In print we have already seen cutbacks at
- or closures of - many metropolitan newspapers round the
world, more outsourcing of functions such as layout that used
to be handled in house; the launching of online-only papers
such as Fairfax Digital's Brisbane Times, Australia's first
metropolitan online-only newspaper that was launched in March
this year; the use of online clicks to determine printed content
as is done by Chile's most widely read newspaper "Las
In broadcast media audio and video, which until broadband
was widely available could not be supplied easily online,
has not yet been hit as hard but there are ominous signs in
the degree to which younger people already get things via
downloads to computers or on mobile devices rather than via
There is also the issue of the extent to which demographics
desired by advertisers have made the move compared to the
populace in general, in particular issues of income: The poor
are much less likely to have the same access to newer digital
devices than the comparatively well-off.
Add to this the perception by advertisers that online audiences
can be more precisely targeted than those for broadcast media
and adverts tailored to them with the result that more advertising
is being moved online and the finances of traditional media
Then there is also the potential whammy for terrestrial radio
in the US of having to pay performance royalty fees as pretty
well everywhere else in the world already does, yet again
reducing profitability. At the moment terrestrial broadcasters
get an advantage over satellite and Internet broadcasters
who have to pay the fees but this could change depending upon
who has the biggest lobbying clout.
Many commentators point out that at
the moment the size of terrestrial broadcasters' audiences
remains substantial and draw the conclusion that the threat
can be seen off, pointing to the way in which radio has survived
past challenges and is making moves - in this context they
list HD radio in the US and other digital radio formats elsewhere
as well as moves such as reducing advertising clutter.
What we have not seen is any sound analysis of how market
leaders can be overtaken by various linked developments: Consider,
for example, how Microsoft Word was able to take over as the
dominant provider of word processing software from Word Perfect;
of spreadsheets from Lotus; and of databases from Borland's
In the case of radio advertising, online advertising is already
set to - or already has - overtaken it in various countries
and each move of money away from radio to online boosts the
latter's ability to develop and weakens radio's ability to
In the case of radio its profitability could be eroded much
more rapidly than has previously been thought by a combination
of movement of advertising - particularly local advertising
that has so far been less affected than national advertising
in many countries- and development of technological trends
that allow people to get what they want when they want it
for much of the time.
The former weakens radio and strengthens its competitors financially
and the latter bites into audiences as does the availability
of audio via satellite services and on mobile devices.
The question thus is not of whether there is an audience for
radio but when the money that can be generated from that audience
starts to dip towards and then below the cost of providing
So far what has happened through consolidation
and technological development has in our view been a form
of asset stripping with the prime concern for many companies
being the bottom line and financial expertise rather than
retaining listeners in the long term.
Through the use of technology that allows one person to do
much more than they could have handled in the days of physically
editing audio tapes and playing discs or records and consolidation
that allows support services to be amortised amongst a cluster
of stations, operators have been able to cut costs- largely
through cutting staff.
They have also been able until recently to exploit the lack
of alternative options for advertisers. This has boosted industry
profitability but also eaten into the programming with the
result that much of the demand for satellite radio has been
fuelled by the absence of adverts.
So why would a prosperous individual who can easily afford
a satellite subscription and take audio from the Internet
listen to radio at all? Unfortunately the list of why not
to listen seems more compelling than the why to listen list.
Not for music! They can get a much wider choice of this elsewhere
and it can be accessed while on the move, be it in an automobile
or - when stored in a mobile device - in places a radio signal
is not accessible.
Maybe for news? Well not for the information as such most
of the time for those in a location that can access the Internet
but currently for those in an automobile radio is unsurpassed.
For major national and international news, however, satellite
can provide all that terrestrial does.
For sport? The same applies.
For local news and sport? Here radio still retains an advantage
but many advertisers are switching local advertising to online,
so the ability to make this pay as opposed to the demand for
it could be under threat.
For quality reasons? Well no, whatever the hype about HD digital
radio. For quality audio, a well produced CD has the edge
over downloads but digital radio doesn't if the download or
stream is of reasonable quality and in any case unless being
listened to on quality equipment in a suitable environment.
