In this week’s Programming To Win column, Richard Harker looks at the state of the radio industry and declares that we are in the midst of its “most dangerous experiment.” After years of cutbacks and personel consolidation, what effect will it all have on radio as whole? Harker examines some of the possibilities.
Richard Harker
By Richard Harker
Radio is in the midst of the greatest transformation of local radio since national networks faded in the 1950s. The rush to trim local operations and consolidate many operational tasks at the corporate level is a bold experiment that moves local radio into untested and uncertain territory.
The audacious action will certainly change the face of radio. What isn’t clear is whether radio will be stronger for it, or suffer as a result.
Maybe the transformation is necessary for local radio to survive the onslaught of digital challengers. Maybe radio has no choice.
But what if this transformation sacrifices the very things that have made local radio a success? Could it be that these changes will ultimately hurt local radio, and make it even less able to successfully compete against national digital services?
Radio revenue reached an all-time high of over $20 billion in 2007. Then the Great Recession hit.
The industry took an immediate hit of $2 billion the next year, and hit bottom the following year as it watched nearly $5 billion of revenue evaporate.
Today with the recession years behind us, radio continues to perform well below 2007 levels.
Faced with massive declines in revenue, radio’s reflexive responsive was to cut expenses. Whole budget lines were wiped out. No more marketing, no more research, no more promotions unless clients paid for them.
But the cut backs didn’t end there, and didn’t end with the recession.
We continue to see the elimination of expensive morning shows. Program Directors are still forced to double and triple-up on the stations they over-see. New PD jobs often include an air shift. Voice tracking and syndicated shows continues to grow replacing more and more local personalities.
Radio stations that were once teeming with activity are now silent ghost towns full of empty offices and cubicles.
Never has radio tried to do what it does with so few people and so few resources.
The problem is that no one knows what the long term impact on local radio will be.
Maybe local radio didn’t really need all those people. Maybe a Program Director for each station was a luxury that radio can no longer afford. Maybe radio doesn’t need to market, or research their product, or have a local morning show.
But what if radio does need all these things? What if listeners miss locally produced products, and reject the nationally produced substitutes?
Local radio may be giving up its most powerful weapons in the battle against national services like Pandora.
The cut backs are troubling enough, but radio’s grand experiment goes well beyond just smaller staffs and fewer resources. The very way radio has traditionally made programming decisions is under attack.
The prototypical local radio station is a distillation of decades of experimentation. Over time thousands of radio stations through trial and error continually refine ways to grow an audience.
Through innovation, evolution, mutation, and blind luck every local radio station delivers a slightly different, and more importantly local version of their format.
This massive laboratory of local radio has been churning out thousands of new ideas for decades, and this is why national digital services have had a hard time getting a foothold.
There are roughly 600 CHR stations, nearly a thousand AC stations, over 2000 Country stations, and hundreds more in other formats. Historically, most of these stations had their own Program Director.
Each Program Director made some contribution to the success of their format, some through failing; others through succeeding.
The successes bred more successes, the failures faded away.
It is the sheer number of mad programming scientists in this laboratory of radio that made local radio so successful.
Radio’s Grand Experiment is challenging this diffused approach to programming creativity, replacing station level decision-making with corporate control of programming.
Corporate people may be brilliant, but it remains to be seen whether a handful of decision makers can make better programming decisions than hundreds or thousands of less gifted Program Directors.
Tightly controlled centralized decision making is likely to result is a dramatic decline in experimentation and innovation. Corporate control of programming decisions also means that large numbers of stations will succeed or fail together.
The fundamental question that we have to ask is why the Grand Experiment? What is wrong with local radio programming that needs fixing?
We know that revenue is down, but it isn’t clear that these changes are going to grow revenue. Eliminating a few hundred Program Directors might temporarily help the bottom line, but is local radio ultimately stronger or weaker as a result?
Consider not the economic health of radio for a moment, but rather the programming health of radio.
Many consider Pandora the future of radio. The service claims 77 million active (monthly) listeners, and total consumption of 1.73 billion monthly listening hours. The numbers seem pretty impressive, but we have to put them in context.
According to Nielsen, broadcast radio has 242 million weekly listeners, and total weekly consumption of 4.6 trillion listening hours of listening.
It’s really no contest.
Local radio appears to be losing one or two percent of its TSL a year, but the losses are coming at a time when staffing is being cut, budgets are being slashed, and this Grand Experiment is under way.
Should we blame Pandora for local radio’s loses, or is the damage self-inflicted?
Ponder this: If we were to add just one single quarter-hour of listening per day per station, radio would add more hours of listening than Pandora’s total. One quarter-hour.
We at Harker Research have spent decades talking with listeners learning why people listen to radio. This research has taught us that there is a special bond between listeners and their favorite local radio stations.
This grand experiment of nationalizing, standardizing, and ultimately homogenizing local radio is going to test this special bond.
We are going to find out whether we can take away a great many reasons why people listen to local radio and get them to continue to listen. And it is going to take years before we find out whether radio got away with it.
Old habits are hard to break. We call it listener hysteresis.
When a listener’s favorite radio station no longer gives her what she wants, she won’t notice right away. It can take months and even years before she begins to search for something better.
Eventually she begins sampling alternatives, gradually shifting quarter-hours from her former favorite to other stations or digital alternatives. Ultimately she completely abandons her former favorite.
We are in the very early stages of this experiment. Maybe national formats and central control are the answer for radio today. However, if the strategy is wrong, listeners will have even fewer reasons to choose local radio over the digital alternatives, and we will see it in lower satisfaction, eroding AQH ratings, and ultimately a much diminished industry.
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.
