Take a look at these revenue trends for radio and newspaper. Looks pretty bleak, and the two media track each other almost identically. At first glance, one might interpret the graphs to mean the two media are in the same boat, and the logical conclusion might be that whatever ails newspaper must also be ailing radio (or vice versa).
We don’t buy that conclusion.
The problems with newspapers in a digital age are obvious. In a digital world where information wants to be free, newspapers charge for it. In a digital world where information is instantaneous and continuous, newspapers come once a day. Classified advertising makes up to half of a newspaper’s revenue. What’s the chance of hanging on to that against Craig’s list?
All of the Internet’s strengths target newspaper’s weaknesses, so it is understandable that newspaper revenues would be in a free-fall.
But what about radio?
Despite all the new-media punditry about radio’s growing irrelevancy, all the evidence suggests otherwise. Virtually every credible research study on radio suggests that audiences are steady, and perhaps even growing.
The apparent decline in Arbitron listening levels can be traced to a flawed Arbitron methodology. The apparent declines have been disproved by Nielsen using a much more robust methodology. Nielsen found that even young listeners were listening to radio at levels similar to the pre-digital era. Read more and find links here.
These findings are consistent with research that shows that heavy new-media users are also heavy radio users. Media consumption is not a zero-sum game. Media consumption can grow as methods to consume grow.
Smart phones were supposed to kill radio, but the research suggests that the iPhone and other smart phones have minimal impact on radio. Despite the presence of MP3 players in nearly all smart phones, the amount of time consumers spend listening to music (from any source) on phones is minimal.
The apparent success of Internet radio applications for the iPhone and Blackberry is illusionary. Research shows that while people delight in downloading free apps for their smart phone, virtually no one actually uses the apps. The majority of people download the app, install it, play with it for a short time, and then forget about it.
This shouldn’t come as a big surprise. People also download free computer software they never use. People download “free” songs from peer-to-peer sources and never listen to them. Why would we expect anything different with phone apps?
Research also shows that people are satisfied with their favorite radio stations. As we pointed out here, people tend to distinguish between the majority of radio (which they dislike), and their favorite radio stations, which they are quite happy with.
So the abandonment of radio by listeners is a myth, pure and simple. It is a myth perpetuated by people who have something to gain financially by convincing others that radio is dead.
If people continue to listen to radio, if people continue to enjoy radio, then why the steep decline in radio revenues?
Because the new media pundits have won.
As mythical as it is, the argument that radio has been marginalized by new media seems reasonable. Everybody knows somebody that has stopped listening to commercial radio. Everybody knows somebody who has satellite radio. Everybody knows somebody that loves Pandora. Everybody walks the streets and sees countless iPod users isolated in their iTunes world.
None of this means anything, but personal experience is a powerful influence, even when it leads to the wrong conclusion. Add to that, the problems of newspapers.
Everybody knows somebody that has stopped reading the newspaper. Newspapers are going bankrupt and completely disappearing.
Newspapers are old media. Radio is old media. Newspapers are in trouble, so that combined with anecdotal observations, means radio must be in trouble. So when new media pundits declare radio dead, it seems credible.
Who are the people most influenced by new media punditry? Agency people, media buyers, and large advertisers. These people believe in new ideas and new opportunities. They salivate at new marketing options. Where do they find the money to fund all these new opportunities? By cutting back on old media. But rather than cut back just on newspaper, they target radio as well.
Radio has only itself to blame for the financial shape it finds itself in. It let new media pundits perpetuate a self-serving myth about radio, and radio did nothing about it. It actually did worse than nothing–it panicked. Radio acted like it was in trouble, which only played into the myth. Radio acted scared, so it must be true.
Radio needs to embrace social networking, the Internet, and other digital opportunities, but more importantly, it needs to regain its confidence. Acting timid and fearful has helped new media win. Radio’s only hope is to once again believe in itself.