September 2005

NAB 2005 Radio Show - Dogs that did and didn't bark.

NAB 2005 Radio Show - Dogs that did and didn't bark.

Taking a cue from Sherlock Holmes, our reaction to much of the proceedings at this year's NAB Radio Show is that the things that weren't raised may well be more important than some of those that were.

We continue to think that radio is a terrific medium and for providing information and entertainment with use of minimum resources to those on the move or without the infrastructure of mains power will never be beaten but we also think that the future of the medium is likely to be more rosy if problems and opportunities are evaluated well ahead: There seemed to us to be a fair amount of complacency from radio executives who metaphorically speaking in some cases would probably be happy to still use a horse to pull the plough.

Issues that were raised.

Let us start with some of the issues that were addressed - all in our opinion justifiably on the agenda at present but unlikely to be the major factors in radio's future long-term health when it comes down to the real essential - attracting enough listeners.

*Less is more and commercial spot duration. Yes it would seem that listeners did become peeved about the excessive amount of advertising and it is reasonable to suppose that less adverts may attract more listeners, albeit a moot point whether they will attract more income: That last is a business decision to be modified, as with pricing policies, by the nature of the marketplace.
The same rationale applies to moving to 30-second spots from ones of 60 seconds but it's hardly likely to be THE determining factor when people come to decide what station they will listen to.

*Satellite or any form of subscription radio. Maybe the no-threat view is correct - a number of radio executives including Cumulus President and CEO Lew Dickey and Emmis CEO Jeff Smulyan expressed the view that pay radio services have never yet been profitable anywhere in the world, be it satellite, terrestrial or Internet with the clear implication that advertising-funded radio need not fear the threat from this source.
That seems to us dangerous complacency - not of the level of computer pioneer Howard Aiken's famous comment that "only a very small number of computers would be needed to serve the needs of the whole world, perhaps a dozen, with eight or 10 for the United States" - but foolish nevertheless especially as similar views were expressed about cable TV.

*Radio is a local business - again a means of playing down the threat from other media operating on a national or international basis. The fact that the statement is true for most radio in the US is again complacent and appears to us to neglect the reason for this - the original regulation of the medium in the US at a time when it was new and national distribution was nowhere near as simple or inexpensive as is now possible - and also the degree to which local stations owned by major conglomerates have reduced the local through techniques such as voice-tracking and many stations rely on nationally syndicated programming. The adverts in other words may be local but if the content is not, the local station may well lose a significant portion of its audience because the latter make a rational assessment that for much of the time the local has no advantage.

*Digital radio - perhaps a little more hopeful although indications of co-operation to form an alliance - or a cabal? - amongst executives of big players Clear Channel, Emmis, Entercom and Infinity as to how they are going to share up extra stations available from multiplexing makes us think that the devotion to competition is only skin deep and the result may be more of the same - and less to attract new listeners. We think the estimation of some executives that they have a very narrow window to convince listeners and auto manufacturers to move to HD is probably correct and that if all that is made available on the new channels does not break any new ground, a lot of the former will only make a move when receiver prices are way down - Catch 22 as this will only happen if there is a mass market for them -- and they are getting a new receiver anyway.

*Audience measurement - an area seen as crucial to attracting advertisers and one where electronic metering is inevitable. This is an area where there are still objections from those who perceive the change will be to their detriment but overall it's probably the area where today's executives are best informed. After all they don't need to know how it works and it only changes numbers.

*The future audience. Apparently the issue that keeps Infinity CEO Joel Hollander up at night is concern about younger listeners. We rather doubt that they'll be attracted into the radio habit to the degree they were in the past unless there is something compelling in the content to make them turn to radio rather than other sources of audio.

Issues that didn't come up.

As far as we can gather there was no or almost no discussion amongst the big players of how advances in wireless technology may significantly impact on listening habits in the future.

As far as we can gather there was no or almost no discussion amongst the big players of quite a few issues.

*First is how advances in wireless technology may significantly impact on listening habits in the future. As Wi-Fi morphs into Wi-Max and more and more places make wireless broadband easily available - such as, for example, university and college campuses, Mr Hollander - many more people will have a free and easy way to listen to Internet audio. It takes a particular kind of imagination to assume this won't have an impact on listening to radio.

*Add to that the fact that such developments will also enable more people to put podcasts on to - or download music to - portable MP3 players and that cell phone technology advances are also going to combine portable media players with easy access to the Internet and we suggest that the impact may be significantly greater than many current radio executives seem to think.

*Copyright holders' restrictions. This is an issue that seems to be on the back burner but that should not be. The Recording Industry Association of America (RIAA) is still pushing the Federal Communications Commission to restrict home copying of HD digital signals and the broadcasters are probably relying on the decision from the U.S. Court of Appeals for the D.C. Circuit that ruled that the FCC lacks jurisdiction to impose a "broadcast flag" obligation on television receivers.
We hope they're right because the RIAA is pushing for much tighter restrictions when it comes to radio but in the meantime this is an area where they should in our view be joining with other opponents to give the RIAA a really bloody nose.

* And most importantly, we didn't note much discussion on the life-style of many of today's youngsters, as important a factor as any in our view of which media will or won't prosper in the future. Most of them it seems to us exist in a world where, for the prosperous ones at least, there seems no good reason in normal circumstances to wait to get what they want.
That is already affecting newspaper sales and also local advertising since online news sources can now push out advertising that links to the location or specified or learned preferences of the consumer.

We see no reason to assume that it won't affect radio, whatever the current situation. Yes, we would agree, through lobbying the broadcasters may well ensure that satellite radio continues to be barred from providing local services and taking local adverts, but that situation does not apply to Internet audio services. We would anticipate that as broadband and podcasts develop, online local sponsorship and advertising will grow, maybe a significant degree.

It won't matter if nearly everybody still tunes in to terrestrial radio but if advertisers perceive that they can get much better results and a significant better targeted audience through such means, enough money could move from radio budgets to the Internet ones to cause some serious reduction in profits.

That in our view makes it very important for radio to commission seem in-depth research into youngsters' listening habits and also, as far as possible, into how those habits are likely to change as they settle down: If it turns out that once lost to alternatives they don't turn back to radio, the future could be quite bleak in a decade or so.

What you think? Please E-mail your comments.

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