society and Mr. Callahan's writing wonderfully captures it's soul. Thank you Mr. Callahan and Thank you Radio World!
By Jerry Goodell on 11/27/2013

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