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An invitation to the radio industry

In the past few weeks I have had conversations with two different companies about the frustrations they experience selling their wares to radio stations.

What’s disturbing about this is that both companies sell services which cost stations something in the short-run, but are investments in stations’ ability to drive revenue via non-spot business in the medium-run.

And what I hear from both companies amounts to this: It’s very difficult to get many stations to pay any amount of money for anything that they’re not already paying for now. Even a few hundred dollars a month may be too much to ask.

Way back in business school I learned that the way to evaluate any expenditure is to consider the present value of the future gains in dollars and cents. And if that present value is greater than the expense required, then this is an investment worth making.

That’s the essence of business.

And it’s particularly critical in a time of great industry upheaval.

I can only say this simply:

This moment in time will go down in the history of radio as our most critical time of transition ever.

We have an opportunity to reshape our future by reimagining what it means to be in the radio business in the first decade of the 21st century and beyond.

Or we can rest on our laurels and stick our communal heads in the sand.

The problem with the NAB’s recently announced “Radio 2020” initiative is that it is a public relations solution to a problem that can’t be solved by public relations. As a lobbying group, nobody knows more about PR than the NAB, but they can’t solve what ails us in radio.

The cooperation between groups with regard to HD Radio has been admirable (if misplaced). But can we summon this level of cooperation when the future of our business is at stake? Can we summon it when even good business propositions are thrown out because any medium-term gain is less important than the short-term expense required to produce it?

Do you really believe that our conventional model of advertising revenue will continue to grow at historic levels into the future?

Have we missed the obvious trends toward accountability in advertising (that is, advertisers want less to buy ears by the truckload than to know that their expenditures actually work)? Have we watched the flow of ad dollars to new media and wondered why they’re flowing? Have we considered the prospect that the future of radio is much more dependent on non-spot revenue than on any over-the-air dollars? Have we pondered the notion that leveraging our relationships with listeners and advertisers in new ways will be our primary engine for revenue growth in the years to come?

Better start now.

Our future is not about cutting expense. It’s not about merging and purging. It’s about transforming our over-the-air model into an over-the-everywhere model.

I call on the leaders in our industry to create a goal that’s about transforming our industry before we are left behind. That is the role of leaders in any industry.

Let those who insist on cowering in fear eat our dust.

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