I know, I know. Kills.
When I interviewed Cal Rifkin, CEO of Breakthru Radio, a couple of months ago, I was primarily concerned with how his internet station had made money. I assumed that it had something to do with ads on their website, but that was exactly the problem: they couldn’t have only stayed afloat from the ads on their website. I must admit, the sponsors were big names like Apple and Continental who were paying for banner space, but that couldn’t have been it for them. They were quite successful, and weren’t broadcasting from the basement of someone’s parents’ house. What was the reason? Well, it turned out that they had been getting those companies to additionally sponsor their shows. For example, a company like Apple would pay to have the DJ say “This show is sponsored by Apple,” etc, etc. And it worked, then, considering who knows what will happen with these danged laws that are set to destroy internet radio.
But the (sometimes) soulless Clear Channel is going to try to do the same thing as a test on 92.5, otherwise known as KZPS, in
So what does this say about the industry? Listeners are clearly not interested in sitting through advertisements anymore (as if they used to love them). People don’t necessarily have to, either, as they can change the dial as soon as an annoying jingle comes on. Or, as Clear Channel is reacting to it, the radio industry is changing so that they don’t have to have advertisers anymore. Some people figured out that the masses would pay for radio, and that’s all the revenue they’ve needed. Although, considering the lackluster success of satellite radio providers, it hasn’t really been that beneficial yet. But if terrestrial radio doesn’t see a need for change and stays the way that it is, then more and more people will flock to the satellite providers.
But this is a clear indicator that terrestrial radio is taking notes. Clear Channel owns an enormous slice of the terrestrial radio pie, and if this business model succeeds, then terrestrial radio will have more of a benefit over their competitors; they may even be able to completely X ‘em out (little satellite radio joke, please try to bear with me). And this is exactly the type of formatting that listeners want, right? People don’t like having to switch their radio every four or five songs just because it’s time for a commercial break. In fact, I don’t think I know anyone that actually listens to them. If I were forced to sit through them and analyze them, I would pull out my hair after ten minutes. It’s simply too pointless to listen to ads when all you want to hear is music.
The unfortunate aspect of this whole ordeal is the fact that advertisers are going to have to dish out some serious dough to make this all happen. Sure, they get to sponsor an hour of radio time – a dream for any company who wants publicity – but it’s going to come at a much higher cost. Radio stations would be able to jack up the prices as they see fit, and if this all goes according to plan, it may become the norm for companies that don’t hop on this type of bandwagon to be committing advertising suicide. Radio stations would surely take advantage of this, especially ones who are all about the profit (i.e. Clear Channel), and the whole initial purpose – which, I take it, is to compete with other radio formats – would be pointless as advertisers jump ship. They could easily run to internet radio stations and advertise for much cheaper, and as audiences for satellite and internet radio stations are ever-so-rapidly increasing, this may be more lucrative for investors in the long run.
But there may not even be a long run. This type of advertising comes at a time when internet radio is posed to die a slow and painful death. With most internet radio stations stamped out, the remaining net stations would most likely increase their advertising costs as a result of the heavy increase in fines. Advertisers would probably refrain from running to internet stations as they will be seen as risky investments, and the only other options would be satellite and terrestrial radio. So for Clear Channel, this would be a blessing. Advertisers may be forced to advertise on their stations in this way, and may have to cough up a lot of money to do so. Satellite radio may even crumble as a result of this (even though they’re already crumbling now), and terrestrial radio may be the last man standing.
Then again, there’s the option that advertisers will look at overall investment in radio technology as a risky investment. With all sorts of media hoopla about how radio is dying out and how other formats are suffering as well, advertisers may just stick to basic forms of advertising like on television and in magazines and completely ignore radio. This would have to happen after contracts run out, of course, but companies may not be so inclined to renew those legal bindings. I can’t blame them, either. Radio is a dying format altogether, and with this type of move that Clear Channel is making, it is becoming more and more clear that stations are starting to cash in on what they should have done years ago.
Call me pessimistic or call me a realist. This is a clear example of how the radio industry is suffering. This being my last post for this blog and all, I figure I would use this news story as a jump-off point to talk about the industry as a whole. Radio has recently taken some serious hits and people are just getting tired of the industry’s games. The public is still hesitant to pay for radio, internet radio is going to be killed, and terrestrial radio – well, it plainly sucks. I don’t even find myself listening to the radio anymore. I know that there are millions of people who listen to the radio on their way to work, but even they will figure out alternate forms of entertaining themselves along their boring drives to work everyday. iPods are all the rage, and people are going to be gravitating towards them as time goes by. Surely one could argue that people still look to mainstream formats to get the scoop on what’s popular in music, but even that is wearing thin. People don’t have the same trust that they used to in regards to radio, and the industry is suffering because of it.
Where do I see the industry going? I can’t imagine that a format as troubled as this will be able to succeed in the future. No one even pays attention to the radio industry (except for the Imus statements, but that had nothing really to do with radio itself) and the news that is written up about it. Do people really care about it anymore? I don’t think I know one person that listens to it. Then again, I’m in college and we’re a whole different type of music consumer. But really, it’s sad to have written about the radio industry for the past couple of months and seen it only get reported on when something bad happens. And that’s pretty often. Everything is met with skepticism, and nothing ever looks promising. Does that mean that I’m right in my assertions? Who knows. But all I can say, good luck to the radio industry, and thanks for reading. I’m out.

