The struggles of AOL and Kodak should be a warning to both broadcast and its challengers that success is far from assured for either.
Millions of Americans discovered email and the Web using an AOL account and software. For years, AOL was synonymous with the Internet, but that was then.
Now AOL is struggling. The company has lost half its value in just the past year, 28% in the past few days. Today, Pandora has a higher market cap than AOL, despite a tenth the revenue.
A two year effort to refocus AOL into a content provider has faltered. Even the purchase of the Huffington Post for $315 million has failed to reverse declines in AOL traffic.
The New York Times reports that AOL's share of US display ad revenue continues to decline from 6.4% in 2009 to 4.2% in 2011. In contrast, Facebook has nearly 18% of display ad revenue, with Yahoo! close behind.
Kodak is most closely associated with film photography, but the company essentially invented digital photography, manufacturing the first commercially available digital camera.
The company has had only one profitable year in the past six, and has watched as its stock price has fallen from $30 in 2006 to today’s $1.77.
Two pioneering companies with enormous strengths and deep pockets both find themselves struggling.
What are the lessons for radio?
First, there is no First Mover Advantage. In digital, the opposite is more often the case. Early entrants into a space help identify opportunities, but generally the companies that follow are more successful.
Google+ launched in June, years after the leading social networks, but it has already become the fastest growing social network, attracting nearly 30 million members in its first month. Analysts expect it to surpass LinkedIn and Twitter in its first year.
Pandora has shown there is a market for personalized radio, but not even a hundred million registered users is an insurmountable lead. Now it is up to broadcast groups to exploit the opportunity Pandora identified by creating their own brands of personalized radio, refining and expanding the category.
While watching immediate threats, keep an eye on the horizon. Personalized radio may be the future of radio, but it's popularity might fade to be replaced by something else.
Crowd-sourced radio like Jelli hasn’t gotten the attention that Pandora has, but broadcast shouldn’t dismiss it. Even while broadcast develops its own personalized channels, the industry should research alternatives such as crowd-sourced radio.
AOL understands that survival will depend on creating original content. However, failed efforts like Patch show that Internet companies don't understand how to create it.
Radio understands how to create unique content, but radio has to ratchet-up its investment in quality content to remain competitive with new threats.
Worry more about the quality of your product than how people listen to it. If the content is good enough, people will find a way to listen to it.
And radio can’t stop evolving. Radio's competitors will continue to grow and evolve, and broadcast has to adapt to remain competitive.
It all boils down to providing what listeners want. Remember, listeners decide what kind of radio they want to listen to, not radio groups.
Listen to listeners and make sure you offer the type of radio they want.
And understand that what they want will change, and that it can change quickly. Don’t be so committed to one approach that it blinds you to other possibilities.