Newspapers Are In Trouble, But Radio Isn't!

I can't believe how radio gets lumped in with newspapers and television in discussions about how old media is not longer able to sustain their business models. Newspapers are in trouble. All you have to do is follow the news the past few months to see what is happening to this once robust industry. But is radio facing the same troubled fate? That's easy, No! The problems radio faces are not even close to what newspapers and television face. Let's look at the facts:

Newspapers are expensive to run. That bit of news is not a revelation to any one. Newspapers involve printing presses that cost millions, paper and ink are consumed in huge volumes and the price of these commodities changes daily. Pressmen, delivery trucks, truck drivers, and the trusty paperboy are all still a part of the chain. And that doesn't include writers, editors, photographers, and all of the support behind the scenes.

Newspapers have four sources of income and ALL are down.

First, subscriptions are down. Young people are not subscribing as their parents did and many older folks, who have discovered their favorite newspapers on the Internet, have dropped their subscriptions. And they often compete in their same markets with weekly free newspapers.

Second, news stand and news box sales are down. I can't believe the number of times I went to purchase a paper from a machine, not having three quarters in my pocket.

Third, classified advertising is down over 50% in many markets. Web sites like Craig's List have made classified ads FREE on the web. Other web sites like Autos.com, Cars.com, AutoTrader.com, CarSoup.com have taken a big bite out of the automotive classified sections.

CareerBuilder.com and Monster.com have cut into employment advertising, in addition to a number of regional employment sites. And even obituaries have been hurt by national sites like legacy.com and free on-line obit services in many smaller markets.

And added to that, real estate brokers and agents, huge print advertisers, are not spending large amounts since the beginning of the housing crisis.

And forth, display advertising is down 28%. Not a pretty picture as any one can agree.

How does radio compare?

Radio stations are not expensive to run. As a matter of fact, they are fixed expense businesses with towers, transmitters, antennas, and studio equipment that is probably paid for and payrolls that don't include all of the staff necessary to deliver the newspaper.

Newspapers have subscribers but radio is and has always been FREE! Radios are ubiquitous. They are readily available, and are included in other purchases like cars, clock radios, and CD players. Every one has access to several and they are free to use.

Newspapers lost classifieds, radio never had them. Newspapers lost subscribers, radio listening is down only slightly, and still is heard by over 90% of the population each week. And while display advertising is down 28%, spot radio advertising is down, but not as a result of the business model being outdated, but simple down because of the economy and down as a result of automotive advertising being off substantially. But radios non-traditional revenue is up, and it's Internet revenue is up, as well.

Sure, spot radio is interrruptive advertising. But it is advertising that listeners have come to expect as the small price to pay for this free, readily available service. Television, satellite radio, ipods, mp3 players, all have found a niche, but not at the expense of radio!

Is the radio model changing? Sure it is. But it is changing slowly, and as it does radio has begun to embrace both non-traditional revenues (events etc.) and Internet sales, streaming, and using micro-sites, landing pages, and the synergy of moving listeners to their web products as a way to evolve radio's business model. As spot sales decline, these new categories will fill in and a new model will emerge.

Television has it's own problems. Television stations are expensive to operate. Programming is expensive to create and Tivo and Digital recording devices have made it easier to fast forward past the commercials for content. But radio doesn't have these problems. No one is fast forwarding past the commercials. You might argue that listeners can change the channel, but they have always been able to do that.

Radio is changing to be sure. But, unlike newspapers and television, our model still works, evolving to be sure, and radio might emerge from the recession a smaller business, but the radio model is still healthy as long as we realize that it is changing and embrace other revenue streams like the Internet to keep us moving forward.

What do you think? I'd love to hear your comments.

Radio's Uncertain Future

We are experiencing a fundamental change in the radio industry.

1. Radio revenues will continue their decline until 2013. At that point revenues will again begin to increase but we will be a smaller industry and a return to the 2003 billing levels is far into the future, if ever.

2. Rate integrity is an outdated idea. We will have to make rate concessions to retain advertisers. A failure to do so will result in them going elsewhere (not radio) and they will not return.

3. Advertisers will be slower to pay. The net 30 will become 60 and advertisers (like Budweiser) will want us to extend credit to 120+ days. We take the deal or we will be eliminated from their ad schedules.

4. Advertisers will demand more and more accountability in our ability to provide a measurable return on investment. Value will become the strategy.

5. Barter will again be a way of doing business. In tough times many people are willing to barter their services in return for advertising schedules. Where we can do so and cut cash expenditures, it might make sense. Remember the half cash/half trade deals from past recessions.

6. Bad debt write-offs will increase. There is no way around it, if we extend credit past 60 days, some advertisers will not pay or worst yet will go out of business. We will simply write off more bad debt.

