Evolve or Lose Relevance

23In two months, the world’s largest radio meeting will once again be taking place in Las Vegas; the 2016 NAB Show. Ironically, since leaving the radio industry and entering academia at Western Kentucky University, I attended my very first NAB show in 2011 and have every year since. So as visions of massive crowds and very sore feet dance in my head, I thought I’d look back over those past years and see how the theme of these meetings has evolved.

In 2011, the NAB highlighted that media consumption had become more digital and connected. TV everywhere strategies, mobile TV, the connected TV and the use of social media dominated the show.

In 2012, everyone was shouting about 4K video, ISP content delivery and the evolution of special effects technology. Everywhere you went you were shown 3DTV (I didn’t care for it, personally.)

In 2013, the NAB show hosted its first ever 2nd screen Sunday and the impact of more than one screen (the television set) vying for the viewer’s attention was fully recognized if not totally embraced by broadcasters.

In 2014, the NAB show wasn’t so much memorable for what it had but for what it didn’t have 3DTV. What had once been prolific throughout all the convention halls was now nowhere to be seen. 4K video & TV was now all the rage with Japan’s NHK demonstrating 8K video & TV. NHK said they will be recording the Rio Olympics in 8K and plans to televise (in Japan only) the 2020 Olympics in 8K. When you see TV pictures this detailed, you can instantly see why 3DTV bit the dust. 4K and 8K feels three dimensional and you don’t need any funky glasses.

Which brings me up to last year’s NAB show in 2015 where the theme was “Evolve or Lose Relevance” voiced by NAB President/CEO Gordon Smith. Smith urged broadcasters to embrace the new technologies like ASTC 3.0 & 4K for TV, and NextRadio’s mobile app for FM radio on mobile devices. Smith also talked about the spectrum auction which begins in March 2016 and characterized the auction as both “exciting and daunting.”

What may have been most daunting and certainly not exciting was to have been an AM broadcaster at this meeting – or any of the meetings of the last five years. Move along guys and gals, there’s nothing for you to see here. HDRadio was there every year and I think they had more cars outside of their convention hall than any previous year featuring their spiffy HDRadios, a technology that has been better embraced by the automakers than radio broadcasters for the most part. And of course, there were drones. Lots & lots & lots & lots of drones. Big drones, little drones…a drone for every size and budget. I’m wondering if the FAA will start coming to these meetings along with their friends from the FCC.

The only thing I haven’t seen addressed over these past five years is what seems to me to be the elephant in the room. Everything is supported on a business model that has been around since commercial broadcasting began in 1920, that being the selling of advertising. The covenant with the consumer of radio/TV programs was we will give you the programming for free if you allow us to expose you to our advertisers; a business model that worked extremely well through the birth of the Internet and dial-up connections. It would be the introduction of broadband and its rapid expansion that would challenge everything.

Blockbuster vs. Netflix is a good example. 2004 Blockbuster has 9,000 stores and almost $6 billion in revenue and only 4.4% of American homes had broadband. Netflix was mailing DVDs to its customers. 2010 Blockbuster files for bankruptcy, 68% of American homes have broadband and Netflix had been streaming to their customers for three years. Today Netflix has a market cap of almost $33 billion.

That really brings home the concept of “evolve or lose relevance” doesn’t it?

So what will the business model for media be evolving to? That’s the billion dollar question. Nobody knows. But what we do know is that Apple gave up its free iTunes music streaming at the end of January 2016 and now will only offer a paid subscription model. Disney’s ESPN is suffering the “agony of defeat” as more consumers cut their cable bundle (for which it’s reported that ESPN gets $7 per sub) and is causing this revenue stream to dry up while the cost of bidding for live sports events continues to escalate. Everything appears to be moving in a direction of asking the consumer to pay for what they want – like they do for HBO, Showtime, and Netflix etc.

So what’s the plan Stan for broadcast radio and TV? Or for any advertising supported medium for that matter? I think about this a lot.

8 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

8 responses to “Evolve or Lose Relevance

  1. The way I see it is radio and newsprint lost its monopoly through digital disruption. That is nevercoming back. Advertising is a cut throat business that when you own a large scale audience you come up with voodoo rate cards advertisers have to abide by. The Smothers Brothers TV show in its heyday was the most viewed show because if you missed it there was no other way of getting it. American Idol in its besr year had 22 million viewers. Rush Limbaugh had 20 plus million listeners. That demograpic is dead or so fragmented all over the media spectrum that advertisers now have unlimited choices on reaching them. The budgets for quality programming in radio have been slashed and low cost syndication is the new normal. There in lies the dilema, how can radio innovate a monopoly? In the old days circa pre-internet the mantra in print was advertise or go out of business. Today’s Ad Executives in all media are forced to sell for a living using voodoo rate cards that are based on hope not reality.

    Liked by 1 person

    • What’s certainly true is that having an FCC license is no longer a license to “print money.”

      However, a broadcast license — radio or TV — still is the best way to reach a mass audience. Radio has become not just the best frequency medium but now the best reach medium once again; a position not held since the birth of radio.

      What’s also clear is that there’s a media revolution going on and the mass audience is being fractionalized. That’s why the new paradigm for mass media is finding your tribe and super-serving them. Now’s the time to begin that transition while radio & TV have the audiences to tell their story to.

      Thanks for contributing your thoughts to this post Victor.

      Like

  2. I concur with you that we are in a tribal marketing landscape. Give us your forecast of radio carving out it’s dominant niche? Since my radio listening time is split with podcasts, NPR, and Rhapsody music and I don’t plan on listening to radio on a smart phone. How will radio reach it’s core demographic advertisers are willing to pay top dollar for?

    Liked by 1 person

    • There’s no one-size fits all solution. It will be up to every operator in every market to figure that out for their operation.

      But don’t discount the power of over-the-air radio. Lots of people are still very much tuned into this medium and could not imagine a day without it.

      But you probably are representing a trend line.

      Remember Everett Rogers and his Diffusion of Innovations curve. We are still on the upward slope.

      Like

  3. 1. Pandoras come and go; Radio is forever.
    2. Content providers & best shows win.
    3. Folks pay when it’s worth the price of admission.
    http://www.broadcastideas.com

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  4. Countryboy

    I think you’re missing the fact that pay radio is a small part of the business. Whether you look at subscription streaming, Sirius, or NPR memberships, it’s not where the money is. Apple is being forced to replace free streaming with subscription by the record labels. They’re not going there because it’s where the money is. Same with Spotify. NPR stations are struggling for members, while their non-paying listenership grows. Sirius is giving away subscriptions at highly discounted prices. So the future for pay radio is not good.

    I understand that it’s easy to get distracted by all the video marketing when you go to the NAB. It’s one big commercial, and they’re good at what they do. But when you get back home, you have to look at the reality. Radio is not TV. The reality is that the majority of people don’t want to pay for radio. They don’t want to pay for music. They don’t want to pay for news. They don’t want to pay for local personalities. They also don’t like commercials. But it’s preferable to a monthly bill.

    Like

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