Radio's New Music Fantasy

The recent headline "Google and MySpace will challenge radio’s music-discovery position," got me asking the question "What music-discovery position?"

In the years I have been analyzing consumer use of media, including broadcast radio, Internet and more recently smart phone behavior, radio has had the potential to capture the new music discovery crown.

Unfortunately, it never has lived up to this potential.






In 2007, Bridge Ratings conducted a series of deep studies of music consumers of all ages and, as you might suspect, found that 18-30 year olds were most interested in discovering new music though any means possible. In the category of where most of this discovery was occurring, broadcast radio followed peers and the Internet as the place to go to find great new music.

However, in focus groups to dig deeper, radio had the greatest potential of all three for new music discovery due to its primary benefits: ease of use, accessibility and the fact that radio is free.

Yet radio never took the initiative.

In the last two years I have discussed this notion of new music discovery with at least 100 radio programmers in the formats of Contemporary Hit Radio (CHR), Adult Alternative and Alternative.

Would it surprise you to know that none of them saw the wisdom of claiming the "new music" position in their markets by proactively promoting and playing new music by either established performers or undiscovered talent.

Radio's belief that it is the new music discovery destination is pure fantasy.

There's a fabulous on-line worldwide talent competition called "Fame Games" which boasts two million worldwide listeners; 70% listen in the U.S. alone. I have had an interest in this five-shows-a-week talent competition and thought it would suit American radio just fine.

"Fame Games" features unsigned artists of any cross-over genre competing for best track of the week and ultimately a major record contract.

This is a well-produced, fun feature that pits two songs against each other vying for the votes of listeners and the program's judges. So, I took it to U.S. radio.

American programmers won't go there.

Aggressively marketing one's radio station as the "place for new music discovery" would greatly bulk up a station's image if done properly and perhaps even draw young listeners back to a medium that is having its problems holding on to this important demographic.

So, when I read that Google or MySpace will challenge radio's music discovery position, or when I read the RAB's Jeff Haley's concern about how radio has to protect this turf, I have to shrug my shoulders.

As far as radio's listeners are concerned, there is no new music turf to protect.

Radio had the opportunity to claim this territory for itself at least two years ago when audiences told us that radio's convenience would make it the most likely place to go to discover new music.

It never took the opportunity and very well may find itself pushed out by new media which seems to take every opportunity to infringe on radio's weaknesses.

This all points to radio's biggest challenge: getting back to creating and presenting engrossing and compelling programming....for all ages.

The radio industry must build upon its rich history of being listener-focused.

In its confusion in recent years, radio has simply forgotten how to compete.

Will Traditional Radio be Invited to the Wi-Fi Party?

As a proud owner of an iPhone I was thrilled to hear that Steve Jobs had cut the price of the 8 gig iPhone by $200 just in time for the upcoming holiday season. Boy, that makes me feel just great!

But wait....as radio broadcasters, we should we feel good or bad that Mr. Jobs didn't 'refresh' his new Fall iPods with FM radio receivers.

The radio industry shouldn't feel slighted that FM radio seems to be at the back of the line of applications that are waiting to be included in America's favorite audio toy. We need to be realistic; it's just never going to happen.

Why is this?

Bridge Ratings has conducted studies over the past two years on iPod and MP3 use and believe me when I say that very few users of these devices want a radio in them. It just is counter-intuitive. Focus groups have been asking why it would make sense to put a radio in an iPod.

Steve Jobs has seen the research too. He's not even contemplating adding a radio to his iPods. Because Mr. Jobs doesn't ever look back. He has the luxury of doing what radio management hasn't had the chance to do in over 7 years - look to the future.

Of more concern to traditional radio is the new iPod Touch which comes with Wi-Fi capability and a Safari browser - the best mobile device browser out there. It's on the iPhone and it makes surfing the Internet effortless.

