Radio's Best And Worst Day
Imagine for a moment you’re the CEO of a major publishing company, and you see that Jeff Bezos has announced the Kindle by Amazon. What’s your first reaction? It probably sounds like this: “People love books. They love the touch and feel and smell of paper, they like to show them on their bookshelves — plus, they won’t pay for digital words. This Kindle thing is silly, and it will be short-lived. Anyway, Sony tried an e-reader and it bombed.”
In June of this year, e-books outsold paper books for the first time.
Imagine you’re the CEO of Kodak. “Digital isn’t as good,” you say. “People like pictures, and film is better technology. It’s tested, it’s been around for 100 years. Digital photos are a passing fad.” Kodak actually invested $25 billion in digital photography but still failed to control it because they were unwilling to believe film would be superseded.
Maybe you’re a radio executive saying this: “The transmitter is a more efficient means of delivery. We can send a signal to millions of people at no additional cost. Streaming is stupidly expensive and has a cost per user. The model can never work. Plus, who wants to sit at their desk to listen? There are billions of radios, with an average of six per household. We’re in virtually every house in America and in 100 percent of the cars. The transmitter will never go away.”
What if the transmitter were no longer relevant? You say that will never happen? Here’s how it could.
The New York Times says the auto fleet in the U.S. averages 11 years old, and that by 2015 we will see approximately 70 percent of the market buying new cars. Already a high percentage of new cars, including lower-end brands, are Internet-enabled and can receive Pandora, TuneIn, and iHeartRadio. What if, by 2015, all new cars have Internet radio? It’s very possible. It’s also possible that auto manufacturers will decide to stop putting AM/FM radios in cars.
Seem silly? Car manufacturers are some of the biggest advertisers in radio, but they want exact listening data, not estimates. This is a world where Google and others can tell them exactly who saw and heard their ads. Automakers are not required by law to put radios in cars. They could make the Internet the only way to listen. That way they could track exact listening stats. No more estimates. No more panels of 150 people representing listening for an entire city.
Ask the CMO of any giant marketing company and they’ll tell you “big data” is the next big wave. Big data allows data from all places to be combined, creating a depth of information never before available. With radio listening exclusively online, an advertiser could use GPS data to air a spot for their business when you’re a few minutes away. Imagine driving down the road and hearing, “Whole Foods is just a couple of minutes down the road. It’s dinner time, why not give yourself a break tonight and pick up a pre-made meal?” or “You’re just a few minutes away from our new location, why not try it for lunch today?” Big data allows this, and it’s already happening.
Though losing our over-the-air monopoly in the automobile seems like a bad thing, a world of nothing but streamed signals could make for the biggest boom in radio history. If radio could assemble big data and tie it to the car, the biggest advertisers would use radio more than ever.
No, it’s not good for Arbitron, unless the company can insert itself into the middle of the exact-data play, and it’s not good for the transmitter companies (though you’ll probably always need a transmitter to serve the remaining analog units in the world).
Will this scenario play out? I think it almost has to. Though it seems counterintuitive, forcing all radio listening through IP would give us the best advertising environment in radio history. Losing the transmitter would be the best — and worst — day for radio. Best because it allows us to have the real-time, exact audience stats, worst because it forces us to abandon the in-car monopoly. I also think there will come a time when AM and FM spectrum will become so valuable to the government for other purposes that the FCC could force radio off the air and online.
Imagine how that would change everything. Suddenly the FCC is no longer controlling radio. Suddenly that license is no longer a concern. But it would also democratize radio even more, since any Joe can create an online station.
Shooting the messenger here is a natural reaction, and so is denying it could ever happen and defending the status quo, which many will do. I don’t blame you. And I may be wrong. But history says people who denied that such dramatic changes would or could occur were usually wrong. If you catch yourself saying, “That will never happen,” that’s a signal that it probably will.
This is in no way an indication that I don’t believe in radio. I remain our biggest champion, but I also know that change is inevitable, and at the moment, Ford, Toyota, and the other automakers hold all the cards. They know they can change the face of radio and make it exact, measurable media just by removing the AM/FM receiver from the car.
Radio’s survival, your survival, is predicated on great content, great brands, and making sure those brands are everywhere. How we deliver is less relevant than what we deliver, as long as we’re where the consumers want us to be. Call me crazy, but I think that radio becoming 100 percent Internet-based is the one move that can make this industry boom financially again.