Future of Radio Online

MORE DATA FROM THE FUTURE OF RADIO CONFERENCE:  THERE ARE NOW MORE STREAMS THAN LISTENERS ON-LINE

Plus A Dire Perspective on Radio Revenues as a Percentage of Retail Sales

Stephan Sloan of Media Services Group told the Future of Radio Conference that in 2007, half of all Internet listening was being done to 81 of 10,000 streams. In 2011, the data shows that half of all listening will be done to 161 streams, but there are now more streams than there are people listening to the Internet. This is more evidence of “the long tail theory.” The implication is that if these streams are supported by spot ads there will be an enormous amount of spot inventory to sell requiring an “exchange” to populate these streams at a profitable rate. The rapid proliferation of smart phones, however, is greatly increasing the amount of on-line listening that is occurring. If the industry can manage all this it could be good for radio.

Sloan also addressed the relationship of retail sales to radio revenue, which he’s been tracking since 1980. In 2000, at the peak of the business, radio was doing over .6% of retail sales in revenue.  In 2010 it was only .34%, and the forecast is almost flat going out to 2013. That’s lower than the BIA/Kelsey forecast, which did not see radio getting back to ’08 levels through 2013.  Neither forecast is a great indication of advertiser confidence in terrestrial radio.  Increasingly advertisers are choosing to put their money into Internet advertising. That sector was up 15% in 2010 over 2009.

Sloan also talked about the difficulty of innovating.  He said that when companies are focusing on the next quarter’s financials because of worries of violating their loan covenants, it’s difficult to come up with the next great idea.  Institutional memory is another barrier to the next “new thing.”  So is success.  Why didn’t Google invent Groupon or You Tube?  Why didn’t Microsoft invent Facebook?  What happened to My Space?  You can view Sloan’s entire presentation at www.futureofradioonline.com/videos/sloan.

According to Jim Hooker, leader of the Future of Radio group, they see four distinctly different possible futures for the industry, based upon three critical uncertainties that are driving the business.  Those uncertainties are:

• Technology – Will radio be able to continue to depend on RF/ towers to serve the consumer, or will radio morph into some form of “Radio App” that is more digitally based?
• Advertisers – Will the advertiser continue to value radio as a viable service to reach customers or will they spend their dollars on other media?
• Listeners – Will the listener continue to turn to radio as a source of entertainment and information or will they get those things from other sources?

Go to www.futureofradioonline.com. Under “White Papers” you can read an overview of the scenarios created in 2010 that describe the four very different possible futures the group envisions.

Hooker noted that when dealing with the future, another huge variable is the velocity of change. In this case, it appears to be accelerating. Answers about the future vary widely depending on your perspective.

• Are you looking just at top 25 markets or smaller markets?
• Is your business primarily transactional or retail direct?
• What’s your time horizon…the next 12 months or 5 years from now?

Clearly, if radio operators don’t invest for the future, they will lose it.  But if they invest in the technologies for an integrated digital future, and advertisers and listeners like the product operators put out there, the future for radio will look considerably different than if they reject them and turn to other media.  The stakes are indeed very high.

Look for a release of John Gehron’s comments and his video next week.

Here are a few comments participants made following their involvement in this year’s meetings:

“This is a one of a kind meeting, not duplicated by any other industry conference. Looking forward to next year.” Allen Shaw, CEO, Centennial Broadcasting
“Jim, Susan, kudos for your hospitality and, more importantly, for the insights, planning and preparation that made this meeting a success. The agenda was well-organized, well-paced and created a stimulating meeting.” Tom Birch, President, Lakes Media, LLC
“Susan and Jim, thanks for creating a safe environment in which we can all complain and moan, rejoice and delight, and more importantly, use purposeful techniques to squeeze our noggins in pursuit of ways to transition through these disruptions of communication and culture.” Kevin Metheny
“Thanks again for including me. Like everyone there I’ve participated in many seminars, retreats, conventions etc. with varying levels of satisfaction. This is a good one. Lot of work for you guys and it shows. Thanks.” John Dille, Chairman Federated Media

For more information contact Jim Hooker at 815-353-5032.