These are becoming rather dark days for radio. The deepening recession. Shrinking staffs with consolidation. Eroding younger audiences. The RIAA assault on radio webcasting. The unknown impact of the Internet. DAB still not happening. The threat of Sirius and XM “death stars.”
We’re in uncharted water, to be sure, but radio has been in the cross hairs of economic slowdown and challenging technology in the past. It’s always darkest before the dawn.
I’m not going to tell you there are sure-fire answers or slam-dunk solutions to all these problems facing radio in the new millennium. But I do know this: Radio has always survived by focusing on its strengths: local service, ease of use and availability almost everywhere to everyone.
Let’s just see how radio will likely continue its own survivor series over the coming seasons as the industry adapts to the stress and onslaught of change. Now is a good time to celebrate and reflect on the reality of why we are still thriving after 80 years.
RADIO HUNKERS DOWN
Recession and a slow economy are nothing new to radio. Indeed, it even expanded and kept the masses safe and sane during the big bust of the 1930s. Radio is the best mass medium of all at hunkering down with efficiency of delivery. It’s even more efficient nowadays with computer technology streamlining the process of selling, producing and transmitting radio.
Consolidation may have fewer people doing more of the work, but that helps to insulate the business from much of the labor strife that cripples other industries when the going gets tough. It also spreads out the resources and provides much deeper bench strength. Downsizing usually forces the cream to the top. Consolidation may be the blessing in disguise that has made our industry lean and mean to weather any storm or challenge it faces.
Jerry Del Colliano of Inside Radio thinks radio is in deep trouble because the college-aged audience doesn’t use it anymore. He thinks MP3 and the Internet are luring away this audience, which supposedly finds radio irrelevant. He’s forgetting that this crowd has always bought and heavily used the latest electronic entertainment toys of the day, whether they were records, 8-track tapes, cassettes, CDs, MP3 players, or PCs. There’s just a few more to choose from nowadays.
All of those formats require extra effort to use. As folks get married, get jobs and get busy with life, time becomes a lot more valuable and they naturally turn to more convenient and easily used delivery devices. Nothing beats radio in this category and nothing probably ever will.
There is a radio in practically every room of the house and in every car on the road. A Walkman is still easier to use than a portable MP3, MD, cassette player, palm pilot, cell phone or any wireless Internet device by far. Simply turn on a radio and punch up your favorite station. Unless you’re in a very small town in the middle of nowhere, there are more radio formats on the air to choose from today than ever before. I just marvel at my fellow geeks who love struggling to retrieve ballgame scores from their cell phones or pulling up news stories on a wireless palm top.
Lots of media experts predicted the demise of radio in the early 1950s when the glitzy new technology of television displaced it as the primary American family entertainment source. But radio had already reached critical mass penetration of the marketplace and became more resourceful, seizing on its advantages of portability and localism.
Watching TV or using a portable computer while driving just doesn’t work out too well. And when FM displaced AM for music listening in the late 1970s, AM invented all news, talk radio, and more recently all sports. Ya gotta love never-say-die AM. Radio has stood up to and embraced all kinds of new technology music delivery formats. Today’s MP3s are nothing more than yesterday’s LP vinyl records.
The Internet was shot out a cannon and has been falling back to earth over the past year. Dot-coms with shaky or non-existent business models have morphed into dot-gone. Radio has not been able to harness the lucrative marketing potential of the Internet and make real money, but neither has any other business except maybe e-Bay and Yahoo.
The RIAA wants to get its hooks into radio webcasting for more music royalties. Many stations and at least one top radio group have recently bailed out of their simulcast webstreams, which meant nothing to the bottom-lineanyway. Litigation spawned by the RIAA’s move will slow down webcasting for traditional and web-only radio for a while, but streaming media including radio will certainly be a big part of the Internet in the future as this issue gets resolved and bandwidth delivery continues to increase.
Radio may not be making money with the Internet yet, but it has not been hurt by it either. In fact, a recent study highlighted in the March 30 edition of Radio World shows that radio listening is actually increasing, as many Net users turn on the radio while surfing. Traditional radio should view the Internet as an additional delivery mechanism to expand its reach and saturation, and also as a value-added resource for listeners and advertisers, but probably nothing more.
It is not and will not be the holy grail of mass communications, at least not until it can deliver mass appeal content as easily, cheaply and reliably to anyone, anywhere like radio can.
