INK TANK: Liberating This Chained Industry The Good and Bad News About Radio and the Coming Renaissance

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December 02, 2009

Liberating This Chained Industry The Good and Bad News About Radio and the Coming Renaissance

A message from Radio Ink Publisher Eric Rhoads

First, the bad news.

Radio will be down 18-20 percent in 2009 and is expected to finish the year at $15.5 billion, down from $21.5 billion in 2006.
Radio has lost over 10,000 jobs, and that number could increase.
Several radio companies are facing bankruptcy.
High fixed costs (much of which is debt), perishable inventory, and overcapacity are creating a deflationary spiral in rates, which continue to fall.
We have commoditized the radio business because it's easier to stimulate demand through price than to train people and hold them accountable for selling value.
Much of our industry has been forced to eliminate valuable localism, strong sales organizations with accountability, and much-needed promotion.
We face low-cost competition from online media, which is seducing advertisers with brilliant technology that makes offerings highly targetable and attractive.
The likelihood of increased federal regulation appears to be looming, with deeper controls on content and potentially increased costs through performance royalties.
None of us is immune. Every station owner, operator, employee, vendor, and supplier is impacted.

Now, the good news.

Unlike print, newspapers, and television, radio listening is alive and well, and radio continues to have a strong hold on audiences. Our audiences are not eroding.
New data suggests that radio has not lost its grip on the youth market and remains relevant with 18-34-year-olds.
Independent broadcasters and many small-market operators have been able to prevent severe declines in business with strong localism strategies.
Some radio companies are starting to wake up to the fact that digital media plays a significant role in our future and are integrating it deeply into their organizations.
Desperate times spawn great innovations. New plans seem to be emerging that will change the very nature of how we operate our business.
Bankruptcies and further consolidation will weed out many of those who have had a negative impact on radio.
There is money to be made even in a declining industry, and most industries cycle back eventually.
Breakups of some larger groups will spawn more independent, true-to-the core broadcasters.

The Best and Worst of Times
Historically, the worst of times bring the best of times. When things appear their darkest and coming storms create further disruption, we must stay focused on the idea that with storms comes a cleansing and dramatic change.

The Radio Reset Button
It won't be long till we see a massive reset in this industry. Though flushing out equity and handing companies over to lenders won't solve our problems, it might, at the very least, open eyes to the need to focus on sound business principles that have been ignored, and to simultaneously focus on true innovation. This innovation will be disruptive, will create further job losses, and will bring a true reinvention of how every radio station is operated.

One thing is for sure: Returning to the past won't work. Though elements of the past that have been ignored will become critical to continued survival and success.

Liberating This Chained Industry
We, the people of radio, are living in an important time. Those of us who remain committed to the radio industry will see days ahead in which we thrive. Those who understand that we must reinvent the way we create programming, the way we offer it to the marketplace, and the way we sell it, and those who are willing to challenge every assumption will thrive. Those who possess the important heritage skills, many of which have been ignored, will again have the opportunity to prove how radio can thrive with the right tools.

But this won't be your father's radio industry, or even the industry we knew pre-consolidation. The past won't return, no matter how much you pine for it, and you'll need to remain flexible and open-minded. Actions that may at first seem like bad ideas may in fact liberate this chained industry. It will be a different industry than we know today, but those willing to adapt their skills will see very bright days ahead.

Refusing to Repeat Our Foolish Mistakes
For decades I've watched this industry from the perspective of an industry publisher. My gut tells me that radio is about to experience a renaissance. No one can predict what it will look like, what the outcome will be, and who will emerge to lead it. I can almost guarantee it will be different from anything most of us can anticipate. With it will come great hardship, great change, and, sadly, many more of our industry brothers and sisters will be sacrificed. Yet this industry will emerge stronger than ever.

But only if we refuse to repeat the foolish mistakes of our recent past. Radio's future lies with debt holders, equity investors, and board members, whom we can only hope will demand higher levels of accountability from their CEOs and be willing to invest back into this industry, which has been stripped of its natural resources. We must have strong, accountable boards and stronger CEOs, who are willing to battle the whims of investors who not broadcasters and who will not be puppets or yes men.

We need experienced operators who can not only implement the core basics that have been removed from our industry, but are open to dramatic change in the way everything is done. Unless these debt holders start to understand that, in some cases, they've bought into the tricks of fools, and unless they begin to surround themselves with experienced people who have earned their stripes on the streets of radio rather than pretenders, we'll simply enter into phase two of a radio experiment gone bad. Yet somehow, I sense the bad eggs will be thrown on the grill, and the domino effect will be like bringing down the Berlin Wall, with the hope of returning this industry to great days ahead.

Are you ready to commit to the coming renaissance? It will be a wild ride, but well worth the effort.

Best,
Eric Rhoads
Radio Ink

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Comments

Posted by: allnewsbundle.com | November 08, 2013 at 03:35 AM

I'm 27, and will be so bold as to say that I'm a very capable radio broadcaster, communicator, and manager. Fueled by my Internet-savvy, digitally-enhanced upbringing and now 10 years of experience in radio, my head is filled with ideas for the future of the radio industry. My vision of the present is not clouded by the successes experienced in the past. By more accurately assessing the present, I think young people like me have the best chance of creating a new future for radio.

