Tag Archives: Investment

What Radio Could Learn from Vladimir Putin’s Dilemma

History never really repeats itself, but it often does rhyme with the past.

For the radio industry, today’s Internet is a challenge not unlike what the industry faced when TV began to take off in the 1950s. For Putin, the plummeting price of a barrel of oil is reminiscent of what happened in 1985 when the Saudis stopped protecting oil prices and focused instead on share of market. Then, as now, the Saudis decision is putting Russia in a corner.

Russia is dependent on oil and gas. The radio industry is dependent on the sale of radio commercials.

52% of Russia’s revenues and over 70% of its exports are oil and gas. 78% of radio’s revenues come from the sale of radio commercials.

See the similarity?

Gordon Borrell will be holding his 2015 Local Online Advertising Conference in New York City this coming March (https://www.borrellassociates.com/loac2015/) and the key note speaker will be investment banker Jim Dolan. In a comment promoting this conference, Dolan has been quoted as saying that valuations for companies with a strong digital presence will be much higher than for any company relying on legacy platforms for 50% of more of their income. (http://rbr.com/boring-in-on-digital/)

For Putin, 25 years after the last time the Saudis turned wide open their oil spigots the lessons not learned from past history have put this leader into corner. Radio has the lessons learned from the birth of TV.

Again quoting Dolan, “I think the smartest thing that legacy media managers can do is plow all of their free cash flow into digital products and services….it’s too late to knit a digital parachute when you’re falling off the cliff.”

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Winners Invest in the Future

America got to be the leading country in the world by investing in its future and much of that investment came from the government investing in the new ideas of its citizens.

In 1825, an American painter was commissioned by the City of New York to paint a portrait of Lafayette.   The painter traveled from his home in New Haven, Connecticut to Washington, DC to paint Lafayette before he departed back to France. While in DC, the painter received word his wife was very sick. Before he could even begin to travel back to New Haven, a second letter arrived to say his wife had passed away. Grief stricken, this event would cause the middle aged painter to search for a faster means of communication.

Samuel Finley Breese Morse would, with the financial assistance of the United States government, build the first telegraph system between Washington, DC and Baltimore, Maryland in 1844. He would secure his patent for the telegraph in 1847 and be given the rights to privately build telegraph systems throughout America and the world. He co-founded the Morse code language that bears his name and is still the code used today by practitioners of this form of communication.

This kind of investment in the future has been the Hallmark of America.

Radio has benefited from many creative geniuses over the years since its commercial birth in 1920. Programmers, air talent, engineers, managers and visionary stakeholders have all played a role in making radio the second greatest invention of all time (according to the History Channel).

Growth of any enterprise only occurs if there’s a steady stream of new innovation. Innovation occurs when experimental research is conducted without thought for where it may lead. The transistor was invented in 1947, but it didn’t really see a practical application until the first transistor radio was put on sale in November 1954. It was the Regency TR-1.

The transistor radio and car radio would be the salvation of AM radio with the advent of commercial VHF TV in the 1950s. The inventors of the transistor did not envision that their creation would save the radio industry by making it available to a whole new generation who wanted to hear the latest music wherever they went.

Ironically, our government funded virtually every piece of technological development that would make possible the Internet, the iPhone and even Siri. Radio can either be like Google and Apple and take advantage of what’s been created to leverage it for their business or relegate their medium to the era of flip cameras, walkman, dial telephones etc.

Radio today invests a lot of energy in trying to hang on to the past. It’s playing defense instead of offense as it did back when television was born.

To win in the future, you have to invest in it.

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