And now a music-playing device has the ability to go to iTunes and download music direct to the player. How far away are we from a time when these same devices can surf over to an Internet radio website and in a Wi-Fi hot zone listen to Internet radio. Not very far.

Generally, the radio industry has done a decent job and has dedicated some resources to its Internet radio efforts. This has occurred in mostly large and some medium markets. The remaining markets/stations haven't taken the step because they are intimidated by the streaming/copyright expense issue and they really don't know how to do an effective job of delivering an Internet radio product.

But if you can feel that Wi-Fi enabled MP3 player train bearing down on you, you are not alone, traditional radio. It's coming and coming fast and as far as Internet radio is concerned, traditional radio's greatest weakness is the vast choice (thousands) of stations available on the Internet. Practically every taste is served. And soon it will be served in a small hand-held device.

Traditional radio's greatest strength is its brand and the current distribution system of blasting its programming across metropolises (is that a word) up and down our great land. Radio's bright leaders should take these Steve Jobs press conferences to heart because each time Jobs steps on that stage, radio's exclusivity and relevance shrinks.

If you have not instituted an Internet radio effort for your company or station, don't wait too much longer. The pervasiveness of portable devices that can bring the world of radio to a hand-held music player or mobile phone is on the horizon. In fact, some already do.

You want to be invited to that party.

Terrestrial Radio:The Old Dog is Resilient

How is satellite radio doing? Judging by Bridge Ratings' just-released data covering the first four months of 2007 - not too well. And now XM has issued their first quarter report by announcing that though they had a losing quarter financially, subscriber growth surpassed the 8 million mark.

XM, which agreed to be bought by rival Sirius, reported a loss of $122.4 million, or 40 cents per share, narrower than $151.4 million, or 60 cents per share, in the year-ago period.

Revenue rose 27%, to $264.1 million, from $208 million last year. Makes it sound like XM's making progress.

The company ended the quarter with 7.9 million subscribers, up from 6.5 million a year ago. Last year, XM forecast that subscribers would exceed 8 million by the end of 2006, but scaled back that target significantly as retail sales of its radios waned. XM now expects to have 9 million to 9.2 million subscribers by the end of 2007, with subscription revenue for the year around $1 billion. Bridge Ratings estimates that subscriber number will be closer to 8.9 million - but, wait, we still have the summer months to get through.

Summer '06 was a comparative dead spot for consumer interest in satellite radio in general and that was before a merger of the two services was announced. Typically, merger news tends to send a 'caution' sign to consumers and it's either that or something is terribly wrong with the public's opinion of satellite radio that is causing a lull.

How can I say that when XM reports Q1 growth of several hundred thousand subscribers?

XM announced that they had passed 8 million subscribers adding 868,000 paying subscribers. But they lost 584,000 who did not renew their subscriptions! Is this a good sign? I think not. So, XM's net gain in Q1 2007 was 285,000 subscribers and that's why the true number of XM subscribers comes to around 7.9 million.

Based on past quarters when Sirius has grabbed a 60 share of subscriptions, it's possible that we'll see a net gain for Sirius in the 427,000 range for a total sector quarterly net gain of around 712,000 subscribers which is comparable to satellite radio's worst 2006 quarter (Q3).

What's interesting is that these companies continue to sign subscribers but it's getting much more difficult as time passes. 67% of XM's hard-earned first quarter subscriber gains were wiped out by consumers who did not find the value in retaining their subscriptions.

Actually, this is not all that far off from the typical performance for new companies with sharp growth curves like those that have existed in the satellite radio space for the last three years. And while there are those in that industry that underscore the fact that satellite radio growth is the fastest new media introduction ever, we are now seeing that its growth is also flattening faster than any previous new media play. Satellite radio as an industry is maturing faster than one would expect from such a new technology. This is what Bridge Ratings has been projecting for the last few years. And while 2006 was a turning point for the sector, 2007 will be a more difficult year for satellite radio.

