At the Crossroads....or past it?

Have you heard of “Trajectories of Industry Change”.

Historically, all industries find themselves faced with gut-wrenching decisions related to remaining relevant.

Compare the lifecycle charts below for MySpace and broadcast radio.

The relevance clock for broadcast radio is nearing midnight which means little time remains for the industry to adapt to the times.

According to author and business strategist Anita McGahan, who observes all types of industries and companies, traditional radio may no longer be at a crossroads, but beyond it and should seriously heed the warning signs presented by new competitive media. She explains that broadcasters are misreading growth clues and may be arriving at false conclusions.

The most important thing to understand, she says, is that all business goes through lifecycles during which obsolescence becomes a real threat to the core of the business. New technologies shake up all industries and all companies at some time are faced with ‘defending their turf’.

So, what has really been going on with the broadcast industry?

Radio has been caught in an evolution as a result of Two Types of Threats of Obsolescence from digital media:

1. A threat to its core activities (those activities of attracting listeners with programming, technology and delivering consumers for advertisers), and

2. A threat to its core assets (durable resources such as talent and programming and intangibles such as programming knowledge and brand capital, that have historically made radio effective at delivering audiences).

Based on the nature of these threats, the broadcast industry has been on a growth curve with the following identities:

Phase 1 (1960-2000) – The Stable Trajectory when neither its core assets nor core activities are jeopardized. During this phase the industry was operating effectively and efficiently, it understood its strengths and weaknesses with no significant outside competitive threat(s).

There was a balance between investing in product and sales.

Persons using radio 1980-2012. Click on image to enlarge.

However, this phase began to weaken after an extended period of wealth and profit-taking. The traditional radio industry had been on a Stable Trajectory until around 2000-2001 when a “perfect storm” of weakening economies coupled with the rise of new technologies began to threaten its core.

Phase 2 (2001-2007) - The Intermediary Trajectory – the period after successful times when the industry began to experience new competition generally aided by new technology when either its core activities or core assets started to become threatened – but not both. It was a time when a “tipping point” was approaching and there was still time to adjust and avoid significant damage to revenues, profits and consumers.

This phase is often characterized by short-term profit-taking as a reaction to this new threat while avoiding investment that could later prevent competitive inroads.

According to Dr. McGahan, the traditional radio industry at this point of the trajectory curve should've fended off attacks to either its core activities or core assets by reinvestment in those core strengths. Defensive strategies should've come from company marketing, product,  sales and technical innovations which would've refreshed perceived obsolescence.

Phase 3 (2008-Present - A Radical Trajectory, the most serious, occurs when core assets and core activities are both threatened with impending obsolescence. Often considered too late in the lifecyle to recover from severe competitive and technological inroads, industries in the radical phase may never be able to infuse enough funding back into the business to fend off the momentum of on-coming competitors. It is often too late for industries in this phase to offset the negative momentum of consumer attrition.

These three trajectories of industry change can be applied to most industries.  Read more here.

With this in mind what path remains for broadcast radio?

I'd be interested in your thoughts.

Your feedback is vital to our company's on-going success. As always, I look forward to hearing from you.

Sincerely,

Dave Van Dyke - President

Broadcast Streaming is at a Crossroads

Bridge Ratings has been conducting a study since January of this year to determine the interest in broadcast radio simulcast listening on the internet. You can read about these studies here and here.  Part of the study included reactions by a sample of 1500 persons to custom, personalized internet radio stations which would allow panel members to adjust various musical aspects of their favorite radio stations.

Initial results and follow-up data points to great interest by our sample of average radio listeners 12-49 years of age in broadcast radio offering customizable internet radio stations.

Studies done by other researchers support the idea that broadcast radio simulcast internet streams do not garner great usage. One estimate states that 7% of their sample listens to AM/FM content on a mobile device.

New additional data from the Bridge Ratings studies confirms this. But our study goes further.

Of the 3200 panel members in a new Bridge Ratings parallel study, 87% preferred mobile listening to desk-top listening of any streaming music. Only 9% indicated they have listened to AM/FM content in the last seven days.

