I attended three excellent Country Radio Seminar panels last week and was struck by how beautifully they connected, like bricks along a roadway. A keynote from Todd Wagner on Entrepreneurship; a report on morning country listenership from Edison Research; and a panel about the upcoming Connected cars.
Back home I wondered if the wisdom I extracted from these meetings was purposely planned by the Agenda committee or did I stumble upon an interpretation unnoticed by other attendees? The reader will have to decide, but connecting the dots between these three panels enlightened me as to the state of radio’s last stronghold—the car— and the industry’s fast approaching challenges.
Dot 1: Entrepreneurship
My first CRS lesson was about entrepreneurship, from Keynote Speaker, Todd Wagner. Wagner—you might recall—joined with Mark Cuban to launch Broadcast.com, which they took public in 1998, and later sold to Yahoo! for $5.7 billion. His full-house interview/discussion was filled with interesting anecdotes, but his repetition of a quote from the late entrepreneur Teddy Forstmann was especially moving:
“The entrepreneur, as a creator of the new and a destroyer of the old, is constantly in conflict with convention. He inhabits a world where belief precedes results, and where the best possibilities are usually invisible to others. His world is dominated by denial, rejection, difficulty, and doubt. And although as an innovator, he is unceasingly imitated when successful, he always remains an outsider to the ‘establishment’. He is usually found disturbing and irritating, even unemployable.”
[Sound like anyone you know?]
I thought to myself, “Why are we hearing this discussion at a radio convention? How does entrepreneurship apply to radio, an industry with decades of consolidation and a mature business model?” Nonetheless I was moved.
Wagner added, “As humans we resist change, but technology is a freight train coming down a mountain. You either get on board or it eventually just flattens you. Too often executives getting close to retirement say, ‘I’m just going to let someone else worry about it.’ So get on board, figure out a way to make it work for everybody and move forward.”
Dot 2: Wake Me Up & Bring Back My Listeners
The following morning the hall was again packed for a research presentation from legendary analyst Larry Rosin of Edison Research. Rosin presented—Wake Me Up, a project paid for by CRS. Rosin divided mornings into four parts; Waking up, Getting ready, On the road and At work.
The data was bleak. Consumers today are all about smartphones and TV and only 36% of country listeners even have a radio in their bedroom. I remember the pre-smart days when everyone woke up to a clock radio, but today people wake up with their smartphone alarms and check email and Facebook. Most don’t turn on a radio until they get into the car for an average 26-minute commute.
Rosin looked at the programmers and warned, “Radio needs to make sure it stays competitive in those first moments of the day and adjust its strategy if necessary to do so.” He advised finding ways to get on the hardware people are already using (smartphone, TV). The researcher also offered a strategy of tying stations to morning symbols like coffee so when people think of that morning cup of java they also would look for your station. Made sense to me.
I thought morning radio was solid, yet here was Dr. Rosin prescribing a powerful dose of entrepreneurial thinking to stop the exodus of morning country music listeners. Did radio’s morning role diminish because some executives decided to pass the problem down the line as Wagner had warned often happens??
Dot 3: The Connected Car- The Digital Auto Ecosystem
This essential CRS panel drew a disappointingly light crowd, but revealed that sweeping changes to the car dashboard are on the way and will greatly effect radio business models. Auto technology experts painted pictures of incredibly connected vehicles with data streams that are always on, instantaneous and personalized in the same way as smartphones. John Ellis, from Ford noted the safety issues, “But it’s still a multi-thousand pound device,” he said, “traveling at well over 70 miles an hour that the person who just turned 16 today gets a license to drive.”
While discussing radio’s role in this rapidly approaching future Ellis cautioned, “The biggest change is people. My twins are in the back seat listening to Katy Perry and they say, ‘Dad hit the back button.’ I say I can’t, this is a thing called radio where you have to listen to what other people pick. My younger twin says, ‘Well that’s stupid.’ These young people who will be driving cars in 6 years or so are expecting a personalized experience which far outstrips what we have today. Automakers are being forced to respond to environments like those from Google and Apple and it is forcing a massive transformation. You have some time, but not as long as you think.”
“People won’t tune to a certain megahertz anymore,” said Derek Kuhn of BlackBerry Software Systems. “They are going to tune to a station they know visually, even when they are out of range of that FM transceiver.”
“This audience should have a concern about the prevalence of streaming radio as being a competitor,” said Joel Hoffmann from Intel. “The answer isn’t to just stream your station or create a branded app, that’s just following and it’s the wrong response. You have to step over it. What can you do to innovate, differentiate and give broadcasters an advantage they can’t take away from you.”
John Ellis agreed saying, “Is the traditional way of doing radio dead? Probably.”
Paul Brenner from Emmis gave the discussion more radio industry context. “At this point in time radio is still a great promotional tool for the artist and label,” he said reassuringly. “Programmers rely on it and record labels leverage it. The value of radio is those relationships, but we are watching Google and Apple also build relationships with artists in promotion, value and content that ultimately could compete with us once that ship sails. Broadcast radio must recognize our own values, what we’re good at and makes us unique and marry that with everything being created. I know how dysfunctional our industry is, but we have to come together and do something the same way—across all owners, groups and labels—to make it work with what they are building.”
“If you came into my shop you would see programs for model years 17,18, 19 and white boards for 20,” said Derek Kuhn. “More and more models will launch with interactive technology in the 16 model year. Some of the bigger thinking in terms of how all this eco system will work together is probably some additional years down the road, but it’s happening incredibly quickly. It will be a different experience for folks in a car in the not too distant future.”
Ellis added another concern. “The problem you face is my twin daughters. They don’t know what radio is. This is not just a car problem. It began six years ago when streaming internet first started. Vehicles offered radio a respite to encase itself and feel comfortable. But now change is manifesting itself in traditional radio’s last stronghold. So it is a much bigger issue than just about the car.”
Thinking about a future that could seriously disrupt your business is, as Forstmann’s quote says, “disturbing and irritating.” But as Wagner added, “technology is a freight train coming down a mountain.” So this kind of honest thinking is necessary and vital.
According to Rosin and the Connected Car panel, radio is going to have to reimagine itself to meet the oncoming challenges it faces and it’s going to need to rely on some entrepreneurial leaders, like Wagner, to do so. And Nashville needs to begin asking itself, how will these new models impact the radio/country music partnership?
If radio were to adopt a new distribution medium, for example, then the royalties that publishers and songwriters receive from terrestrial airplay might vanish and all revenues would be based upon streaming royalty payments. Record labels would have to reimagine how they leverage radio for exposure and airplay in a more personalized, on-demand world. I wonder if artists would still be doing so many free radio shows in that environment? Perhaps.
No one can say precisely how the love affair between consumers, radio and records, will play out in the next decade, but undoubtably it’s going to be a time of disruptive change. Those that can innovate and build a new value network will emerge as the leaders.