The Uncertain Future of Radio

Normally I pontificate about business model problems with newspapers or television. But the third leg of the 20th century mass media, radio, has exactly the same problems. Largely unnoticed by the general public — except for the Clear Channel (CCO) death throes — broadcast radio is heading to the same ignominious end as awaits dead tree papers and broadcast TV.

Earlier this month, Boston Globe columnist Jeff Jacoby interviewed radio analyst Michael Harrison. Most of it was about talk radio — both conservative and liberal — but there were some important general points about radio’s viability:

Q: How big is talk radio? How does it fit within the larger radio universe?

A: Well, the talk-radio universe is affected by the economy, and the recession has been brutal to all advertising-based media. AM and FM radio are also faced with technological change taking away its monopoly on mass-appeal audio entertainment and information. You've got competition from cable television; you've got iPods and podcasts and iTunes; you've got satellite radio. And you have the Internet, which is changing everything. That being said, within the world of radio, talk has a huge following that's growing. The baby boomers grew up with radio. Radio personalities meant something in their life. They know how to use a radio.

Q: Doesn't everybody?

A: No. Many kids don't even have radios. The biggest problem facing radio is that the younger generation doesn't think of it as an institutional component of day-to-day life. And if people stop thinking of radio that way, then what's the value of owning a license to broadcast? That's why radio is in trouble.

And then to the proposal (opposed by the right wing blogosphere) to re-impose the “Fairness Doctrine”:

Q: Some people have suggested that instead of making broadcast licenses renewable every eight years, they should last only two years - that would put station owners on the spot more frequently, make them more susceptible to pressure.

A: Look, if we were coming into the golden age of radio, I would say, "Sure, owning a radio license is a privilege. It should serve the community. People should have to jump through hoops to have this privilege." But it's not such a privilege anymore. It's mired in debt, it's choked with regulation. And it's surrounded by competition that's not regulated and not in debt. Why make it even harder?

If you think about it, a broadcast license (TV or radio) was once a license to print money: a government-sanctioned monopoly (premised on RF scarcity) that was valuable in perpetuity. Now, while Internet has high entry barriers in terms of network effects and advertising costs, it has no formal regulatory barriers and thus (in principle) no upper limit on the number of entrants.

Things have changed dramatically in my mother’s lifetime (my dad died in 1995). For my parents, radio was the first mass medium — the only way that all Americans could participate in the same news during the Depression (FDR’s Fireside Chats) and WW II (Edward R. Murrow.) For people my age, radio was what you turn to after an earthquake or during a war; it also keeps me company during long drives across California. For my daughter, NYTimes.com or news.google.com will probably be all the news she ever needs — until she’s 30 and something even cooler comes along.

Indeed, for Harrison, the end is coming much sooner than people think:

Q: How many good years does talk radio have left?

A: AM/FM radio has about five good years left, if that. And what we consider to be radio today will be on the Internet. And the Internet websites will be media stations. The Internet is not only going to change radio; it's going to change humanity. That's how profound this revolution in communication will be.

If that’s true, I wonder who the surviving Internet radio stations will be. Will it be the online versions of the existing broadcast stations (who now have a huge royalty advantage)? Will it be Sirius XM and other premium services? Will it be Live365, Pandora and other web-specific aggregators? Will it be stations bundled under iTunes and the like?

Or will the idea of a stream and “station” go away? For music, Last.FM provides songs on demand. I’ve found that podcasts work much better than streaming for medium length interviews (10-30 minutes), although (as with HTML pages) only some publishers are committed to making them available on a permanent basis.

I was recently wondering whether to retrofit an HD radio onto my 2000 pickup. I guess at this point I should plan to replace my dead iPod and just download podcasts for the long drives.

Comments

[lmaze:]

Joel: Go to TSS Radio.com, or call them and order a Sirius Stiletto 2 with all the accessories. Its portable, WIFI capable and its a sat radio, with a great battery and good storage capabilities and it does everything your IPOD does, just better. It's all you will ever need. Why Sirius doesn't push its retail products is still something I can't figure out since this product is awesome!Once its activated you will NEVER listen to free radio again.

As to Clear Channel this company can't die soon enough, they have screwed everyone, including Howard Stern, Bubba the Love Sponge, Recording artists, the music industry and finally their own employees. Our government and the FCC, under both democrat and republican administrations gave them free reign to consolidate radio media and this bloated whale is the end result. I only feel sorry for their employees.

May 28 07:39 AM

[relmar2003:]

Yes, this is 100 percent the American Peoples fault. Not the government or industry. Once people realized their long standing media laws that restricted this type of situation were being removed, those people should have been arrested who moved to push for this. People should have demanded minimum a treason charge to all Nothing is more important than protecting the media from large money grasps. These legal attacks opened the door for SIriuxXM to even be necessary. This KILLED FM radio. Once local communities lost control over their stations, it was only a matter of time.

May 28 08:05 AM

[bluesmoke:]

Terrestrial radio is a broken business model. In many ways it's just like the housing market. They were all carrying too much debt when the rug got pulled out from under them. Once companies like Clear Channel have either gone broke or left the industry, then the radio model can start to 'reboot'. I suspect both AM & FM will become regional players, just like they were in their infancy.

May 28 10:15 AM

[Mr. Stupid:]

Jay Boy Billy was right. He said a few weeks ago this stock was going to take a dive and he was RIGHT.

Should have listened to him. GOSH

Frank

May 28 11:31 AM

[Mr. Stupid:]

You tell em' Relmar. You should be in movies with your knowledge and passion.

Let's take a stand now and be done with all this hogwash.

Frank


On May 28 08:05 AM relmar2003 wrote:

> Yes, this is 100 percent the American Peoples fault. Not the government
> or industry. Once people realized their long standing media laws
> that restricted this type of situation were being removed, those
> people should have been arrested who moved to push for this. People
> should have demanded minimum a treason charge to all Nothing is more
> important than protecting the media from large money grasps. These
> legal attacks opened the door for SIriuxXM to even be necessary.
> This KILLED FM radio. Once local communities lost control over their
> stations, it was only a matter of time.

May 28 11:34 AM

[Buffetphan:]

Very well written, it was a pleasure reading, I agree on all points that were stated.

May 28 02:23 PM

[Thomass:]

Hey Mr. Stupid go in a room with your boyfriend Gay Boy Billy and don't come out until 2020 ,please .

May 29 05:23 AM

[ChicagoDude:]

Excellent article....

It is ironic that the only mass media left that is actually growing audience are newspapers if you include print and digital.

Now if they can only monetize it....

May 29 11:03 AM

[longandshort:]

FYI:
CCO= clear channel advertising
CCMO= clear channel broadcasting

Jun 03 01:02 PM