(courtesy or Eric Rhodes, Radio Ink Magazine)
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.
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.