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Ignoring Apple Music: Should Terrestrial Radio React?

A screen shot from the new Apple Music campaign.

 Should you ignore Apple Music? Or should your station react?

History shows that established companies with first-mover advantage ignored Apple. Phone manufacturers did it before the iPhone, MP3 players were on the market before iPods, digital music services existed long before iTunes, and others were even producing small tablet computers before Apple came up with the iPad. But those manufacturers underestimated Apple's ability to reinvent -- to take something people were already familiar with and make it hip and mainstream. And that meant that many of these companies reacted too late, and most lost a giant portion of their market share. Apple is always disruptive: They look at a product and ask not just how they can make it better, but how they can make it a hundred times better.

History also shows that radio responds to every threat -- typically long after the fact, and with defensive spots talking about "the power of radio." We did it on the launch of satellite radio. We did it in response to the buzz around iTunes and Pandora. Heck, we've been doing it for decades. Our response is always radio spots, because that's what we do best (and it's free). But, to my knowledge, we're not even doing that over Apple Music. And frankly, with Apple's domination of network and cable TV, and their ubiquitous Facebook and YouTube ads, radio ads alone wouldn't be enough to counter it anyway.

On June 30, Apple Music is launching. Radio's response, it appears, is more of the same: nothing. That is, until we see it cutting into our advertisers and audiences.

Why no reaction? It may have to do with defensive statements like....

"It's not a sustainable business model due to the cost of streaming and data consumption."

"It's too costly to pay for music licensing."

"Radio has 93 percent of people listening in an average week."

"Consumers have deep relationships with local and national radio talent."

"Radio doesn't have the burden of streaming and licensing costs."

"There's a radio in every car."

"Not every consumer has a smartphone."

"People have been coming after radio for decades, and it's never worked. They said cassettes, CD players, MP3 players, and cell phones would destroy radio listening."

But what happens when the world's most valuable corporation decides to go after radio?

What happens when Apple tells the world that it will fund Apple Music based on user experience and it doesn't need to be profitable?

What happens when a new Apple Music "radio station" launches by dominating national television for the next few months, at the beginning of the high summer listening timeframe?

No one knows, really.

But if history is a measure, then radio should be shaking in its boots. Of course, so should Spotify and Pandora, maybe even more so.

Advice From a Wise Executive

Years ago Arbitron's Rhody Bosley told me (I'm paraphrasing), "Now that radio has consolidated, they no longer feel the need to promote. Gone are the big prizes, gone are the TV ads and billboards. One day they will find out that the lack of promotion will result in a decline in listening. We've found that promotion does increase listening."

Though there are rare exceptions, very few radio stations are promoting themselves on television or boards or other outside media. Of course, iHeartRadio is doing a killer job of this nationally, with network television awards programs and loads of publicity, and Cumulus' NASH is doing some of it as well. But what about local stations and brands?

Your Listeners Will Sample Apple Music

I've seen two different TV campaigns Apple and Beats (Apple-owned) will be using for the rollout of Apple Music. (Watch them here.) They are emotional, play off of people's love for radio and music, and show the first "world radio station" with the concept that we are all one world, with one love for music.

They also present Apple Music as the next iteration of radio, as they show the old days of broadcasting, through the '50s and into the present. Apple has made the product hip, and you can be sure that everyone with an iPhone will check it out and play with it. The radio industry can't do a thing to stop it.

What Happens Next?

Will consumers stay with Apple Music? Some channels are all music, all are curated (programmed), and some even have top air talent. What does Apple not have that radio has? It has no deep local content -- and no long commercial stop sets.

We have to assume Apple is counting on consumers experiencing Apple Music and comparing it to their local radio experience. No commercials (or very few) vs. stop sets that run 12 minutes or longer.

Should Radio React?

If you're arrogant, believe that nothing can touch radio, and know that your listeners are loyal to a fault and nothing can ever take them away, I suppose you don't need to respond to Apple Music. You'll just have to wait and see.

But I think every music station should be reacting. Not by mentioning Apple Music or just being paranoid, but by being ready for the summer months when consumers will be flipping between radio and Apple Music during their three-month free trial.