The problem is that there's not many of us interested in radio, anymore. Those of us who are interested are eventually so put-off by how incredibly tight our older co-workers cling the the "good 'ole way" of doing things. It's next to impossible to teach old radio dogs new digital tricks. Mostly, because they're not really interested.

I am leaving radio soon. Completely leaving the industry. I'm tired of fighting for something that should be so obvious. I'm tired of horrendous hours and an employee pay scale that resembles that of a McDonalds.

The same can be said for a number of talented individuals I went to college with. People with more talent and drive than I could ever hope to have. Many of them left radio long ago, regretting investing their money in educating themselves in FCC regulations, microphone pick-up patterns, and how they used to spin vinyl records and load reel-to-reels back in the "good 'ole days".

I'm growing bitter, I understand this. But, growing bitter with good reason. I cannot wait to get out of this cesspool of old-ways and negative thinking.

Posted by: Dan | December 04, 2009 at 11:39 AM

Eric,

You are a voice of reason in the darkness. Radio needs to connect to the local community in order to be effective. In the past large National accounts covered most of the operating costs and local ads were gravy on the bottom line. This led to a detached attitude toward the local community as long as they turned out for the national sponsor's big events, chili cookoffs, sporting events, Department store openings, etc. radio was serving its purpose. Now the national accounts are pulling back and the station ownership is crying about the bottom line. If they had nurtured the local businesses this would be their sustenance over the next two years.
You also mentioned the sales staff. We have offered a course in broadcast sales for the past thirty years and I have tried to get stations to send their new AE's to the school for training in how to interact with clients. We have seen no response and we continue to see high turnover in these jobs because they do not know how to sell to businesses. The new blood comes in, without doing any research and tells the local merchant their ratings, the merchant doesn't care, they try to offer the special, which has higher rates then the last time the merchant bought, again the merchant doesn't care, they offer free streaming, the merchant really doesn't care. Why? Because the AE doesn't know what they are talking about or to whom they are talking. When you own your own business and have owned it for ten years or more, you don't want some fresh face out of college who only wants to own a porsche, calling you Jim, or Jack or Bill when your name should be Mr. xxxx. Get it. They don't. Training how to sell is important if you want to grow. Apparently radio has forgotten that.

Bill Butler
President
Columbia School of Broadcasting

Posted by: Bill Butler | December 03, 2009 at 12:33 PM

For local content believers, there's good news.

Clear Channel has reportedly purchased some 400 remote control systems, which it will monitor from an operations center in Cincinnati. (The National Supervisory Network source code was owned by Jacor when CC bought it in 1997, not that there's hardware around today, 12 years later, that would run it...)

If CC's hedge fund management is going to sat-feed 400 stations/markets and centrally monitor and operate them, ala NSN, it would appear they've given up on radio and opted to establish a "terrestrial XM/Sirius" business model to further cut costs.

If this rumor is fact - then this should represent the far point in the "radio is a computer" pendulum's arc...

Posted by: Bill Sepmeier | December 03, 2009 at 10:07 AM

Local! Local! Local! How many times can we stay it? And, why are so few at the highest levels listening?
I feel like I'm screaming in an empty room. I've been carrying the localism banner for many years, and everybody that actually WORKS in radio knows its true.
But, by and large, the decision-makers in our business simply don't understand. Radio is not like any other business. We are a sales and marketing business, which by definition means that we must TAKE THE LEAD!
When radio takes the lead in programming, news, public affairs, and local involvement, we become the go-to media. And, that results in sales, revenue, jobs and profits.
Why is this so hard to understand?
Are we going to completely collapse before we figure out the link between serving the community and profit?
While we may disagree about the details of Eric's argument, we know his conclusion is sound!

Art Morris
www.artmorris.com

Posted by: Art Morris | December 02, 2009 at 07:16 PM

"There is money to be made even in a declining industry, and most industries cycle back eventually" I don't think so. What industry? Buggy whip manufacturers? American car companies? Newspapers? Anyway, we are not an industry. We're just one of many distribution channels for information and entertainment. There is absolutely no reason to believe that anything will cycle back. And overwhelming experience to show that it will not. Instead, we must pull out our heads and focus on the things we could do but so far mostly choose not to do better than an iPod. It's all about local (as in relevant, not as in within 5 miles) human communications.

Posted by: Steve Casey | December 02, 2009 at 05:20 PM

Eric;

I have always admired your wisdom and your positive solutions for broadcasting over the years. Instead of expecting others to ring the bell this time, how about YOU actually pull the rope. Go lead a real radio station or group of stations to success using the advice you are dishing out. I think Eric Rhodes leading BY EXAMPLE would really be a "bell ringer" for an entire industry that clearly needs positive news. Once a broadcaster, always a broadcaster…right Eric?

Posted by: Tim Schwieger | December 02, 2009 at 05:20 PM