Know Your Audience: Researcher Larry Rosin Understands How Radio Can Remain Vital To Todayís Media Consumers (08/06/07)
By Editor-In-Chief Joe Howard
Calls and e-mails to the station have their value, but to learn what consumers are really thinking about radio, detailed audience research is essential. Edison Media Research is one of radioís trusted sources of audience research data, and Larry Rosin is the man in charge. He understands better than most how consumers feel about radio, where it fits in their lives, and what radio must do to remain relevant to the millions who tune in each week.
Radio has ably met every challenge thatís come its way over the years, so while some think todayís challengers are just the latest in a line of competitors radio will ultimately face down, Rosin warns against such complacency. ďThere is a feeling that if we could survive television in 1950, we can survive anything,Ē he says. ďIím not saying itís not true, but I still think itís way too simplistic to assume itís true.Ē
Specifically, Rosin believes radio must delve headfirst into cyberspace. ďWe canít ignore the Internet; we canít say no one will use it and it wonít affect us, so we have to find the smartest ways to integrate the Internet,Ē he says. And Rosin believes the ability to time-shift content with podcasting is one such opportunity radio hasnít fully exploited. ďThere are shows that people are really committed to that they just canít tune in to at the time they air,Ē he says. ďOne of my client radio stations has an incredibly popular nonmusic feature show that runs in the 2 oíclock hour every day. Why should that 10-minute feature only be available to people who listen to the radio at 2 oíclock?Ē
Rosin also notes that the business case for this client expanding into podcasting is solid. ďThe podcast should have a preloaded spot on it that makes money for the station,Ē he says. Itís such an old paradigm to only be able to hear that show if you happen to be by a radio every day at 2. Fans who really care enough to want to hear it should be able to hear it, and they should have to hear spots for the privilege.Ē
In fact, Rosin believes radioís future may hinge on finding ways to monetize these new opportunities. ďWe should not assume we will survive anything,Ē he says. ďRadio had a 40-year unbroken growth curve from 1961 to 2001, and weíve been steady flat as an industry in terms of revenues for each of the past six years. You canít be flat forever; weíve got to come up with strategies for growth, or we wonít survive it.Ē
RadioInk: Edisonís joint study with Arbitron, The Infinite Dial 2007: Radioís Digital Platforms, addressed how radio is losing ground as an essential medium to audiences. What are some of the reasons for that?
Larry Rosin: We didnít specifically ask why, but I donít think itís a rejection of radio as much as the ascension of the Internetís importance in peopleís lives. As the Internet continues to grow, and with so many more people having wireless broadband, the Internet has an infinite quality that allows it to serve many people in many ways. So itís not a rejection of radio nearly so much as a reflection of the attendancy of the Internet.
RI: What should radio be doing to improve its online presence?
LR: That is such a broad-ranging question, itís hard to answer it in one specific way. Everyone has to go through this thought process: What if some day down the road, perhaps not even that far into the future, more people are accessing radio stations via the Internet than through AM or FM signals? I donít think we as an industry have scratched the surface of understanding the differences in listening to audio content/radio through the Internet vs. listening to it through AM or FM signals. For people streaming a signal at a PC, the overwhelming majority of radio stations have not enhanced that process, or thought through what added value we can create. The primary added value is a ďjust playedĒ tab, where listeners could click and see what songs were played. Some station sites offer the opportunity to buy the song, and most ID the song, but thatís about it. There is so much you could think about doing or offering to people while they are sitting in front of the computer listening to the radio station, and that doesnít even touch all the sales aspects of it.
You have to think about the experience. Right now, the experience of listening to a radio station online is basically the same as listening on AM or FM, but often itís worse because most stations are still forced to cover up the spot breaks with things that are less than optimal. As an industry we have to think it through the other way. What if AM and FM never existed? What if this whole medium started online? How would it be different? It would likely be significantly different. It wouldnít just be, ďClick here to listen online.Ē It would be integrated into a whole web experience. If we had started on the Internet, listeners would probably have a lot more opportunities for interactivity and use of other aspects of the Internet at the same time. We have to go through that thought process from the beginning, and throw the resources at it. Part of the problem is that people have a lot of ideas but no way to execute them because theyíre not given the resources to build online presence.
RI: You mention covering up spot breaks while streaming. Is the uncertainty over royalty rates affecting radioís willingness to do more with streaming?
LR: Obviously, that is a factor. With the old broadcast model, you put up an antenna and once youíve amortized those costs, thereís no marginal cost through increased listeners ó it doesnít cost the station any more if one more listener flips on the radio. On the Internet, there is the marginal cost of serving another stream, and the various costs of content. Iím not an expert with regard to paying for the music, but I support radioís point of view that it seems to have been a good trade for both sides all these years: We donít pay the labels for the music, but they get free marketing when we play a song. Seems to have been a very nice handshake deal, but the music industry is trying to change the deal because their business is even more troubled than radio.
