Are you working for or running a financially oriented organization? If so, you may be headed for trouble. Finance provides the capital to fund business development and tracks the results of operations, but it doesn't have that much to do with what comes in between. The bottom line is on the bottom for the simple reason that it is the result of operations, not the cause. Yet many managers focus on bottom-line financial results and thereby fail to manage the things that drive those results.
How do you know if you or your organization is overly financial in orientation? The most obvious clue is that everybody is held to "the numbers". That's how managers are evaluated, that's what the boss always wants to talk about, and that's what everybody manages for. If you find that you or your people are obsessed with "making their numbers", then you know you have a financial orientation. And while financial management needs to be a core activity in the organization, it cannot be permitted to displace other forms of management.
People and organizations that manage by the bottom line never perform as well in the long run as those that focus on the causes of bottom-line performance. An orientation toward your employees, customers, technologies, and business processes is much more likely to produce good bottom-line results.
Let's look at a real-life example. Radio group "X" hires a new GM for its major market cluster of 5 stations. This person is tough. That's why he was hired. This person insists that his sales managers make their numbers, even though the sales goals they were given were unrealistic. And so, these sales managers - constantly pressured to make their numbers did so - by "loading the trade" or unrealistically overselling the commercial unit limits, under pricing, throwing in "value-added" promotions that the programming department could not live up to and using other aggressive sales methods. The numbers that were seen by this new market manager looked great and subsequently they were passed on up the food chain to corporate. Confidence was high. Then it hit the fan.
Commercial inventory was so oversold and there were not enough cancellations 30% of the projected revenue evaporated. The lower priced spots that were sold and did get on in high-revenue day parts like morning drive did not enable the station to achieve budgets. So much for rubbing people's noses in the bottom line. It just doesn't produce long-term results.
Financial statements offer one of many possible views into the inner workings and end results of a highly complex business process that is itself a small part of a complex economic and social system. If you focus only on the bottom line results in your financial statements, you will be managing in the dark because you won't seek out and understand the variables that drive your systems.
Wednesday, February 28, 2007
Friday, February 23, 2007
The Truism of Knowing Your Audience
It's becoming more and more difficult to target consumers with advertising. Just ask former and current clients of traditional media. The concept of cohorts, defined as a group of subjects - most often humans from a given generation - defined by experiencing an event - typically birth - in particular time span, is one of the reasons. The splintering of audience and the scattering of their media consumption is at the heart of the advertising challenge.
Bridge Ratings has spent considerable time and money studying one of these cohorts - Gen-Y - over the past five years and have what we believe to be a fairly honest and eye-opening understanding of this group's media interests and needs and the best way for advertisers and content producers to reach them. (Gen-Y typically refers to those born between 1981 and 1999).
We've also been one of the few research organizations to dissect the podcast universe. After a rocky start and terrestrial radio's quick acceptance of the medium, podcasting is gaining ground as a viable manner to extend its reach, solidify its brand and improve its distribution. While there are certain roadblocks to the medium's expansion to a significant percentage of the masses, podcasting - or netcasting - is becoming one of the advertising solutions in reaching the hard-to-reach Gen-Y.
Fellow research firm eMarketer estimates that advertisers will spend $400 million on podcast advertising by 2011 - up from $80 million last year. And there have been numerous articles written about advertising solutions to reach Gen-Y on MySpace, YouTube and other such media where Gen-Y congregates. Yet, none of the 'experts' in advertising seem to know this audience well enough to make that $80 million or $400 million effective.
Based on what I've learnt when experiencing the advertising on these Gen-Y gathering spots is that commercial content, production and length seem generally not to be customized to the tastes of those that are trying to be reached. We understand through out Bridge Ratings work that 'commercials' of virtually any kind are potentially a turn-off to this hard-to-reach cohort and they will even give up or use less their beloved MySpace or YouTube if commercialization gets in the way of their experience. But there are ways to make it work - ways that have been suggested by the Gen-Y peers we study.
