Radio Today March 30, 2014

The Battle of Radio vs New Media

Contributor

Radio will continue to compete with other delivery platforms and innovations like Apple's dashboard 'CarPlay' which is another exciting step into the in car entertainment future.

Radio brands will compete with all the other apps that will eventually dominate our dashboards and play to radio’s strength of portability and ‘in car‘ listening.

But it will be the content behind those apps that will be the decider for the consumer.

Traditionally, content has driven the mass uptake of technology, not the other way around. Although across numerous industries – including radio, music, film, television, gaming and entertainment – technology is a driver that shapes and influences content as it opens up new possibilities.

Then it gets down to the quality of the content created that leads to success or failure of the technology.

Radio programming will continue to remain a combination of art and science. It combines creativity, research, strategy and entertainment. Whilst technology changes rapidly (yes I listen to radio and streamers via apps and I get my news headlines from Twitter) it's still early days for new technology platforms for the average consumer, in particular older demos.

Radio groups have invested in new music platforms like iHeart, Songl, Rdio and Omny because of their threat to radio in the longer term. Subscription music services compete with free radio just as subscription television competes with free TV.

Of course radio, especially here in Australia, offers more than just music, unlike radio in other parts of the world. This is also a battle of business models – advertising versus subscription.

Some consumers will take time to accept paying for something that traditionally has been free, and of course there is only so much discretionary income. The streamers early adopters naturally have been teens and younger users. Spotify is currently offering discount subscriptions for college students in what’s probably a loss leader! So we are seeing price wars already in this space.

Pandora now has one million users here in Australia, about the same size cume as leading FM radio stations in Sydney and Melbourne. They have an estimated 70 million users worldwide with 3.3 million paid subscriptions. Only a few years ago, any of the large US radio companies could have easily afforded to buy the fledgling Pandora. These days Pandora can legitimately claim to be the #1 or #2 radio service in most major US markets – and is valued at far more than all of the large US radio companies combined.

The Nova radio network by comparison to Pandora has a national weekly cume of about 3.3 million. The music stream field is now becoming crowded and is getting very competitive, some will die others will thrive. Perceived value of these services is shifting. The McDonalds of them all, iTunes, even though it's technically not a streaming service has now sold 25 billion songs and represents 30% of music sales worldwide.

Interestingly it looks like iTunes will launch an on demand subscription service to rival Spotify soon. And there will be many more to come. Streaming companies don't have the barriers of entry radio does, they don't need to hold a licence. It will become more and more competitive.

Demonstrating the continued strength of radio, a recently published study in the US claimed that 35% of 12+ consumers still used radio as their main source to keep ‘up to date’ with music compared to iTunes 3%, Music TV 4%, Pandora 9%, YouTube 10% and word of mouth via friends and family 21%.

While the ‘Millennials’ are the heaviest users of online, social media and mobile devices, the demographics with the money, the Gen X’s and Baby Boomers will take their time to catch up.

Media brands like Twitter, Facebook, Pinterest, YouTube and Streamers will only continue to grow of course, and they will learn from 'old media’ like radio. The music streaming services are similar to the early days of FM radio as a business. They have to continue to find ways to monetise their service, compete for advertisers and face the same commercial realities that radio has had to and still does.

Radio in Australia has been and remains one of the most competitive media battlegrounds for decades, with a proven advertising model and the basic principles of strategy, targeting, research, engagement, talent, creative and entertainment also apply to the online, social and mobile world.

There hasn’t been a great deal of innovation in radio programming for some time, probably since comedy talent based drive shows, rock sport & comedy, two ads in a row, the Hot 30 and female breakfast shows were put on the air, and that’s a while ago now.

Where are the great new ideas? There’s plenty of new, creative promotions but where is the real innovation in the product of radio? Radio programmers will need to continually think of new ways to innovate. Who is the Steve Jobs of radio right now? Is it a Technology guy (or girl), or is it someone in Programming?

Radio will remain the great 'passive’ medium for entertainment and information. Consumers today are even busier and very time poor. They need things to be easier not more complex.

Content, however it's delivered, regardless of what platform, remains king. And in particular unique, compelling, quality content whether it's big news stories, music, promotions or talent shows. The recent Sydney ratings of Kyle and Jackie O prove the power of great talent yet again. Similarly Howard Stern moving to satellite radio in the US was a game changer for Sirius at the time. Just as sporting events and quality, original programming such as drama series like Breaking Bad and House of Cards on Foxtel grow subscription television numbers.

A point worth making is the role of online and social media for radio. It should be seen as a companion, the icing not the cake. The vast majority of radio groups revenue comes from radio advertising, and it will for a long time, though advertisers now clearly want more than radio ‘spots' they want integrated campaigns, not only in the on air content but also with social media, online and mobile content. Consumers more and more now move from one device to another, radio just being one of the many devices in their daily life. And this gives radio advertisers many ‘touchpoints‘ to deliver their message.

New delivery platforms will continue to grow and compete with the estimated 70 million FM radios in Australia and approximately 20 million mobile phone devices.

The larger radio groups like DMG have reflected the shift by rebranding to Nova Entertainment redefining themselves as a multi platform digital content company, although radio will remain the largest part of their business for quite some time. Also ARN recently announced the initiative to integrate new and old media with the launch of the ‘Thumbs Up Chart‘ combining The Edge brand with iHeart.

SCA’s Head of Digital, Clive Dickens (left) even made claims recently that the company is one of the most socially engaged companies in Australia. One thing's for sure though, there’s plenty of examples of radio exploring, embracing and exploiting new media. And that's a good thing for the future of radio.

The bottom line is radio will not die, but will continue to evolve and take its place next to "new" media and audio choices. "Local" will become an even greater differentiator for radio brands. Radio's ease of use and its ability to deliver customised local info like gossip, news, traffic, and weather will ensure it remains relevant (and very profitable!) well into the future.

Cleverly marketed and well defined radio brands with strong brand images and attributes will continue to survive and thrive. And powerful, entertaining shows and unique talent delivering strong content will continue to be one the most important differences between radio and the "new media".