08/23

Seth Godin on Radio’s Future

If you like your head stuck comfortably into the sand, then Seth Godin is your nightmare.

Godin, of course, is the author of many books which are probably already on your shelf: Permission Marketing, Unleashing the Ideavirus, Purple Cow, Free Prize Inside, among others. His latest, Small is the New Big is a compilation of blog posts and ebooks and articles from Fast Company magazine. A recent keynote speaker at the 2005 NAB, Seth is also CEO of Squidoo.com.

If you care about the radio industry, then you owe it to yourself to listen to the full audio Q&A with Seth. You won’t find this interview anywhere else. Only a small part of the interview is excerpted here.


MP3 File

Seth, how, exactly, is small is the new big?

Well, big used to matter. Big companies used to defeat small companies, big armies used to defeat small armies. The whole idea of being successful was to go to a big college, get a big job, run a big organization and do big things. Because you could leverage your factory, you could leverage your marketing money, you could leverage your FCC licenses.

SmallAnd what happened just in the last five or ten years is that big stopped mattering as much. Suddenly, you didn’t need a big ad budget, you didn’t benefit by being the biggest newspaper in a three- newspaper town, you didn’t have economies of scale; in fact, the economies of tiny – the advantage of outsourcing, the speed to market, the flexibility – suddenly helped little guys succeed.

What we see is not necessarily that you need to have a small group of people, but that you need to think small. And thinking small helps you get big and stay big, because thinking small means you’re going to treat individuals with respect, it means you’re going to be quick, it means you’re going to be responsive.

The radio industry is a big business. What should radio do to maintain its relevance in this era when thinking small is really the key to success?

If you’re in radio today, you have a spectacular asset: The ability to communicate to people directly who want to hear from you. But it’s a wasting asset. And big media companies refuse to acknowledge the fact that their licenses are gonna be worth less in ten years than they were ten years ago. And they’re trying very hard to keep their head in the sand and ignore that.

The smart media companies, the ones who are thinking small, say “we have this really powerful asset, we need to use it to migrate the attention to smaller and smaller buckets of identifiable people who want to hear from us.”

So if I ran a media company today, I’d say, “How can I turn this group of 100,000 listeners into 1,000 groups of 100 people who wanna subscribe to a podcast? How can I deliver exactly what they want, anticipate it, offer them personal and relevant information that they need when they need it.

Do you think that the large broadcasters will figure that out?

Well, if history is any guide, 80 percent of them will not. But 20 percent of them will reinvent themselves for a different future. They will realize that if they go fast and first in a big way, they can start acquiring this asset, earning this privilege of permission.

GodinWhy doesn’t my radio station know my zip code and my email address? And why doesn’t it earn the right to deliver to me their audio, or by email, information that’s extraordinarily local in a way that I want to get it? If radio started carving up the world by zip code, they could go to an advertiser and say, “We’re gonna let all the people who live within two miles of here know about your grand opening, but nobody else”. And by being able to pinpoint the right person with the right message on the right day, they would build an asset that’s priceless.

Advertisers for years have been insisting on one or two things at the lowest possible price with a CPM mindset. And the mistake that media companies make is they listen to the advertisers. The advertisers didn’t ask for Google. You build it first, and the advertisers show up second.

Terrestrial Radio, HD Radio, Satellite Radio, Internet Radio, Podcasting, and more. Where do you think those things fit in the constellation of what consumers are going to be interested in? What’s your vision of radio’s future?

You know, I see three or four alternative futures and they depend on some technology and marketing bets.

Scenario A: Everyone has Wi-Fi or WiMAX in their car. Once that happens, we’re not talking about 200 XM radio stations, we’re talking about 2 million, and all bets are off.

Scenario B: The aftermarket people get very focused on putting hard drives and iPod docks in cars. If that happens, again, radio is in trouble, because people are gonna bring their own pre- recorded content with them.

Scenario C: We end up in the satellite world, they figure out how to get a little bit more content through those pipes and we end up with 300 or 400 channels in the car. I had XM radio for a year to check it out. What’s interesting is it doesn’t matter how many stations there are, sooner or later you end up with four. And so the thing is, what do you have to do to be one of the four, and how do you live in a world where you’ve got hundreds of competitors a click away, but if you spend all your time not offending anybody, you’ll never get anybody.

Scenario D: A hybrid of what we’ve got now: Traditional analog radio combined with HD combined with satellite. This scenario will, I think, not make anybody particularly happy, because the advertisers are going to be faced with an increasingly splintered audience that’s hard to address, and as a result, it will be hard for that local car dealership or that politician to do a sensible radio buy.

Well where’s the logic, then, in going down that last path?

If you’ve got a radio station that’s doing okay, you need to figure out how to build non-radio links to your listeners. Look at Google – why didn’t Random House or Simon & Schuster or the New York Times start Google? The technology wasn’t that hard. The answer is because those companies saw themselves as being the “dead tree” business, not in the “how do we help people find information” business.

Well, if radio is about the “how do I leverage my FCC license” business, you’re in trouble. But if instead you say, “how do I deliver multimedia to local users wherever they are”, then you win, because you have such a huge head start over all these little guys who are trying to start web companies or trying to start Internet radio stations. You’ve already got the attention, loyalty and emotional connection with hundreds of thousands of people.

* = required field
  • You rock Mark.

  • Thanks Jeff. But I really think that Seth is the one who rocks. I hope our industry heeds the call.