The point here is that billions are spent on advertising to try to reach Gen-Y and there is a growing interest in podcasting as a platform for such things. But all of it will be so much dust in the wind, ineffective audio or video, if clients, agencies and producers don't take the time to know this audience.
Through the years, understanding the consumer has always been at the forefront of marketing. Today, however, more than ever, knowing your audience is a critical component to being effective with advertising - even to the point of having your target audience fully embrace the product and its benefits.
Bridge Ratings has spent considerable time and money studying one of these cohorts - Gen-Y - over the past five years and have what we believe to be a fairly honest and eye-opening understanding of this group's media interests and needs and the best way for advertisers and content producers to reach them. (Gen-Y typically refers to those born between 1981 and 1999).
We've also been one of the few research organizations to dissect the podcast universe. After a rocky start and terrestrial radio's quick acceptance of the medium, podcasting is gaining ground as a viable manner to extend its reach, solidify its brand and improve its distribution. While there are certain roadblocks to the medium's expansion to a significant percentage of the masses, podcasting - or netcasting - is becoming one of the advertising solutions in reaching the hard-to-reach Gen-Y.
Fellow research firm eMarketer estimates that advertisers will spend $400 million on podcast advertising by 2011 - up from $80 million last year. And there have been numerous articles written about advertising solutions to reach Gen-Y on MySpace, YouTube and other such media where Gen-Y congregates. Yet, none of the 'experts' in advertising seem to know this audience well enough to make that $80 million or $400 million effective.
Based on what I've learnt when experiencing the advertising on these Gen-Y gathering spots is that commercial content, production and length seem generally not to be customized to the tastes of those that are trying to be reached. We understand through out Bridge Ratings work that 'commercials' of virtually any kind are potentially a turn-off to this hard-to-reach cohort and they will even give up or use less their beloved MySpace or YouTube if commercialization gets in the way of their experience. But there are ways to make it work - ways that have been suggested by the Gen-Y peers we study.
The point here is that billions are spent on advertising to try to reach Gen-Y and there is a growing interest in podcasting as a platform for such things. But all of it will be so much dust in the wind, ineffective audio or video, if clients, agencies and producers don't take the time to know this audience.
Through the years, understanding the consumer has always been at the forefront of marketing. Today, however, more than ever, knowing your audience is a critical component to being effective with advertising - even to the point of having your target audience fully embrace the product and its benefits.
Monday, February 19, 2007
XM/Sirius - a Consolidation Misstep
News of the XM and Sirius satellite radio merger sent tremors through both the business and media world. But at this early stage the jury seems confused, if not out, on whether this is a good idea.
Certainly from a business perspective, the saving of $7 billion annually is a good start to pulling this business back from the brink of disaster. And placing Mel Karmazin in control is another good move since Mel's proven his prowess at goosing his media enterprises with operational effectiveness.
But what of the consumer? Is a monopoly such as the one potentially created by this merger good for the consumer?
The topic of a satellite radio sector merger has been floating around for months and Bridge Ratings has conducted some preliminary research on what effect such a merger would have on the satellite radio consumer both current and prospective.
1. The "why" factor
Over 90% of those currently subscribing to either or both services had no opinion on a proposed merger other than what such a merger would do for them.
67% of current subscribers don't understand or appreciate the business reasons why such a merger would take place. That's left to those who understand Profit and Loss statements and subscriber attrition reports. Most consumers don't understand why such a merger would be necessary so soon. Many of those we surveyed perceive the satellite radio business as new, vibrant and exciting. Unaware of their financial difficulties, most current and prospective subscribers can't rationalize why such a combination of two strong companies is necessary at such an early stage of the industry's development. For many consumers, satellite radio is still perceived as a brand new technology and service.