What can we do?

First, we must recognize that this fundamental change in the media business will present opportunities for those companies willing to embrace the change.

We must think of ourselves as being in the media business, NOT the radio business. We must begin to think web first, then radio. As a result, we need to:

1. Make the web part of EVERY advertising schedule. The web gives radio the opportunity to have a visual component for the first time. This opens up new categories of advertisers like real estate, retail medical, and others.

2. Use landing pages, jump pages, squeeze pages and micro sites as a means of bringing a visual component to out advertising and giving more value and better accountability to our clients.

3. We can no longer retreat to selling spots with the mistaken thinking that this is our core business and this will get us through the storm. That’s exactly what Kodak did. When the world was switching to digital photography, they stuck to their core business and invested in better film. Now Kodak is playing catch-up in a crowded market they once dominated. They should have been the leader in the digital photography transformation, but the stuck to their guns and did what they always did.

“If you always do what you always did, you will always get what you always got.”

4. We must embrace the Internet; we must spend most of our training time and training money on developing the Internet “brands” of each of our products.

“We must not expect success BEFORE we have made the investment! We must invest, then implement, before we can ever expect success.”

“R.O.I. no longer means return on investment, it means Risk of Inaction!”

The natural tendency when things are bad is to retreat to what you know. That strategy worked at one time. It won’t work NOW! We can’t afford to put a toe in the water of new media; we must jump in head first. Remember:

“A timid trapeze artist……is a DEAD trapeze artist!”

4. We must hire web savvy employees in ALL departments. Disk jockeys are as obsolete as 45’s. We can no longer run our business hiring the same people to do the same jobs they once did. The business has changed and so have the job classifications. In the new media company that also does radio, the jobs we will be hiring for are web designer, IT specialists, code writers, database managers, and digital marketing specialists.

“Do you want to run your business or career as if; the past will last just a few more years? Or, that the future will come faster than you think?”

From what I can see there are two distinct models of how radio will be operated in the future that are emerging.

First; “the low cost, mostly generic, music-based, but higher margin station.” This is the model that the top broadcast companies seem to be embracing. Formats that are somewhat generic (programming from one central location, say San Antonio), with a choice of a nationally syndicated morning show, and voice tracked jocks, usually national and generic, or regional, doing several stations a day in the region. Their web sites will be national boilerplate with generic information linked together and sold as part of a larger ad network.

Why this model?

First, it IS cheaper to run. It provides a bigger margin for investors of publicly held companies. It helps when they are writing off millions in lost value and good will. It works for a percentage of listeners who simply want music and little else, especially when a company has critical mass (five or six signals) in the marketplace. And it can be run by out-of-towners, with little or no connection to the market they are serving.

And second: “the high value, hyper local, content rich, news and information based, but lower margin station.” This is the model that many smaller and local broadcasters are embracing. The formats don’t rely as heavily on music elements, and what music that is played, is researched locally if possible. These stations have a local morning show, with lots of local information, news, sports and community. And they will be voiced tracked the remainder of the day by local voices, that do tracking as only a small part of their job, which is that of content creator. Their web sites will be hyper-local; generally heavy on news, sports, format information, concerts, and local events.

Why this model?

First, it might be the only way to survive against the clusters owned by the big conglomerates. It embraced the community, provides a resource for charities, local events, politics, news, and opinion. Although there is a smaller margin of profit (where was it written that radio had to make 40 cents on a dollar), there is a huge increase in good will, loyalty, and “pillar of the community” status, that can’t be quantified. And it can only be done well locally. Another future benefit comes when the music industry imposes a fee for artist royalties through Sound Exchange. Although the industry is fighting the added fees, they will come. It’s not a matter of if but when, and the future usually comes faster that we predict.

Which model is right?

Well, BOTH. It really depends on the situation in each individual market, what your holdings are, what percentage of the market you control, and who are you competing with. I can only offer this; that unless you’re the big dog, you will never out do the publicly held companies at the low cost higher margin model.

Every broadcaster in America must decide which model they will follow and make that known, with complete transparency, to their entire organization from the president to the janitor.
Why? Because each model requires a different thought process. The first is about cutting costs, consolidating formats, morning shows, and web sites. They will bill less money that they once did, but they will maintain close to the margins that stockholders have come to expect.
The second model requires building local content, hiring local content creators, and getting that information disseminated across all platforms, radio, web and cell phone in their market. It will cost more, but their billing will be higher, and their margin smaller. But these operators understand the good will that comes from serving the public’s interest, convenience and necessity, which, by the way, is what ALL licensed broadcasters are charged to do.

Rocky Mountain News Video

Final Edition from Matthew Roberts on Vimeo.

