Will the Internet Kill the Radio Star?
This is based not only on history, but also on research commissioned by Interep in September by four audio technology professors from Kellogg Business School, the Annenburg School of Communication and MIT Media Lab.
Obviously, all media have been affected to some degree in recent years by the growth of the Internet and the proliferation of other media options now available in the home. Radio is no exception. However, the effect on radio has been minimal compared with other media. The reasons are varied. For one thing, about two-thirds of weekday radio listening is done out-of-home - always one of its primary marketing assets - and as of yet the Internet is limited primarily to home or office use. Secondarily, radio is used as accompaniment to online usage more so than other media.
Of course, as technology advances, this may change as new competitors enter the media arena and wireless Internet access becomes more viable. In light of this, marketers need to be cognizant of how the changing media environment may affect the way they do business. The two main audio technologies on the horizon that marketers may want to watch are satellite radio and streaming audio.
Addressing satellite radio first, two companies, Sirius and XM, plan to offer a subscriber-based audio entertainment service to in-car listeners. Sirius has agreements with Ford and Chrysler, XM with General Motors. Both services plan to offer 100 channels of subscriber-based, niche programming, with about half devoted to musical formats, and the other half devoted to news, talk and sports formats. About half of the channels also will sell advertising.
As with the rollout of FM radio, satellite radio can probably expect similar technological bugs and issues with consumer demand for some years to come. This is not to dismiss the new technology, but rather to place it in a more realistic context within the total audio entertainment environment.
How will satellite radio eventually fit into a marketer's media plan? It can be argued that satellite radio's niche programming may attract commercial radio's fringe listeners, or pull back listeners who now play compact discs in their cars or on their Walkmans - thus expanding your reachable consumer base. For example, satellite radio will offer multiple jazz stations, classical music and other special-interest formats that may not appeal to commercial radio's core listeners.
On the other hand, satellite and streaming may remain perennial niche broadcasters. Once their new formats attract a large enough audience, terrestrial broadcasters are likely to duplicate that format, making it available to their mass markets. This is not unlike what people who own daytime AM or class A FM stations continue to experience today. In order to offer unique programming, niche programmers are forced to constantly develop new formats to attract advertisers. And the cycle continues.
This leads to the other emerging audio technology attracting more and more of marketers' attention - Webcasting.
Anyone who has listened to streaming probably has found that there are still technical and logistical deterrents to this listening experience. Broadband access is, of course, the first obstacle. But bandwidth is not the only problem. A colleague at the MIT Media Lab, which is equipped with extremely high bandwidth access, said that even he is plagued by stalls and dropouts that make it frustrating to listen to streaming audio.
Moreover, streaming audio will not reach its potential until it can be accessed from mobile, wireless devices - allowing it to duplicate terrestrial radio's mobile accessibility. While rudimentary versions of wireless Internet devices are now available to perform limited activities, the introduction of wireless Internet devices capable of supporting scaled streaming is several years in the future, especially in the United States.
Last, but not least, is the issue of cost. Ironically, unlike broadcast, the more listeners, the higher the cost is to the broadcaster. For this reason, it may take awhile for content providers to strike a profitable balance, thus limiting the number of marketing venues for some time.
But, while these deterrents may slow mainstream adoption of streaming audio, it will occur. Currently, about 20 percent of Americans have sampled audio streaming. Most marketers agree that the tipping point for eventual mass adoption is 25 percent, a watershed mark that may be reached within the next six months.
Is the mass adoption of streaming audio important to marketers? Certainly. The promise of precise targetability and personalized advertisements is an exciting prospect. But just as importantly, this type of marketing is unlikely to replace traditional media advertising, but rather to complement it.
History tells us that communications technologies tend to exhibit patterns. In general, a new media technology (and its subsequent advertising opportunities) does not replace its predecessor because it cannot reproduce the exact experience or benefit. For instance, the photograph did not replace the drawing; radio did not replace the newspaper; television did not replace radio; and the Internet seems unlikely to replace newspapers, television or radio.
Secondly, marketers need to follow consumers, and the changes occurring in the way we receive and use media are not merely technological, but also technocultural. People use new technology only if it answers real needs and desires - and, of course, not all people have the same needs. The vast majority of consumers still prefer to rely on the more comfortable and uncomplicated joys of passive consumption, like listening to radio or watching television, for most aspects of their entertainment.
For this reason, there probably always will be a range of opportunities for marketers to reach consumers, whether via tried-and-true media or with the emerging technologies. The key will be, as it always has been, to understand the needs of consumers and the various roles that media play in their lives.
So, while it is wise for marketers to keep an eye toward the future, they should not forget the tremendous strength of media in its present form. Speaking on radio in particular, it is powerful. It is free. And it is everywhere. Radio is part of our country's culture, and it promises to remain firmly implanted there for the foreseeable future.