2. Subscriptions
In three different studies conducted between August 2006 and January 2007, it was confirmed that a combined entity of a singular satellite radio business would not garner as many total subscribers as two distinct competitive entities over the first two years of the enterprise. The reasons are many, but primarily the culprit is the elimination of consumer choice in the manner these services have been sold. The previous combined impact of two companies heavily marketing their benefits to the masses tends to generate increasing market awareness and interest. Marketing budgets will likely be trimmed - this is one of consolidation's nasty little secrets. However, reducing marketing is not in the best interest of satellite radio at this time. In fact, among those consumers who have expressed interest in satellite radio but who have yet to subscribe, 62% need a better reason to purchase. As yet, they have not been 'sold', 'convinced' or 'motivated' by the marketing to make that purchase decision. Marketing is a key to sustained subscriber growth.
As of this writing, Bridge Ratings has re-evaluated its growth projections for the satellite radio industry. Should the merger proceed and be completed by the end of 2007 (an unlikely event), we see 2008 subscriber counts for the combined entity to be 8% lower than if both companies were to continue operating separately.
3. The Monopoly Model
The creation of one superSat company provides some new opportunities for Mel Karmazin and the new combo's shareholders and Wall Street watchers. One is monopoly power. Monopoly power is usually defined as the ability of a firm to earn high profits by raising and keeping the prices of its products substantially above the levels at which those products would be priced in competitive markets. That is, a firm with monopoly power can charge high prices and get away with it - the market will not punish it for doing so. In a competitive industry, in contrast, the market will punish a high-price firm by the loss of its customers to rivals with lower prices.
Karmazin has hinted at subscription price hikes long before this latest wrinkle and now has the power to do just that despite the fact that the new merged company is considering a tiered pricing model with an a la cart approach for the consumer. But monopoly power is undesirable for several reasons, some of them obvious:
4. Programming & Culture
In research Bridge Ratings has conducted, XM has consistently been considered the service with the better original programming. Satellite radio is a music medium and in the opinion of thousands of consumers studied by Bridge Ratings, no one does a better job at it than XM. What will happen to the creative structure in place at XM once Mel begins with the consolidation scythe? After all, as with terrestrial radio, consolidation of these two satellite radio companies should save billions a year. Those cost savings will have some bearing on the quality of the product much like personnel and resource cuts have negatively impacted terrestrial radio in the last ten years.
No, it seems to me that once again the American consumer will get a front row view of where they stand in the eyes of U.S. regulatory agencies. This proposed merger must pass muster with the FCC, the DOJ and others. And when one looks at the business end of this deal, and how government bail-outs have been common, clearing regulatory hurdles is a safe bet to save the failure of another space venture.
5. The Balance Sheet
The balance sheets represent the biggest problem for these companies.
Sirius has almost $1.1 billion in long-term debt. At XM that number is over $1.3 billion. Sirius has cash and securities of $350 million. XM has $285 million. So, combined debt would be $2.4 billion against about $600 million in cash. Payables and accrued expenses of the combined company would be over $500 million. To have a significant value to shareholders, the combined business would have to pay down at least $200 million in debt per year. None of the debt is due until 2009, but the majority is due by 2013. The combined company would be able to partially use cash on hand and could go to the capital markets with a new debt issue with the sole purpose of refinancing that amount due in 2009 (and with convertible debt if they were smart and/or able). All of this if revenue growth can continue at 10% quarter over previous quarter and expense growth can be held to 5%.
Mel Karmazin is a smart, strategic business operator. He will find a way to make this work. Wall Street and investors - even the government - will see the immediate benefits of such a joint-relationship. What will take more time will be confirmation of whether such a merger is in the public interest.
Certainly from a business perspective, the saving of $7 billion annually is a good start to pulling this business back from the brink of disaster. And placing Mel Karmazin in control is another good move since Mel's proven his prowess at goosing his media enterprises with operational effectiveness.
But what of the consumer? Is a monopoly such as the one potentially created by this merger good for the consumer?
The topic of a satellite radio sector merger has been floating around for months and Bridge Ratings has conducted some preliminary research on what effect such a merger would have on the satellite radio consumer both current and prospective.
1. The "why" factor
Over 90% of those currently subscribing to either or both services had no opinion on a proposed merger other than what such a merger would do for them.
- Will it mean that they have to get new equipment?
