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Snow White and the Future of Radio

A No-Nonsense Marketing Smart Tip February 22 2006

Radio’s future was first glimpsed on a cold night in March of 1948, but it would take sixty years before anyone would see it.

That was the night of the 20th Academy Awards, and the world of American movie-making was on the verge of radical change – thanks in part to the advent of an alternative entertainment medium called television. The Hollywood studios would try to battle this new medium, they would try to kill it. They were dependent on audiences and any substantial decrease in those audiences would mean economic disaster (does this sound familiar, radio broadcasters?).

Fear was in the air that night for all the studio-heads. All but one. The one with the crazy ideas.

Walt Disney would win no awards that night, but he would be the spark that ignited his industry’s future and, at the same time, point the way for our own.

The Good Old Days

Previously, all studios but Disney made their money strictly from theatrical exhibition of their motion pictures. They profited by squeezing down the costs of producing films and distributing them to their own theaters. The talent was under contract and they owned the channel of distribution from head to tail (does this sound familiar, radio broadcasters?).

Disney had already baffled the other studio heads after successfully creating the first full-length animated feature, Snow White and the Seven Dwarfs, which had once been known as “Disney’s folly.” Not just any movie, this was the first film to gross $100 million, the first to have a soundtrack, the first to have a merchandising tie-in, the first with multiple licensable characters.

In one fell swoop, Walt Disney had done more than create a new hit, he had created a new business model.

The New World

Today, the movie business per se is a relatively unimportant part of the business of the conglomerates which own the studios. All the majors routinely lose money on theatrical release, where the massive audiences of days gone by no longer exist. According to Edward Jay Epstein, author of The Big Picture: Money and Power in Hollywood, the studios make the bulk of their profits from licensing their filmed entertainment for home viewing and by leveraging that content across all entertainment channels: video, music, television, gaming, etc. Writes Epstein, “theatrical releases now serve essentially as launching platforms for licensing rights.”

Put another way, the movie studios aren’t in the movie business, they’re in the content licensing business.

Like the movie business in 1948, the radio industry is in the midst of dramatic change. Audiences are in motion, alternative channels for audio entertainment and information abound, and acceptance for these channels is growing. Our industry has responded by creating a new channel of distribution which we own exclusively, HD radio, but while this will be part of the tapestry of audio options in tomorrow’s entertainment firmament, it is still one channel among many. You can’t keep movie fans from leaving the theaters by building a new set of theaters.

So what is the answer? Here’s what Uncle Walt would tell you:

1. Create original, magnetic, unique content.

“Content” is a cliché in the radio business, usually representing “that which we have on the air.” But this isn’t what Disney meant. If radio is merely a vehicle for the product of the music labels we are only a conduit, a distribution channel, and thus every bit as vulnerable as the theater chain owners are as they enter an age where movies will be simultaneously released on the big screen, on the small one, and at a video store near you.

“Content” means stuff we create that no one else has. “Content” means viewing radio as a source for unique, compelling programming, not as corporate radio’s musical iPod. “Content” is Howard Stern, it is not the new Kelly Clarkson hit. “Content” is “Loveline” or Clear Channel’s “Stripped.” Content is the Ricky Gervais podcast which is now (supposedly) the most downloaded podcast ever, with millions of cumulative listeners.

2. If “Content is King,” Distribution is Queen.

The goal of the radio industry should be to syndicate or license its content across all available platforms. Satellite radio is about to figure this out. Look for them to behave more like a production company than a set of pipes which must be subscribed to. Listeners will buy Howard Stern, not Sirius. Sirius may think Howard’s in the Sirius business, but in fact the exact opposite should be true. In the future, listeners will buy the content, not the channel. They’ll be more apt to listen to what’s ON your station, not your station itself.

Take a page from Ricky Gervais [you can hear my interview with Ricky about his podcast here]. It was just announced that the next series of his podcasts will be available for sale only. That is, each of at least four 30-minute episodes will retail for $1.95 at – the entire series will sell for $6.95 If just half a million of the millions of listeners who downloaded the free episodes pay for at least one episode, Gervais and company will gross $1 million dollars – for as little as two hours of programming.

Content plus distribution equals profit.

3. Get set for a more costly, risky business.

Talk to the TV networks and they’ll tell you that creating content is a risky, expensive business. But a handful of hits make all the risks worthwhile. The radio industry will have to awaken to new market realities: Investment, trial, failure, success. More programs, less programming. There will be no free lunches and no shortcuts. It will not be possible to operate multi-million dollar franchises like an FCC-licensed CD player. The bar has just been raised.

4. Follow the vision.

The big wins in radio will go to those who have the vision to see the future and take risks – those who put Wall Street’s money where their mouths are. Just as the golden age movie studios couldn’t cut production expenses to create their future, you can’t save your way to success either. Look for the broadcasters with big ideas and follow them.

Where’s Steve Jobs when you need him?

Coincidentally enough, he’s at Disney.

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