Will the Radio Industry Turn Around?

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?

The Internet

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).

Digital Fiber

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.

Stimulus Checks

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.

Car Buying

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.

GYMS

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.

“What you are going to be tomorrow

you are becoming today.”

-John Maxwell

15 Comments

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15 responses to “Will the Radio Industry Turn Around?

  1. VBaskin2010

    Only the spirit of Marconi knows the answer.

    Like

  2. Adaptive Radiation & Survival of The Fittest – Darwin. Radio’s agility, connection, communication and appeal will call the shots. Just put in a good shot of local creativity!

    Liked by 1 person

  3. Bill S

    Radio was born with a few stations in the country. It thrived with a few in each market. If died with 8090 and 30 stations per market. The internet presents an infinite number of “stations” everywhere. Without some massive promotional budget – and so far even I❤️ Hadn’t figured out how much – streaming will be a non-profit operation operating on someone else’s platforms, networks and good will.

    So far, the only person to make money at it is mark cuban – and he sold a domain name (broadcast dot com) to yahoo to do it a few weeks into 1997. That turned out well for him – but not for yahoo.

    Liked by 1 person

    • Bill, thanks for stopping by the blog and adding your perspective.

      I think 8090 was certainly the opening of the barn door that let the horses out. Then the Telcom Act of 1996 put a nail in the coffin.

      No one ever stopped to consider IF any radio market could support the number of ad-supported media outlets, they only thought they needed more stations.

      Then the internet comes along and the playing field changed dramatically.

      Next a global pandemic takes the changes that were already in motion and puts the pedal to the medal and change is accelerating at warp speed.

      This may not be the environment radio owners wanted to be operating in, but it’s the environment they got.

      Hope you will come back and continue to participate in our weekly discussions.
      -DT

      Like

  4. Rich R.

    Dick, as painful as it will be the market needs less stations. Many get nostalgic when an AM turns in a license, even with a translator, or someone sells to A non-com operator, but ultimately the number of active stations selling in a market needs to reach a balance where capacity meets the ad market. Between move ins and 80-90, it it like having 16 McDonalds in a market of 40k people, they all can’t survive.

    Liked by 1 person

  5. Julia Gonzales

    A factor to consider is mindset.

    Radio has the ability like all other industries to grow and considering it has provided an emotional connection to music since the early 1900s, has the foundation to be hugely successful. It has adapted very nicely, with the addition of apps, podcasts, and products, that connect clients to listeners.

    Because of the internet, Radio stations have the ability to expand outside a “normal” listening market and gain listeners across the Country / World. However, with a fixed mindset of how it used to be, it will never allow for what could be…

    Liked by 1 person

  6. The geezers among us remember that before consolidation, radio markets had big winners, winners, losers and big losers. A couple of stations were killing it, some were getting by, and quite a few were money losers. That made owners of failing stations more receptive to the crazy bastards who came up with new ideas. Consolidation, in it’s own way, killed the need to be creative and competitive. Now, stable mediocrity is valued above all, since companies spread the risk and revenue among many stations. Creativity is out, just when it’s desperately needed to keep people interested.
    As you say, talent is the secret sauce, but I think we’ll see a mix of live and local stations and a few powerhouse syndicated formats. Whatever happens, adaptation is essential. That’s the history of all media, especially radio.

    Liked by 1 person

  7. Christopher Fenton

    There will always be a place for wireless because it invites listeners to use their imagination. No other electronic media does this. Only RADIO!!

    Like

    • I’m sure your local librarian would disagree that “only radio” allows people to use their imagination. I would also add, that podcasters and streamers are taking the lead from over-the-air radio in creating “theater of the mind” programming.
      -DT

      Like

  8. Victor

    The realists say never like it once were. The optimists say, never say never-radio is a creative medium ripe for innovation. The truth is that the future of radio lies in hands of Wall Street bankers and advertisers not in the control of the operators. Investors and advertisers only care about ROI not radio talent. That leaves radio’s future existence in greater peril subject to more shrinkage and fragmentation in a digital world that prefers on demand everything. I still work in am Spanish radio getting ready to join the podcast broadcasting revolution. If you can’t beat them join them.

    Liked by 1 person

  9. Radio had an amazing opportunity to own the digital audio medium, but instead it focused on putting more analog radio stations on the air in radio markets that could not support all of them by advertising. The result was pure play operators took the lead.

    Victor, once you experience a world of ON DEMAND, you aren’t likely to go back to having programming spoon fed to you.

    Good Luck on your podcast.

    Drop me a line and let me know how it’s going after you get it up and running.
    -DT

    Like

  10. Cumulus’s memo was a sharp change in direction for a company that has allowed, and even encouraged, hosts to engage in polarizing and sometimes extreme political talk to increase ratings and ad revenue. Yet it remains unclear how — and indeed whether — its new policy will be enforced in a medium dominated by hosts who have reinforced and reshaped conservative opinion for a generation.

    https://www.washingtonpost.com/lifestyle/media/conservative-talk-radio-cumulus-levin-bongino-capitol/2021/01/19/5265a108-55de-11eb-a931-5b162d0d033d_story.html

    Like

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