- Will their current radio work with the 'other' service
- Will prices go up or down now that there is no competition?
- 56% of both current and prospective satellite radio subscribers are confident that monthly subscription prices will increase - certainly for new subscribers and likely for current subscribers when their current contracts expire.
67% of current subscribers don't understand or appreciate the business reasons why such a merger would take place. That's left to those who understand Profit and Loss statements and subscriber attrition reports. Most consumers don't understand why such a merger would be necessary so soon. Many of those we surveyed perceive the satellite radio business as new, vibrant and exciting. Unaware of their financial difficulties, most current and prospective subscribers can't rationalize why such a combination of two strong companies is necessary at such an early stage of the industry's development. For many consumers, satellite radio is still perceived as a brand new technology and service.
2. Subscriptions
In three different studies conducted between August 2006 and January 2007, it was confirmed that a combined entity of a singular satellite radio business would not garner as many total subscribers as two distinct competitive entities over the first two years of the enterprise. The reasons are many, but primarily the culprit is the elimination of consumer choice in the manner these services have been sold. The previous combined impact of two companies heavily marketing their benefits to the masses tends to generate increasing market awareness and interest. Marketing budgets will likely be trimmed - this is one of consolidation's nasty little secrets. However, reducing marketing is not in the best interest of satellite radio at this time. In fact, among those consumers who have expressed interest in satellite radio but who have yet to subscribe, 62% need a better reason to purchase. As yet, they have not been 'sold', 'convinced' or 'motivated' by the marketing to make that purchase decision. Marketing is a key to sustained subscriber growth.
As of this writing, Bridge Ratings has re-evaluated its growth projections for the satellite radio industry. Should the merger proceed and be completed by the end of 2007 (an unlikely event), we see 2008 subscriber counts for the combined entity to be 8% lower than if both companies were to continue operating separately.
3. The Monopoly Model
The creation of one superSat company provides some new opportunities for Mel Karmazin and the new combo's shareholders and Wall Street watchers. One is monopoly power. Monopoly power is usually defined as the ability of a firm to earn high profits by raising and keeping the prices of its products substantially above the levels at which those products would be priced in competitive markets. That is, a firm with monopoly power can charge high prices and get away with it - the market will not punish it for doing so. In a competitive industry, in contrast, the market will punish a high-price firm by the loss of its customers to rivals with lower prices.
Karmazin has hinted at subscription price hikes long before this latest wrinkle and now has the power to do just that despite the fact that the new merged company is considering a tiered pricing model with an a la cart approach for the consumer. But monopoly power is undesirable for several reasons, some of them obvious:
- High prices reduce the wealth of consumers. The use of monopoly power is obviously undesirable to consumers because no one likes to pay high prices. Such higher prices may make the firm with monopoly power rich and make the consumers of its products poor. These effects on the distribution of wealth are generally considered undesirable. Even the current subscription rate of $12.95 per month has had most consumers think twice about why they need satellite radio.
- High prices lead to resource allocation. Economists give greater emphasis to a second undesirable effect of prices that exceed the competitive level. Such prices tend to reduce quantities of the products that consumers demand. Allocation of profits is not necessarily guaranteed to be in the public interest.
- Monopoly power creates an obstacle to efficiency and innovation. A company with monopoly power is one that does not face much effective competition - and consequently it does not have much reason to fear loss of business to others. Where this is so in the satellite radio business, there be less incentive for management to make the effort to produce efficiently with a minimum of waste or to undertake the expense and risks of innovation such as was experienced during the two company's competitive battles. The result is that the coming product from a merged satellite radio business may be of poorer quality than it would if the company possessed no monopoly power.
4. Programming & Culture
In research Bridge Ratings has conducted, XM has consistently been considered the service with the better original programming. Satellite radio is a music medium and in the opinion of thousands of consumers studied by Bridge Ratings, no one does a better job at it than XM. What will happen to the creative structure in place at XM once Mel begins with the consolidation scythe? After all, as with terrestrial radio, consolidation of these two satellite radio companies should save billions a year. Those cost savings will have some bearing on the quality of the product much like personnel and resource cuts have negatively impacted terrestrial radio in the last ten years.
