There was a time not long ago when radio broadcasters were united sharing a vision of a vibrant industry full of opportunity and potential.
The recession and new-media’s growing threat has fractured this shared confidence, creating radio’s Great Schism. Today radio’s leaders are deeply divided by dramatically different visions of radio’s future.
One vision sees broadcast radio entering its sunset years. This mind-set believes that new media’s assault will prevent radio from ever recovering its former glory.
Those who share this vision believe the best is behind radio.
With a dark foreboding future facing the industry, they believe that radio’s past necessities are today’s luxuries.
Local program directors, live announcers, marketing budgets, and the other tools that every station once used to drive ratings are expenses that this faltering business can no longer afford.
Every traditional medium making the transition to digital has seen significant declines in revenue, so why would radio be any different?
As we noted in 2010 in the post Digital Dimes for Broadcast Dollars:
Even if we use the most optimistic newspaper numbers to estimate radio's future digital revenue outlook, there's still a good chance that local radio, once a $20 billion industry, will become a $6 billion industry.
If one believes that streaming will ultimately replace broadcast radio, then there’s no choice but to dramatically lower costs.
This realization is perhaps why large public groups in particular have chosen to cut expenses by abandoning radio’s unique historical strength as a personal local medium.
They believe radio’s economic survival depends on it.
But what if this pessimistic vision of radio’s future is wrong?
There are those who see radio entering a new transformational phase. While radio has faced challenges from new media in the past (and predictions of its imminent demise), it has survived by creating new products that revolutionized radio.
Believing that radio’s past is its prologue, broadcasters who hold this more upbeat view of radio’s future continue to invest in the broadcast product, with local talent, entitled local program directors, and respectable marketing budgets.
The hope is that good local programming will enable radio to hold on to its broadcast audience (along with their much higher cost per point value), while at the same time giving the industry time (and money) to develop new digital products.
We were reminded of these differing visions as we surveyed the results of a Harker Research ratings analysis looking at radio group ratings success rates.
As we reported in the post Does Radio Group Size Help or Hurt Ratings?, taking into account group size, the most successful groups are not the largest.
Presumably with greater resources, one would expect the largest groups to have the highest proportion of winners, but that isn’t the case. Smaller groups with more limited resources are outperforming some of the largest groups.
Companies like Hubbard and Cox manage to win in more markets, despite competing against much larger groups.
Obviously there are many factors that go into a radio group’s ratings performance, but could it be that smaller groups are approaching radio’s challenges differently? Are they more optimistic that radio can remain masters of its own future? More willing to invest?
It will be years before we know which vision of radio’s future is the right one. The tell-tale sign will be whether future rating winners are the homogenized products of central planning, or local radio stations that take the slogan live and local seriously.
If radio’s optimists are right, and the pessimists preparing for radio’s sunset years are wrong, the pessimists will have done irreparable harm to their companies.
Stripping stations of the tools necessary to grow audience will ultimately back-fire, driving listeners into the arms of stations that continue to evolve and improve the product.
Stay tuned.
Re: "If radio’s optimists are right, and the pessimists preparing for radio’s sunset years are wrong, the pessimists will have done irreparable harm to their companies."
Yes... but if the opposite is true we'll see a continued aging of radio's audience, as it battles "The Format of Your Life" syndrome. And those in power will say "we should have listened to the pessimists."
As for your "...broadcasters who hold this more upbeat view of radio’s future continue to invest in the broadcast product, with local talent, entitled local program directors, and respectable marketing budgets..." - In which markets (groups) do you see this happening? And where are you finding this "improved local programming"? Your radio receiver must be pulling in stations mine is not capable of getting.
"Gunfight at the OK Corral" is the metaphor for when mainstreaming of the digital dashboard occurs. It's not going to be pretty for those sticking to antiquated weapons.
Posted by: Ken Dardis | August 27, 2012 at 01:09 PM