That said, someone needs to sit down and analyze what is a reasonable cost of goods sold, and can it work. I donít know the answer. I do know that radio is in a better position than many to possibly make it work because we have an ad-based model and know how to bring in revenue. Thereís just not a lot of evidence that the subscription-based models are sustainable for pure web-based play.
RI: What is your outlook for satellite radioís competitive impact in the coming years?
LR: The growth has leveled off, but they continue with their level of intensity in promoting themselves. But there is too much of an attitude in radio that weíre bulletproof. Satellite radio has 13 million subscribers ó thatís not nothing! There is absolutely a market for subscription-based, mostly commercial-free music and other content strategies. I think it is way too early for radio people to wipe their forehead and say thank goodness, we got past that one. You canít ignore what inspired people to like it and continue to pay for it.
There is a feeling that if we could survive television in 1950, we can survive anything. Weíre adaptable, weíll survive. Now Iím not saying itís not true, but I still think itís way too simplistic to assume itís true. When Pierre Bouvard and I presented the results of the very first Internet study we did together in 1998, an older gentleman walked up to me and said, with a very dismissive air, ďI heard back in 1974 that CB radios were gonna kill us and they didnít kill us, so Iím not worried about this Internet thing either.Ē It really stuck with me that he equated the Internet to the CB radio. We should not assume we will survive anything; furthermore, radio had a 40-year unbroken growth curve from 1961 to 2001, and weíve been steady flat as an industry in terms of revenues for each of the past six years. You canít be flat forever; weíve got to come up with strategies for growth, or we wonít survive it.
RI: Are these challenges the toughest radio has seen because they compete more directly? Listening online or to an iPod or satellite radio is more similar to radio that television or a CB.
LR: Exactly. I think people are way too quick to dismiss the iPod. The constant mantra about the iPod is that people have always listened to music, itís no different than a portable CD player or Walkman. But in many ways the iPod is a transformative device because it is the most obvious way that time-shifted content can happen. Instead of listening to whatever is on the radio right now, the iPod allows me to listen, for example, to This American Life, a public radio program I enjoy. In New York, it runs Sundays at 4 p.m., and Iím never available to listen to it. Well, now I can listen to it every week; itís actually week by week the most popular podcast on iTunesí music store, and the hour that I give to This American Life is stolen from AM and FM radio. Time-shifted listening is time that would have been spent listening to whatever was otherwise on the AM and FM radio.
This relates to the broader issue that you will soon have access to wireless broadband in your car. Anywhere you go in any populated part of this country, very, very soon ówhether in two or three or five years, people argue about how soon ó your cell phone or smart phone or iPhone will have the ability to pick up any live stream in the world. It wonít just be my radio station against your radio station; it will be my radio station against any other option on earth at any given time.
RI: If automakers are dragging their feet with HD Radio, is in-car Internet something that will realistically develop?
LR: Absolutely. The automobile manufacturers are committed to your car being a mobile Internet unit, because they believe they can make more money from those options. Iím not a technologist or an engineer, but I am telling you that your car and cell phone will be mobile Internet units. There will be competing technologies to bring you this, but youíll have access to the Internet that is as robust and fast as what you have with a cable modem or DSL connection.
RI: When you listen to that podcast of This American Life, itís taking time away from AM/FM listening, but itís also rescuing an hour of listening that you couldnít do otherwise. That really drives home a point about making radio content available for people who are constantly wired.
LR: Right. It gets back to the content. The key going forward will be orienting ourselves toward things that people actually pull in. Right now there are zillions of AM and FM radio stations rocketing through the room youíre in, and if you turn on a receiver you can pick up any one that happens to be available. You can dip your cup into whatever the stream has at that moment. Sometimes all you want is to listen to some country songs or some classic rock, whatever strikes your fancy at that moment.
But there are shows that people are really committed to that they just canít tune in to at the time they air. When they can easily shift those programs, I believe a certain percentage of people will do that. Itís so easy, why would I listen to the best mix of the Ď70s, Ď80s, Ď90s, and today when I could listen to my favorite show at any given time?
Radio stations should be podcasting any material they own, and making it easily available. One of my client radio stations has an incredibly popular nonmusic feature show that runs in the 2 oíclock hour every day. Itís still not available as a podcast, even though itís incredibly popular. Well, why should that 10-minute feature only be available to people who listen to the radio at 2 oíclock? They could get more people to listen to it if they had it available as a podcast every day, and the podcast should have a preloaded spot on it that makes money for the station. Itís such an old paradigm to only be able to hear that show if you happen to be by a radio every day at 2. It should be available every day on podcast on the website. Similarly, the highlights of that dayís morning show should be available as a podcast every day. So what if only a small number of people care to access it? Fans who really care enough to want to hear it should be able to hear it, and they should have to hear spots for the privilege.