  • Very interesting interview. I think Seth hit the nail right on the head.
    People are smarter and more demanding now than they were before. They want their stuff customized for them and at the time when they want it. Businesses (radio as well) that recognize this will grow … those that ignore this shift will eventually phase out.

  • Dave Paulus

    As usual Mark, great information. The king “Purple Cow” hits it perfectly. Thanks for sharing it!
    I also wanted to mention that I’d bet you get plenty of grief from clients and companies you do business with saying “Mark, you’re so negative”….”come up, be more upbeat!”
    Well, there isn’t anyone who would read the post before this one (the “average consumer strikes back”) or the Seth interview and think this blog isn’t (to quote a catch phrase) “fair and balanced”. 🙂
    As a local market manager…who cares for this business greatly….thanks for that and for the “grief givers”..let me mention:
    “De-nial” ain’t a river in Egypt!

  • Richard

    This is spot on. I think what needs is happen is a huge shift in the way radio staff are used. Rather than everyone making one deeply staffed format, everyone works thin making the 1000 podcasts talked about here. It’s a no-brainer really

  • Hi Mark – I’m a regular reader of your blog and really like and appreciate it. Thanks for getting Seth Godin on the record about the future of radio. It’s great to get a fresh set of ideas from someone outside the industry particularly one who is such a great thinker. I liked his four scenario predictions, but especially his comment:
    “The idea of radio… audio determined by an external editor… isn’t going away any time soon. People like it.”
    From the perspective of direct response radio advertisers, it doesn’t matter which of these scenarios becomes reality.

  • The future of radio?

    I’m not what you would call a radio fan, even before iPod and other music players I had the tendency to carry enough music with me, just to avoid having to listen to anyone else dictating what I should be

  • People definitely do like it, Brett.
    Seth’s words are not all doom and gloom. But if you don’t grapple with reality then doom and gloom will surely ensue.
    Thanks for your notes, all!

  • Changes in Hitland

    The buzz is always about how TV and print are changing with…or are threatened by the new digital world. You hardly ever hear anything about radio dealing with the new realities.
    Maybe that’s because some have already written radio’s obit and jus…

  • Yes, and the bottom line is BROADcasting is the buggy whip of the 21st century. Content providers who win will be those who give people what they want when and how they want it, and, in turn produce asccess to subsets of targeted consumers that have value to potential advertisers. That content may be delivered by HD radio, Internet, MP3s, or a tin can and a string…but probably by all those means and more.
    Give ’em something they want to hear/see and make it easily available to them and you’ll have a sellable commodity–folks! And advertisers will always want to buy access to folks, so long as they are targeted potential customers, reliably measured, and realisitically priced.
    Don
    http://www.donkeith.com

  • Alan Morrison

    NAND flash memory chip capacity has tended to double every year since 1990. This implies we could have chips with 160GB of capacity by the end of the decade. Flash-based MP3 players could store 47,000 songs–whole catalogs, in other words. If they built Tivo-like personalization capabilities into these flash players, music owners could get into the virtual radio business, bypassing the intermediaries. They could sell images of their catalogs rather than discrete songs. Users could select what they like until their players learn from what they select to suggest. After awhile, users could just set their players on “shuffle” to simulate a radio experience that would actually be more in sync with their tastes than any real radio station would be.

  • People have had the capability of programming their own “music station” since the advent of the automatic record changer. It’s the stuff that happens between the records, the way the records are mixed together, the “Hey, friend, let me play you something great you’re gonna love!” excitement that will have to save radio from its product-killing bent.
    As an old radio guy who is now an advertiser, it scares the crap out of me that the people who have the keys to this once-great-and powerful medium are allowing it to fade into oblivion. Radio has two constituencies: the audience and advertisers. Their “product” has to serve both. But if they allow the listeners to migrate to other means of finding entertainment, information, and companionship, then the advertisers will be gone, too. I hope they can find enough cell phone companies and wifi node providers to buy space on their towers, ’cause advertisers won’t pay enough to keep the strobes on when they can get perfectly targeted potential customers elsewhere, and pay for them on a per-lead/per- action basis!
    Don
    http://www.donkeith.com

  • Mark:
    I found your presentation to be very enlightening and pertinent at this point in time. It seems that radio is scrambling to devise a plan that will rescue itself from future failure. I hope you don’t mind, but I actually referenced your presentation in my blog this past week. I think the message you are trying to get across is a not only vital to broadcasters, but consumers as well. Thanks for taking some time to address this issue and, as Seth mentioned, helping people realize what they already actually know.

  • Just catching up on your blog and I enjoyed the interview. But I was really surprised at Seth’s statement:
    “Look at Google – why didn’t Random House or Simon & Schuster or the New York Times start Google? The technology wasn’t that hard.”
    Say what?
    That’s a very bizarre statement since much of Google’s success comes down to algorithms. I’m certainly not saying that’s the whole deal but it’s rather significant.

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  • It surprises me that radio stations here do not have an option to subscribe to Ad-Free broadcasting.
    Eg. 5 bucks a month. Makes sense right, it would not be over the radio, instead wi-fi/cell-data, however it makes good business sense to re-sell what you already have. It’s the same content! but instead of ad’s, they play a song during that time, that’s the only difference for the subscriber.
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  • There have been a very few experiments in this area, but even in Pandora’s case roughly 2% of their listeners choose the premium service. 2% of the audience for the average radio station does not a worthwhile business model make.

  • 2%! Wow 8.o
    OK that makes sense then.

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