Is Radio Industry Bankrolling a False Hope?
¡vamonos! ’Marketing 101′
Let’s start with a quick product association quiz. After naming this product, immediately give three uses as they pop into your head. Ready?
Ok, here’s guessing your answers include talking, texting, checking e-mail, taking pictures, using Facebook, tweeting, watching YouTube, GPS, enjoying the mp3 or Apple music player, checking a game score, looking up something on the browser or playing some mentally stimulating game like Angry Birds. That’s a lot of functions! May have missed a use or two but it’s probably a safe bet that one use of the smartphone not given was “listening to FM radio”. Now the Radio industry is seriously hoping you’ll make that a regular function of your phone.
Starting this September 2013, Sprint introduces new HTC phones complete with an FM chip and the NextRadio app which allows listening to local terrestrial FM radio. The Sprint HTC One and HTC EVO 3G LTE are the first of many phones–even up to 30 million new smartphones the wireless carrier will roll out over the next few years with the NextRadio FM app. This app employs the phone as an antenna that picks up local, over-the-air FM signals. In addition, the NextRadio app displays information on the screen such as song title and artist, station promos, news updates and of course, ads.
As innovative as the smartphone technology sounds, this FM feature was not the next “hot” idea of Sprint or of any other wireless carrier, but the result of a longtime plan by Radio industry leaders to retain listeners with FM radios included on phones. Emmis Communications, owner of 19 Radio stations and a number of magazines, led the development of the NextRadio app to receive and play terrestrial FM stations. Then Jeff Smulyan, CEO of Emmis, devised a program for the Radio industry to collectively give $15 million in ad inventory per year for three years to Sprint in exchange for producing and offering smartphones with the NextRadio app. (It’s reasonable to believe that this offer was floated to all the major wireless carriers and Sprint took the deal) Smulyan not only only had to sell the program to Sprint but to the multitude of other group and individual Radio station owners as well to secure their portion of the yearly $15 million in ad inventory. In exchange, the Radio industry secured a commitment from Sprint that will incorporate an FM chip into 30 million of their smartphones over the next three years. As a bonus payoff for it’s efforts, Emmis will get a cut of the revenue from the digital ads sold to display on the phone during the use of the NextRadio application.
No doubt the Radio industry feels it scored a victory. It traded out the ability to get more listening time from Sprint subscribers using this FM radio app. Thirty million phones is a respectable national representation. But this project is solely with Sprint, the third largest wireless carrier in the U.S. What about all the millions and millions of other wireless customers not having this app? At some point will AT&T and Verizon show interest to offer these smartphones; and will the Radio industry have to broker deals with each carrier?
What is concerning is that current apps found on smartphones today such as Facebook, games, Twitter, and web browsing were pushed by consumer demand. These apps drive smartphone sales. But filling the void of not having an FM receiver on a smartphone was never pleaded by wireless customers. If the public demanded it, an FM Radio chip/app would have been made years ago. Instead, it took the carrot of $45 million in Radio airtime for Sprint to be persuaded in adding this feature to their phones. Up to this point, Sprint and the other carriers, who spend incredible amounts of money researching their customers, saw no real value–no competitive advantage–in adding FM radio to their phones. So now that this phone and NextRadio app is available, will smartphone owners even use it?
Ironically, many of these local FM stations are already available to listen to on the smartphone via apps like iHeartRadio, TuneIn, Radio.com and others. Smartphone users now in the digital mode would have already downloaded any app to keep listening to their favorite local Radio station on the go. If they already can listen to their favorite terrestrial Radio station via a digital app, why would they utilize an old FM tuner technology on their phone? Isn’t what their home and car radios offer? If the wireless user travels outside of their hometown, the FM radio app becomes useless in getting their favorite local station. On a side note, the NextRadio app works for local FM radio–not AM. That leaves thousands of AM stations screwed out the program–which is not good for those owners who strive to make a living off their AM signal.
In the end, when the $45 million of airtime is run, and the 30 million projected Sprint phone are out, will the Radio industry have gained any more listeners or longer time spent listening to local stations? Expanding the availability is good–but it’s content that draws listeners. What is the Radio industry doing to develop exclusive or compelling programming that keeps listeners engaged and listening longer to local stations? This is an industry now almost completely run by corporations who live by the bottom line, in an era when competition for music, information and conversation is higher than ever before. Generally speaking, after years, even a decade, of continual corporate staff and operating cuts it’s hard to image this same industry making significant investments into new programming and exciting features. Unfortunately, terrestrial Radio may need to re-invent, or at least reposition, itself to entice listeners back from the iPod, satellite radio or internet-only radio. It’s going to take local Radio more creativity to intrigue a consumer than just selling any possible station sponsorship opportunity such as news, traffic, studio and request line. Make the station sound relevant and perform to the listener’s desires–and they’ll use whatever technology to follow you where ever they go.