What if radio charged for its content?


Content is king. How content is distributed is less important than the quality of content. Radio people intuitively understand that. New-media people didn’t, but recent events suggest they will quickly find out.

Amazon, the current king of e-readers got into a tiff with Macmillian Books over pricing. Amazon sells its books for $9.99, a price it dictated to publishers. Macmillian Books decided that it wanted to set the price of its books. At first, Amazon balked and pulled all of the publisher’s books, but ultimately backed down and accepted Macmillian demands.

Amazon came to the realization that Kindle needed Macmillian much more than Macmillian needed Kindle. Now Hachette Book Group, another publisher, is looking to cut a similar deal.

Wired outlined the events under the headline, Macmillan’s Amazon Beatdown Proves Content is King. Here’s what Wired wrote:

The spat between Amazon and a major book publisher is no mere blip on the radar, but rather part of a trend towards content owners dictating the terms of how their content is sold.

Last decade was all about tech companies eliminating brick-and-mortar middlemen. This decade could see content owners get the last laugh, leveraging creative monopolies to wrest control from Amazon, iTunes, and other innovators.

New media has had a cheap if not free ride, but that seems to be changing. Mark Cuban recently called Google a vampire sucking traditional media’s blood. Newspapers and magazines are threatening to block Google and start charging for their on-line products.

Google appears to accept the inevitability that providers will start charging for content, Google’s Krishna Bharat admitting, The industry appears to be moving toward pay walls…Google is very interested in working with whatever scheme ultimately takes off. The other day, News Corp’s CEO Rupert Murdoch observed that without content, the iPad and Kindle devices would be unloved and unsold.

This new assertiveness of content providers is not be choice, but by necessity. As newspapers became increasing dependent on Internet readership, they hoped that they could continue to make most of their money from advertising. They found that they couldn’t.

Internet advertising revenues haven’t come close to what they made from print. They need an additional source of revenue to service. They believe their only option is to charge news aggregators like Google and readers for Internet access to their product.

Radio is finding the same thing. It is becoming increasingly clear that radio isn’t going to replace all the revenue it has lost with Internet based revenue.

The debate over the future of radio has assumed that the battle would be between advertising supported pure Internet products like Pandora and advertising supported terrestrial stations. What if radio evolves differently?
What if radio also starts charging for its content?

Radio has unique content that people want to listen to. That is why 90% of Americans continue to listen to radio and why time spent listening to radio has hardly suffered in the face of all the new alternatives.

It might sound crazy, but charging might be the only way radio can afford to remain a local product.

Terrestrial radio’s greatest strength is its localism. That advantage is rapidly slipping away. With advertising options growing, spot pricing pressure is increasing, and revenues declining.

In response, many stations are cutting programming costs, laying-off expensive morning shows, using syndicated personalities, voice tracking, and in other ways providing a weaker less local product. The cutbacks may offer a short term solution to declining revenue, but the abandonment of localism makes commercial radio extremely vulnerable to national Internet products.

Degrading commercial radio by eliminating localism in an effort to maintain profitability plays into the hands of Internet radio. If all radio is national radio, terrestrial radio loses. On the other hand, if terrestrial radio rediscovered the power of local radio (rather than just pay lip-service to it), Internet radio will not succeed.

Perhaps the answer is for local station clusters to evolve into a mix of inexpensively programmed advertising supported terrestrial stations along side listener supported local on-line products with few or no commercials.
Commercial radio has the most creative and innovative programmers in the world. There is no question that this business can create high quality local products that can out-compete any pure Internet product. It may be our only hope.

— Glenda Shrader Bos & Richard Harker of Harker Research