Is It “Open Season” or “Payback Time” for Radio Industry?

http://www.audiographics.com/agd/082107-1.htm

Peter Smyth is the most progressive CEO/President in any of the radio industry groups. His foresight has been mentioned here on more than one occasion, and his words speak of current issues. In addition to sitting as chair for RAB’s Board, Mr. Smyth runs a monthly column at GreaterMedia.com titled “The Corner Office.” This month he asks “Who Declared Open Season on Radio?” and he almost answers the question.

A myriad of problems face radio today. Listing them makes the future seem dim. (List the ways radio industry execs have approached each problem, and it becomes solemn.) Here is my list of the ten most intimidating items facing radio, in summary fashion. It helps answer Mr. Smyth’s question and shows how this may not be so much an “open season” as “payback time,” and why that in itself is not such a bad thing to be facing.

1) In direct answer to Peter Smyth’s object of discussion this month – how radio now faces performance royalty fees – he demonstrates the primary problem faced by the radio industry: It always waits until the last minute to do anything about negative issues. You’ll find this a central theme in all of the items listed below. While there is plenty of warning about an oncoming train, the radio industry has a well-documented record of staying the course and ignoring the headlamp.

Performance royalty payments were a flashing light many times before, particularly on May 2 when the Copyright Royalty Board announced it would level such high royalty fees against internet radio. It was pointed to, here and by others, that internet radio was only the stepping stone to broadcasters having to pay similar rates. But, when the fighting was fierce and the internet radio community went to Washington to drive home the error of such high rates, broadcast radio representatives were nowhere to be found.

The record industry and SoundExchange have long shown piranha’s teeth. Yet, as long as they weren’t nipping at the terrestrial radio industry, Peter Smyth and all other radio industry execs remained silent. Now it’s a problem with precedence.

2) There’s a headline over at Radio & Records that reads “Internet Streaming: There’s Gold In Those Hills!” Guess that makes it official. In the approach that’s been with the radio industry since consolidation, nobody acknowledges anything until it’s reported in industry trades. Only, the trades have given what’s happening online little coverage until this year – ten years after it started showing life.

The internet is a new revenue stream that will save radio’s sinking local and national ad revenues. But how? There is still no clear-cut approach to adapting broadcast radio to an internet environment. Web sites are still inadequate, and they reflect designs thought effective in 2001.

Radio’s approach online is based on the concept of “promote, promote, promote.” Yet today there’s a whole new world of web site design called Web 2, by which the audience is guided through your site in a way that answers their questions. You lead someone through a web site if you give them items that capture their interest in a logical way. Using this technique, home pages are becoming less cluttered. Vibrant/flashing colors are being downplayed. Look at radio station web sites and you’ll see this, overwhelmingly, is not the case for this industry.

3) New Media is the reason for a decline in TSL; no, it is not. The New Media landscape is like a geophysical reshaping of the earth that took time to develop, and radio ignored the process. Terrestrial stations made no effort to alter programming to accommodate this shift. They “stayed the course” with a plan to cut playlists, implement voice-tracking, and add commercials… all are the antithesis of what consumers desire in today’s audio media.

4) This is not the first time you’ve heard this claim: Programming went from local to homogenous. Making things worse was a decade in which the radio industry failed to program for youth. Bad timing, because it was at this same time that youth were looking for programs they could relate to. Youth still want to know what’s happening locally. If radio won’t tell them, they have this thing called the internet. And, boy, have they turned to it.

5) Advertising changes; reworded, the way the public is reached successfully through advertising changes. The only change that radio made to its main product – its money maker, commercials – was to dismantle their quality. Expelling higher paid production directors in the Great Purge and replacing them with less talented individuals wasn’t a smart move. Then, doubling (tripling?) the number of commercials that these inexperienced production directors were expected to produce magnified the problem. No creative person can be THAT creative. The results were that all commercials now sound the same and have become equally less effective.

6) HD Radio is yesterday’s future. We’re coming close to the time when the towel will be thrown in. HD Radio is not going anywhere. Worse, no radio person will ever use the HD Radio campaign to diagram successful radio advertising. To continue this chase is to throw manpower and money away. Want to read a review on one HD receiver? Try this from Wired.com. I’ll give you a quote: “Remember those crappy $15 AM/FM cassette radios from the 80s? The HD100 looks just like one and has the sound to match.” Consumers aren’t biting.

7) Accountability in advertising. Get used to this mantra: “Show me how my advertising dollars are making me money.” That’s what today’s buyers are asking from all media. The days of selling strictly by CPM are gone. Google, Yahoo!, and MSN Live have shown that people can be removed from the selling process, and that process can also document whether advertising expenses are justified. Local Search Advertising is getting more attention everyday. Radio needs to find a way to attach itself to it. There isn’t a radio group around that should not have an expert on each local staff to guide clients through a keyword ad buying campaign that’s ancillary to a radio campaign.

Then there’s buying local radio advertising online (or buying geo-targeted internet radio advertising). Ignore Google Audio, Bid4Spots, SWMX and others at your own peril. In the not-too-distant future, if media buyers and advertisers can’t find you in these services’ listings of stations, they’ll buy around you.

8) Dismantling local news operations was one of radio’s biggest mistakes. This one action resulted in removing from the audience’s presence what made radio “theirs.” Terrestrial radio is local. Without this news element it is just another choice among many audio programs.

9) Believing its own hype was the result of radio being led by a myopic individual, until recently. As President of RAB, Gary Fries did more damage to the radio industry than any single individual. His constant misstatements about radio’s health and direction after each fiscal quarter held back the reins of innovation. His words kept talking about “moving to the future,” but actions showed nothing being done behind the scenes.

10) Paying incredible multiples for stations in the 90s was the heart of many problems facing radio today. Those notes are due, and there’s not enough money to make payments. Further cuts are in front of us now that Wall Street has declared radio is not a “darling industry” anymore. To change this, the radio industry needs to alter its approach and begin creating new concepts again. We’re slowly beginning to see this, as some groups are bringing in folks with a technical background to run their internet divisions. We’re long past the point where interns can update a station web site.

It’s painful to see the radio industry struggle to keep up with New Media, especially when it’s radio that is such a perfect accompaniment to it. There are ways to reconnect with the audience, to give them a combination of radio and New Media, and every radio group must move towards delivering this. Stragglers will only hold the industry back.

Here are a few suggestions:

Invest in gaining knowledge about how the internet truly works – not how you view it as a competitor. Every week I show radio professionals things online that bring the same reaction – “I didn’t know you could do that!”

Practice search engine optimization, so those who are looking to learn about radio advertising can see your station (or group) at the top when they do a search; or, so the growing mass of internet radio listeners find your web site when they search for “rock radio stations.” (BTW: Begin your stream the moment a person hits your home page. Do away with the “Listen Now” button. If a user is going to a radio station’s web site, they’re looking for the same ease-of-listening found when turning on their receiver. When your home page loads, they should hear your program.)

Learn the analytical side of the internet because it is impacting radio’s bottom line. Today, there’s more to buying advertising than a cume rating or CPP.

Turn your creative people loose, and listen to what they have to say. Radio is audio. Nearly everywhere you turn there’s a dire need to improve the audio that’s between the songs. If you want to take this to step 2: Improve the songs. Try playing those independent artists that are being found online.

In short, turn this “payback time” into “pushback time.”

It is an “open season” … but, unlike Peter Smyth, I don’t think it’s “on” radio. I believe it’s an open season for radio to improve, if the industry quits complaining and starts thinking differently.

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