Radio Applies the Pogo Principle
In case you hadn't noticed, this is not a happy time for our industry.
The vitriol spewing forth from radio's trenches toward its own executives sounds like a town hall meeting on health care. Meanwhile, the industry's leadership continues to take a Cheney-esque stand against the music industry it once enjoyed such cozy relations with.
Oh, and there's the economy, causing many to amp up their fears of the new media bogeyman as cause for all the industry's current ills.
Nothing good will likely come of all this negativism, leading one to conclude that broadcast radio today has more to fear from its own actions (recent and future) than from any new competitors.
While many in the industry point fingers elsewhere, it's becoming clear that what radio itself does over the next few years will have more impact on its prospects than will the undertakings of third parties.
The predicament is of course more evident on the commercial than the non-commercial side of radio right now. Yet none is immune to the same consequences, if they partake in the behaviors that have wrought such malaise: Hubris, imprudence, lack of foresight and generally poor business judgment.
Meanwhile, out of the spotlight, some radio operations continue quietly to churn out successful business, while dabbling in the new media environment, even under such harsh current conditions. Generally, these are the broadcasters whose leadership largely avoided that list of nasty attributes over the past decade or so, and for whom those good practices now provide safe haven.
Six simple rules
Hindsight is 20/20, of course, and there's not much to be done retroactively for those that suffer consequences of such past action.
But some things are becoming evident that can right the ship, or keep on course through the storm.
Here is a distillation of such learning to date:
- Focus on news/info/sports services, where radio still has strong appeal for its immediacy, access to high-value content and wide service-availability.
Yes, these are relatively expensive services to provide, but the old adage that you get what you pay for certainly applies to radio-format selection today.
- Along those lines, if you want to provide music service, it had better be of very high quality and value.
Find something fresh or unique, and do it really well, or don't bother. Music formats probably are going to inherently become more expensive soon, anyway, so you might as well make it worth your while by investing in curatorial excellence.
(This is perhaps the area in which new media competition has indeed had some real impact on radio, as younger listeners turn to music blogs, online streaming, iTunes and other Internet services for music discovery.)
- Maintain or expand connections to the local market. This does not just mean doing local news, but rather implies true community engagement, awareness, events, outreach and other constant involvement. New media competitors generally have no foothold in this area, so it's a slam dunk opportunity for local broadcasters.
- Use the radio station as a base for building out an agile, locally focused media empire. This includes new media elements like streaming, podcasting and mobile, as appropriate, but can also involve investments in "old media" like print and events, as well as acquisition of additional radio stations in the market or region, as regulations permit.
It also implies the development of technical infrastructures that are easily adaptable to changing requirements (e.g., IP-based systems).
- Don't place much hope for early financial salvation on HD Radio. This is not to say it shouldn't be implemented, or maintained and expanded if already in place, but it should be considered as one spoke in a large wheel of assets.
Consider HD Radio as the long-term, speculative play in the portfolio, and balance it with other components on a faster and more likely track to new media ROI.
- Think more about metadata. Radio's business is and will remain primarily - but no longer exclusively - audio. A little text on the side is becoming increasingly important, and is particularly appreciated, if not expected, by younger audiences.
Ultimately, the target zone will expand to include other forms of non-aural content such as graphics and video, but start with text today. Emerging consumer devices can make even simple text content look pretty good on their GUIs and bright, high-resolution displays.
While implementing these processes, keep in mind a few other high-level precepts - which you've likely heard before in this column and elsewhere, but they bear repeating in this context.
- • Broadcasters' traditional business actually occupies a space that has become two different businesses in the digital age: a) Content, and b) Service (i.e., signal delivery).
This is an enviable position, but broadcasters need to think and act that way - as if they are operating two different component companies - because in digital terms that's how the market works.
So sometimes a broadcaster should think/act like a content-only company (e.g., streaming, podcasting), and sometimes as a service-provider only (e.g., datacasting), while the core business (OTA radio) remains both content + service. New growth can come in all three domains, and management's key challenge is optimizing that triple play. "Manage change, or change managers."
- • Broadcasters can enter the online world at will, but online media companies cannot enter broadcasting as easily.
There are costs to do so either way, of course, but barriers to entry are much higher (and far less incremental) for the online side to cross over into broadcasting than in the opposite direction. This is a big advantage for broadcasters, and makes the old-to-new media transition their game to lose.
- • Without government mandates, any old/new media transition is by definition a long, slow, crossfade, in which the old may never completely fade out. Consider that the AM-to-FM transition continues, more than a half-century on. By any definition, then, we are still experiencing near-field effects of the HD Radio transition, so no reliable trajectories can yet be charted.
- • The days of an easy path to high profitability for radio are ending.
This doesn't mean the end of the business - only that its purveyors will have to work harder and smarter going forward. Unlike newspapers, radio's core value proposition remains relatively high. But music formats in particular, which have enjoyed uniquely high profitability due to low operational costs, will require fundamental reevaluation due to the tandem impact of new competition and possible new copyright regulation.
- • Finally, the multiple service opportunities open to broadcasters by traditional and new media must be adapted to their best respective applications. For example, while online services can offer great choice and flexibility to individual users (and thereby expand the audience one listener at a time), FM remains the best service for large local audiences to hear the same content simultaneously and in real time.
Understanding of these revised fundamentals will be key to radio's getting out of its own way and renewing its value in the new media age.
Skip Pizzi is contributing editor of Radio World. Follow him on Twitter at twitter.com/skippizzi