No, it seems to me that once again the American consumer will get a front row view of where they stand in the eyes of U.S. regulatory agencies. This proposed merger must pass muster with the FCC, the DOJ and others. And when one looks at the business end of this deal, and how government bail-outs have been common, clearing regulatory hurdles is a safe bet to save the failure of another space venture.
5. The Balance Sheet
The balance sheets represent the biggest problem for these companies.
Sirius has almost $1.1 billion in long-term debt. At XM that number is over $1.3 billion. Sirius has cash and securities of $350 million. XM has $285 million. So, combined debt would be $2.4 billion against about $600 million in cash. Payables and accrued expenses of the combined company would be over $500 million. To have a significant value to shareholders, the combined business would have to pay down at least $200 million in debt per year. None of the debt is due until 2009, but the majority is due by 2013. The combined company would be able to partially use cash on hand and could go to the capital markets with a new debt issue with the sole purpose of refinancing that amount due in 2009 (and with convertible debt if they were smart and/or able). All of this if revenue growth can continue at 10% quarter over previous quarter and expense growth can be held to 5%.
Mel Karmazin is a smart, strategic business operator. He will find a way to make this work. Wall Street and investors - even the government - will see the immediate benefits of such a joint-relationship. What will take more time will be confirmation of whether such a merger is in the public interest.
Monday, February 12, 2007
What's Wrong with This Picture?
Have you ever been apprehensive about some piece of information that you assumed was true but hadn't any statistic to confirm it? The fine folks at Inside Radio revealed such a stat during the RAB festivities in Dallas last week.
Many radio industry observers, including myself, have drawn conclusions about the consolidation of the radio business that point to the "C" word being responsible for much of the industry's problems of late. Whether you are a sales person at a radio station or a management expert, one of the arguably key issues facing the industry is the lack of focus that comes with one manager overseeing multiple stations, staffs or budgets.
As I pointed out in a recent missive here, the problem of too much on one's plate could be at the root of the listener death in Sacramento where a station's promotion staff approved what became a deadly promotion that involved the consumption of gallons of water by its listeners all in the name of winning an electronic gaming system. Had the general manager been more aware of what was going on 'down the hall', I believe this promotion would never have made it to air. The GM (and perhaps other managers) just had too much to keep track of.
Now we know just how prevalent is this issue of consolidated management and staff. Inside Radio reports through their analysis that there is one General Sales Manager in our business handling 13 radio stations. Another's doing 12 and another 11. Four GSM's handle 10 stations, 11 oversee 9. 34 have eight stations, 48 have 7 stations.
129 General Sales Managers handle 6 stations, 198 have 5, 325 have four, 509 have 3 and 1359 GSM's have two stations. Interestingly, there are still 2477 GSM's out there that still handle just one station. There are 3921 situations out there where the GM is also the GSM!
All of this to say that pulling back the covers to reveal to the light of day these statistics brings a certain soberness to this whole discussion about whether multiple stations under one manager is truly the most effective way of bringing the radio business out of its doldrums.
According to these stats, of the approximately 10,000 commercial radio stations in the U.S., only 25% are managed by one general sales manager. You do the math: that means that 75% of the country's commercial radio stations either have one GSM overseeing multiple properties or the GM, serving also as the GSM, has other issues on his/her plate.
Operational efficiency (and bottom line improvement) is at the heart of why this development occurred. Perhaps it has helped with the bottom line - at least from a personnel cost perspective - but do you think it has done much for efficiency?
Part of my job involves speaking with many members of station management on a weekly basis. Most of those I speak with tell me they are not being more efficient and there is frustration that these managers can't be more efficient that they just can't be proactive.
I doubt we'll see a change in this strategy on a mass scale any time soon. Along with efficiency problems with station management, consolidation has also brought with it higher purchase multiples and higher debt on one side and Wall Street analysts on the other both squeezing the ability of the radio business to operate effectively. This pressure will likely prevent most broadcast companies from returning to yesteryear's station management structures. They simply can't afford to.
