(By Peter Smyth) During the past months, I’d had the opportunity to think and view the radio business from a different perspective. Without the day-to-day obligations of leading a company, I have watched, read, and talked with friends throughout the radio industry. It’s a different view and at times, a disquieting one.
2018 was another challenging year for the radio business. If you eliminate the midterm political advertising, it was another in a series of “flat to down” revenue years. Managers must focus all their time and energy on the immediate viability of their company and forward-looking strategy can become an afterthought.
At the same time I do believe, as many say, that this is the golden age of audio. There are new and exciting delivery systems and content creators who are finding their way to connect with listeners, but not on the radio. We continue to struggle to find the right format mix or sales plan and hope for a bump in our ad revenues. What’s wrong?
In the era of hyper-individualized choice, radio’s offerings creak under the weight not only of its debt structure, but also its accumulated history. Much like our brethren in television, we are being whipsawed by an expanding universe of consumer choices. We no sooner adjust to Pandora than we have to contend with Spotify, Apple Music, Amazon Music, You Tube, and Google Play. As an industry, radio has not experienced anything like this since the FM breakthrough of 50 years ago. We are at an inflection point that demands a more radical approach. From where I stand, broadcast needs digital and digital needs broadcast. There are podcasts with great content that need more circulation, and there are broadcast stations that desperately need compelling content. We need to experiment with new delivery platforms and full digital integration to see if we can find valuable relationships with younger listeners (anyone under 35!).
We are at a point where consumers pay for the control and choice that they demand. We should respect and learn from that behavior. We need to stop clinging so tightly to our spot-advertising business model. More spots per hour are a dead end. We need to look at alternative revenue models such as sponsorships and subscriptions as a supplement to rational spotloads. We have burdened our products to the saturation point.
As leaders we no longer have the luxury of short-term fixes and band-aid thinking. We have to be all-in on a more radical and strategic way forward. I certainly do not have all the answers, but I know that we are going to have to fund and support experiments that may fail in order to find the best way. We have to see this business through a new lens, the critical lens of consumer behavior. We have to admit that we are overly-dependent on older listeners and formula DJs to prop up our one-time monopoly on customers’ ears. We have resources and community awareness that most digital-only operators would die for. We have to be open to new partners and joint ventures. Just creating a podcast/broadcast of our morning show is not sufficiently exciting. It is table stakes, not a winning hand.
The demand is for compelling content, where they want it and when they want it. The demand from sponsors and advertisers is for partnerships that move product in a provable and accountable way. We have to figure it out and not lull ourselves into extinction. Time’s short, the job is big and we need to start now.