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Radio Industry ROI Strategy How the internet affects radio advertising and music airplay.
Monday, November 15, 2010
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Radio's Competition is Global

There is an article in this week's Time titled "The Future of Content." Not a long read, it has comments from four people - one happens to be Pandora's Tim Westergren. His final words sum up what should be the radio industry's objective today: "Consumers are able to interact with you in ways they've never been able to before. So you have to put much more effort into transparency and continually connecting with, listening to, reacting to and cultivating people who use your service. If you let them down, you fall off a cliff."

This concept has its foot in an adage - "the customer is always right" - which corporations seem to have slid away from over the past few decades. Westergren's synopsis of how to capture an audience takes it one step farther, though. In his words, it's "cultivating people who use your service." Online, in his view, "If you let them down, you fall off a cliff."

"We must acknowledge that the radio business model will need to change to stay profitable."

If your future is tied to a stick, what Tim Westergren points to will have little effect. There are limited frequencies on a radio tuner. Your station will always be found. However, it may lose listeners to a new selection of programs coming from the internet.

Few internet stations can speak to a limited terrain. There just aren't enough listeners coming from a small geographic area to make it economically viable. Streams come from around the world, and so will much of your online audience. Already, nearly all internet radio stations are speaking in an oh-so-generic language as to not connect with any specific location.

Online, a radio station plays more towards a person's holistic interests; this brings us back to Westergren's point about "transparency, and connecting with," and a need for improving content (which, today, is part-interaction with audience).

The geographic walls are tumbling for internet radio stations. I've witnessed it through an increase in the number of stations outside of the United States submitted for listing at RadioRow.

Let me share with you the way these interent radio station owners describe their stations when submitting them:

The station that plays the best in Jazz Soul& Funk 24/7 with DJs that are
passionate about their music!
AllDance.FM spins the best in Dance Music
Perth's Home of Relaxing Easy Favourites
Zecom Radio - The Choice - Quality Rock 'n Roll from Chicago
Great 70's and 80's Music
Playing the best kick-ass, steel guitar-dripping, bass-thumping, sawdust on the floor,
barroom-brawlin', honky tonk music and a little killer bluegrass

Besides using a few more words, the descriptions aren't much different from how we hear the broadcast side of our radio industry label its content.

Bowling Green's Classic Rock Station
Chicago's Rock Station
Q107 - The Classic Rock Station
Streaming Hip Hop Live, 24/7
Non-Stop Hip Hop
The Greatest Hits of the 60s, 70s & 80s
Southern New England's Country

It's evident there's not a lot of thought going into either describing the content, or in putting the content together for radio stations - online or off. And that brings us back to Tim Westergren, and why his Pandora is making so much progress being found and used. Tim cares about connecting with the people who "use" his service. He interacts with them, as his appearances at colleges across the US attest. Part of Pandora's "content" is Tim's direct connection with Pandora's consumers.

In the future we'll be seeing a larger percentage of persons turning to the internet for audio programs. If you're in the broadcast radio industry and stream your program, then that expands your base of competition. You need to change your operational approach to be successful.

The radio industry is moving from being local to fighting for a piece of the global audience online. We may see the terrestrial side of radio be less "local," but what's important is that, online, it finds a way to stand out from thousands of competitors.

We must acknowledge that the radio business model will need to change to stay profitable.

You're no longer only selling spots to the local auto dealer. You're no longer only going into the same local agency for the buy, and they are no longer limited to only looking at you as a way to reach consumers.

The more local you lose, the more global you become - and it's an extremely competitive internet radio market, so plan your future wisely.

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