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August 21, 2014

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05/22/06 A World Without Commercials?

As generations and paradigms change, successful industries are faced with dramatic change overnight. Recent examples are the travel agency business and the record label industry.

In anticipation of coming change, I recently asked the CEO of a company on whose board I sit how he would reinvent his company if its current main revenue stream dried up overnight. How would he replace that revenue? His initial answer was that he would need to go into a different business entirely, but the more he evaluated the scenario, the more energized he got by the challenge.

If radio had to invent a way to generate equal or greater revenue without commercials, could it survive?

All the hoopla about payola begs the question: Is legal pay-for-play the answer for radio? People listen to radio stations that play hit records; if there are too many stiffs, listening deteriorates. A 100 percent label-supported radio station, which I suggested a decade ago, would probably make a lot of money - until the labels realized no one would listen if there weren't enough hit records. But how many stiff songs are too many? Would replacing commercials with paid songs work? Many people believe commercials lead to radio station tune-out, anyway.

If a station is doing 12 minutes of commercials (let's say four breaks with 24, 30-second units), why not substitute those spots with three, four-minute songs with legitimate paid (and disclosed) exposure? Place a two- or three-hour rotation limit on a song, and you have a compelling argument for a new way to break a record (which requires high rotation anyway). Even if the songs are not hits, if they fit the format, would their presence be any more of an irritant than commercials? Probably not, especially because stations already devote some airtime to new music as they search for new hits.

The record labels are dying, and seeking solutions to sell music. They would potentially be rejuvenated by the frequent airplay of their tunes with a strategy to drive immediate downloads. I think they would gladly pay for the airtime the songs are replacing, and it would bring hope to their antiquated business. Plus, I think ratings would go up.

Perhaps this suggestion is politically incorrect, with new payola hearings on the horizon, but it is legal as long as it is disclosed. We as an industry should be thinking about new forms of revenue to replace commercials. In this world of contextual advertising and ad-word advertising, there is a lot of money being thrown to the Internet, and the traditional “push” of commercials is going out of vogue. This trend will continue. It wouldn't hurt to spend some time imagining a world without commercials.




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