Welcome to 2017. Today marks the last installment in our “Best of” series, and we’re back tomorrow to start the new year with fresh JacoBLOG content. Today’s post was written by Paul and me just about one year ago, and it has become the foundation of one of our core presentations to broadcast radio groups. We hope these four questions still resonate today, providing you with a jumping off point to 2017. As always, your comments are appreciated. – FJ
As we put the holidays in our rear-view mirror and begin to settle in for what’s ahead for 2016 (and beyond), Paul and I have been thinking long and hard about some bigger-than-life questions about radio and what’s next for the industry.
From our journey to CES earlier this month to a series of calls and meetings with radio CEOs, as well as other players in the media space, conversations frequently revolve around some deep questions about media, entertainment, and the changing mindset of the consumer. On top of that, we have been involved in numerous consumer interviews covering the gamut of technology and media.
In another January from years past, our questions might have revolved around the number of diaries in a market, ways in which to position against music marathons, and the most effective amount of cash to give away. Those days are gone. In retrospect, those were quaint, simpler times for radio – even if we didn’t think so at the time.
So, here are four questions for the new year, with some color commentary from Paul and me. Hopefully, as an industry, radio will have the courage and tenacity to face them head-on, with research, resources, investment, thought, and wisdom.
1. What is radio?
Might as well start with the big one. This is a good question because “radio” is a device – something embedded in your dashboard or the alarm clock on the nightstand next to your bed. We are in the audio business (or maybe the media business), as our definition of “radio” continues to evolve and be shaped by many of the brands around us.
And the forms in which “radio” have traditionally taken are being reshaped as well. That’s because “radio” can now be consumed as long-form programming on the air or online, or in small, on-demand bites such as podcasts, via video, on smartphones or smart TVs, or in third party distribution channels like iHeartRadio or TuneIn.
The tricky thing about these other “radio forms” like streams, podcasts, blogs, and videos is that broadcasters are still having problems deriving serious revenue and profits from them. None of these other distribution models is proven to be a valid moneymaker, thus creating an uncomfortable reluctance among broadcasters who intellectually know they need to embrace these digital pathways, but have emotional challenges when it comes to running headlong into these brave new worlds because they are slow to mature and pay off.
The truth is that consumers don’t care. They’re the ones who are truly platform agnostic. Got a new smartphone for Christmas? Then their hometown station better be there or maybe they won’t be. Just signed a lease on a new car? Then their P1 morning team has a new challenge, cutting through the newly found options provided by SiriusXM, Apple CarPlay, and that hard drive full of party songs.
Consumers are discovering new gadgets, distribution paths, and platforms. It’s up to the radio broadcasting industry to accept that new given, redefine its business model, and adjust to a fluid, ever-changing, uncertain future.
2. What are ratings?
Radio has a growing measurement problem, because as more listeners access content outside of the comfortable, familiar terrestrial boundary lines, the analytics splinter has become more difficult to package, market, and sell. The current path that radio is on reveals an audience that is moving to platforms and gadgets that broadcasters cannot easily measure or monetize.
The industry awaits Nielsen’s SDK so at least mobile and online streams can begin to generate ratings, and hopefully the dollars that will follow. But what about podcasts, an area in which we expect to see growth in the coming years? As TV has flailed away at DVRs, radio will have to come to grips with an audience that increasingly enjoys time-shifting and on-demand usage.
Matt O’Grady from Nielsen said it best: “You can’t monetize what you can’t measure.” He’s right, of course, and audiences (especially younger ones) are gravitating to consuming stations and personalities in places that represent net financial losses. Last week, a listener in a focus group told us how they religiously listen to our client station for hours each day. When we asked about the device she listens on, she told us, “TuneIn.” Why? Because she doesn’t have a radio at work and didn’t know her favorite station has an app.
And concurrently, radio revenue is flat while digital revenue continues to grow. So the audience is moving in a trajectory advertisers say they want, but broadcasters can’t adequately measure or market it. Ouch.
3. What is content?
As we’ve recently written, content may in fact be king, but distribution is queen. We have been trained to think that we create a 24 hour continuous stream of programming, delivered via a transmitter and tower to a receiver. But technology has changed all of that, as listeners now access content on mobile phones, tablets, and other devices. And along with these new platforms come podcasts and on-demand content, allowing the audience to listen to only those parts of a program they want to hear, when they want to hear it, and on the device they prefer (or that’s handy).
