October 2005

Convergence - Development or delusion for radio?

Convergence - Development or delusion for radio?

Almost daily we read of a development that is being pushed as having major potential to change an industry in some way or another and while some of the comment is obviously suited more to snake-oil salesman than honest brokers, some of it is technically or technologically correct.
Even then though the development is of little benefit unless it fulfils a need or desire - or a perceived one can be created for it - and in many cases major damage can be done when the wrong gamble is taken.

In many ways the story of convergence, much touted in the 1990s could very easily have been described as a delusion as billions went to waste on ideas that were ahead of their time, too expensive, or simply not what people then wanted.
Now it seems that convergence is back on the agenda and some big players who held back in the past such as Rupert Murdoch are throwing their hats into the ring.

Two questions arise from this: One whether this time round things will really be different and secondly what it is likely to mean for various media that until now were considered distinct.

The "traditional media".

By traditional media we mean print, radio and TV, in that historical order. Each has so far met challenges from newer technology and survived in a very similar state to the one it was in before the development but that was a time when they existed in different compartments: The question therefore arises as to whether the digital revolution will fundamentally change things this time round.

Our first reaction in relation to this is to point out that the technology may evolve but human senses and abilities don't seem to change that drastically: There are therefore times when people prefer to get their information or entertainment from the written word, times when the still photograph or illustration is preferred, times and places when an aural medium is the only practicable option and others where a mixture of pictures and sound -TV being the most common of these - is preferred.

Since our attention is focussed on radio, note that we said that at times an aural medium is the only one practicable; in other words, there are times, as when driving, when print and visual media are out of the question but the options now available do not stop at radio even at those times, especially as mobile audio devices become more capable and sophisticated.

Originally the availability of mobile audio was very limited - first the car radio, thanks to Motorola, then the Walkman, thanks to Sony, then with digital the i-Pod and other MP3 players. The first added to the audience for radio at a time when listening was very much an experience of sitting in front of a large box and having to wait for valves to warm up. The second was a competitor for listening time as is the i-Pod but neither of them competed for the real essential for commercial radio - advertising revenue.

Competition for advertising.

That last may be about to change as technology moves on and rather than just loading their players with chosen (and maybe bought ) music, people start to use combined cell phone and Internet devices together with digital storage: There is no reason, after all, why the concept of sponsored programming tied into podcasting and portable devices could not take a sizeable share of both listening and advertising revenues.

But what if they do? And what if Bill Gates is largely right about how much advertising will become Internet based in future? Could the developments seriously threaten radio as now known and if so which parts will be hardest hit?

We can see that overall, just as a loss of classified advertising to the Internet and a decline in the habit of buying newspapers has affected the newspaper business and pushed even laggards into taking the Internet seriously to varying degrees, the current environment for terrestrial radio is bound to change.

But just as some newspapers are certainly leveraging their existing strengths into Internet benefits - albeit the jury is still out concerning the long-term future for many -radio companies also have existing strengths: They may not, however be particularly competitive ones when it comes to attracting advertisers in a future where widespread development of wireless technology may yet put the Internet within range of portable devices and other technology allows targeting and aggregating of the audience in specialist areas.

The Internet-podcasting combination, we would suggest may well be better suited to this than broadcast but what of the more general audience. There we suggest radio still has the edge providing it keeps the audience.

Competition for Audience.

Unless the nature of time changes, all new listening or viewing has to detract from the time left for other activities and surveys already show major inroads into the times some groups, particularly the young, used to spend on old media from that they spend on the new, in particular the Internet.

So we have no doubt that there will be less time spent listening to traditional radio as it becomes more and more simple to listen to other things from other sources, one of the reasons why we have out doubts about how far formats like Jack-FM can succeed since the other sources now offer a combination of a much wider range of listening and the ability to choose.

The radio, however, needs only one push of a button whilst more time and thought has to be devoted to other options if choice is to be exercised - even the iPod shuffle option needs the music to be put onto the machine somehow in advance.

