Thursday, May 28, 2009

We know how this story will end

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 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, or 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 a 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.

No comments: