Tis the season when radio companies are discussing their second quarter performance. And by and large, the numbers have been so-so to down. You can learn a lot about where the radio business is headed by focusing on the remarks, comments, and analysis from company CEOs about their companies and the state of the business.
Sometimes, they’re actually revealing, like in the case of Urban One CEO, Alfred Liggins. Tom Taylor reported last week that Liggins was lamenting the industry’s shift to digital:
“I would’ve preferred that the digital revolution had never happened…”
Liggins went on to explain how difficult the digital side of the business has turned out to be, but that Urban One is forced to compete because “there’s billions of dollars flowing into it.”
He underscored the uncertainty of the digital business, noting there’s a speed bump because “we don’t frickin’ know” where its headed.
True that. Everything is pointing to digital – it’s the one revenue category in the radio business with the upward trajectory. But where it goes and when it gets there is the big question on every CEO’s mind, especially in broadcasting.
As Ruchir Sharma, Chief Global Strategist for Morgan Stanley, summed it up well in The New York Times over the weekend:
“The clocks have no hands.”
Radio’s corporate leaders, by and large, have a strong sense of digital’s power and its future. As Sharma points out, they may not know its full extent or have a specific timetable, but many are moving rapidly to integrate digital into their portfolios and their corporate strategies.
The writing is on the wall. We see the inexorable move by consumers to a digital future, while the RAB continues to tell us the dollars have been flowing in the same direction for several years now.
At the NAB in April, we blogged about how radio CEOs are embracing digital. In “What Was The Vibe At The NAB?” we discussed how digital denial was taking a back seat to a sense of optimism and excitement about the digital revolution.
Last week, Entercom’s investment in DGital Media provided another strong indication of the import of a digital strategy integrated with traditional radio brands. Whether it’s podcasts or digital content creation in general, Entercom is ensuring it has the infrastructure and people in place to take advantage of the content offerings from its legacy stations, as well as its content-rich acquisitions – the CBS Radio group.
David Field joins Ginny Morris in placing several million chips in podcasting. Recall that Hubbard Radio made a major commitment to Podcast One back in 2015. And that same year, Scripps made the leap and purchased Midroll Media. These commitments to digital content creation and distribution are just the tip of the digital iceberg as other radio companies – big and small – are placing their bets on digital.
Radio’s leaders will tell you they don’t know precisely where digital is headed, much less when a tipping point for monetization will occur. But they all willingly admit that all signs point to the inevitability of continued digital disruption and the need for their companies to embrace rather than deny that certainty.
One thing I can tell you with confidence is that the radio industry’s personalities are ready and energized about the digital opportunities. I witnessed this first-hand last Friday at Morning Show Boot Camp. Our panel discussion – “New Skills For Survival” – featured four savvy digital strategists: iHeartRadio’s Chris Peterson, Entercom’s Kim Reis, Cox Media Group’s Tim Clarke, and SonicAi’s Steve Goldstein.
Each outlined the opportunities, and the enthusiastic room of more than 200 air personalities from all-sized markets was all over it – armed with questions, thoughts, and ideas of their own. There’s no question about it: they are ready to face the digital future, and radio companies should be tapping into the passion of their on-air staffers. Rather than viewing digital as a speed bump, they perceive it as a way to build brands and better engage with their changing audiences.
The media industry is moving quickly. And Liggins’ lamentations are another sign the captains of the radio industry have lost control of the clock. It truly has no hands, and that means they either need to step up and lead the way or let outside circumstances determine the fates of their companies.
When Wall Street hears a radio CEO ruing a digital future, complaining that it doesn’t bring a financial windfall and the easy returns that radio became used to back in The Roaring ’80s, it tells them broadcasters are out of step. That’s not the perception we want the investment community, automakers, technologists, or consumers to have about radio and its ability to adapt to the exciting uncertainty.
Are radio’s leaders going to embrace the future or will they wring their hands about the change that is all around us?
Optimistic innovators or rueful, reluctant followers?
Tick tock.
The future of radio will be on display later this month at Podcast Movement. Jacobs Media will host an entire day of sessions designed for radio professionals – “Broadcasters Meet Podcasters.” Details here.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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Its been awhile since I posted about this, so its probably a good time to reiterate what I’ve been saying about radio and digital since the advent of digital audio. With the notable exception of podcasting (no royalties), streaming digital music has been a money loser for everyone who has ever tried it…with literally no exceptions.
