Monday, November 07, 2011

Is Local Radio Dead? In Some Ways It Is, But Owners Don't Know It Yet

I came across a post on LockerGnome, Chris Pirillo's website about all things tech and geek (and I say that in only a good way) posted by Matt Ryan that asked if local radio was dead.  Chris's conclusion on a video that was part of the post was that it was but it just doesn't know it yet, and it got me to thinking about the industry I've been involved with for most of my life, its past, and most importantly its future.

According to the ratings service Arbitron, local radio reaches 93 percent of Americans 12 years and older in the average week.   I certainly have had my disagreements with Arbitron over the years, especially since they've introduced the PPM as the way to measure radio listening, but I do believe that local over the air radio still touches almost everyone almost on a daily basis.

For now.

The PPM, or Personal People Meter, is a means to electronically measure what listeners are hearing and it has forced many broadcasters to drastically change the way they program their stations so they are more "PPM Friendly".  That means stations have had to move commercial breaks to "better play the PPM game", tell talented Air Personalities to cut down the amount of talk they do on the air, and make it easier to import generic programming to local stations.

Those changes have led to mixed results and hundreds of lost jobs in the radio industry in the last month alone, (FD) including mine.  PPM wasn't the only reason for the layoffs, big radio companies had to cut expenses because of lower revenues, and even one large company said the layoffs were designed to make their stations better.

All that is just background for the meat of this post.  The people who own radio stations, whether they are the big companies or the smaller operators, simply do not understand that the way they deliver "radio" has to change, and they have to get out in front of the change.  

CourtesyTom Bosscher
Those big giant towers in the middle of cornfields and cemeteries, those 50,000 watt legendary AM stations, those HD Radio channels that nobody is listening to, they are losing value and necessity every day.  Broadcasters think all those things are trophy's, somehow showing how "heavy" they are in the industry.  Going forward, all that hardware and early 20th century based technology will mean very little to listeners or advertisers.

Wireless device usage is exploding, and now there are more wireless devices activated than there are people in the United States.  Most of those devices have the ability to play audio, whether they be iPhones, Android devices, tablets like iPad or Kindle Fire, or gadgets we haven't even heard about yet.  Yet, broadcasters continue to do a second rate job of serving those devices and don't see the future where people can receive the radio station from their home town, Spotify, Pandora, or a local radio station in Turkmenistan on the same device WITHOUT using AM, FM, HD Radio, AM Stereo, FM Quad, or any of the other failed and antiquated technologies that broadcasters have tried to force on consumers.  Toyota is rolling out a car with Pandora and I Heart Radio in 2012, making it even easier to not listen to local radio.

image via
The days of wireless delivery platforms and complete parity for any kind of audio or video stream are here, and American broadcasters are not prepared for the migration from those old school technologies they've relied on for almost a century to the wireless, personalized experience that listeners will discover, adopt, and almost certainly use to replace traditional broadcasts.  As media guru Fred Jacobs wrote almost a year ago, being local matters, no matter how the content is delivered.

Local matters.  While consumers may enjoy renting movies from Netflix, buying toaster ovens from Amazon, bidding for cars at eBay, or creating custom music channels on Pandora, that doesn't mean they've lost interest in what's happening next door, down the street, and in the heart of where they live.
 Jacobs isn't the only one who sees the future, The brilliant media strategist David Martin wrote this blog post in August of 2004 about the future of music radio.
It is time to admit it - we are operating in a fundamentally different business environment; the rules of the game are changing and so must we.
Speaking at the Web 2.0 Summit last month, KCPB's Mary Meeker showed the growth of mobile usage and the fact that Pandora, the online radio network, is already getting 60% of it's traffic from mobile devices. Those people listening could be listening to traditional broadcasts, but they're turning off AM and FM and turning on digital streams. 

Radio companies will tell you they have a "digital strategy".  Here are real live examples of those strategies in action at some of the major radio companies right now.
  • A major radio company has moved all its stations to its own app for smartphones and tablets, but after testing the Android app on six different devices over three carriers, the app was only able to stream listenable audio on two of the devices.  Android now commands 40% of the U.S. smartphone market, but this company's stations can't be heard on a majority of those phones and many Android tablets.
  • Clear Channel Media Holdings, the country's largest radio owner, has recently hired Bob Pittman to run the company.  Pittman is a very smart man and understands the future of content delivery as shown by the company's huge investment in I Heart Radio, their streaming and station creation app.  Unlike the above example, this app works on every Android device I tested it on, as well as devices on other platforms.  They may have some of the right ideas, but have eliminated hundreds of jobs in the last month as they add more centralization to their programming, completely ignoring the fact that being local is one of traditional radio's most important ways to differentiate itself and keep listeners, regardless of how the content is delivered.
  • Most other radio companies let each station create their own digital presence, controlling the overall look of websites, but using a myriad of vendors for streaming and mobile applications.  Most of the reason for this is that the companies either refuse to acknowledge the future of mobile while they concentrate on those big towers in the cornfields, streaming a single station (often badly), or trying to make people care about HD Radio.  One major company will let any station have an iPhone app, but the station has to wait until a certain number of iPhone apps are downloaded before they can have an Android app.  Looking at the penetration of Android, it is clear this company does not understand how listeners use streaming or even what they listen with.
All of this brings us back to the topic of this post.  Is local radio dead?  Not yet, but in most cases the people who own local radio stations don't realize that their properties are dying slowly in a hospice called AM and FM.

These broadcasters, notorious for spending their lifetimes in perhaps the last industry to see the world as it really is time after time, need to get their brands on life support by coming up with a well thought out, forward thinking strategy that involves delivering audio how and when people want it, making local information available no matter where the listener is (how many radio executives really understand the power of GPS and location based application development?) and adding a strong social and interactive component to their brands.  The benefits will be immediate, and will keep their brands viable for years to come.

There once was a radio in the kitchen
Almost a decade ago, these same broadcasters began to see the number of people using radio in the morning begin to decline  Traditionally, the morning show was the most listened to and most profitable daypart for radio stations.  Where did the listeners go?  Directly to television, because TV figured out they could give all the local information and much of the entertainment people were getting on the radio and add pictures to it.  Morning radio listening continues to decline, especially among listeners under 40, and some of the most successful local TV morning shows are produced by former radio morning show producers.  Yet, the radio industry for the most part has done little to fight the migration of listeners to television.

A recent story in the Chicago Tribune talks about how FIVE local TV stations are doing local morning newscasts starting at 4:30AM and two of them continue locally after the network morning shows start on affiliate stations.
The moves reflect a national trend that has reached critical mass over the past two years. Most large-market stations now broadcast local news at 4:30 a.m., with at least one station starting that early in all of the top 50 markets, according to Steve Ridge, president of the media strategy group for Frank N. Magid Associates, a television consulting firm.
"Thirty years ago, we had to beg stations to get into the morning news business," Ridge said. "Now, it has become the most lucrative daypart in local television."
I for one do not want to be a pall bearer at local radio's funeral, but I'm afraid that I'll live to see that day.

What do you think?  Comments are welcome!

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