Radio revenue continues to decline. As the graph to the left illustrates, the second quarter pain was spread pretty widely. (Click to enlarge.)
In a common ritual that accompanies public radio groups’ financial announcements, the dismal results were attributed to competition from New Media along with the recession.
As usual, there was the upbeat announcement regarding cost controls and pride expressed on how the bottom-line was stronger than the revenue decline would suggest.
Yes, we are in the midst (some would say near the end) of a deep advertising recession. Yes, every medium has been hit. However, implicit in the upbeat tone of recent quarter announcements, is that things will return to normal once the recession ends. But will it?
What happens when the recession is over?
Why should we think that radio is going to return to double-digit growth rates? Doesn’t that imply that listeners and advertisers are going to forget that we willingly devalued the product for both users?
Consider the possibility that total advertising revenues start growing again, but radio revenues do not. How will radio respond then?
To hit their numbers, stations have already cut programming and marketing budgets to the bone. They’ve already eliminated most promotional dollars. Stations already voice-track and simulcast morning shows. If business does not pick up, what is left to cut?
All the bogeymen that radio has blamed for its poor performance seem to be fading.
It looks like it is going to be more difficult to blame all our problems on the Internet. Research shows that Internet usage has stopped growing, and Internet revenues are down (suggesting that moving to the Internet is not going to be our salvation).
Rhapsody is suffering massive subscriber losses, 50,000 this quarter alone. Sirius XM announced that on a pro-forma basis, the merged companies lost 185,999 net subscribers during the quarter.
Pandora and Slacker may be New Media pundit darlings, but neither is making any money, and it isn’t clear whether they ever will. Slacker now wants members to pay $3.99 a month for special privileges, and Pandora offers a commercial-free version of its service for $36 per year. By the way, Pandora claims a membership of over 30 million, but generates revenues of only $40 million.
What happens if all these threats to radio go away, yet revenues don’t return? Maybe then the industry will have to admit that a great deal of radio’s troubles were caused by its own actions. Perhaps then radio will finally admit consolidation, paying too much for stations, taking on too much debt, and then punishing our listeners for those mistakes have put radio in a deep hole.
Radio is off the advertiser’s radar screen. Over 90% of Americans use radio weekly, but you wouldn’t know it. When asked which medium people find most helpful in helping them decide what products or services to purchase, all of 3% of US adults answered radio. Television got 37% and newspapers got 17%. (PDF here.)
Where were the large public radio groups, the NAB, and the RAB as radio quietly slipped into a coma? Where was radio’s leadership when it was needed most?
Let’s be honest. Satellite radio isn’t our problem. Internet streaming isn’t our problem. The iPhone isn’t our problem. These are just excuses to hide radio's terribly bad decisions.
Radio was ill equipped to weather a recession. The question now is whether it is equipped to weather a recovery.
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