Will Radio’s Inertia Be Its Savior?

Although these are not the heady days of the dot.com boom, the number of media-oriented introductions per se is far higher today than it was in the late 1990s.
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Although these are not the heady days of the dot.com boom, the number of media-oriented introductions per se is far higher today than it was in the late 1990s.

Seems like every week or so someone announces the addition of another ring to the new media circus, and everyone’s head turns toward it … briefly. Then our eyes quickly shift to the next new entrant, and so on.

If you look back a bit later, most of the fresh players will already have quietly exited, replaced by other, more recent offerings.

There are many reasons behind this instability, including the resurgence of venture capital investments, the decreasing reluctance of traditional media firms to try new things, the aging of the first “digital natives” consumer generations, and the still-increasing deployment of broadband connectivity — the latter fueled by growing competition and falling prices in the telecom sector.

Although these are not the heady days of the dot.com boom, the number of media-oriented introductions per se is far higher today than it was in the late 1990s.

To help understand why this is happening, it’s important to recall that the original Internet gold rush occurred in the dial-up era, when 56 kbps was considered high-speed. Consumer broadband remained on the horizon throughout that period, and IP multicast was seen as the best real hope for streaming media to take hold at the time.

Obviously a lot has happened in a few short years, and much of it unexpected.

Churn and burn

There’s a reason they call it “venture” capital; it’s always a gamble, and the odds are stacked against success. Once in a while something breaks through, but it has to offer a near-perfect storm of compelling values or improvements to do so.

For media offerings, the three Cs apply: Content, Convenience and Cost. Considerable improvement has to be shown in all three areas for the new entrant to gain any consumer traction, and in radio’s case this is pretty hard to do.

Looking closer into these components, though, broadcast radio is most vulnerable today in the Content sector, where many consider the medium to be lacking in variety and overburdened with commercials.

This is how satellite radio has gained its foothold, but its higher Cost and somewhat lower Convenience have kept it from becoming a true killer (i.e., replacement) application. It also remains unclear whether satellite radio will remain a sustainable service, even with its premium consumer pricing.

The category of Convenience actually involves a number of sub-issues when applied to radio, including receiver form factors, features, ease of use, service availability and reliability. Naturally, terrestrial radio (or as NAB now prefers to call it, “local radio”) ranks strong in this area, as it also does in the Cost category, where receivers are cheap and service is free.

So judging prospective competitors to analog terrestrial radio against this “3C” metric makes the hill a very steep climb. A win in one area is countered by a loss in another, and so far no one has come up with a new offering that can assemble a net victory over regular ol’ radio.

Another element of the mix is the fact that new systems inherently are more complex than their predecessors.

Many involve bidirectional, interactive components, and they may appear as just one part of a multipurpose device. For many consumers, such complexity is a disincentive, particularly when it is positioned as a replacement for an intrinsically super-simple legacy format like radio.

The “pocket convergence” concept that bundles multiple media functionalities into a single device (e.g., phone, radio, camera, e-mail client, Internet browser, gaming device, etc.) is clearly not for everyone.

There is also a natural reluctance to jump into new services when they first launch — particularly if there is a cost involved (for hardware and/or service). The typical predilection — even among relatively open-minded early adopters — is to “give it some time” to stabilize, mature, work out the kinks, etc., by which time many such new offerings have already given up the ghost.

Extrapolating the trend

Even among relatively established new-media services, flux remains high.

Consider how the industry is currently moving towards deprecation of subscription music services, or tossing out DRM-protected music downloads. Even satellite radio’s future hangs in the balance, as lawsuits, increased music royalty rates and possible rejection of a proposed merger all loom on its horizon.

One thing satellite radio has done right in this analysis is to make itself a relatively simple consumer proposition — in fact, it attempts to model the familiar operation of local radio as much as possible. In this respect satellite radio differentiates itself quite well from Internet radio, but its service availability and robustness still lag a bit behind local radio, and of course its cost is significantly higher. So on balance, even satellite radio has an uncertain future in this analysis.

Next up is wide deployment of wireless broadband (WiMax, etc.), which brings substantial portability and otherwise increased availability (i.e., higher Convenience) to Internet radio. It is unlikely that wireless Internet radio will ever match local radio’s user friendliness, however, particularly in terms of one-button, instant access.

Yet wireless Internet radio’s proliferation of portable, narrow music formats may actually hurt satellite radio more than it does local radio. Is the enemy of my enemy my friend?

Ultimately, the fragmentation and complexity of the new media marketplace could become local radio’s strongest unintentional allies. Being old school isn’t necessarily bad here. This is not to say that radio should not explore and embrace change where it makes sense, but while doing so it should always remember the fundamental values of simplicity and stability that put it where it is today.