Bob Garfield is the ad critic for Advertising Age and the co-host of one of my favorite public radio programs, On The Media. He is also the author of a forthcoming book called The Chaos Scenario about the collision of traditional and digital media and the collapse of familiar marketing structures.
Bob’s take on what he calls “The Chaos Scenario” is one of the most important pieces you will read this year if you are in the radio trenches – or in its corporate boardrooms.
Read on. And share it with your peers.
Here's the full and unfiltered interview I conducted with Bob. You should listen to it. What follows is an abbreviated and edited transcript.
Bob, what is “The Chaos Scenario” that media face today?
The Chaos Scenario presumes first, that all of our existing media structures built on the symbiosis between mass media and mass marketing are collapsing – that we’re in the middle of an apocalyptic episode in our industrial history, equivalent to the industrial revolution. And because of the digital world, all of the old structures are shrinking, fragmentation is calamitous, and the yin and yang of media and marketing are flying apart, never to be rejoined. So that’s the first part.
The second part is that the new digital universe does not entirely replace the old world as we’ve come to know it and cherish it and count on it and believe it’s our birthright, and that while the digital revolution promises us more content than has ever been imaginable in all history of man and great opportunities to market and to forge relationships between marketers and consumers, that it will not give us new episodes of Lost and the Howard Stern Show.
So you’re saying that the new advertising structures may not finance the premium content we most desire and have grown accustomed to receiving for free. That’s because ad inventory expands exponentially in the digital space, but advertising supply is finite so prices fall and as a result, a lot of things that used to be sustainable aren’t anymore; is that the gist of it?
Yeah, that’s 50% of it. The other 50% is that radio is an industry that is built using a lot of electricity to transmit radio signals into the ether, a technology that is almost hilariously obsolete in the digital world.
There are only two reasons radio makes any sense at all right now: First, that we are not 100% broadband penetration, and second, that localization is still very, very important – although, many broadcasters have effectively squandered their localization advantages over the years by cutting costs.
So between the obsolescence of the technology and the means of distribution and the supply/demand problem on the advertising side, broadcasters may face a very bleak future.
But when we talk about radio, the definition you’re using, the definition most of us use, is “that thing that comes over the air from the tower.” Would you acknowledge that the way we define the four corners of “radio” and what it can become is relevant to our determination of its future?
Oh absolutely.
If you think of yourself as being in the business of sending radio waves through the sky to remote receivers, forget it. It’s all over but the shouting, because that’s not your business. You think it’s your business, but it’s not. It’s just how you used to distribute your product.
If you can get past that and understand that not only are you not married to radio waves anymore, but you might not necessarily even be married to an all-audio platform anymore, then you can start imagining how you can find your place in the future.
I personally believe that those who will survive in the existing media are those which become multi-platform and become the news, entertainment and cultural hubs for their communities. A lot of local media companies and third parties yet to be conceived are all going to be fighting for that same territory, to be the central repository of everything in their communities.
If you win that race, good for you, you’re well positioned. The bad news is you’ve got to be prepared to do more things than morning drive.
Well then, let’s talk about what that list of things might include. Give me some examples.
I’m talking about all formats of music. I’m talking about real time news, weather, sports, headlines and traffic. I’m talking about cultural events in the community, concerts and what have you, maybe broken down genre by genre. I’m talking about all of it and more.
And the media that survive locally will be those that are full service – they will survive and prosper. There are plenty of companies that are going to hang on by their fingernails for a while, but all of radio’s competitors are putting audio on their websites now and text and video, too, so the radio side had better be prepared to deal with text and video as well.
Otherwise, they’re just going to be pushed to the side.
So we should no longer consider ourselves “a radio station with a website” but instead a “local media company” with endless monetization potential driven, for the time being, by our over-the-air loudspeaker.
I have a public radio show. And what I am telling my colleagues and management all the time until they are sick of hearing it is that at the moment we are a radio program, but we have to start thinking of ourselves as a website that also happens to have a 60-minute audio portion to it.
We have to completely re-imagine what we mean to our audience, and the longer we think of ourselves as a program, and not as a source of all things that our community of listeners care about, we walk ever closer to our own doom.
It’s very difficult for people to move beyond the status quo. It’s very hard to get them to do anything more than the most incremental little changes. Incremental change is fine, and maybe that’s the only way to get large things done, but if you’re too slow in accomplishing them, the race is over before you get to the finish line. It’s a tremendous frustration for me.