RI: How does HD Radio fit into this mix?
LR: Iím a bit of a skeptic on HD Radio. I support HD Radio if for no other reason than it has forced radio companies to create new streams of radio. Itís unlikely that Clear Channel would have created its format lab without HD Radio as an instigator, and HD has generated similar efforts to create new ideas at other radio companies. Itís led to streaming HD channels and making them available on platforms that people actually have, and thatís been really great.
Iím skeptical about how many people will go out and purchase an HD radio in its current form. Where HD has a chance is this: The next time you buy a radio car radio, clock radio, any kind of radio it just is HD. Just like the next time you buy a Windows computer, youíre going to get Vista instead of a previous operating system; itís just what is installed right into the computer. I think the market for people running out and buying an HD radio is actually very small, especially at the current cost levels. I like that HD is forcing us to think more broadly, Iím just not entirely convinced that as a separate consumer product itís got that much of a chance.
We need to find a way thatís inexpensive enough that the next time you buy a radio, of course itís an HD radio. No one would not want it if there were no massive increased costs involved.
RI: What importance will the Hispanic listener have in the next five or ten years? What can radio do to make sure this audience stays committed to radio?
LR: Some really smart entrepreneurs and operators created media for the exploding Hispanic population pretty early on, and then figured out how to make money and create great loyalty. Many markets have Hispanic-targeted radio today that didnít five years ago; markets like Atlanta and DC. In the heavily Hispanic market throughout Texas, California, the Southwest, and even New York and Chicago, multiple options are serving different subgroups of the Hispanic population in different ways.
Hispanic-targeted radio has been one of radioís best success stories; weíve actually been a bit ahead of the curve. But we canít stop technology, so we need to work with it. As Hispanic listeners move to other delivery platforms, it should be the radio operators who take them there and who have the best content in all environments, whether through streaming or any other option. All the best Spanish-language podcasts should be coming from Spanish radio operators; all the best Internet streams should be coming from those same operators. Whether weíre talking Spanish or English or any other language, we should be leveraging whatever loyalty we have and converting it, as opposed to just digging in to our older paradigms and saying letís see how successful we can be at stopping people from leaving.
RI: Edison recently studied Hispanic listenersí interest in country music. Can country radio compete for Hispanics?
LR: The answer is a pretty firm yes. In Edisonís Survey on Hispanics and Country Music for Country Radio Seminar 2007, Hispanics showed attitudes about country music that were very similar to what non-Hispanic whites would say about country music. Just as in any population, there are Hispanic people who love country music, and people who absolutely hate it. The biggest obstacle turned out not to be the programming on country radio; the biggest obstacle was a perception that country radio didnít want Hispanic listeners, that they had never invited Hispanics to their radio stations; that they had never engaged in any outreach or efforts. So the answer turned out to be, you need to ask for the order. You need to market to these newer, changing populations. I thought it was an extremely optimistic outcome that said you absolutely can grow your audience among Hispanics, it just takes a little effort.
I did get some blow back from people in the country radio industry who feel that any efforts of outreach to Hispanic listeners will actually hurt listening among the white part of the audience. My response was: First, I didnít recommend playing songs in Spanish on the air, or having deejays speak in Spanish; I was only recommending outreach to the Hispanic audience. And I just canít believe that a white listener will stop listening because you had a booth at the Latino Day Festival. Second, mathematically it is worth the risk because there is so much upside from the Hispanic audiences, and the white percentage in every market in America is shrinking.
RI: Can that idea be extrapolated to other formats that arenít traditionally thought of as attractive to Hispanic listeners?
LR: Absolutely. Some rock stations have dabbled with outreach programs with some success. Iím not aware of any format that is absolutely unlistenable to Hispanic audiences; some are better, some are worse, but you canít ignore the Hispanic audience. Whatever the Hispanic population, if you market it today, five years from now it will be bigger; itís not going down anywhere. It is not a subset of the population that you can afford to ignore. Youíve got to think through your strategy and its impact ó whether it will be attractive to Hispanics.
RI: What is your advice to general-market broadcasters who have never tried to connect with a Spanish-speaking listener?
LR: It comes down to research, whether it is the formal kind that my company does or hiring consultants who can be a liaison. One of the most famous business school stories is when Chevy was going to bring the Chevy Nova to Mexico, and didnít look into the fact that no va in Spanish means ďdoesnít go.Ē Radio obviously must take the efforts necessary to ensure we donít make similar mistakes in our outreach, but the old strategy of just hoping probably is unlikely to be successful.
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