A Failed Quest and Why Radio Needs to Embrace Failure

A Message from Radio Ink’s B. Eric Rhoads

 

Historically, change rarely comes from within any industry. We are all too close and set in our ways. Most innovation comes from outside, from those who can see our mistakes more clearly. Therefore we as an industry should embrace outsiders, even though we may think their unusual ideas aren't a fit, or aren't "the way things are done" in radio.

Jeff Hinson came to radio as an outsider, known for his turnarounds and innovation in other industries. A couple of years ago, he was hired by the board of Border Media Partners to save the failing radio company.

Turning Radio Upside Down
Now Border Media Partners' lenders are taking over the company, and CEO Jeff Hinson has chosen not to stay on as the lenders try to divest, though he is leaving on good terms. Since Border is not on everyone's radar, this may seem like a minor story. But I believe the loss of Hinson at Border could have an impact on the future of radio, because he was one of those outsiders who was reinventing radio and turning the business model upside down.

What few people knew (unless they attended our Convergence conference, where Hinson unveiled his plan) is that Border Media Partners was taking the lead in a sea change regarding how radio and digital media intersect. Jeff had invested heavily in the creation of a new digital radio model unlike any in the world.

Looking Cross-Eyed
A traditional, dyed-in-the-wool broadcaster would look cross-eyed at Hinson's moves as risky, which is why Jeff's plans will probably be shut down with the change in control. But Hinson was not some wet-behind-the-ears rookie who didn't understand radio. He was a wise innovator who believed radio could not continue to survive and thrive in its present form.

Hinson came in as an outsider willing to throw tradition under the bus, and he put his entire radio group on the line, reinventing how it did business. How many people do you see willing to do that today? Most people only talk about it, but Hinson did it. Instead of being a radio company that integrated digital offerings into its stations, he flipped it around, and Border was becoming a digital media company using its owned radio stations as a vehicle to reinforce the digital properties.

Rules for Radicals
If what Hinson did sounds radical, it was. Though his recently launched efforts had no time (or environment) to prove themselves, Jeff understands that rules for radicals require burning the ships behind you, no longer relying on past models that aren't working anymore and investing in new ways to do business.

As you know, I spend my life immersed in digital media. I created a conference devoted to digital media for radio, and I try to spend as much time as possible working on models that will reinvent radio and make it thrive again. Jeff was among the two or three people in the entire radio industry who I believe understood what needs to be done, and one of the few who persuaded his board to allow real investment in reinvention.

A Back Full of Arrows

Though pioneers are the ones with arrows in their backs, I think the Border Media experiment had a strong chance of success, had it been given time to succeed (it wasn't even six months old). Though Hinson employed the important radio basics to try to save an already-broken company, he was also willing to take some big chances to move it where all radio stations belong. But the recession and advertising climate, combined with the problems plaguing Hispanic radio, placed too much pressure on the business, which left investors Goldman and Vestar no choice but to take it over.

 

Reinvesting in Reinvention
As we all suffer through this economy, our tendency is to stick to the basics and not reinvest or reinvent. Why risk it? (Plus, who has the money to invest, right?) Yet risks like Jeff's, with the right timing, will capture revenues the radio industry would never otherwise see. Necessity forces innovation, and it's critical not to cling to our history, but to focus on what customers and consumers want. We must make sure we design a digital-centric radio platform that works. If not, someone else will, and it probably won't be a radio company.

 

Yes, There Is Good News
Everyone could use a little good news about now. The good news is that the struggles you're experiencing will not only strengthen your skills and resolve, they will force you to come up with new ways to do the things you've done for decades. The other good news is that your customers are seeking better solutions too, and will be open to almost anything fresh and new. Are you listening to them? Are you innovating to give them what they need? Are you burning the ships behind you?

 

Break the Rules. Please!
Though Jeff Hinson's experiment failed, it was only because of timing and market conditions. Had he been able to ride out the storm, there was a fair chance he would have emerged ahead of the rest of the industry. In radio, we must seek outsiders like Jeff to break the chains of our past. We must demand innovation. We must promote rebels to break the rules.

Though sticking to our knitting is comfortable, "just the basics" won't move us into a new era and allow us to be competitive in this new digital world. Though no one else may encourage you, you have my permission to break the rules. Please.

Eric Rhoads

A Message from Radio Ink VP/GM Deborah Parenti:

Eric talks about reinvention, and he's charged me with making our Forecast Conference focused on breaking the rules, finding new forms of income, and taking a serious look at survival in this environment. Please join Chair Bill Stakelin at Forecast '10, December 8 at the Harvard Club in New York. This event has become the premier forecasting event in the industry and is attended by a who's who of radio -- and it's followed by the most elegant event in the industry, honoring the 40 Most Powerful People in Radio.

 

Limited to 200 people. To register, call 561-655-8778 or go to www.radioink.com/forecastsummit.

