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FMQB Thinking Ahead!

Saturday, May 18, 2013

April 20, 2012

Darwinism and the Radio Jungle
By Richard Harker

Richard Harker

It’s a jungle out there.
            Predators and prey locked in continual battle with winners surviving to fight again, and losers struggling to stay alive.
            Welcome to the radio jungle.
            The battle is for market share, successful predators gaining share at the expense of others who see their shares evaporate.
            Sometimes the battle is quick and decisive like a lion’s attack. Other times it can be an agonizingly slow process like a Green Anaconda consuming a capybara.
            Like the capybara, whole formats can disappear in this jungle, taking dozens of stations with it.
            The history of radio is a succession of once highflying stations crashing and burning, while once-struggling stations coming out of nowhere to take their place.
            Radio is the essence of survival of the fittest, and always has been.
            But the jungle is changing.
            There are new predators and a new wrinkle in the survival game–new media. The latest predators aren’t found on our radios, they are found on the listener’s computer and smartphone.
            But we’re getting ahead of ourselves. To understand radio’s future, we need to begin by looking at radio’s past.
            Compare an old ranker to your latest. You’ll probably find stations that aren’t around any more. You’ll also find some new stations that weren’t there before.
            The longer the time between rankers, the bigger the changes.
            But why?
            Why should previously successful stations fail, and how is it that previously failing stations suddenly take off?
            In the fall of 1978, New York’s WKTU grew over 700%, from a 1.4 share in the Spring to an 11.3 that Fall.
            Despite an FM being number one (remember this was a time when most CHRs were on AM), the next four stations were all AM stations. The second FM, WRFM, Bonneville’s Beautiful Music station, trailed in sixth place.
            A decade later, nine of the top ten stations in New York were FM, but WKTU was not among them.
            By that time Disco had cratered, and in an effort to find a viable alternative, the station had tried no less than three formats.
            In a decade, the station had fallen from first to seventeen in one of the most stable markets in the US.
            WKTU wasn’t the only Cinderella-in-reverse story over that period. Only two of the top ten stations from 1978 were still in the top 10 a decade later, WCBS-FM and WOR.
            How is it that once highly successful stations fade away? What determines which stations take their place?
            In the jungle, it is the hungry that innovate. It is the starving that find a way to eat.
            Historically, radio format innovation hasn’t started at successful major market stations owned by large groups.
            These stations were too successful to change. Their interest was in protecting the status quo.
            It was the hungrier small groups owning small market stations that found better ways to win. They had no choice.
            It’s the player with little to lose that swings at the fence.
            WKTU had a 1.4 share up against WABC’s 9 share. What did WKTU have to lose?
            Radio is full of rags to riches to rags stories, most not as spectacular was WKTU’s, but just as telling.
            Hungry innovators exploit opportunities created by the laziness of dominant stations; then years later find themselves the victim of another generation of hungry innovators.
            The difference now is that radio’s evolution towards fewer large groups has left the entire industry vulnerable to a second hungrier group of predators, new-media.
            Here’s one indication: Name the last big format breakthrough.
            Personalized radio? That’s courtesy of Pandora.
            Crowd sourced radio? That’s courtesy of Jelli.
The truth is that there hasn’t been a broadcast radio format breakout since consolidation created today’s mega-groups.
            Too often today’s broadcast groups play to not-lose rather than to win. Better to protect stable mediocrity than make a daring run towards the top.
            And with fewer small operators, the guys of the past who swung at the fence are all retired.
            What does all this say about 2012 and beyond?
            It say that broadcast radio had better get hungry and start innovating, or radio will become new-media’s lunch.
            Today’s Arbitron ranker might list twenty or thirty stations, but tomorrow’s ranker (probably produced by Arbitron’s successor) might list hundreds or thousands of alternatives.
            Pandora already claims nearly a 5.8 share of US radio listening.
            Maybe they’re right, maybe they’re just making the number up since there’s no way for them to actually measure share that way, but the very fact they can throw a number out should be sobering.
            That share (whatever the number) is coming out of local radio’s share.
            Today few broadcasters may be swinging at the fence, but our online competitors are.
            What can broadcast stations do to stay on top of the radio jungle food chain?
            Radio history tells us that stations that play the game cautiously ultimately lose. To mix the metaphor, hunt or be hunted.
            Few leading Beautiful Music stations went on to become leading Adult Contemporary stations.
            Disco had a great but brief run. As the format flamed out, few Disco stations were brave enough to bale with the listeners. They thought the party would continue.
            Alternative, 80s, Smooth Jazz, on and on. Each format produced winners, and too often the winners became losers.
            The message for radio is that no format is forever. Every format morphs, evolves, and in many cases fades away all together.
            The cautiousness and timidity of radio today has to be replaced with the boldness of the past.
            Speed and nimbleness has to replace the inertia and ossification that is broadcast radio today.
To borrow a phrase from economics, radio has to embrace creative destruction, a willingness to continually reinvent itself even while things seem to be working.
            The radio jungle has become bigger and meaner than ever.
            If broadcast radio has any chance of remaining at the top of audio entertainment’s food chain, it will require dramatic changes, but it sure beats ending up as new-media’s lunch.

Richard Harker is President of Harker Research, a company providing a wide range of research services to radio stations in North America and Europe. Twenty-years of research experience combined with Richard's 15 years as a programmer and general manager helps Harker Research provide practical actionable solutions to ratings problems. Visit www.harkerresearch or contact Richard at (919) 954-8300.