NAB President and CEO Gordon Smith followed Jeff Haley yesterday and advised broadcasters to crunch the numbers before jumping into the streaming pool with both feet. His philosophy is if it doesn't translate to revenue, and it takes time away from selling your core business, why rush? "Lately, we've read in the trades about a difference of opinion in our industry - some believe streaming is the future. Others believe it does not grow our bottom lines - that stations should focus on bringing in more traditional revenue. I don't know the right answer, but as someone who does not come from the broadcast business, I can tell you what I observe: that local, regional and national advertising for over-the-air signals still provides the strongest source of revenue for stations."
Smith said of the top 50 radio operators, 80 percent of their AM/FM stations simulcast their radio content online through a website or stand-alone app. "And while more stations are streaming, many report that it hasn't necessarily translated into more revenues. In 2011 total radio online revenue is projected to be only 4 percent of total radio revenue. We can't abandon building the successful business model that radio delivers to listeners. Any expansion into the digital sphere cannot be at the expense of our core business. Perhaps we are sensitive to criticism that if radio doesn't jump into the streaming business, we risk being left behind or will be seen as resistant to change."
Smith says, and we've reported many time, there's a battle brewing in the dashboard of the automobile and radio must find a way to expand its main over-the-air signal. "Radio is an automobile-centric industry and the digital community is diligently working to subordinate local radio on the dashboard of every new automobile to other digital offerings. If you take a look at new cars hitting the market, you can see that our digital competitors are succeeding. Radio must find a way to get onto other devices, like smartphones - a challenging task in a very crowded and competitive media landscape. Yet, if we don't, we risk compromising radio's core mission of providing the American people with the services they depend on. So radio is confronted by the dilemma of choosing which path to take - does it focus on building its traditional business model or invest more dollars in streaming?
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