Please don't reply to this e-mail, but respond in comments.

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[Carl Magnuson]

For me the most memorable and exciting presentation about the future from Convergence was from Jeff Hinson.

Though after the conference I couldn't remember his name or that he was from Border Media, his presentation stuck with me above all others. Its a sad day that he's leaving. I hope he remains in the industry.

Just wanted to say that todays blog was sad to read, but needed. - Though you know that, Eric. I just wanted to give you props for laying it out so publically.

[Michael Raffety]

I just read your recent article “A Failed Quest, And Why Radio Needs To Embrace Failure”. I’ve been in radio, mostly as a producer for morning radio shows and talk shows for over 16 years since high school. I’ve been thinking the exact same thing about what radio will become and your article verbalized it! Thank you!

Radio stations, I believe, will be just one of the many venues that digital content will be dispensed through. A show (or a whole “station” or “network”) is no longer just a “radio” show. The audio form of the content is just one option for users (listeners/viewers/readers) to take in your show or brand. A show or brand must deliver multi-media content (written blogs, video/visual, audio) and deliver it via many platforms (online, TV, radio, mobile PDA’s).

I think we may see more radio stations acting as simple platforms or venues, piping in the created digital content that is just the audio offerings from independent multi-media producers. We see this play out in the channel and content offerings on Satellite radio (Martha Stewart’s brand audio content, Oprah’s brand audio content, Howard’s brand audio content, Playboy’s brand audio content, etc.). Radio can be the audio extension of these well known and niched brands.

I believe those in radio who love this industry and want to continue to be a part of it will have to transition to the concept of working for multi-media producers, not radio stations. We can utilize our skills in producing the audio portion of these brands. We should also learn the online and visual elements as well. Some radio stations may become these new “multi-media producers”, but like you say, they must change their view of who and what they are. They are merely an audio platform for multi-media brands, but they can choose to be multi-media producers, using their audio broadcasting capabilities to dispense audio content and to promote their visual/video, written, and interactive content.

Thanks again for articulating this new model!

Mike

[Mike Luoma]

Radio has only itself to blame, and the quick exit of Hinson is merely symptomatic of the industry's larger problems. From the era of the Reagan administration onward through the Telecommunications Act of 1996 radio stations became concentrated in the hands of fewer and fewer publicly held companies. These companies brought an incredibly high level of risk aversion into the industry, partnered with an irrational belief that radio stations could be increasingly profitable year after year. This combination stalled radio in its tracks, as playlists and programming formulas calcified out of risk aversion and staffs were cut to the bone to increase supposed productivity.

With the creative side of radio cut to the bone and held below a living wage in small markets, radio choked off its own talent pool, both on the air and off. Overnight radio shows in small markets were gone, eliminating a fertile training ground under the name of cost cutting. Programming became codified and banal - with playlists trimmed to a non-risky test list, the only surprises on the radio came from shock jocks.

Risk aversion stalled radio in the late eighties and irrational profit projections wiped out the creative pool. If radio is now forced to look outside for its creative thinkers, it's because radio as an industry drove those people out. The folks now fueling the digital revolution come from the same talent pool radio could have been tapping into for the last twenty years, but instead sent packing under the guise of cost cutting and risk control. Radio wrote its own death warrant long ago. It's barely eking out on life support now. Hard to get an industry to live in the present, never mind look to the future, when it is stuck in an outdated, outmoded, antique paradigm.

[Bill Sepmeier]

I had been wondering what your request for information re: digital media was going to turn out - I guess this is one story. I'll have to read up on the proposed plan, even though it didn't take off well this time.

I bought my new wife an iPhone recently as a wedding present. The first thing she downloaded from the AppStore was Pandora. I've played with it a bit and frankly, the service Pandora provides - tailor-made radio stations - is even more remarkable in the car. Streaming 3G Internet is as solid as XM/Sirius and, when the iPhone's plugged into either of our vehicles' "aux ports," the sound is excellent.

I downloaded another app called "I (heart) Radio" and use it to listen to a Denver 5kW AM talker that has no prayer of coming in up here, 3 hours west. Again, excellent quality.

The NAB whined for years that the iPod has no radio. Well, let me tall you, the iPhone does! A great one! The Pandora music radio stream will be a new challenge for XM/Sirius (oh they're available too, for a monthly fee) but there's no reason broadcasters can't take advantage of the remarkable capability of both the iPhones and iPodTouch (which runs all the apps using wifi instead of G3/Edge) base. The era of "portable radio" really has returned, to those aware of it and willing to promote it.

[rocketx2]

I’ve always found the expression “all pioneers get are arrows in the back” to be an odd one. In a normal Indian fight the arrows would be stuck in the cowboy’s front. You can only get shot in the back by the people on your side standing behind you.

It’s been my privilege to fix a number of broken stations and the problems are always INSIDE the building (or company) not outside.

Radio’s wounds are self-inflicted.