Here is the poignant video of the closing of the Rocky Mountain News in Denver. This nearly 150 year old newspaper printed its last editions this past week. The video shows the real drama of people loosing jobs in this age of new media.

How will our companies react. Will we make the necessary changes before this happens. It's worth a view.

Many American's Wouldn't Care If Their Local Newspaper Folded

That interesting piece of news is the result of a new study released by Pew Research. Fewer than half of Americans 43% said that loosing the local newspaper wouldn't hurt civic life in their community. even fewer 33% said they would personally miss reading the local paper if it was no longer available.

As expected, of those who regularly read the paper 56% believe that it would hurt civic life in their community and 55% would personally miss it.

Among younger people, the demise of the local newspaper wouldn't be a great loss. Pew Research found that only 27% of Generation-Y (those born after 1977) even read the newspaper. Fewer that a quarter 23% of those younger than 40 would miss the paper they read most often if it went out of business.
There are many more aspects of the report that were released by Pew Research and another report on The Rush Limbaugh effect is also worth noting. Rush was the number two political story in the news last week as his feud with President Obama got the national spotlight. You can check out that report by clicking here.

For a complete report on the demise of local newspapers, click on the link here to go to the Pew Research site.

Who's Using The Web?

If you think it's only young people using the web, then think again. Older adults have not only embraced the web but are using it for more hours each month than their younger counterparts. That's according to a new study by Nielsen Company this past week. The study, "The A2/M2 Three Screen Report" of Television, Internet, and Mobile Usage in the U.S.," outlines usage on the three screens, television, the computer and your cell phone or other mobile device.

A few finding of interest to me. One is the number of time shifting devices in use. Currently 29% of households have a digital recording device, up from 27% in the third quarter. And we know from research that 80% plus fast forward past the commercials. That amounts to a whole lot of money spend by television advertisers only to have their commercials eliminated from the recorded programming by simply fast forwarding the device. That certainly doesn't bode well for the television industry assuming that the number of devices increases at the current rate.

The use of mobile web viewing is up to 11 million households an increase of 9% versus the previous quarter, due mainly to the increase in available content.

And the average 35-44 uses the web a whopping 38:40 hours a month and represents the largest demo for Internet Usage, Adults 45-54 are 37:46 hours, and 55-64 is 33:39 hours. These older cells who love news provide a fantastic opportunity for growth of local news outlets.

Other findings of interest include:

• 31 percent of Internet activity occurs when consumers are also watching television.

• Men continue to watch video on mobile phones more than women, and women continue to watch video on the Internet and television more than men.

• Weekdays outpaced weekends for online video viewing in October with 65% of online video viewers streaming content between 9am–5pm Monday through Friday, versus 51% of online video viewers logging on between 6am–8pm on weekends.

For a complete look at the findings, go to Nielsen's blog by, clicking here.

The Fastest Growing Online Category?

What is the fastest growing Online category. I's Job Search! With the current economy that shouldn't surprise anyone. Last years, Job search web sites saw visits increase 58%, to 18.8 million visitors, and millions of Americans are looking for a new job.

CareerBuilder.com leads the category with 9.1 million visitors up a whopping 78% vs. 2007! Other category leaders saw increases in the triple digits.

The research conducted by comScore a premiere digital media measurment company.

Job Search Category Total U.S. (Home/Work/University Locations December 2008 vs. December 2007)
	Total Unique Visitors (000)
Site	Dec-2007	Dec-2008	% Change
Total Internet: Total Audience	183,619	190,650	4
Job Search	12,445	18,826	51
CareerBuilder.com Job Search	5,132	9,121	78
Yahoo! HotJobs Job Search	2,282	5,605	146
Indeed.com Job Search	2,712	5,106	88
Monster.com Job Search	4,131	3,776	-9
Simply Hired, Inc.	1,188	3,104	161
JOB.COM Job Search	731	1,237	69
MSN Careers by CareerBuilder.com Job Search	593	1,004	69
AOL Find a Job by CareerBuilder.com Job Search	504	856	70
Jobs.net Job Search	350	368	5
Jobster.com Job Search	186	365	97
Source: comScore Media Metrix

Jack Flanagan, executive vice president of comScore, said "While much of the U.S. economy is suffering, job search has performed significantly better than average web site during these challenging times... Americans are turning online for this assistance now more than ever."

Read the entire report, click here.

Local Web Advertising Cools

Local Advertising has accounted for the most recent growth of Internet advertising over thet past few years. That tremendous growth curve has begun to level off and even decline in some areas. Although local business are chopping their ad budgets with the economy in a downspin, local Internet advertising, although not what it has been is probably one of the very few bright spots. To read more, check out the article from the Wenesday, February 18th edition.

Wall Street Journal- Local Web Ad Markets Cool Down.