What Business is Radio In? (Part 1)

A No-Nonsense Marketing Smart Tip December 16, 2004

This is the article you should send to your staff. This is the one the trades should be excerpting. This is the one that you should forward to the NAB and the RAB and the head of your group. This is a manifesto for change that our industry sorely needs. This week I’m focusing on the listeners – next time, I’ll focus on the advertisers.

Buggy manufacturers disappeared from the face of the Earth because they thought they were in the buggy business, not the transportation business. With the swarm of up-and-coming technologies rocking the headlines and our world daily, with Satellite, iPods, Podcasting, Streaming Broadband, etc., all threatening to slice off a portion of our listening audience, it’s fair to ask what turf we should be defending. It’s fair to ask, as an industry, where is Radio going? Fundamentally, we all need to understand one thing loud and clear: We are not in the "Radio" business.

If Your Station is all about Music, Sports-Talk, Talk, or Personality…

…you’re in the Audio Entertainment business. Not the "local" audio entertainment business. Not the "mobile" audio entertainment business. Not the "free" audio entertainment business. These are all unnecessarily small niches. Historically, we have had the market almost to ourselves, especially whenever the listener was away from home. Our only music competition came from the occasional CD. And Personality Radio had no competition. It’s all changing folks. And it means we have to change, too.

Being in the Audio Entertainment business does not just mean that all the evolving, competing technologies are threats, it also means you need to exploit these very same technologies for your own benefit. When the Internet blasted onto the scene, Microsoft didn’t lay there and say "so what, we’re a software company" (as we’re saying: "So what, we’re Radio, we’re free, we’re local"). Oh no. They said "we’re in the business of helping computer users get their work done, and this Internet thing changes our business strategy completely. We must exploit it."

There’s no advantage for Audio Entertainment to be local. Especially for music-intensive stations where their programming is a commodity easily reproducable in a multitude of forms. Even for personalities, it will take a great talent to stem attrition to nationally-based greater talents. There’s a reason, for example, that no local TV affiliate anywhere in the country has any significant local entertainment programming: The national stuff is clearly and unambiguously better. Talent is and always has been scarce.

What is our Advantage, Really?

If "local" isn’t an advantage to the Audio Entertainment business, if "free" isn’t an advantage in a world where folks gladly pay for content that’s valuable (i.e., Cable TV or bottled water), if "mobile" is fast-becoming a technological free-for-all, then what inherent advantages do we have?

We have universality. For now, at least, everyone listens. That means we have vast distribution. Much like a TV Network, we’re already in every home – and we’re also in every car and on every hip. Opie and Anthony and Howard Stern can move to Satellite if they want, but it is only because of Radio’s vast distribution that any listener will care. Subtract the distribution and you subtract the personality. And once you have distribution, I believe you should ADD the personality. And not the home-grown organic Joe Blow variety. I mean the Grade A, Hollywood Comedy Star variety. And do it nationally. Because, once again, there is no "local" advantage in the Audio Entertainment business. Does this involve terrific risk? You bet. National Radio will be a lot more like Network TV. But as any TV executive knows, no risk equals no rewards.

I say "free" is not an advantage because untimately we’re foolish if we don’t offer premium content and charge listeners a fee to hear it. Some morning shows are doing this now. O’Reilly and Limbaugh do this online. It’s inevitable folks. We should give away most of our product to listeners for free so we can sell them the rest.

If Your Station is all about News, Sports, Traffic, or Weather…

…you’re in the Audio Information business. Being "local" is definitely an advantage when you’re in this business because information is, like politics, primarily local. This is why, for example, local TV stations are overgrown with locally-based news programming.

In the Audio Information business, technology is conspiring to rid you of your proprietary advantages. The Internet has weather and traffic – and has a picture of it. Satellite Radio is making deals to localize its information services. You must climb aboard the techno-train and exploit any and all available technological routes to maintaining your position. More than any other form of Radio, Audio Information must embrace technology. And Radio companies with a big stake in Audio Information stations should be buying up relevant technology vendors.

Our vast distribution is an advantage – only for a while. After all, the Internet’s distribution is likewise vast. What the Internet lacks, however, is warmth. Ask any NPR listener and they’ll tell you that they love NPR not only because of the information but also because of the personalities providing it. I believe Information personalities are as important as information content and that fact further reduces the advantage of being "local."

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