Mel Karmazin likens the Internet to the telephone system in a recent L.A. Times interview. It’s just another big network that offers dial-in access to more information. “The Internet just may be like the telephone,” he said, adding that “everyone has one but that there’s not much money to be made selling the service.” So far, he’s a genius with his call on webstreaming.
IBiquity Digital has been taking its sweet time perfecting the digital generation of radio delivery. But anyone who understands how difficult it is to make IBOC DAB co-exist successfully with our present analog system realizes that it takes time to make this technology as good as it can get in order to protect and insure radio’s future. IBiquity must submit standards to the FCC for both AM and FM together. But it seems clear that FM DAB is much closer to completion and may be adopted first, within the next year. AM DAB will probably come another year or so afterwards.
IBiquity has been short-changed on the level of improvement its FM DAB service will provide over existing analog FM. Multipath distortion will be dramatically cleaned up. That alone will be a very noticeable improvement for a big chunk of radio’s audience. And it goes without saying that 15 kHz stereo on AM DAB will give the AM band parity with existing FM and its first meaningful quality enhancement since perhaps the 1950s. Tell me I’m overly optimistic on this, but it’s still damn ed exciting to ponder the coming age of digital radio.
DOUBTS ABOUT THE BIRD
Traditional radio to be sure will have a digital future to remain competitive. But the satellite death stars will appear on radio dials before then, sometime later this year. Both XM and Sirius have satellites launched and prototype receivers being tested in the field. Both say they’ll be happy and profitable if they sell a small percentage of the car radio market. Their programming will be very familiar to what is on existing radios already, with fewer or no commercials. But let’s remember how well pay for play radio has worked in the past.
Cable-delivered DMX won over a tiny percentage of cable subscribers at its peak and has never been a smashing financial success.
The death star business plan is a bit more creative and is rolling the $10-a-month subscription fee into the purchase price of various high-end new cars as an option. Painless for some I guess, but I hope there’s a cancellation escape hatch if the service doesn’t work very well for those new car owners who bite. I can see getting this service in a new car with factory hardware. But having Car Toys hack up my year-old Beamer with “after market” satellite-receiving hardware that doesn’t look laughable or degrade resale value could be painful.
I’m sure it’ll be wonderful out on the plains of Kansas, but there’s not enough cars paying $10 a month in the wide open spaces to make a dent in supporting the construction and maintenance costs. There are still serious doubts voiced by many smart RF design types whether death star technology will work well enough in population centers where building obstructions, bridges and tunnels block the signal. Heavy rain and atmospheric fades even at 2 GHz can do damage to relatively low-power satellite signals hitting small antennas of various shapes and designs on moving cars. Buffering can only help so much.
Building enough terrestrial gap-fillers to cover this properly will be extraordinarily expensive. I’ll hafta see it to believe it, but these boys have some fairly challenging hurdles to clear breaking new ground in an area where mother nature can be pretty nervous and unpredictable.
XM and Sirius have both ridden through the dot-com/high-tech Wall Street roller coaster and have been selling near one-year lows. But the venture capitalists and stockholders are getting restless. We hear through the grapevine that money to continue funding the break-neck schedule needed for launching the XM service on time is beginning to run low. XM employees are starting to wonder if they’ll soon be like some of their dot-gone buddies still out looking for work. It’s likely no different over at Sirius.
Clear Channel owns a piece of XM Radio, so at least Lowry Mays thinks it’s worth betting something on one death-star trick pony getting ready to bolt from the gate. Maybe Mel Karmazin is looking to pick up a cheap position with Sirius to diversify Viacom into this arena. But Mel has always been skeptical of business plans based on high tech and lots of blue-sky promise. The betting is that XM and Sirius will either merge or end up running lots more commercials to stay in business. It will never be close to a level playing field for those guys, especially with no local content. There’s even a better chance one or both could go broke before profitability is attained.
Even if everything works well enough with the death stars to entice a small portion of radio’s audience over to using satellite delivery, losing even 10 percent of the listening base would hardly be a crippling blow. The losses were much higher when television launched. Clear Channel or Viacom could easily swallow up both Sirius and XM in a few short years, so satellite radio would quietly blend into the larger universe of radio anyway and the debate over the death stars won’t really matter.
I continue to remain convinced that traditional radio is still sitting in the catbird seat of information and entertainment delivery to the mass audience. Nothing else can do it cheaper with more instant saturation…..in a marketplace where there are five times as many radio sets as there are people. Think about that and be happy. My vote is to keep radio on as the one survivor show that really matters.