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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A call to stern? omg. That would be very bad for sirius.
Posted by: spotmagicsolis | July 13, 2015 at 06:09 PM
I cannot recall reading a more thorough assessment of the "Facts of Radio" as they truly exist. Congratulations, Mr. Rhoads. You've not-so-gently tapped on the necks of business leaders hiding their heads in the sand. At the same time, you've skillfully recognized and catalogued the battles thus far lost. I wonder how many others reading your blog will share my intepretation that here is a spine-tingling wake-up call. Indeed, without your subtle call to action and offer of hope woven through the piece, it might just have easily read as an early start on the obituary of a medium once lively, entertaining, informative, frequently profitable--and perhaps most importantly, innovative. In my "magical years" day, commencing in 1968 in Miami-Ft. Lauderdale, broadcasters couldn't be easily characterized. Some were programmers living the dream, some (often more memorable) were in-your-face hucksters while yet others fell in between. Collectively though, they capitalized on a medium once relevant to virtually anyone. And, they universally seemed to grasp that the ONLY right to an advertising dollar came exclusively from proudcing a product that attracted a mass audience. Were some of those harscrapple personalities still with us as broadcasters today, I think they'd long ago have recognized that the incorporation of things digital would be essential to survival. It is my view all too often that "operators" (note I chose to not use "broadcaster") seek first and only the revenue, fulfilling their obligatory end of the contract by merely getting the advertiser to agree to some copy. (Wouldn't it be nice if radio people were advertising people FIRST?) Consider this my hope that hoards of media folk read (and then RE-READ) your well-researched, thoughtfully-reasoned, and superbly-constructed overview of a crisis. If today, there were more like you in control of broadcast licenses, I along with other veterans sharing my view--despite our resolutions to the contrary--just might be lured back to re-enlist in the fight.
Posted by: Tom Hunt | June 17, 2015 at 08:30 AM