“When Wall Street hears a radio CEO ruing a digital future, complaining that it doesn’t bring a financial windfall and the easy returns that radio became used to back in The Roaring ’80s, it tells them broadcasters are out of step.” works better as a criticism of Wall Street than radio IMO. Its one thing to work harder on something with lower margins than the industry enjoyed in its long since passed heyday, but quite another (in a flat to down environment) to be bullied by Wall Street into something that no one has ever been able to make profitable.
Yes – the whole world under 40 has embraced digital music and that is one of the primary reasons for the drop in radio listening in that age group. But all of those digital music operations that they love are losing money, with no end in sight. If radio wants to jump on the digital train, it needs to find a way to do it that doesn’t require throwing vast sums of money onto the tracks. Every listener converted from terrestrial to digital is immediately transformed from a money maker to a money loser. This is like the old joke about losing $5 on every sale and making it up in volume.
Yes, it all comes down to royalties. The current system is unfair to artists and streamers and was designed by the Music biz for the music biz. Congress hasn’t budged on this because none or the stake holders are nearly as big as the Music Biz and in these battles the biggest player usually gets their way. But radio IS a stakeholder here and can compete on at least equal footing with the Music industry in congress and the court of public opinion.
Yes, apps are cute and nice, but radio has always been mostly about music. Digital could sink radio and it could save it – but there are realities that are close to 20 years old that need to be faced and addressed IMO. Its not a side issue, its THE issue.
I feel better now – and won’t repeat any of this til at least next year 🙂
Here we go again, Bob. 🙂 You raise compelling points, but I think there are some important issues to consider here (or I wouldn’t have written this post). It may be Wall Street’s “problem,” but when you’re a public company, that’s the arena in which you’ve chosen to play. Complaining about where the goal posts are situated isn’t going to work – you’ve got to find a way to score.
Your points about music royalties are correct. There are some built-in limitations that are tough to work around. But to suggest that radio is a music business misses some of the other important opportunities in spoken word generally, and on-demand/podcasts specifically. Commercial radio has been slow to dive into this space, while public radio has been all-in for many years – and they’re succeeding in the space. Not to continue our Podccast Movement self-promotion, but this is an area that coincides with changing consumer tastes. It is an opportunity for broadcasters who seize upon it. The examples mentioned in the post – Hubbard, Scripps, and now Entercom – suggest there’s a “there there.”
I’m not suggesting any of this is easy. But it’s the world in which we live. We’ve got to innovate our way to success.
As always, appreciate those thoughts, Bob.
Fred:
I think we’d all like to be able to “wish digital had never happened”. But, the Titanic wished it hadn’t hit the iceberg, either. And, we all know how that one came out.
So many radio managers want to embrace digital, then look at what it’s going to cost in not only money, but the time of the employees and the possible jobs that will need to be created to deal with it and then they get the willies. (Not all stations are deep pocketed…think of the small town manager in Nowhere, Ohio who doesn’t yet stream his stations because of the cost.)
It appears the industry may have been paying for its digital efforts thru the downsizings and layoffs which have occurred over the years. (Not every broadcast company is as heavily indebted as some and that money saved had to go somewhere.) Now, they’ve cut just about all they can…and the digital beast is screaming “Feed me more”. Makes one wonder sometimes as to the where it’s all going. Are we trying to do too many things digital, instead of focusing on a handful of things that could be done well? In other words, could our approaches be too scatter-shot? Perhaps that is impossible in this day and age, but it’s a thought.
I agree it’s the future. But, we need to figure out what parts we, as an industry, want to be in. Don’t know that it’s an answer, but it’s a thought.
Kevin, these comments are spot-on. I am sympathetic to the small broadcaster in this conversation. David Field, Ginny Morris, and Caroline Beasley may have more resources than small market owners. But they can learn from these top-notch broadcasters, picking and choosing areas of focus. Not to be self-serving here, but our Techsurveys cost just a few hundred bucks, but they’re invaluable guides for helping broadcasters understand where to invest.
You are correct – the little guys can’t do it all. They need to focus their resources and their efforts. The good old days of answering the phone and quoting rates are over. Radio is no longer an easy business. So broadcasters will need to adapt – or honestly, put their stations up for sale. I see a lot more of the former happening, but I also know many who are struggling – or will be soon.
Thanks, Kevin.
As a founder and the Number 2 stock certificate holder on behalf of DG Systems, Inc., the first National, digital, business in the world-1991…developed to be used for radio: Sorry to Urban One CEO, Alfred Liggins and everyone else about the trouble with digital. But I must say that most of it today it is not being done very well. It’s still early in the development and hopefully our new company can do something about that, using smarter people and better technology. -rs
Urban One supposedly has changed their name. Maybe they changed their mind back…or they’re not using the new name yet?
Yes, nuf said!