It therefore seems to us that radio retains some advantages that other media may approach but won't necessarily be able to match fully and it is these areas we feel should be at the core of radio programmers thinking when it comes to facing up to new challenges.

Radio advantages.

The first and one of the greatest advantages of radio, already mentioned, is that to get the service only the simplest push of a button is required. True there is the countervailing disadvantage that this means less choice but it's one that should not be underestimated since, if the product is good enough, listeners will keep coming back even if maybe a little less than before they had other choices.

To us this means that the old adage of keeping the customer being a better option than finding a new one - not that new ones should not also be sought - is often just as true when it comes to keeping the listener: In other words evolution may often be a better option than revolution when it comes to format changes. In the UK a good example of the former came in changes made to BBC Radio 2 a few years ago, an example of the latter in making perhaps too speedy changes at BBC Radio 4 although in each case the station was retaining a broadly similar appeal.

In the US the switch of WCBS to Jack FM has so far indicated perils there of the revolutionary approach but a gradualist option was not offer: Hence the decision has to be based on different criteria but we still feel that if the change is to be revolutionary it should be accepted that it means dumping a large portion of the former audience who may resent this and not only switch to another station but, where the owner is a conglomerate, resent the - as they see it - big bad parent and thus the switch could do wider damage.

As well as simplicity in operation radio also has the economic advantage of cheap receivers, low running costs, and general availability: For those on the move wireless Internet is never going to be universally available in rural areas even if satellite radio not only is but does offer people in such areas the opportunity to have as much choice as those in the cities.

The above means to us that for people on the move (except maybe in subways) radio will remain an option on almost anybody's list, especially if they want to have news availability. It will no longer however be the only option in some places, particularly the wired urban areas of the future where developments will mean the full range of Internet choices will also be available to allow news and other updating, never mind those that cell phone development may add and portable players and podcasts already offer.

The other thing radio can offer is a balance between the expected and desired and the serendipitous new but again technology is making this

Radio disadvantages- and overcoming them.

The main disadvantage of radio is that, come what may, a broadcast medium will never be able to tailor product to the individual and also, so long as advertising is the means to pay for it, programming is going to be interrupted by the adverts or sponsors' messages.

Nothing can be done about the former apart from what is already done in the variety of formatting already on offer but in the latter case it does seem sensible to keep the clutter down. We are still not convinced that in the short term less will mean more money but Clear Channel's "less is more" initiative certainly seems to show that audiences prefer it - and that takes us back to our view that keeping the listener should be a major priority for radio owners of today.

If they do that - through not only programming but strengthening local and community ties but also, as digital becomes more widely available and receivers cheaper, adding - and promoting extra channels - to pull in new listeners we have full confidence that radio will be able to weather the changes although it may not produce the same returns and there may be some casualties
Where we have most concern is that the short-term approach of many operators allied with trying to squeeze too much cash by having more adverts than the listener wants may lead them to losing audience and not being able to recover.

Already it is obvious that many satellite radio subscribers have been attracted by the combination of more choice and fewer adverts, are finding its (digital) technical quality superior and are sticking with satellite once they have tried it to the cost of terrestrial.

So a final comment specifically for the US - look at the price of satellite receivers and compare them with those for digital terrestrial ones and then look at the UK experience of how DAB prospered as receiver prices tumbled; after that if the major radio companies don't come up with a promotional deal to bring receiver prices down they deserve to lose the audience. Indeed they need a collective kick from a mule for not having done so already-we suggest that if the four major companies had put some of the millions they have spent on station deals into a large purchase of a base-level digital receiver that could have been available for Christmas this year through a special promotion the return on investment in the longer term would have been much greater than they'll get from their other spending.

In the meantime others have been more pro-active: XM for example gave away a receiver (voucher) to all those who attended Game One of the 2005 World Series and the satellite and various Internet companies in general have been much more innovative in terms of product, publicity and marketing. They have had to because they need to build but that's no excuse for complacency in these areas by existing radio empires.

What you think? Please E-mail your comments.

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