Welcome to Radio 2020, the blog

Remember 1994? From my point of view, it seems like it was only a few short years ago. But the decisions that were made then shaped the radio landscape we know in 2007: The satellite networks were developing their business plans. Broadcasters were deciding which form of digital broadcasting to support (Eureka? IBOC?). Early experiments with structures like LMAs were precursors of consolidation. And so forth.

In just a similarly few years from now, the year 2020 is going to be here. What do we know or reasonably suspect radio is going to be like then?

Well, here's what I think is starting to become clear:

• Internet radio will be available on most personal communication devices (i.e., cell phones, PDAs, portable music players).
  
  
• AM/FM simulcasts will be available on the web but not very popular. (Analogy: Some movies are simply plays performed in front of a camera. But not many.)
  
  
• Internet radio will be available in the car dashboard (probably using a simple touch-screen interface, riding along on the car's existing telematics systems).
  
  
• HD Radio will be dead or at best limping along (kind of like AM stereo is in 2007). (It won't be able to "cross the chasm." Significant numbers of listeners won't be interested unless broadcasters across the dial drop their analog signals and broadcast eight HD channels per frequency instead; broadcasters won't do that unless HD is already wildly popular. Chicken/egg.)
  
  
• The big winners will include multichannel brands of Internet radio that offer some form of interactivity and personalization (i.e., a customized stream for each listener). Each of these will be distinguished by its unique user interface rather than by musical genre. (Early indicators of this trend include LAUNCHcast, Pandora, Last.fm, and I like to think AccuRadio.)
  
  
• Because there's always an opportunity for specialists, in addition to the multichannel brands, there will be one or two nationally- (or globally-) dominant brands in each of the important musical genres -- jazz, classical, hit music, country, indie rock, Broadway, pop standards, Sixties-oldies, comedy, blues, and so forth. Each of these will be much smaller than the big multichannel brands, but not insignificant.
  
  
• Many of these leading brands will be owned by a new set of competitors rather than today's radio broadcasters -- e.g., Microsoft, Google, CBS (but not CBS Radio), various entrepreneurs, etc. Some of these brands, on the other hand, will be owned by today's broadcast groups.

The purpose of this blog is to argue for some ownership of these new Internet-only brands by broadcasters. After all, this is where all the growth in audience is going to be and this is where all the growth in advertising spending is going to be.

Broadcasters will be increasingly marginalized by 2020 if they ignore these opportunties today.

What do consumers want?

A recent (June 2007) Arbitron tabulation of diary entries from several dozen markets revealed an unsettling fact: The audiences listening to simulcast streams of AM/FM stations via the Internet are surprisingly low -- comprising less than 1% of the averge market's total radio listening quarter-hours.

Of course, this is reported listening, not actual listening, which might be somewhat higher. But still, let's assume this number is largely, with a certain margin of error, true.

So, what does that tell us?

(1) We know from other sources (comScore Arbitron Online Radio Ratings, Ando Media's Webcast Metrics ratings, etc.) that total Internet radio listening apparently comprises 4% to 5% (or more) of all U.S. radio listening. (Satellite radio comprises another 3.5% of all U.S. radio listening, according to a different Arbitron report.) That means that listening to AM/FM streams comprises a very small percentage of all listening to Internet radio... which means that the vast majority of Internet radio listening is to the Internet-only channels.

(2) Why would that be? Perhaps because listening to a AM/FM station via the Internet does not add any value to the radio listening experience. The consumer isn't getting a different format than they can get on the AM/FM band, or a tighter or deeper playlist, or more songs per hour (except in the rare case where a broadcaster fills their terrestrial spot break with bonus songs), or any type of interactivity or customization or personalization.

More to follow...

"Big radio makes a grab for Internet listeners"... or does it?

A big story on the front page of the Arts section of The New York Times last week said:

"After ceding ground (and potential advertising dollars) for years to an army of autonomous Internet radio stations, some of which are run from basements and spare bedrooms, the nation’s biggest broadcasters are now marching online, determined to corral the next generation of listeners."

But the details in the story didn't support its thesis.

On the one side of the equation are the "autonomous" Internet radio stations: Last FM (which CBS -- the corporation, not its radio division -- paid $280 million to acquire late last month), other venture capital-funded operations with thousands or even millions of channels like Live365 and Pandora, and smaller entrepreneurial operations like Soma FM (11 channels of hip genres likeAmericana and spy movie soundtracks) and BAGeL Radio (indie rock).

Meanwhile, on the other side, we have the terrestrial radio groups. The article says that for broadcasters, "the bigger focus is on developing features that can be rapidly promoted using the chains’ mass and reach."

What does that mean? Live chat rooms. Blogs. Giving away prizes in those chat rooms. Sending out text messages before a requested song plays on their FM station. For Clear Channel, building "miniature social networks" into eight of their stations' websites and "letting fans choose to hear songs posted by unsigned or other emerging artists."

Do you see the difference? The radio broadcasters aren't offering radio programming! They're "marching online," yes, but to what end? To offer chat rooms!

Elsewhere in his piece, the writer observes, "The trick for the big radio corporations, though, is that pursuing listeners online may mean developing a wholly different approach to programming."

Could you go on? "Many Internet-based stations say their medium allows them to offer an abundance of genres far outside the boundaries of traditional over-the-air music stations, often with playlists that can be tailored to the taste of the individual listener."

The writer concludes, "The result may be a showdown to define the future of the medium." True that.

But right now, when it comes to actual programming and content, the real score to date in this exciting showdown to define the future is pretty much Internet-only properties All, radio groups None.

http://www.nytimes.com/2007/06/12/arts/music/12RADIO.html?ref=music

or, in case that link gets disabled,
http://www.financialexpress.com/fe_full_story.php?content_id=167447