I’ve talked with Seth several times over the years, and his ability to verbalize the essence of an issue never ceases to amaze me. This dialogue is culled from all of these conversations and edited specially for the cover story of SESAC’s NAB Convention issue (available now for those of you at NAB in Washington).
Time may pass, but radio’s challenges and opportunities remain.
Seth, where do you see the radio industry today?
If you’re in radio today, you have a spectacular asset, but it’s a wasting asset. And big media companies refuse to acknowledge the fact that their licenses are going to 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 say wait a second – 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 want to subscribe to a podcast, for example? How can I deliver exactly what they want; anticipate it, personal and relevant information that they need, when they need it?
One of our obsessions in radio is to emphasize our local origin, identity, content, and service. What does that mean to you?
Radio may be inherently local. But then why 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? Because if they started carving up the world by zip code, they could go to an advertiser and say, “We’re going to 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 a CPM mindset. And the mistake that marketers and media companies make is they listen to the advertisers. The advertisers didn’t ask for Google. You build it first, and then the advertisers show up second.
It’s inevitable that radio will face a booming volume of competitors – even in the car, which has largely been all ours until now. What’s the best way for broadcasters to navigate this turbulent future?
Well, if radio is in the “how do I leverage my FCC license” business, you’ve got troubles. But if instead you define your business as “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.
If you are running a radio station you need to ask yourself an honest question, which is: Is it likely to ever be any better than it is now? Meaning, is satellite radio going to become less popular? Is Internet radio going to become less popular? Are people going to find fewer things to do when they’re in their cars?
I think the answer to all of those questions has to be “no,” that traditional, terrestrial radio is a zero-sum game. In fact, it’s worse than a zero-sum game. It is clearly headed towards a dead end.
But, you have all these assets. You have advertisers. You have access to creators of content like record companies. You have access to listeners. Why not use those assets to build something new? If I ran a radio station today, I would say, “How do I get every one of my listeners to sign up so I can have a direct relationship with them by phone and by email? How do I learn what their zip code is? How do I discover what they’re interested in?”
So what advice would you give to the management that has to answer to the stockholders and the Wall Street folks? What do you say to them when they’re face to face with the money guys?
Well, Wall Street has doomed a lot of companies. Now it’s not your fault, Mr. Broadcaster, that your company went public. But, you are public and now you have two choices. You can either say “Wall Street’s going to force us down a dead end, I’d better make sure my pension is fully funded,” or you can just go to Wall Street and say, “Look, this industry is changing. We have a plan. It’s going to take several years to get there. We’re going to continue running radio stations the best we can. But, guess what: We’re going to build for the future.”
“For the future, what we’re going to build is space-based, location-based mobile interaction on a custom basis that no one will ever be able to surpass, because we’re not going to define ourselves by our FCC license anymore. We’re going to define ourselves by how many people have come to us and said, ‘Here’s my contact info. Here’s my Twitter address. Here’s my Facebook info. I want you, Mr. Information Man, to keep me up to date with music and information that’s geography based for the rest of my life.’”
And if you don’t start doing that now, there’s zero chance you’re going to be able to do it in five years.