Listening in an automobile on the move, digital may have advantages
in terms of not having the problems of analogue radio but
its no benefit when compared to listening to music that is
being played from a recording, be it from a download or CD.
So maybe for a sense of local community, the reason people
may choose to listen to or watch local broadcasters and buy
local newspapers rather than opt for national services that
are now widely available through cable or satellite. The problem
with this last scenario is not that the listeners for radio
will change so much as that advertisers will move advertising
online: The audience may remain but not the money!
The above list does not mean that there are not areas where
radio still possesses tremendous advantages - can anyone,
for example, suggest a better emergency medium than a battery-powered
radio receiver? - but it does mean that when finance is no
concern there are now other options that can better serve
them for many of their needs and that switching to other options
is likely to become easier rather than harder.
So where does that
With a financial and programming problem
we'd say. At the same time, if people can be persuaded of
the real benefits of a medium that with comparatively cheap
reception equipment that does not need mains power and enables
someone almost anywhere to be in touch with the world and
receive a wide range of services, the medium ought to have
a healthy future.
The question is what that future might be and none of the
answers currently being proffered leave us confident that
the levels of income - and even more of profitability - seen
in the past can be maintained. The audience, in other words,
maybe there but its composition may be of declining interest
to advertisers compared to their other options and its listening
may decline yet further. That combination will almost certainly
reduce the overall profitability of the industry and we suspect
that it may well also lead to a concentration on talk and
sport - with a little news thrown in - and trend away from
music. It's also likely in our view to hit public broadcasting
less than commercial counterparts and may even benefit community
The worst long-term scenario in our view would be either another
round of cost-cutting or attempts to push up the amount of
advertising carried - reducing the quality of programming
and pushing more people who can afford it to subscription
and non-advertising supported stations and services.
The problem we have is that we cannot see a way round this
in the long-term: We still can't understand why people would
pay to watch on a tiny phone screen TV programming that they
can view on a much larger one, often for free but mobile phone
companies in various countries seem to think that there is
a market here (although we do note that one such service in
the UK failed to meet targets and was withdrawn: That service,
however, wasn't available on all phones thus severely limiting
its attraction whilst in other countries there has been a
more universal system).
If the mobile companies are correct in their assumptions -
and they, like satellite radio, certainly seem more skilled
in marketing their services than does most terrestrial radio
- then there is a process under way that will progress at
different rates but will certainly bite into radio.
It can be slowed down if radio programming is compelling to
an audience and the financial leakage can potentially be slowed
by sufficient effort to provide advertisers with evidence
of the efficacy of radio. On this last, work done in various
countries has shown radio as a cost-effective medium in conjunction
with campaigns in other media and there does seem to be hope
that this work is yielding dividends.
That however will not be in our view enough to prevent advertising
money moving online, a development that suggests to us that
the future for radio will be strongest for those stations
in which there is a strong community interest and involvement
- some commercial stations may fit this mould and most public
broadcasters in the US (where they are kept going in part
through fund drives -the situation is rather different where
there is a licence fee as in the UK) and community stations
fit this model.
The logic of this is in our view to give more emphasis in
policy planning to the non-commercial: Should local commercial
broadcasters fail, we think the frequencies should then be
made available to community radio bidders if no other commercial
bidder comes forward, a policy that has already been applied
in the UK.
In addition, in view of the value of radio in emergencies,
we think this should be allied with suitable moves to require
all community and non-commercial stations to have facilities
to broadcast emergency messages - the US Emergency Alert System
is a reasonable example of this.
We hope that our gloom is ill-judged but the surveys we have
seen and our own experiences of asking teenagers about their
listening habits are what led to it, even in the UK where
radio -boosted by BBC stations, seems to be in better health
than the US. The worry is that if the habit is lost - and
in the UK commercial companies' lobbying to restrict the BBC
is more likely to lead people to move away from the medium
rather than switch to commercial as are NAB moves to restrict
community radio in the US - the audience will never come back.
Radio companies therefore in our view would be well advised
to support almost anything that keeps people listening on
the basis that the more of them they are, the more likely
they are to tune to a channel than if they've moved off to
other listening sources.