Only HD radio can make satellite radio look good at this point. Our latest study indicates that just about every consumer whom we asked whether they were interested in purchasing an HD radio in the next six months said they weren't because they couldn't see the benefits of it.

HD radio is almost still-born and the radio industry continues to invest heavily. Good news this week was that Best Buy would stock HD radios in all of their nationwide stores. That's a positive step. Only one problem: no one cares.

So, we're experiencing the flattening of satellite radio which will continue to experience growth but at a much slower rate than previously expected and we're seeing almost non-growth for HD radio.

Terrestrial radio continues to be challenged for its time-spent-listening by other new media such as MP3 players, Internet radio and cell phones, but if trends hold, satellite radio will not be the grim reaper it was once thought it would be.

Terrestrial is far more resilient than many on Wall Street thought. It will still have its challenges but because of its purest benefits it will stick around for quite a while longer: It's free. It's easy to operate. Everyone has one. Everyone knows its benefits. And the public doesn't seem to mind paying for it with commercials.

To paraphrase Charles Dickens "these are the best of times - these are the worst of times" for media consumers, but at least there's plenty to choose from and most consumers are the real winners.

Keeping Up with Gen-Y

I can't tell you how long the alarm has been sounding for terrestrial radio to get its act together to save its future by developing new programming and content that will be compelling enough for today's under-25 year olds, but I do know that Bridge Ratings has been publishing studies about this for at least four years. And I know several other highly-respected researchers who have been doing it longer.

Yet have we seen any creativity on this front? I can't say I have. There are some youth-oriented attempts on HD radio, but these kids don't care about HD. Even satellite radio hasn't developed any programming that will attract this hard-to-reach generation. Is everyone just giving up? Knowing how important it is to develop future audiences, one would think both traditional broadcasters and the satellite radio companies would dig in their heels and get with it.

I was invited to present some findings at three corporate retreats last year. Bridge Ratings was commissioned to find out what terrestrial radio could do to make its business relateable to Generation-Y. Everyone nodded their heads, slapped me on the back to thank me for opening their eyes, yet nothing's been done!

Frankly, perhaps the reason nothing has surfaced that is compelling is because technology and Gen-Y tastes are a moving target and they are moving too fast for radio to keep up. First there was P2P music file sharing; MP3 players, iPods, iTunes, then Myspace, Facebook, YouTube - it can be exhausting for some. This I get. Now comes something new that will blow your mind: Mobile Social Networking Software or MoSoSo which is essentially the sophisticated reach of cyber-social networks like MySpace combined with the military precision of GPS.

New cell phones equipped with this software were marketed to the college-aged life-group by Rave Wireless last year. It's mobile GPS technology that enables students to find like-minded buddies (Bored? Love Indian food? Meet me under the clock!), it also offers a cyberescort service linked to campus police. If the student doesn't turn off a timer in the phone, indicating safe arrival at a destination, police are dispatched to a GPS location. Your friends can find where you are at any given moment and can keep tabs on your whereabouts all day long if they want. Fortunately, the locator function is strictly "opt-in", meaning users can turn it on and off at will.

The point here is that the more time that goes by, the more convinced I am that terrestrial radio - even satellite radio - are being left in the dust as today's youth clamor for more customized, on-demand, "what I want - when I want it" media which includes the high-speed train known as mobile phones. Cell phones are becoming, if they haven't already become, the new 'radio'. Cell phones serve the same function today as portable radios did two generations ago; they are just more sophisticated social technologies that are empowering groups of our youngest consumers.

Technology will not slow down. Shelf-life for any of these things grows shorter and shorter. The first wave of MySpace users long ago abandoned it and have moved on. Fodder for technology companies to stay ahead of the game. In fact, most highly-focused consumer-oriented tech companies have divisions of brainiacs whose only job is to work on what's next.

Has radio invested in anything similar for its future? Or has it given up on keep up with Gen-Y only to be satisfied with an aging listener base? This is what keeps me up at night.