So the FCC is contemplating the relaxation of radio ownership rules. Some broadcasters want to own more stations under one roof in order to compete with more platforms attacking radio from the fringes.
Central to this issue is what radio “is” now. In order to regulate something you need to know what it is and what it isn’t, right?
Here’s a fact: Radio is not an industry of towers. It’s an industry of content and listeners and advertisers.
Spotify, Pandora, and podcast platforms all want to carve out a piece of the radio industry revenue pie for themselves. It’s all audio. It’s all (primarily) ad sponsored. So let’s chase those dollars, they say.
When your competition is chasing the same pool of dollars you are, that means they are in your business and you are in theirs. When they’re chasing the same ears you are, it means the same. By that logic, we should expect to see ratings for Spotify and Pandora alongside ratings for your local radio stations, and perhaps one day we will. Indeed, if you argue to the FCC that you’re the same, then you can’t argue to Nielsen that you’re not.
It’s ironic, to say the least, that Facebook and Google in particular can possess duopoly power over the majority of the vast and fast-growing digital advertising landscape and wield that power with impunity, while radio broadcasters deal in a world of antiquated rules and categories.
But be careful what you wish for.
Radio: Be careful what you wish for.
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Because owning your competition on the “radio dial” will not solve the radio industry’s long term problems. It seems to me that the more signals you own in any given market, the more you double-down on the status quo. While the back office shrinks (and the front office too, most likely) you will cut overhead but not necessarily grow revenue beyond that short term bonanza. Has consolidation to date significantly grown revenue?
We’re in a world where advertising is more resented than ever and digital alternatives are training listeners to expect fewer interruptions than what they hear over the air. Meanwhile, advertisers are increasingly focusing their dollars towards digital. Does that sound like a world where broadcasters will profit by owning more traditional radio supply?
The future of audio revenue will not come from doubling down on broadcast towers. Just as the future of TV won’t come from owning more TV stations and the future of newspapers won’t come from buying more dailies. These are strategies to grow by cutting costs, not by increasing revenue. And they are short-term.
Did the New York Times and the Washington Post grow revenue to their respective brands because they acquired the competition? Or because they leveraged their muscle according to market opportunities for both advertisers and consumers?
Consider Starbucks. How are they growing revenue nowadays as a mature brand? Is it by purchasing every coffeehouse they don’t already own? Nope:
One of Starbucks’ key priorities is to expand its digital interactions with customers. “Establishing digital relationships with many more customers represents a significant growth opportunity, as we have proven that a direct communications channel combined with personalization enhances the customer experience and drives customer engagement,” said Starbucks President and CEO Kevin Johnson.
So yes, Mr. FCC, radio is more than towers. And radio needs to grow its strategic umbrella to compete more effectively with competitors for the same advertisers and the same ears.
Technically, Mr. FCC, you should see the industry as more than the sum of its signals in any given market. That means – yes – you should permit more consolidation. And when you do, it will be time for those of us in the broadcasting space to ask questions like these: Are we better off now? Will we make better content now? Will our listeners be happier now? Will we stem the erosion in listener attention and interest now? Will we make more fans now? Will we be better positioned to battle digital media alternatives now? Will we manage to increase ad revenue now?
I see the answer to all those questions as “no.”
Meanwhile the universe will always welcome great content amplified across great platforms, whether it comes from a radio tower or not.