7 Trends Radio Missed

Jerry Del Colliano

Friday, May 01, 2009

It seems that almost daily we witness another miscalculation by the CEOs running the radio industry (into the ground).

And, another missed opportunity.

The New York Times Thursday reminded the business world that radio's largest consolidator, Clear Channel, has a critical cash flow issue. And the article deals with whether Lee & Bain should have spent $20 billion for the company in the first place.

Now I'm thinking that we have at least two tragedies here.

One, that so many talented people in many radio companies have been let go or compromised (more work than they can handle).

And the other is, the missed opportunities that would have fit nicely into a new age business plan where radio could harvest its huge free cash flow ability to invest in the digital future.

All that free cash flow never went to pay dividends for shareholders because it was busy trying to pay down what I call irresponsible debt that consolidators ran up when they purchased their stations at highly inflated prices.

But, look with me at just a few of the trends radio missed that could have made all the difference in the world:

1. Internet Streaming

The penny pincher's that they are, radio consolidators missed the real meaning of streaming radio.

They saw it as a chance to repurpose on-air formats without spending a dime. All it took was software to cut out local commercials and insert Internet spots.

What they got was chump change for revenue, maybe 3-4% increase in total listening above the terrestrial stream and a big bold sign that told the next generation "I don't know or care about how you really use the Internet".

They missed the chance to go to their clients and build Internet radio stations forthem. But in radio, the consolidators own the stations and they wouldn't like the idea of renting stations to advertisers.

Maybe they should have pictured the money coming in every month.

They missed the chance to get out of 24/7 programming online and create content that streams for a specific purpose other than general consumption. Because in today's world, listeners want programming on-demand. They don't need to sit and wait for you to broadcast it to them -- especially online.

2. Podcasting

Adam Carolla gets a half million people to listen to his podcast after he is axed by CBS Radio, but is that a business?

When stations cut up morning show content for distribution as a podcast, is that the future?

You know what I'm going to say.

Of course not.

Podcasting is personal radio -- the kind that the industry flirted with early in its history and has abandoned today. Any damn fool can do a podcast -- and I'll bet you've heard a lot of those damn fools. There are also many people who have unique talents and communications skills that do not do "radio" on a podcast -- this is encouraging.

The difference between radio's version of podcasting and the one I think would provide numerous revenue streams to broadcast owners is the ability to make podcasting a franchise.

Radio missed the podcasting revolution because it doesn't know how to make each podcast a franchise -- funded by revenue derived in ancillary ways (not commercials) and grown by viral social networking tools.

3. Apple Apps

There is nothing hotter or more relevant to the future than Apple applications.

Apple, the only real communication company that understands the next generation, made it possible for one billion app downloads to happen. Many are priced 99 cents or more.

Consumers are voting with their wallets. Apps are worth something and music is nothing -- thus, the piracy. Apple controls the app store and prevents theft of its applications which is more than record labels can do with their music.

The radio industry and the music business should be into this not as an adjunct to over the air radio but as a business model for a future revenue stream. These guys think I'm speaking a foreign language when I talk about this, but broadcasters should be developing apps and monetizing them in ancillary ways. (I did a piece on how creative Nine Inch Nails' Trent Reznor is in adapting apps for his fans -- if you'd like, you can read it here).

Consolidators are cutting back air staff and can't even deal with the fact that the hottest device (an iPhone) doesn't need an FM chip, it needs apps to feed the appetite of rabid mobile fans willing to spend money and participate in marketing strategies.

4. Ringback Tones

Ringtone sales have peaked but ringback tones (the music you hear while you're waiting for the other party to answer) is booming.

Record labels are getting in on this because that's all they have -- the rest of their ideas have laid an egg.

But, I'm suggesting that radio broadcasters have missed an opportunity to use local acts under a rights-free arrangement to sell reasonably priced ringback tones to listeners and fans. The labels won't do this because they think it undermines their core business (whatever that is).

But radio stations could if only they knew where these acts were -- which brings me to the next missed opportunity.

5. Music Discovery

Think about it -- CBS has a whopping two million listeners according to People Meter ratings for its new AMP in Los Angeles playing the same hits their competition is playing over and over again. Thank you People Meter for accurately reporting radio listening.

Radio broadcasters have missed the trend to once again become the facilitator of music discovery for a new generation. I know, I know -- playing the hits gets ratings.

Get over it.

If you want to be relevant to the 80 million members of the next generation, you'llalso have to get them -- and they are used to discovering a wide variety of music on their own, through social networks and through music piracy.

Radio missed a chance to blow out the same old repetition that has helped seal its fate by refusing to commit to new music and lots of it. (I didn't say "stiffs", I'm saying promising new music from local artists).

They won't listen but the next generation discarded radio and finds its own music online.

Hell, the iTunes store on Tuesday is what radio stations used to be Tuesday nights -- the source of music discovery. Now radio stations can't compete with Apple.

6. Social Networking

Again, radio thinks social networking exists to help it salvage terrestrial radio listening with a new generation, but it is more than a replacement for the telephone in ticket giveaways.

Radio missed many chances to build its own entertainment network(s) and cultivate an audience that could be marketed to advertisers and sponsors. Instead, local entrepreneurs (not radio) have developed sites like Dirty Scottsdale(which I'm using an as example not a specific recommendation).

Perez Hilton is a radio station -- even includes music. He is a snarky, bitchy gossip columnist for the next generation. Radio could have done this -- locally and cashed in. That train has left the station when the banks robbed it to pay radio's debt service.

Local social networking -- what a concept.

And who better to do it but a local radio station if only they could see that this venture will be a new form of revenue to their broadcasting business.

7. Video & Mobile Devices

I hate to say it but someone should tell Lew Dickey or Fagreed Suleman while they are busy saving their necks and padding their compensation, radio operators are going to have to get into the video business.

If you're not creative -- just imitate Disney.

They are buying 30% of Hulu -- the popular new form of television embraced by high school and college students who lay on their sofas or beds and watch the same TV shows you and I watch on HD screens.

They have more fun.

They can do other things -- right on their computer while the shows are on.

They are subjected to fewer commercials.

Radio missed the opportunity to be in the local video business -- not as an appendage of local terrestrial stations but as a standalone business.

Some stations have experimented with interesting off-air projects, but the big groups that own the majority of stations are still living in the past.

There are endless ways to use a local platform with video derived from local sources.

The world wide web may be worldwide, but it is only a delivery system not the programming destination.

Handheld mobile devices, smart phones, iPhones, touch screens, Kindles, iPods (the rumored new mid-sized tablet Apple is working on) are your future. Radio is stuck in a dashboard or is an ugly box. We're going to have to do better than that if we want to be part of the future.

The problem is that while the radio industry bet the ranch on owning clustered station monopolies in cities across the nation, that "ranch" is in the process of being repossessed due to failure to make the mortgage payments.

And while consolidators are fighting for a way to hang on to antiquated technology, stifle innovation needed to build out the digital future and squander its readymade, already-employed talent, it's missing the very thing that could save the industry.

Innovation.

Mastering generational media.

Discovering new marketing opportunities.

When you snooze, you're old news.