One can only hope that more wisdom enlightens our industry's leaders and a solution to this madness can be found.
Many radio industry observers, including myself, have drawn conclusions about the consolidation of the radio business that point to the "C" word being responsible for much of the industry's problems of late. Whether you are a sales person at a radio station or a management expert, one of the arguably key issues facing the industry is the lack of focus that comes with one manager overseeing multiple stations, staffs or budgets.
As I pointed out in a recent missive here, the problem of too much on one's plate could be at the root of the listener death in Sacramento where a station's promotion staff approved what became a deadly promotion that involved the consumption of gallons of water by its listeners all in the name of winning an electronic gaming system. Had the general manager been more aware of what was going on 'down the hall', I believe this promotion would never have made it to air. The GM (and perhaps other managers) just had too much to keep track of.
Now we know just how prevalent is this issue of consolidated management and staff. Inside Radio reports through their analysis that there is one General Sales Manager in our business handling 13 radio stations. Another's doing 12 and another 11. Four GSM's handle 10 stations, 11 oversee 9. 34 have eight stations, 48 have 7 stations.
129 General Sales Managers handle 6 stations, 198 have 5, 325 have four, 509 have 3 and 1359 GSM's have two stations. Interestingly, there are still 2477 GSM's out there that still handle just one station. There are 3921 situations out there where the GM is also the GSM!
All of this to say that pulling back the covers to reveal to the light of day these statistics brings a certain soberness to this whole discussion about whether multiple stations under one manager is truly the most effective way of bringing the radio business out of its doldrums.
According to these stats, of the approximately 10,000 commercial radio stations in the U.S., only 25% are managed by one general sales manager. You do the math: that means that 75% of the country's commercial radio stations either have one GSM overseeing multiple properties or the GM, serving also as the GSM, has other issues on his/her plate.
Operational efficiency (and bottom line improvement) is at the heart of why this development occurred. Perhaps it has helped with the bottom line - at least from a personnel cost perspective - but do you think it has done much for efficiency?
Part of my job involves speaking with many members of station management on a weekly basis. Most of those I speak with tell me they are not being more efficient and there is frustration that these managers can't be more efficient that they just can't be proactive.
I doubt we'll see a change in this strategy on a mass scale any time soon. Along with efficiency problems with station management, consolidation has also brought with it higher purchase multiples and higher debt on one side and Wall Street analysts on the other both squeezing the ability of the radio business to operate effectively. This pressure will likely prevent most broadcast companies from returning to yesteryear's station management structures. They simply can't afford to.
One can only hope that more wisdom enlightens our industry's leaders and a solution to this madness can be found.
Tuesday, February 6, 2007
The Telephone Game
Remember when you were a kid when you had several friends together in a row one of you would whisper a word or phrase in the ear of the kid seated next to you and he whispered what he 'thought' he heard you say into the ear of the kid next to him and so on and so on? The fun part of this game was when the last kid in the row repeated what he was told. Invariably, what that last kid repeated was considerably different from the original message. Oh what fun we had!
Did you know this game is still going on?
Yes sir, and the thing to worry about is that it's being played primarily by members of the print media and the words they are butchering directly impact the image and perception of the radio business.
I must receive at least three calls a week these days from print journalists seeking answers or advice that can help them write a column. Typically, the first question out of their mouths is "So, is it true that radio is dead?" Before responding, I ask why they ask. I can't remember one of the 15 or so journalists I've spoken with this year telling me that they ask because they had found reliable statistics supporting this claim. Their sources have 100% been other print journalists. Even better, they tell me they'd read it on Internet blogs!
This telephone game emaciates the truth as one journalist after another not only repeats a story that is not true but that is often embellished.
The truth is that for the third year in a row our research at Bridge Ratings shows that the number of people listening to AM/FM radio stations on a weekly basis has slipped only slightly in recent years. Between 2001 and 2006 our information indicates this number has gone from 96% to 94% of the U.S. population using traditional radio in a typical week. Use among younger listeners has been reduced more noticeably (92% to 89%), but there are still 34 million 15-24 year olds still listening every week.
