A long time reader of this blog, who is a major market personality, asked me “in your opinion is there any chance the industry will turn around?” This question assumes that the radio industry is going in the wrong direction. Is it?
The World is Constantly Changing
I often pondered if the town blacksmith ever wondered, as he saw motorcars become more common, if America’s transportation system would one day “turn around” and return to one powered by horses? For many Amish people, horse power remains as vital to their lives as it has always been. Horsepower in our time has been a way we measured the output of our fossil fueled engines, in our motorized vehicles.
We need to realize that changes and evolution are the realities of life. Nothing stays the same. Does anyone think the radio industry is exempt?
I’m communicating with you right now via the internet. When I first started on the internet, it was by using a dialup modem over the same telephone line my house phone used to make and receive telephone calls.
My first internet service was an interactive personal service called “Prodigy.”
Dial-up was very slow, crashed a lot and sometimes it took several attempts to get a phone connection for your computer.
Prodigy’s business model depended on rapidly growing its advertising and online shopping business. It created email and message boards primarily to aid people in shopping, not for general communication between users, which in practice is what it became. Ironically, at a time when long distance calls were billed by the minute, Prodigy’s message boards exploded in popularity with users who would stay connected to the service far longer than projected with the result of driving up Prodigy’s operational expenses and negatively impacting cash flow for its stakeholders.
Prodigy, which began operations in 1984, would finally disappear in April of 2013. (That’s a life span of less than thirty years.) By that time, I had long departed the service for the much more robust America On Line (AOL).
At the end of 2020, my street was wired with fiber optic cable and our house abandoned Xfinity’s copper wire and download/upload speeds of 117/5 Mbps (Megabits per second) for the more symmetrical offering from Glofiber of 300 Mbps upload/download speed for around $15 less per month in cost.
I tell you this because back in the 90s, dialup access to the world wide web was amazing. It was like experiencing AM radio in the days when all that was available were newspapers and magazines to connect daily with the world. We gladly suffered through busy signals when trying to connect our computer modems and never realized how slow our connection speeds were. Like AM radio, it was good for its day but I seriously doubt you would want to return to that type of internet service after you’ve experienced high speed digital via fiber optic cable.
Just in case you are wondering, the 300 Mbps symmetrical connection speed I signed up for is the slowest speed offered. They offer up to 2 Gigabits per second but not being a gamer, I seriously have no need for anything that robust for what I use the internet for.
AM, FM, Streaming
AM radio was incredible 100 years ago when commercial radio service was licensed to begin operating in the United States. AM radio listening was eclipsed by FM radio listening in the late 70s, which is the dominate way most American’s hear broadcast radio. However, we’re now fifty years beyond that time and living in a world where audio listening can be fully customized and on demand whether you want music, talk, the sound of ocean waves, or crickets.
January 2021 is seeing another round of stimulus checks coming out from the Federal government. When Generation Z and Millennials were asked how they planned to spend their $600 check, after some basics like groceries, rent and overdue bills, their next most important expenditure would be for video games/consoles that filled their entertainment passion while they socially distanced at home.
COVID-19 changed the way people bought a new car. As we were all forced to work, play, shop and communicate online, consumers found they could just as easily shop for cars via the internet as well. Moreover, surveys have shown that consumers really liked it and don’t plan to return to the old ways of buying a car. Car dealers, which had been resisting doing business this way for decades, now find themselves having little choice but to embrace this disruptive change or go out-of-business.
59% of Americans say they plan to continue working out in their own home when asked about returning to a physical gym after the pandemic subsides. Among Millennials, that number grows to 81%, according to a survey by The New Consumer.
Interestingly, gyms are now finding themselves in the same situation as arcades. Once upon a time, people went to malls or amusement centers to play video games, but that’s been replaced by playing those games on a video gaming system, like Xbox or PlayStation.
The Power of Talent
I’ve often written that the “secret sauce” of great radio stations are their air personalities behind the mic.
Alexandra Bonetti, a fitness studio owner in New York, observed the bond that fitness clients formed with a particular instructor. This led her to create a tech startup called “Talent Hack.”
When COVID closed down gyms, fitness instructors suddenly found themselves on their own. (Not so dissimilar to the radio industry jettisoning their air personalities.)
Bonetti’s “Talent Hack” allowed fitness instructors to continue to serve their clients and monetize their talents.
It’s in challenging times like these that new business models like Talent Hack emerge.
The New Nature of Work
While technology accelerated the pace of our work lives, it never fundamentally changed the nature of the way we work. However, COVID-19 mandated changes to the nature of work in all industries.
For many, working from home was no longer a luxury but a necessity, due to social distancing.
Once business owners and their employees learned they could do their jobs remotely, real change to the nature of work was in the wind. Now it has been proven that people could work from anywhere, and that epiphany will produce profound changes for our cities, our transportations systems, our communications networks, the work week, and the work day going forward.
Accelerated by this global pandemic, the challenge has become NOT to turn things around, but to implement the changes needed to thrive in this changed world.
More to the point, the question is not whether the radio industry will turn itself around, but rather is it headed in the right direction? And from my vantage point, the jury is still out on that question.