Only 14% of the sample had a radio app on their mobile device.  Less than 65% of those with radio station apps on their mobile devices use them.

When asked if they would listen to customizable  content on an internet radio station app if it was offered by their favorite station and usage almost quadrupled to 34%.

And when the panel was asked if they would use a radio station app which offered additional personalized content, 41% indicated they would.

Based on this and other studies available, the writing is on the wall for broadcasters seeking a path to increased usage of their radio station apps.

Increase Usage

Current usage of broadcast radio internet simulcasts is less than 10% of the audience. Offering personalized internet radio stations would greatly multiple use and potential digital revenue.

In recent days we've seen increasing adoption to accept this Bridge Ratings data.

Q: But why aren't broadcasters taking this path?

A: Many programmers are not financially incentivized for the audiences generated by simulcast internet duplications of their AM/FM stations.

Many programmers are concerned that an internet radio station offering that can be personalized by its listeners may cannibalize listening from their AM/FM stations.

Click on image to enlarge.

Extend the Brand

Our studies show that if done properly this would not be the case.

Inevitably, the broadcast radio industry must finally learn from years of trial and error by companies like Spotify, iHeart and Pandora. They learned early on that customized experiences generate use and loyalty.

Broadcast radio can develop digital solutions that offer personal, geo-located experiences for their listeners. The technology is available, but it seems as though the will is missing.

From these studies we see a non-future for growing listenership of simulcast AM/FM content.

Isn't it obvious yet?

We do see a vast landscape of opportunity as described here.

Are there any takers?

Dave Van Dyke
President
Bridge Ratings LLC

The Death of the Chart

Napster changed everything.

The music file sharing service debuted in 1999, flared as bright as a comet on a moonless night and faded almost as quickly due to legal pressures associated with licensing of the music that was shared on the application.

Yet, despite its short life, Napster really helped change the world of music consumption and started a ball rolling that continues to build momentum wiping out decades-old business models and creating angst for record labels and artists alike.

We live in a time when we all can individually listen, watch and read virtually anything we want, when we want it and how. Technologies have given us the gift of inflated self-appeasement. Listening to music, for example, is only a mass experience on the radio and in concert venues. The rest of the time, listening to music is mostly an individual pastime as technologies push or allow us to pull only the music we like from the internet.

Before all this technology music charts published by grand old publications like Billboard or Cashbox or industry-focused trade publications like Radio & Records were the way that we were able to ascertain the popularity of music. In fact, music countdown shows were the mainstay of radio as soon as "Rock & Roll" gained mass audiences. Dick Clark saw the future and made a career out of top 10 countdown shows on TV.

Curiosity about where our favorite songs were positioned on the charts or how fast a song traveled up and down the top 100 list, generated great interest from the public and especially record labels.

But technology is about to take another victim. The music chart concept no longer presents a relatable way of showing popularity. There are so many ways of consuming music today that ranking song popularity on a published chart is becoming a more difficult task than ever. Album and single sales have turned into digital downloads, music sharing and music streaming. Popularity varies depending on the platform one consults.

So, is the chart on its way out?

From the public's perception it is.

Consumers may inadvertently discover music and video charts that pop up during on-line searches or news stories, but the majority don't go looking for them.

During a recent Bridge Ratings study of 12-24 year old music consumers, only 15% referenced a chart in a typical week to determine either the popularity of a song or artist they enjoyed or to learn of any new songs.

Even referring to charts reflecting digital sales or streaming popularity carries little interest for consumers. Popularity has become a more personal, one-on-one discovery and word of mouth is becoming more important than ever as a way to distribute popular taste especially among friends.

For this age group, song popularity and music discovery now comes in a variety of ways: word-of-mouth or sharing music with friends being the most dominant. Broadcast radio came in second. Referring to charts was way down the list.

Charts have been a mainstay of the radio and records industries and they will likely continue to be.

For their customers and clients, though, there are other - more personal - ways to determine popularity.

So, as a fan of charts, it hurts to know that charts may be another anachronism of a time when following, even collecting charts of the Top 100, or your favorite radio station's Top 30, was almost a hobby for some.

Dave Van Dyke
Bridge Ratings LLC

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