1. Cut out all unnecessary clutter.

2. Reduce spot loads, and when possible go commercial-free.

3. Seek ways to deepen the relationship with your local talent.

4. Increase and enhance what Apple cannot do (yet): localism.

5. Promote like crazy now. Get people tuning in and coming back.

6. Promote outside of radio. Remind people of their love for your station.

7. Make sure your stream is easy to find, and promote where to find it.

8. Be talent-centric, but not overly so.

9. Play the hits. Tighten up your list.

10. Find ways to draw on listeners' past emotions toward your station and the cool things you've done.

 

Last, you need to be prepared as every advertiser sees Apple's promotion and starts asking about how it's affecting your business and listenership. Here's a tip: Don't be defensive. Apple, Pandora, Spotify -- they're each just one more station people can choose from, and consumers will push buttons like they always have. It's believable -- because it's true.

Is It Over for Radio?

Absolutely not. Your listeners do love their local stations and talent, and they like Pandora. Apple will either erode some broadcast listening, or it will erode Pandora or Spotify listening -- unless, of course, Apple blows it. It's possible.

I don't think radio will die because of Apple Music, but I don't think radio should be overconfident, either. Other MP3 players -- from Creative, Diamond, Archos, even Sony -- were gaining traction everywhere when Apple crushed them with the iPod combined with the iTunes library.

In every business, you should assume a competitor can make even a slight adjustment to its business model and end up crushing you. Newspapers were proactive on the Internet, knew it was coming, and thought they were ready, but they didn't anticipate the strength of Craigslist, and it destroyed them. Never be cocky or arrogant. Assume you can always do more to protect your turf.

Why the Summer of 2015 May Be Your Most Important Ever

Radio has always been the soundtrack of summertime. But the new portable "transistor radio" has been rediscovered in the smartphone, and broadcast radio is under direct attack. You need to consider that if you're going to react, the next 60 days are when you should lighten your clutter and commercial load. Will you? When dollars are necessary, probably not.

Should you? It could make a giant difference. Yes, for your commercial load to feel as light as Apple's, you'll need to air almost no commercials. My guess is no one is willing to take that risk, and everything will go on as usual. And that's exactly what Apple wants. This is no different than when a new FM launches against you with no commercials. After they get your audience, they'll change. The key is not letting them get your audience to begin with, so the best response is to match their consumer promise until it doesn't work anymore. This is risky -- Apple has more cash than anyone and can string this battle out for a long time. Will anyone have the courage to try it?

Being Pragmatic

I remain a believer in the power of this great medium we call radio, but I'm also pragmatic. When we're under attack, the guns have to come out and the soldiers must be readied for battle. History has seen many battles lost because of arrogance and lack of preparation. Apple Music's success lies in your hands -- far more than you think.

 

Is Cisco's Chambers Talking About Radio?

In a speech yesterday, retiring Cisco CEO John Chambers warned the audience that 40 percent of all companies will be dead in 10 years or less because they have not kept up with the digital frontier -- or because they'll die trying. It's sobering, but I fully agree with Chambers. We're living in a world of total disruption, where loads of young tech startups are building great futures by disrupting virtually every industry.

Imagine, for a moment, that you own a taxi company. You've owned it for 50 years, and it's a license to print money, since only so many taxi companies are allowed medallions (permission to operate). But suddenly an Internet upstart called Uber comes on the scene. You open the app, press a button, and a car arrives within a minute or so. Soon you're dropped at your location, and you don't even have to get your money out or tip your driver. That is disruptive.

Predictably, since you have a taxi company, you don't like the concept. Soon you're running defensive ads telling people how dangerous Uber is: Drivers are not fingerprinted, there have been cases reported of drivers assaulting passengers, and Uber users are taking their lives in their hands.

Sound familiar?

Is Radio Being Defensive?

What about radio's defensive campaigns that have targeted disruptive technology? We did it with satellite radio, we did it with the iPod, and now we're doing it with Internet audio providers, telling consumers that paying for data is expensive when you can get radio over the air for free.

But we're missing the point: Consumers seem to be willing to pay for data to get a service that gives them the greatest control over their listening experience. I don't doubt that data is a serious concern for many people, and I'm hopeful that the next radio app will gain traction in smartphone distribution.

Does Apple Music Block NextRadio In Apple Phones?

But I'm also wondering how that plays without ubiquity across all phones and platforms. Does Apple's announcement yesterday of its Apple Music launch indicate that it will be willing to put a free competitor in all of its phones? Unlikely -- unless they see massive demand from consumers for in-phone radio chips.

Will The Transmitted Signal Become Irrelevant?

For decades I've asked our industry to study and deeply adopt digital strategy. Some companies and stations have listened, but others have neglected or ignored digital because the costs are high and, right now, the returns are low. But without a strong digital footprint, do you have a solid platform going forward? What will you do when the transmitted signal becomes irrelevant to consumers, or at least to the consumers with money to spend?

