Is the future for radio stations online streaming over the internet or is there still a place for over the air waves broadcasting?
One of the interesting questions related to advertising for media companies is if the future for radio stations broadcasting over the internet or the traditional business model of broadcasting over the airwaves or a mix of both.
Until the rise of the Internet with broadband connections, all radio stations were over the airwaves with all revenue from advertising spots sold, usually as part of a radio program or specific times of day, in an effort to target specific listeners as potential customers.
Prior to the more recent decades, radio broadcasts were all usually specific broadcast programs with the schedules published in newspapers. As television took market share from radio stations, and listeners, as the television networks really expanded in the 1950s, more and more radio stations turned their business model into a ‘music jukebox’ format and away from set programs or broadcasts.
In the current era, most radio stations are doing one specific format; news radio, talk radio, religious station, music jukebox of a specific genre of music, community radio station, non profit PBS station, etc. On top of all of that, most radio stations are now part of a corporate conglomerate where the programs are all feed to it from a central HQ location. This results in the radio station itself is really nothing more than a transmitter being used for its bandwidth in a specific area and the offices of said radio station mostly vacant of any staff except for an engineer or two to make sure the transmitter is working.
One of the ways to expand the reach of any radio station is to do over the internet broadcasting. This change would allow a radio station to reach anywhere there is an internet connection. The problem for all radio stations in the past for competition for listeners was limited to the transmission range of the radio transmitters. Today, as radio over internet gains in popularity the potential for competitors for all radio stations is any station anywhere in the world that has streaming audio over the internet. With much of the content somewhat generic, there may be little to no differentiation for advertisers except for expected market and reach. i.e. Advertisers will look to pay the least amount per potential realistic customer for their product or service. So a local ice cream shop may get no benefit from one million listeners that are so far away that they would never go to the shop where as a manufacturer that has a web site and ships worldwide could care about such potential customers, could benefit from such listeners and be willing to pay to advertise and reach those potential customers.
One of the interesting mix of both ways to get radio is Emmis Communications Corporation NextRadio app. NextRadio App ). All smart phones can get radio over the internet through specific apps from the station, or internet web site links setup for streaming audio to listeners. NextRadio adds an interesting feature to most smartphones in that the chips within most smart phones have the ability to receive over the airwaves radio broadcasts and the NextRadio app allows one to tune them in.
One important note on Apple iPhones is that many Apple iPhones are not able to do this because, at the moment, Apple has deliberately blocked the receiving of FM signals on the phones. Some people speculate that part of the reason for this deliberate ‘crippling’ of iPhones is that Apple has agreed with the phone carriers to force people to get radio broadcasts on iPhones only by using internet broadband. This boasts peoples usage of data, thereby forcing people to pay more each month for the data plans on their smart phone service.
Over time any media that is available on the internet will need to do or make something so it is not generic with all other media it is competing with, otherwise, eventually, its business model will probably fail.
As an example, let us say I setup a radio station, WLOU, and my business model is to go the broadcast over the internet route. I don’t have any content but I find out how to license and legally play music over station WLOU, and then start to sell advertising. Now, my content is nothing special and anyone else that can get the same music is a competitor that is exactly the same as my station. There is nothing special to differentiate WLOU from any other station. Since WLOU has nothing to differentiate it from any other internet radio station, I can probably only compete by pricing my ad spots as low as possible.
Now let us say things go on like that for a few months, and then I decided to start adding my own commentary or editorials for 10 or 15 minutes every hour, in segments of a few minutes at a time. Now WLOU has something that no one else has, me talking. While it may not be a big draw for listeners, it is SOMETHING that no one else has and no other station can get unless I make an arrangement with them. If people want to listen to my commentary, they have to listen to WLOU, and advertisers may now be willing to ‘pay up’ to advertise on WLOU.
That is the challenge for all media companies; what can my company do that differentiates it from other companies that I compete with, so I get listeners, which then bring advertisers and advertising revenue?
The ‘base of’ any of this problem is listeners; if a media company has listeners, advertisers will follow as long as the pricing is right. If a media company is having problems with revenue then there are two things that need to be done: 1: Unique content or market area that will get listeners/readers/viewers/subscribers 2: Lower the advertising rates to more be in line with the amount and type of listeners/readers/viewers/subscribers the company is getting. As an example, if a radio station can’t sell a 30 second advertising spot at $500 to an advertiser, lower the price and see if that will sell. Some revenue is better than none. Once the time for a radio spot passes and nothing was paid for it in that spot, that revenue is gone forever since one can not go back in time.
Hopefully, all media will be able to find their special nitch market and unique content that will allow everyone to make a profit and serve the general public in the best way possible.
Good Luck and Take Care,
Louis J. Desy Jr
Sunday, November 25, 2018