Radio: The Longest Running Survivor Show
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.
STREAMING HEADACHES
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.
SHOW ME
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.
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