Disintermediation And You
October 19, 2012
So, radio's going to be cool again? Great. Looking forward to it. This should go well.
I'm referring, of course, to the story in the Wall Street Journal earlier this week about how Clear Channel's Bob Pittman is working to change radio's dowdy image among marketers and agency types, in which the writer -- not Pittman himself -- says that word, "cool." And there's no doubt that for the radio industry, which I'll define here as the people who own and operate those transmitters and licenses and antennae, this is an important thing. To protect their investment, they have to convince buyers who don't use their product much that it's still a happening, hep, ginchy, groovy medium. (That's how the kids talk today, right? Solid.)
But focusing on that is, I think, missing a major shift that isn't simply "people are listening to Pandora instead of regular radio." And it's not a matter, as I keep hearing from people deeply rooted in terrestrial radio, of getting people to stop calling terrestrial radio "terrestrial radio." That doesn't matter even a little bit. In fact, the changes are more profound, and the industry has some opportunities therein if it keeps an open mind and has a lot of patience.
To explain, I'll have to ignore my well-documented aversion to jargon (see last week's column) and trot out some jargon that explains in a word what's happening to the radio industry: Disintermediation. That means, in a word, "cutting out the middle man." That's how the business is changing, pure and simple. Program creators are the seller. Listeners are the buyers. The established radio industry is the middle man. What we're seeing, with streaming and podcasting, is the Internet doing to radio what it's done to other industries, making it possible to do without the middle man. We know that already, and we've talked here about how that's evolving and the successes of some streamers and podcasters.
Yet, another piece of jargon, "monetization," is the biggest problem for everyone as the disintermediation continues to open the market to more players and more content. I think that this, way more than stations and branding, is where traditional radio has an opportunity. At present, programming fed through means other than broadcast radio is still not making nearly the kind of advertising revenue that broadcasting still makes. What radio can offer that the new media operations don't have is a long-established sales force and expertise to convert ears into money. To date, traditional media have treated the newcomers as the enemy, but putting aside Pandora for a moment, how about all the others who don't have the sales clout traditional media has always wielded? Many podcasts have formed networks of shows that, in aggregate, reach a healthy and salable number of listeners with the added benefit of exact measurement and demonstrable niche target demographics, quantified in a way traditional radio can't do, even with the meters -- no extrapolation, just raw downloads or streams. If that's what the agencies and clients are looking for, and the new media folks are delivering but don't have the relationships or clout to get their CPMs up, that's an opportunity for radio, I'd think. Add those niche programs to radio's own podcasting, streaming, and, yeah, broadcasting, and that's a pretty strong package for advertisers covering every base. That's one place where reintermediation may work for everyone. The programmers need a middle man to help them maximize revenues. Radio's infrastructure can do that.
And that might not work, but if you're trying to make buyers think you're cool, isn't it easier to associate yourself with things the buyers already think are cool than to dress yourself up in digital garb and try to pass yourself off as Just Like Pandora? That's how radio comes off as the creepy fifty-something guy at the bar dressed in age-inappropriate clothing and hitting on women way too young for him.
When you're dealing with marketing people, they'll see through your attempts to recast old media as new. But if what you're offering really IS new, that could be beneficial to everyone. Just leave the Members Only jacket at home.
=============================Disclaimer: I also work for Nerdist Industries, and they also have a podcast network. I don't work for the podcast network, just the website, and what's in this column is my own opinion and unrelated to anything about the podcasts and definitely not speaking for Nerdist or All Access or anyone but myself. I'm just an observer in all of this)
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I got nothing for a closer. Go have a great weekend.