Ahhh, now we’re getting at it.
Why did Spotify become a thing?
Why did Apple Music launch?
It’s not as if consumers didn’t have access to music before their arrival on the scene.
Just about every person on earth has access to music on radio stations. Free music, 24 hours a day.
Ahh, but Radio is a business, and in order to offer that music free, they had to sell advertising. In fact, you might say that Radio’s first priority was always selling. The music was just played to get the people to listen to the ads too.
And so we all did, for generations. And Radio was a really good business. Double-digit returns, 30%, 40%, 50%! year after year.
That very success in generating free cash flow got the attention of Wall Street, and Wall Street paid for the attention of Congress.
And so de-regulation happened in the late 1980s, and all those profitable, successful, individually owned stations in every town were gobbled up by investors funding the biggest consolidated radio companies. They didn’t know much about Radio, nor did they care to learn. That’s called arrogance.
These new radio companies weren’t risking their own money, of course. They were risking your money, your future. The incentive to run successful radio stations in the traditional sense lasted only as long as they hit the numbers needed to guarantee their million dollar bonuses.
So-called “efficiency” cuts began almost immediately. They continue still, every week.
Talented people who had spent the majority, sometimes all, of their lives in their towns. building relationships and reputations, depended upon 24 hours a day to explain what that explosion was, where that fire was moving, how to help neighbors in need suddenly gone. A pat on the back. A sympathetic look as they were escorted from the building.
Many of the smartest owners sold their stations and companies as the wave began to crest, but not the greediest. They kept re-financing debt, gaining bonuses for becoming bigger not by growing local business, but by borrowing ever more money to keep acquiring stations.
They never proved they knew how to run successful radio stations in various cities and towns around our land.
And pretty soon after, their debt was so large that normal, double-digit returns weren’t enough. They could never be enough.
When they couldn’t charge more for the ads they offered, they began to offer more ads. These geniuses seem to think that the law of supply and demand doesn’t apply to Radio, that if you offer more ad time, prices for each ad won’t then go down.
They were wrong, of course. But they never paid for their ignorance. We did! All of us who work in, and listen to, Radio.
Until finally someone said: “How much would a person pay to listen to all the great music they love without any commercials at all?”
“How much would they pay if we severely limited commercials in a way that Radio cannot now afford, say to 4 spots an hour?”
Did listeners ever say, “You know, we want a station with more liners!” Or, “We want a station with a less talented on-air staff. We want a station without any live and local talent because if there’s an explosion downtown in the middle of the night, we’d rather listen to some guy voice-tracking 1000 miles away.”
Or, “Please give us more commercials! Give us 7 or 8 spots in-a-row. Please commercialize traffic and weather and time checks because we just can’t hear enough ads today.”
Greed, Radio’s greed, created the need for Spotify and Apple Music. Radio answered its own “Why?” question.
And even with the advantage of bankruptcy protections, of simply writing off millions and millions of dollars in debt, Radio still isn’t as healthy as it was before consolidation slit its throat and waited for it to bleed out.
It should have always started with listeners. What do listeners want? That question created Spotify and Apple Music.
What will listeners tolerate is not the same question. Not at all.
Radio needs some major changes to regain full health after the double Consolidation and Covid assaults.
Each company needs to be satisfied with lower profit margins, margins that most businesses would kill for, but which aren’t enough to pay for over-priced acquisitions when borrowing money was more expensive. So, many stations need to be sold to new, local ownership to pay down debt.
Each city needs fewer stations, maybe half of those now on air. A number that is sustainable by local entrepreneurial owners who will once again be embedded in the lives and livelihoods of the people they’re licenses to serve.
Each station needs fewer and better commercials as well as accountability for the spots we sell. We need more talented presenters and personalities and a deeper commitment to their local communities. Make no mistake: When we write good spots, when we pay for talent to produce them well, Radio works! It always has.
The simple truth is, if Radio won’t give listeners what they need and want, someone else will ask — and answer — the question of Why.
Spotify may not end up being the answer. It’s clear that many, possibly the vast majority of listeners want the companionship and entertainment that good on-air talent provides.
But if Radio doesn’t change, and soon, well…we won’t be the answer either.
Even though we all know what the answer is.
And that’s a shame.