It is only fair to mention that time-spent with traditional radio is falling slightly with 15-24 year olds overall - only about thirty minutes a week over the last three years. A small percentage (known as innovators or early adopters) of this younger generation has turned off traditional radio faster than their 'mainstream' counterparts. This is an audience segment radio may never see again unless broadcasters accelerate their adoption of new technologies and get counter-intuitive and rehire some of the key programming minds that have been lost due to consolidation. But there is no significant decline in listening overall.
Traditional radio has gone from being an exclusive club with only one member to a club where multiple players have joined. The Internet, MP3 players, satellite radio - digital technology in general has joined the club in a voting block that is hard to deny. But the club member with the biggest clout remains traditional radio.
Even in-car, long the safe haven for terrestrial radio, is being invaded by these new technologies, but not at levels that would cause any right thinking individual that traditional radio is dead. In a new updated Bridge Ratings study of in-car media use, 74% of those interviewed said that radio was still the medium of choice in-car even when other technology was available including satellite, MP3 players and cell phones!
So, when you read another news story about the demise of traditional radio, remember the days of the telephone game and how much it made you laugh back then; how silly it was that communication along a line of friends could get so mangled that the original message bore no resemblance to the words repeated by the last kid in line. In general, perhaps due to competition for column inches today's journalists write what they think will get published often without regard to truth or reliability.
The truth is out there - it just may require more digging to find it.
Did you know this game is still going on?
Yes sir, and the thing to worry about is that it's being played primarily by members of the print media and the words they are butchering directly impact the image and perception of the radio business.
I must receive at least three calls a week these days from print journalists seeking answers or advice that can help them write a column. Typically, the first question out of their mouths is "So, is it true that radio is dead?" Before responding, I ask why they ask. I can't remember one of the 15 or so journalists I've spoken with this year telling me that they ask because they had found reliable statistics supporting this claim. Their sources have 100% been other print journalists. Even better, they tell me they'd read it on Internet blogs!
This telephone game emaciates the truth as one journalist after another not only repeats a story that is not true but that is often embellished.
The truth is that for the third year in a row our research at Bridge Ratings shows that the number of people listening to AM/FM radio stations on a weekly basis has slipped only slightly in recent years. Between 2001 and 2006 our information indicates this number has gone from 96% to 94% of the U.S. population using traditional radio in a typical week. Use among younger listeners has been reduced more noticeably (92% to 89%), but there are still 34 million 15-24 year olds still listening every week.
It is only fair to mention that time-spent with traditional radio is falling slightly with 15-24 year olds overall - only about thirty minutes a week over the last three years. A small percentage (known as innovators or early adopters) of this younger generation has turned off traditional radio faster than their 'mainstream' counterparts. This is an audience segment radio may never see again unless broadcasters accelerate their adoption of new technologies and get counter-intuitive and rehire some of the key programming minds that have been lost due to consolidation. But there is no significant decline in listening overall.
Traditional radio has gone from being an exclusive club with only one member to a club where multiple players have joined. The Internet, MP3 players, satellite radio - digital technology in general has joined the club in a voting block that is hard to deny. But the club member with the biggest clout remains traditional radio.
Even in-car, long the safe haven for terrestrial radio, is being invaded by these new technologies, but not at levels that would cause any right thinking individual that traditional radio is dead. In a new updated Bridge Ratings study of in-car media use, 74% of those interviewed said that radio was still the medium of choice in-car even when other technology was available including satellite, MP3 players and cell phones!
So, when you read another news story about the demise of traditional radio, remember the days of the telephone game and how much it made you laugh back then; how silly it was that communication along a line of friends could get so mangled that the original message bore no resemblance to the words repeated by the last kid in line. In general, perhaps due to competition for column inches today's journalists write what they think will get published often without regard to truth or reliability.
The truth is out there - it just may require more digging to find it.
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