As we have seen with the success of Serial, Jerry Seinfeld’s Comedians In Cars Getting Coffee, and other podcasting efforts from the likes of Marc Maron and Adam Carolla, content can take many forms, and it doesn’t have to be a four-hour radio show. It can be a 6-part series or a 20-minute segment. It can be a celebrity interview or it can be a cooking show from a morning DJ famous for playing death metal. It can be videos produced by a station embedded in their mobile app, their web site, their Facebook page, and on a smart TV app.
In the not-too-distant future, will there still be a traditional “morning drive” or will time be permanently shifted so consumers can catch a “show” anytime or anywhere they like, in its original long form or in smaller chunks and segments? Will “shows” themselves actually end or will they continue to live online? And how do video, photos, social media, and tools like Periscope change the nature of how we think of shows and personalities?
The dimensions of content and distribution have changed. Our thinking has to as well.
4. What is in-car entertainment?
Up until the past few years, radio has had an entitlement in cars. Or call it a monopoly. Aside from the CD slot, it was always just about hometown AM and FM radio stations. Life was good.
For the automakers it was inexpensive to simply build a radio in the dashboard. Consumers expected it, in much the same way they know the trunk, glove box, and sun visors are standard equipment. Car companies have always been in the business of giving customers what they want, and radio has always created content that reached and satisfied them while they drove. A total win-win.
But that was then, and this is now.
AM/FM stations still dominate the dashboard, and will for some time. But the radio industry’s free, uncluttered, noncompetitive ride is over. There’s a hole in the fence, and the automakers are more than willing to give consumers what they want in the form of satellite radio, WiFi, Bluetooth connectivity, and simple-to-use interfaces that recreate their beloved smartphone in the dashboard display.
The car remains radio’s #1 listening location, but the euphoria that accompanies taking delivery of a new car with all the dashboard bells and whistles suggests that AM/FM dominance is eroding, especially as the automotive industry remains healthy and sells cars at a strong pace. Rethinking content, distribution, and the user experience with drivers in mind represents new thinking for radio professionals.
It is essential for programmers and operators to reimagine content in cars from all the aforementioned angles, making sure that content and distribution are accounted for in the new dashboard reality. Personalities, local roots, information, and community service still matter. But radio’s continued success in the cars of tomorrow, and the autonomous cars of 2020, will depend on rethinking the in-car experience, from 88-to-108 to mobile apps that provide a great User Experience.
In the car, AM/FM radio has plenty of company.
So, now what? We’ve posed and discussed four very tough questions for radio, as well as the problems they present. But as we have always attempted to do with this blog, our goal is to provide answers – or at least paths that can help us collectively face the challenges of today – and beyond.
Ten years ago at a Jacobs Media Summit, Jason Calacanis, who formerly published The Silicon Alley Reporter and went on to start up and/or fund a number of digital businesses, told the assembled broadcasters in the room they were doomed, finished, over, finis.
He suggested they give up.
The uncomfortable silence in the room that followed was accompanied with a palpable feeling of angst and perspiration. And then Jason went on to explain how radio should “give up” its old structure, and adopt a model that could reinvent the business.
He told them that they had everything in their power to reimagine their businesses – exclusive tools that put them ahead of their fledgling digital competitors. Jason believed (even back then) that podcasting and more personalized content that could be customized and time-shifted would be an important alternative to broadcasting. He believed strongly that the radio pros in the room at our summit had the tools and skills to become leaders in this new media space.
Calacanis talked about infrastructure, local knowledge, strong brands, production facilities and in-house content creators, experienced local sales teams, existing advertiser relationships, trusted personalities, simple distribution, and a reliable megaphone that can be used to promote and market just about anything.
Calacanis also perceived early attempts by outsiders who were podcasting and streaming as crude and even unprofessional. He pointed to these digital wannabes as flawed, and unskilled, lacking the experience and the technical know-how that is abundant in most broadcast radio operations.
And Calacanis was baffled the radio industry wasn’t addressing these obvious challenges to its business model. He believed radio could be poised for success in the digital era as long as it confronted the changing reality with boldness and vision.
He provided the answers that day.
Yet, we are still asking the same questions.
A note from Fred: Paul and I co-wrote this post, so if it works for you, he deserves much of the credit. And if it doesn’t, there’s now plenty of blame to spread around.
And a note and a link to a post that Entercom exec Michael Doyle posted on LinkedIn, tackling many of these same questions. Mike’s “take” on the future of radio includes some nice things about us (although we weren’t sure at the time), and his thoughts are worthy of your time. It is gratifying to see how many dedicated radio professionals are engaged, serious, and willing to face some of these big, gnarly issues.
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 1,000 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.