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Fascinating question posed by Jerry Del Colliano of The Audio Revolution:  "After decades of dominance, how did terrestrial radio lose its audience – and will it ever earn them back?"

"In FM radio’s heyday from the late 1960s to right after deregulation of radio in America in the mid-1990s, radio was the single most powerful source for consumers to find out about new music. On a no-cost media that was installed in every car, Walkman and AV receiver, radio was everywhere and had the power to literally make or break an artist overnight.

Financially, radio has always been TV’s bastard stepchild, with some radio insiders saying the media has never earned more than seven percent of the total ad revenue in a given year. Despite this relatively small portion of overall ad revenues, radio stocks boomed with almost the same enthusiasm as dotcom stocks in the late 1990s. It was during this time of consolidation when radio’s leadership took their eye off the ball, looking to economies of scale to cut costs and boost profits. Wall Street loved it, but what FM radio needed to be doing was creating new formats.  But who needed new formats when the stock price is through the roof? FM radio did – badly."

Of course, they didn’t realize that until way too late:

"Enter satellite radio in the early 2000s.  For the first time in radio’s history, it potentially had a real competitor on its hands. While the numbers of satellite subscribers were relatively small, this new media looked at the business and media of radio in novel ways, ways that stubborn terrestrial radio might not have an easy answer to, other than mergers and acquisitions. On a programming level, satellite radio has the ability to offer many times more channels than any major U.S. radio market. With these added channels, satellite radio is able to niche-program while terrestrial radio is trying to cast a big net around an audience that is increasingly difficult to capture. With dozens of niche stations ranging from death metal to ‘70s ballads, satellite radio’s odds of finding the exact genre of a listener’s tastes are far better than FM’s offering, which results in increasing listener loyalty for satellite."

The uphot of all this? As we mentioned back in Radio’s Wounded Business Model, "Traditional radio will likely never be the same nor is it likely to recover."

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Source:
What Makes Satellite Radio So Great Anyway?

Jerry Del Colliano
Audio Revolution, November 24, 2004

http://www.avrev.com/news/1104/24.satellite.html

Category: Finance, Music

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “How Did Terrestrial Radio Lose its Audience ?”

  1. California says:

    Radio networks remind me of Detroit in the 70s – busy rearranging financial deckchairs and cost-cutting while viewing the end product as a milk-cow or something to be taken for granted and coasting on past reputation.
    Consequently, the product has become crappier by the minute and the audience is drifting away.

    From my perspective, my local Clear Channel radio stations are virtually unlistenable – the same very limited list of bland, predicatable songs, repeated ad nauseum. Corproate radio is in the same offend-nobody conformist mediocrity-rut as local TV news, and is about as appealing.

  2. David Bennett says:

    In addition to satellite radio, the cellphone is emerging. 3g is being deployed, 400 or 500 kps and internet access.

  3. Matthew says:

    More to the point, with satellite radio, you typically get the type of music you are in the mood for, without commercials. The only thing I do not like about Sirius is the tendency of its DJ’s to talk. There is a market for all music and no talk, and sooner or later someone will figure it out.

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  5. Jim says:

    “All music and no talk??” With how much dead air in between each song? Like a jukebox?

    Live radio will always be better than Muzak.

  6. RaulJames says:

    As soon as Phil Hendrie leaves

    Im gone!

    The Phil Hendrie show was the LAST! radio show that I will listen too

    Thanks for the memories Phil

    All of my TRUCK DRIVING AND POLICE FREINDS that heard him every NIGHT!

    WE are DONE with your station

    GOOD BY!!!
    RaulJames

  7. Mike says:

    I feel a major problem that is affecting terrestial radio is Cable companies dropping its FM service for Satellite radio. In a rural area, that is all a person pretty much has to listen to now. Unless a poor or non existent signal suits them. The excuse is that FM service takes up too much bandwith. There has to be some sort of legal loophole that Cable comanies must carry Radio stations on their systems.

  8. Rich Unger says:

    I have been in radio for 40 years doing spots for my own businesses and for many others.
    Clear Channel and it’s greed destroyed Terrestrial Radio from Randy Michaels and the thug mentality at Clear Channel to it’s own mantra of “Screw everyone make the quota”, they never cared about people, about clients, about employees, it was always the dollar.
    Clear Channel ruined Terrestrail Radio, and I-Pods, XM and Sirus just put the dirt on the coffin.
    Now that investment bankers have bought clear channel maybe they can clean house and realize the listener is more important than the spot load, the listener is more important than questionable contests, the listener is more important than ruthless program directors who don’t give a darn about the audience or the advertiser.
    I tell every nightclub I consult, stop spending a penny on Clear Channel Radio…………………………..

  9. scooter says:

    Dear, Clear Channel, Cox Radio, Citadel, Emmis and want to be’s.
    It’s a matter of time before the FCC and our bumbling congress forces all stations to turn off their analog frequencies and go 100% digital. Or maybe radio is a dying industry. By 2020 radio as we know it will be irrelevant and replaced by other technologies Like cassette, 8 track tape 45′s and dial-up have become. FM jukeboxes cannot compete with the technologies we currently have never mind the future gadgets. Once cheap wireless internet become available everywhere radio is done. Once cheap wireless internet finds cars.. it’s not good for radio. Radio should bet on content not towers or frequencies. The time for HD was 10 years ago and where the F….K were you? HD feels like Am stereo.. it sounded great. But with two competing flawed technologies nobody cared enough to go out and buy receivers. Static and Am stereo.. what was radio thinking? Hear the same thing on HD that you can hear on an analog radio that I already own? mmmm I’m not sure what are you guys are really thinking? I’ll give you a hint.. It’s not working.. And I’m not even an over paid “con”sultant..

    Thanks to your leadership and greed. Total radio listening is trending down slowly. Radio ad revenues are flat and declining. And because you’ve fired everybody. radio employment has declined sharply. The current crop of management “your flunkies” are struggling to make the Internet a profitable and viable solution to the problems you’ve created. But they simply don’t have a clue. Oh well you might as well fire them too. I’ll give you a another clue.. Advertisers want accountability. Hype, and an intangible radio ad schedule won’t due, thanks to the internet and Googles point and click.. I’m witting in Mr. