The Inside Debate: Is Radio Dead?
     


You may not have guessed, but those of us who write about our industry are a passionate lot, sometimes intensely so, and we care a great deal about the radio business. In this column, I share a recent three-way exchange inspired by a blog from John R. Quain at Fox News titled “Radio Is Dead, Is Apple iTunes Next?”

It isn’t hard to summarize the gist of the blog: The author’s point was that Apple’s music distribution model, where consumers “own” the music they listen to, is now being challenged by subscription or ad-supported “cloud” services. You can hear anything you want, but you don’t have to actually take care of it or maintain it. With mobile interconnectivity becoming more widespread, music can be accessed anywhere from the web.

Of course his dig about radio being “dead” got our eyebrows up. Taking part in our internal discussion were Brett Moss, gear & technology editor at Radio World; a group chief who has written in RW and asked to remain anonymous here; and myself.

OPENING ROUND

Brett took the role of cynic, giving voice to concerns that many people in radio may harbor but not voice openly.

“It would seem to me that music stations are facing a dark future,” he wrote. “Any station relying on material that is recorded and played time and again, never changing, doesn’t have an advantage over the Pandoras, stuffed iPods, et al., but it has many disadvantages.

“However, stations where the content changes every day such as talk radio, sports radio, news/traffic/weather, some religious stations, NPR-types, etc. look to have more defensible positions. That stuff can’t be replicated by a Pandora, though Internet streaming could devour much of that market eventually.

“If or when Rush Limbaugh and ESPN decide to become streaming-only, radio broadcast stocks could look like OTC penny stocks, and a majority of (surviving) operating radio stations may be nonprofits,” Brett continued, emphasizing that this is pure speculation.

“All those #14 music stations in 20-station markets, or #5 in eight-station markets, are the ones that are going to get ripped to pieces in the future. They don’t generate much income. The owner may be too strapped, or even too cheap, to do a decent job of migrating to the Net, and its playlist is ‘meh’ (which would partially explain the lackluster ratings). Maybe they should sell now while the market is high. Or they’ll be walking away from them later.”

Brett worries that owning a station these days may be akin to owning a livery stable around 1920. “You’ve made money in the past, you can still make money but the horse-powered economy is about to go seriously sideways in a few years.”

He also thinks the Fox blogger “underestimates Apple’s ability to keep the Applebots enthralled and enslaved to the Apple family of products. Most assuredly Jobs & Co. have already put the Next Step into motion and will be able to move the moment they sense iTunes losing momentum.”

RIGHT BACK ATCHA

Brett’s musings are personal contemplation, not any kind of official prediction from Radio World. But they are dark, and they produced this reaction from our engineering colleague:

“With a comment like that, I have a hunch Brett hasn’t listened to a ‘real’ radio station in sometime … having been completely sucked into the online streaming and iPod/iTunes music vortex.

“Suggesting that music radio stations are all the same and merely play tunes over and over, as Pandora and iPods do, completely ignores what happens between the songs on well-programmed total entertainment-driven radio stations,” he wrote.

“Such ‘entertainment,’ done properly, includes companionship with a one-to-one human connection, local news, weather and traffic info, human interest stories, trivia, contests, etc. And nowadays, direct interactive contact and side conversation with the live human talent via Twitter, HipCricket and other online services used in most live music station control rooms.

“I find it a little bit amusing to read and hear netheads like Fox News’ Jeremy Kaplan who have been declaring for some time that ‘radio is dead.’ They’re totally and utterly ignoring the reality that 85 percent of the population still uses radio every day. And it isn’t just via AM and FM. More of radio’s brands and products continue to be discovered on the Internet and mobile devices every day.”

He continued: “Content will always be king, and radio has been aggressively extending its presence in the burgeoning digital space. In fact, traditional radio continues to dominate the growing online sector serving as an additional tool to reach listeners when they are not in their car, but also when they are at work in their office, or at home on their PC, or out and about with their smartphone.

“Undoubtedly Brett is right about the smaller radio players that continue to do music radio on the cheap being an endangered species. Unless they can find other supportable business models with other formats to keep their stations alive, they will fail and be sold or auctioned to niche operators like ethnic and brokered-time broadcasters. But as long as traditional radio remains free and ridiculously easy to use via the billion radios in circulation in this country, along with the Internet, we’ll have a very large audience for many years to come.”

As for John Quain’s suggestion that iPods are next to die: “This fellow really should get out a little more and see how the average human is really using the various electronic media devices and platforms available. Yes, radio TSL has fallen off a bit in recent years as more choices have become available, but to declare it completely dead and Apple iTunes is twisting in the wind?”

DARE I WEIGH IN?

The last time I questioned Brett’s visions of the future, I had to quickly eat my words. I had argued against him that it was unlikely any governmental force would try to pry valuable spectrum out of the hands of broadcasters, since it would effectively result in a taking of their business property. About four weeks later, the FCC announced that it was looking to take back 300 MHz of spectrum from television broadcasters so it could be auctioned to wireless broadband carriers. Ouch. Score one for Brett.

So this time I’m going to agree with him, although I won’t take quite as extreme a position.

I agree that the future for music stations is under a lot of pressure. They currently enjoy a very large presence, and they are maintaining that presence via web-enabled streaming. But what they offer faces considerable competition. The Internet has humbled the record companies (to the degree that the quantity of new music being produced by the majors is more limited than before) and it will humble radio over time. It all depends on how long your perspective is. Is radio selling buggy whips or steel? If it’s the former, it will die out. If it’s the latter, competition will erode its importance, but never really eliminate the industry entirely. I think it’s more like the latter.

As far as the other entertainments mentioned, radio seems much stronger when we talk about live sports or news. Consider the highly produced shows that serve as hallmarks of the NPR world, such as “Car Talk,” “Prairie Home Companion” or the news shows like “All Things Considered.” The competition in this arena is largely from television, an industry facing its own pressures, not music distribution companies.

Radio as a distribution technology offers economies of scale that packet-based systems don’t. This remains radio’s best strength. And it’s hard to compare the simplicity of operation of a radio to the Internet version, the Wi-Fi radio.

As far as the “radio stars” and their ability to determine the future: I think we’ve seen how this works already, and it just isn’t as simple as losing two or three big names and radio will end.

Stars like Limbaugh, who have built their careers and fortunes on radio, conceivably could do great harm to radio if they chose to exit the industry. But they don’t have the ability to invent a new medium on their own. Howard Stern tried it and the result was a nice speculative payout to Howard; but this was more than offset by the bankruptcy of the believers in his ability to define an entire industry. I see Limbaugh et al. as holding the power to destroy but not to rebuild on another medium.

I suppose that makes a good case for a streaming provider, like Verizon, to spend a part of its billions on convincing Limbaugh to retire. That’s kind of like Microsoft wanting to acquire Netscape so they could ultimately bury the product.

Is radio technology nearly dead as the blogosphere likes to state? Drop us a line at rwee@nbmedia.com.


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