The economics of supply and demand are inescapable.
Historically, the demand for radio content was high. Indeed, it remains so today. But if we define demand as the amount of time spent with something and not simply the binary "on" or "off" of listenership, demand clearly isn't as high as it has been previously.
And that's because of the second part of the equation: Supply. The supply of real-time entertainment content in cars was once limited exclusively to radio. No more. At home, at work, and in the car, the supply of mixes of music that weren't limited to plastic discs or cassettes was likewise once the domain of radio only. No more.
Just as video is exploding from every corner (TV's challenge) and news is popping up all over (Print's challenge), so is content that is, in many ways, a substitute for radio.
This is not news to you, of course. But now ponder this from an economic perspective.
What happens to the value of something when the demand drops and the supply increases?
Specifically, when there are many, many more places for advertisers to spend their money (assuming for the moment that "advertising" is what they want to spend their money on), what happens to the prices that media can charge those advertisers – especially when the options are relatively undifferentiated and sold on the basis of "number of ears" only?
I submit to you that one of the great challenges of our industry that we have so far refused to discuss is not simply how we transform to a digital model, but how we monetize radio in the years to come – period.
In its early days, advertising on radio was unheard of. Broadcasters made money by selling things other than airtime but used the airtime to help sell those things. Radio has gotten a whole lot bigger since then, obviously.
There is no question that the "loudspeaker" of radio is a huge boon to those who own the licenses because radio listenership is, after all, universal.
The deeper question is how you make money if running mass appeal interruptive commercials is no longer the only – and maybe not even the best – way to do so?
There are lots of answers to this question. Start answering.