Without change, there's no progress

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In reading a recent story about an old-school radio station operator and his statements that “online streaming is simply a fad that is going to die out”, I couldn’t help but think about the old buggy whip analogy from the movie OPM, with Danny Devito. As a matter of fact, by the year 1890, there were over 13,000 businesses in the US that were in the horse-drawn wagon and carriage business. I am sure that there were many business owners in that sector that on any given day could find 10 different problems with the steam engine, and then its follow-on successor, the internal combustion engine.

One of the most valuable things that I learned in the Marines, is that you constantly have to improvise, adapt and overcome if you want to stay one ahead. In 1926, the U.S. Whip Company decided to face the inevitable, and switched from making buggy whips to making fishing line. Radio shouldn’t fear the internet, but embrace it and use it to its advantage like many are. A few years ago, the fear of losing listeners to the internet was far more prevalent. Today, more and more broadcasters have come to the realization that the internet is here to stay, and streaming is not a fad, and the ones that are denying the inevitable are simply sticking their head in the sand.

The ability to stream over the web also gives your listeners all kinds of new interaction ability, social media tie-ins and again, the ability to reach listeners at any time of the day, at any location. Providing you are using the right streaming provider, your advertisers can geo-target their ads to relegated market areas, or the whole world if they want. To deny that you need to be streaming, is telling your listeners that you are not willing to embrace the new media and communicate with them on their terms. To deny that you need to be streaming, is telling your competitors that you no longer wish to compete with them. To deny that you need to be streaming is refusing to acknowledge the huge proliferation of desktop players, mobile apps and internet devices that are flooding the market. No, this is not a fad that is ‘going to fade out’. One has to simply study the history of transitions to new media over the last 100 years knows that this is not a fad, but has become deeply rooted in our culture and is becoming as mission-critical as the terrestrial signal itself.

And don’t count on the FM HD chip in every cell phone being the answer . . . or carriers that would cut their own bandwidth throats by activating the chips. That is far from a ubiquitous solution in a world where total penetration by the internet is now a reality. HD is still limited in many aspects; no DJ interaction, equipment is still very expensive, the higher-quality aspect is exaggerated when multicasting, as individual channel rates are reduced. On the other hand, streaming over the internet is as simple as hooking up an inexpensive PC to your board and sending your signal to a streaming provider that can multicast your broadcast to as many people as you want. Plans are very inexpensive nowadays with bandwidth getting cheaper and cheaper. And have you heard the quality of an AM or FM station that is streaming in AAC+, the latest format for streaming ubiquitously to any device, player or phone? In most cases, it is far more superior, especially when it comes to medium wave transmissions.

Many terrestrial station owners with whom I have talked over the years were resistant at first, in part because it is human nature to resist change, and in part because they really didn’t think they needed to. I do agree with station owners about keeping their eye on the terrestrial advertising ball, because that is the engine that powers the signal, but the internet is here to stay, and it complements the terrestrial side when used properly. Streaming is not meant to replace radio, but to augment it. Just like video didn’t kill that radio star, neither did the internet . . . it only made it stronger. My article last week outlined several ways that a station can promote their online stream and I have written many articles on how to monetize and create new revenue. If you are not promoting what you are doing, you are not going to enjoy any real level of success.

And by the way, complaining that you have to pay additional royalties to SoundExchange to stream online is like saying that you don’t want to make any more money because you have to pay the taxes. Many broadcasters still don’t know what the real cost of streaming is, and are assuming themselves right out of the online arena. When the streaming fees and royalties are all added in, it may be a lot cheaper than you think, especially if you are a small broadcaster. If you are promoting your online streaming properly (see my article from last week), using it to its fullest extent, including all the listener-interactive features and social media tie-ins, you will start to gain simple shift momentum of the same listeners, and actually create more loyalty in doing so. The real key, however, and it’s simple to do, is monetizing the listener traffic with ads. If you really promote it and work it, you can not only cover your streaming fees, but also cover the additional royalties to SoundExchange . . . AND still make a profit.

And finally, let’s look at the cold hard facts of the fastest-growing medium in history.

Most of your listeners are at work or on the road during the day. Making your stream available to them over the internet, via mobile and desktop streams, gives them the convenience of being able to listen anywhere, any time. In today’s technological world, people are going to make choices based on what’s available to them. Online advertising, especially display advertising and impression ads, is literally exploding. According to eMarketer, online and mobile advertising is slated to hit $100 billion this year. That’s 1 out of every 5 ad dollars spent in the marketplace. And the area of fastest-growth? Online radio-anything. Look at the latest Infinite Dial 2011 by Arbitron and see the incredible growth charts, growth that is going to continue at this pace, with some continuum projections as far out as 2015. Bandwidth carries are, in fact, not doing away with bandwidth, but gearing up to try and keep pace with the flood of internet devices from home to the workplace to the car.

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