We are not talking about an incremental technology step. We are talking about the difference between living on a planet where men did not make fire and now a planet where man does make fire, where there was no agriculture, now there is agriculture.
It is revolutionary and it has already changed human behavior on a grand scale. Industries are falling like dominos and the media are one of them. It’s not just a question of weathering a little transitory storm; it’s what happened when the Industrial Revolution overnight made cobblers unnecessary.
On the commercial radio side you are also saddled by these mountains of debt that were accrued for the purposes of acquisition. Even if for the moment you have operational profits, you’ve got these debt payments coming at you like a cement truck going the wrong way on a divided highway. I’m profitable before my debt payment, but I can’t afford to make that payment. That’s one reason station values have been driven down, down, down, down.
Now, I know a lot of your forthcoming book is about solutions, not strictly a description of the problem. One of the words you’ve coined is “listenomics.” What is that and why is it a solution for us?
“Listenomics” is simple. It says that the power pyramid has turned upside down. Everything used to be dictated and distributed from the apex of the pyramid down to the base.
But in a digital world filled with digital connectivity and one in which content creators and entrepreneurs have very, very low barriers of entry and your customers and the groups formally known as your customers, your audience, the electorate, the hoi polloi who large institutions have always had to deal with but mainly by just telling them what they had to say and just assuming the audience would listen – it has flipped upside down. Now the power resides at the base. That’s true for all institutions, whether media or marketing, industry, government, political parties, what have you; they're faced with the fact that they’re no longer in control. I mean literally, this isn’t just some PowerPoint presentation slide; it’s true, you have lost control of your message.
So you can fight it and continue to operate in the old analog way and soon you will be completely irrelevant. Or you have two options: Grudgingly accept it and try to operate with that fundamental knowledge, or happily accept it and start using this very disruptive fact of life in a digital world to your advantage.
You see, the hoi polloi have much to offer you. They can be idea generators for you, they can be evangelists, they can be your defacto marketing team, they can create for you, they can do product development – just because they don’t pay attention to your advertising anymore doesn’t mean they don’t care deeply about your product. They’re a community that you have painstakingly built and they care about you. And instead of just treating them like wallets with circulatory systems, you can start embracing them, exploiting them and having conversation with them, and it can yield enormous, enormous, enormous dividends.
You can even do a little advertising to them, although you better make sure that you’re making it available to them so they can control what and when to consume it and exactly how much at a time.
What about the structure of commercial radio makes this more difficult for us?
I think one sort of structural problem is that commercial radio has become so format-based as opposed to personality-based over the years, and the future that will probably not be format based, I think. Successful audio distributors (as opposed to “broadcasters”) will be multi-format so that you can choose from a pallet of options every time you click.
If you’ve built your relationship with your consumer based on being Top 40 Country or Album-Oriented Rock or Urban and you’ve got robo-playlists and no big personalities who have come to create a relationship with your audience, you’re starting at a disadvantage.
But it’s never to late. People do care about your frequency more than you know. Some people, for whatever reason, regard themselves as 104.1 people and that’s worth something. It behooves 104.1 to leverage that latent emotion and turn it into something more. I don’t think the solution is necessarily giving out concert tickets for guessing Dionne’s first #1 hit.
Bob, let’s pretend you get your own commercial radio station. The wheel is yours. What are you going to do now?
I’m going to flip it and I’ll try to make some money on the arbitrage. I need a radio station like you need rheumatism; you know what I’m saying?
Let me re-frame the question. You can’t flip it, you have to actually manage it. What will you do?
I will make sure that I invest in talent.
I will make sure that I exploit every last ounce of value out of localism.
And I will create the most robust website ever that is ready for the world of mobile, wireless and automobiles – ready for a world in which the technology really does obsolete radio waves.
I will try to become more of a full service platform.
I will reduce – not add – the number of ad slots, because apart from the fact that clutter drives away audience, it has caused so many stations to go off a rate card and just cannibalize their own business models.
I understand that it’s an investment and that the cash flow that I’m going to generate is going to be a lot lower for quite a number of years, but if I survive the shake out that is coming, I will have tremendous market share.
Bob, what you just described is a full service platform. I think it’s worth noting that that’s not what we call radio but that is what you’re calling the future of radio, right?
That’s what I believe.