Imagine cruising down the highway on a long trip to your favorite vacation spot. Imagine you are stuck in traffic, late for work on a Monday. In both scenarios, you need entertainment to pass the time. Now imagine you have no AM or FM radio for entertainment.
Believe it or not, this little horror story is going to get very real in the near future. In an article for Radio Ink – a site for radio marketing and management – Eric Rhodes, the site’s publisher, discussed this very possibility.
Rhodes heard this at the recent Radio Ink Convergence Conference in California. Essentially, representative from General Motors (GM) bluntly stated this very notion as a fact. This will be happening. They will be removing AM/FM radios from future models in the next five years.
One might think that a change this big would send a massive, reverberating tidal wave of change across the industry. In a way, that is true, but only for major conglomerated AAA radio stations. For the public, the current warfare over listenership is of little real consequence. This is because the listener already won this battle a long time ago.
The truth is that, while this will eventually lead to big changes, it will not be instantaneous. According to 2013 State of the Media report this progression was a long time coming. Nevertheless, conglomerated radio companies such as Clear Channel need to brace for impact.
According to the report, 83 percent of radio’s advertising revenue came from spot ads on broadcast radio. A report by eMarketer.com has also noted how nearly 90 percent of ad spending for radio companies is for on-air ads. Meanwhile, online radio listenership has been steadily climbing the ladder.
According to the eMarketer report, the number of monthly Internet radio users has risen from 93.1 million in 2010 to 132.6 million in 2012. That number is projected to climb as high as 176 million by 2016. What do all of these numbers mean? In short, this is another mass medium going through an adjustment period.
This is not unlike the adjustments taking place at news companies such as the New York Times. With online news media, it is cheaper and more convenient for the public. The problem for news companies is that most of their ad revenue was (and still is) in print ads.
The same thing is happening to radio at the moment. While the eMarketer.com report did show a steady rise in online advertising, that number is still below five percent. Online services like Pandora and streaming applications like Spotify have to overcome a major hurdle in the form of royalties to bands and record labels.
There are two ways these companies do this: ads and subscriptions. Pandora now offers a mobile listening application where users can get up to 40 hours of service per month. The catch is that these 40 hours are ad-free. In other words, there are no pesky ads between songs.
According to an article by John Letzing of the Wall Street Journal, advertising is still one of the chief ways Pandora makes money. The site generated $109 million in the fourth quarter of 2012. To make matters more complicated for these companies, they have to pay
At the same time AAA radio stations are going to lose more listeners in the coming years. It is an interesting pickle the radio and music industry will attempt to sort out in the coming years.
From the public’s perspective, this massive headache in the form of corporate warfare is a great thing. It means more start companies and more chances to listen to their favorite bands and musicians. There are already countless smart phones, laptops and tablets being used every day by the public. Each of these pieces of technology can access listener-friendly services such as Spotify, iHeart Radio, TuneIn and many more.
These apps are exciting to the public. They can customize their own playlist and hear the music they want to hear. It is not the focus-grouped Top-40 radio hits on FM stations. You are your own program director with these websites and applications. In that regard, listenership will most likely climb at a sharper rate in the years to come.
At the same time, broadcasted AM/FM radio will never completely die away. Just like news, the medium will adapt with the technology. State of the Media noted that online news just surpassed print news in readership. At the same time, printed news still has an audience.
It could be that radio stations will be mostly online in the future. The public will simply gravitate toward the cheapest and most convenient option available. With so much out there on the web, the listeners will always win. These companies are at the public’s mercy because they rely on our time. They will always be chasing the public for their time. And they will never win the market.
*** This editorial is an opinion stated by the writer and does not represent the views of The Rotunda or Longwood University.