The Coming Digital Shift

Following last week's Convergence conference, where we addressed these digital opportunities, I'm convinced that radio has a viable future because, at present, we're holding a lot of  important cards: We haven't lost a high percentage of our audience (though gradual erosion is happening), and we have the opportunity to employ some sophisticated digital strategies to engage and retain those listeners. But few in radio are doing it well, and fewer still are investing in anything that has no immediate return -- even if it might strengthen their brand, and business, when the great digital shift hits radio.

Radio At A Crossroads

Radio is at another crossroads. Many of our leaders are focused on staying strong and dealing with long-term debt, keeping the troops at work on selling and meeting numbers. Digital can seem like just a distraction for leaders in that position. Also, no one wants to say publicly that radio will have to morph into something different as a hedge against a possible shift in the uncertain -- but near -- future. And frankly, you can't really blame them. No one wants to cannibalize what they have in exchange for something they can't be sure of.

Self-Disruption

Before I started the  Radio Ink Internet Conference (now called Convergence, because all media converges into all things), I attended the Newspaper Internet Conference, where they were light years ahead of all other media in terms of launching websites and adopting early Internet technology. Newspapers could have owned digital media -- but they lost it because they weren't willing to disrupt themselves. So Craig Newmark of Craigslist did it instead, and killed the highly profitable classifieds business.

Digital Cannibals

Also, most newspapers were unwilling to put their Web products first, requiring stories to come out in the print version before they could go online. That meant top stories ended up being held back from newspaper sites, often for hours. Newspapers were so protective of their print product that they couldn't see that owning online media and allowing it to come first was what would save them -- even though, in the short run, they'd be trading print dollars for digital dimes.

Is Radio Immune?

If John Chambers is right, and this is happening to so many businesses, why would radio be immune? Think about disruptive technology that wants what radio has. Pandora, Spotify, Google Music, and now, Apple Music.

The Apple Factor

Radio is being attacked by Apple, the world's biggest corporation, which has a history of successful disruption even when others were in the space first. Though some are saying Apple totally blew its announcement and that the product "isn't as good as radio," we have to understand that Apple's commitment means it can hire the best, smartest programmers in the world. Apple can afford the best and most in-depth consumer research, and it has one of the world's largest bases of active consumers, whom they can work to convert.

Apple's Next Strategy To Crush Radio?

Of course, we as an industry are confidently sitting back, believing that Apple hasn't figured out our secrets to building and maintaining audiences and the importance of localism and live local talent (though too much of radio is ignoring that local strength). But one phone call to Howard Stern offering a check bigger than he's ever seen before will instantly give Apple a way to blindside SiriusXM and engage the international listeners who haven't had access to Stern. Another phone call might buy Ryan Seacrest out of his contract and bring him over to Apple. Apple could, if it so chose, pick the highest-rated talent in radio and put them all on its payroll overnight. Will they do it? What would you do if you were Apple?

Not Predicting Radio's Demise

I'm not by any stretch predicting radio's death. In fact, I want to believe we will remain strong, and believe there are moves you can make to strengthen your position and deepen the loyalty of your audience. We went over many such strategies at the Convergence conference, and there are stations introducing those concepts now and gaining those advantages.

The Fight Of Radio's Life

But radio cannot lie there playing dead, hoping not to be disrupted. We must wake up, fight like mad, and protect what we have while exploring and morphing into other distribution channels to make sure our listeners can use our brands in every possible way.

Are We Driving Customers To Digital Competitors?

Radio also needs to consider that our financial needs may be the butterfly wings whose flapping starts the tsunami against us. Services like those mentioned above are taking advantage of us, just like we used to take advantage of competitors when we launched against them with few or no commercials. Apple said yesterday that it does not need Apple Music to be self-sustaining or financially successful: The primary goal is to deepen consumers' experience with Apple products. You have to ask yourself if you're driving listeners into their arms with intolerable spotloads.

Radio Is The Belle Of The Ball

Radio has a giant opportunity in all of this. Remember, everyone wants what we have. And that means we're doing something right. But resting on our laurels isn't a strategy. Being better than ever, deepening our bond with listeners, enhancing our presence in the community, promoting like never before to keep listeners coming back, reconsidering our spotloads, engaging deeply in social media strategies to promote and be constantly seen by listeners, and building out strong, disruptive digital platforms will go a long way in securing our future.

Will it be enough? Some think not. I'm not ready to give up on radio, but I do know that the fight of your life is going on now. And I believe John Chambers is right: Those that don't become fully digital businesses will not survive.

 

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