Radio InSights

Podcasting and Other Ways to Waste Money

The NAB Radio Show is coming up. Look for a parade of sessions chaired by new media types devoted to interactivity, social networking, streaming, and podcasting. The goal is to convince you that radio’s survival depends on these things. Unless your jocks have a MySpace page, unless your morning show is available as a podcast, unless your website offers a mind boggling multimedia experience, your station is doomed.

Before you deploy resources in these areas, take a look at this ThirdAge/JWT Boom study. The study looked at web based activities of the Boomers, those over 40. What they found raises some serious questions about whether most radio stations should be pouring money into this stuff.

First, Boomers are not web illiterates. 96% use email. They are not luddites. 80% have a broadband connection. They use the web regularly, but they use it for traditional things like email and keeping in touch with friends and family. They use it for research and shopping. What they don’t do are all the things that new media types tell us we have to spend our limited resources on. The following chart shows what they are not interested in:

Web Based Activities Reflecting Little Or No Interest By Respondents

Activity% of Respondents

Writing blogs 67%

Participating in general social networking 63%

Playing games with others 62%

Listening to podcasts/prerecorded audio content 55%

Downloading music 44%

Source: ThirdAge and JWT Boom, June 2008

Only one in four visit social network sites. They don’t have a blog, they don’t listen to podcasts, and not that many download music. But here’s what they do: They talk. 93% of Boomers are likely to share information with friends.

If you program a station targeting Boomers and you want to create a buzz about the station--to get people excited about listening, then forget about podcasting. Forget about Facebook. Do something genuinely exciting on air. I know worrying about the product is so very old fashion, but try it.

People Still Listening!

As we’ve demonstrated several times, the trades seem to delight in reporting critical comments about radio. Terry McBride, co-founder/CEO of Canada’s Nettwerk Music Group, gave R&R Today an opportunity to take a swipe at both music labels and radio. R&R summarized McBride’s criticism of the labels this way:

Music labels have depended on radio airplay for so long, they have never learned the art of effective and relevant marketing, a scenario that has contributed to the current industry slump.

R&R then quotes McBride linking the labels’ troubles to what he believes is radio’s declining status:

They (the labels) based their strategies around radio, press coverage, and [point-of-sale] advertising. Everything came after that. But radio and traditional media have been thrown out the door. Consumers now ignore the radio and print media, and they no longer go into stores.

So radio has been thrown out the door and consumers ignore us? If Mr. McBride has anything more definitive than his opinion to prove this, he didn’t share it with R&R. We suspect that Mr. McBride is just repeating what new media people want us to believe. New media people can’t accept the possibility that radio can coexist with new media. They seem to need to believe that radio is dead. The fact that study after study proves that radio is alive and well is something they just can’t accept. So they ignore the accumulating research and keep spouting off about how people just don’t pay attention to radio anymore.

JupiterResearch has just released the latest study to proves radio’s continuing relevancy. It turns out that radio is the top media source for discovering new music. The Jupiter study found that nearly two-thirds of the survey’s participants listed radio over word of mouth, videos, TV, and alternatives as their favorite means to discover new music and artists. Word of mouth was a distant second. Even among those active online, radio ranked number one.

It is easy for us to fall into the trap of believing all the hype surrounding new media and alternatives to radio. The potential threats to radio are growing exponentially, but somehow radio keeps coming out on top in these surveys. Radio requires no effort and no subscription. You turn it on, and it’s there. It may not be the hottest thing right now. It doesn’t come with a touch screen, but it sure is convenient. And that’s very important to a lot of people.

R&R noted that Mr. McBride was off to London to host "Face to Face With the Millennials," an industry forum. We hope that someone in the audience will ask him about the Jupiter study.

What Were We Thinking?

When someone in the future writes a historical account of radio over the past decade, ample space will be given to radio’s long list of new competitors. The growth of the internet, satellite radio, iPods and so on will be recounted as the weapons that inflicted great harm on our beloved medium. We hope, however, that equal space will be given to radio’s response. We hope that this future author will lay the blame for radio’s dark days squarely where it belongs, not with these new media, but radio’s failure to rise to new media’s challenge.

For decades, radio had a virtual lock on listeners. Sure, people could by records and later CDs, but if someone wanted free musical entertainment or wanted to hear new music, they had just one option radio. Radio operated as a cartel, and behaved as a cartel.

Our lock on listeners began to deteriorate well before the internet and these other new alternatives to radio. Looking back, MTV was perhaps the first serious threat to the cartel. It showed listeners that there was an alternative to radio--that radio didn’t have a lock on music. Once listeners realized this, the door was open for all the new media that followed.

It is not unusual for a dominant business to lose its monopoly on its customers. AT&T lost its telephone monopoly, IBM lost its near monopoly on computers. When a company loses its strangle-hold, it needs to adapt to survive. Radio did not.

Not only did radio fail to adapt to new competition, it started to destroy the very reasons that listeners tuned to radio in the first place. Playlists were nationalized and homogenized. Live personalities were replaced with voice tracking. Promotional budgets were gutted. What listeners wanted became secondary to what Wall Street wanted.

At the very moment radio needed to be better than ever to thwart new media’s challenge, radio got worse, a lot worse. What were we thinking?

Starbucks Stumbles: Another Victim of Wall Street's Short Attention Span

Starbucks is losing market share, closing stores, and laying-off employees. According to Harvard Business Oneline, the reason is Wall Street and the pressures of going public. Founder Hoard Schultz in an internal memo notes that, "Stores no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store." Attributing the problem to Wall Street, author John Quelch notes:

Schultz sought, admirably, to bring good coffee and the Italian coffee house experience to the American mass market. Wall Street bought into the vision of Starbucks as the "third place" after home and work. New store openings and new product launches fueled the stock price. But sooner or later chasing quarterly earnings growth targets undermined the Starbucks brand.

The article goes on to note that in an interest to protect the company's status in the investment community, Starbucks stopped paying attention to the qualities that launched the company in the first place. It began focusing on things that would goose quarterly earnings rather than things that would enhance the Starbucks experience.

Starbucks missteps sound a lot like radio's missteps. Is it any wonder that their stock price is in the tank too?

What Wall Street Thinks of Radio

After years of kowtowing to Wall Street analysts and working to enhance "shareholder value" (by gutting stations) this is how Wall Street rewards radio's efforts. Was it worth it?

CBS

Citadel

Emmis

Entercom