by Dan Halyburton
The past few years have been hard on those who have made Radio their chosen vocation. Vets and rookies have been rocked by the tectonic moves in a business that they really love. The radio station of today is dramatically different than the station of 15 or 20 years ago but from the outside the listeners don?t seem to have noticed the changes. The industry continues to ?test? their listeners with new approaches to product and it looks like we will see more in the year ahead. Cume is holding and that?s good. Time spent listening is off, but you?d expect that with all of today?s media choices.
Consolidation, market pressures, measurement changes have caused less true innovation. The opportunity to potentially double the number of FM broadcast signals using HD2 frequencies was not approached with innovation but with cookie cutter music services with only a few notable exceptions.
Paychecks haven?t grown. They have declined as the staff compensation model was reset. The people who run todays stations have been asked to wear more hats, work more hours and receive less. The fundamentals of the business aren?t broken, but they could be headed that way.
Many look down the road to what has traditionally been the answer to consolidation. Heavily consolidated industries usually generate new more customer-focused products and companies. In broadcast radio that can?t happen because the government controls the supply of frequencies. The industries new verb is ?riffed? The result means a growing number of talented radio people with fewer and fewer places to work. They are looking for a sign, a ray of hope.
There will likely be a tipping point but we may not recognize it immediately. A tipping point can be something small and seemingly insignificant that makes the difference. Internet Radio could provide that tipping point, but it faces significant challenges.
We are seeing the result of consolidation and technology in the rapid rise of Pandora, with its radio like execution and ability to serve a user in a very personal way; their growth is clearly significant. Pandora is a bit of an enigma. It has growing revenue but most of the music based Internet radio efforts struggle with low advertising CPMs and high royalties.
Internet Radio has been primarily nationally focused music based services but broadcast radios? greatest strength is local. We have seen a few innovative music products like Radio Paradise and Soma FM or tightly focused music offerings like Digitally Imported.
We have seen a few locally focused Internet radio efforts. Personality focused East Village Radio in New York City, FishBowl Radio in Dallas Texas and talk radio, SoFloRadio from greater Miami, all take a unique approach to attracting an on line radio audience with some local focus.
The challenges are many; royalties represent the single greatest obstacle. Our current system penalizes success. Internet radio faces the challenge of a media buying system where size of an audience is valued over the composition of an audience. We are still a mass media world.
Where is the tipping point? Many hope and believe its mobile, with 62% of people under 45 years old owning a
Smartphone device and the arrival of Internet Radio in the automotive dashboard will usher in a new era. The Radio industry and the people who make it run are looking for a future, a future of growth and employment. Internet radio may provide that opportunity.
DanHalyburton is EVP McVay Cook and Associates and can be reached at 214-707-7237. Follow Dan @danhalyburton. E-mal Dan at dan@halyburton.com
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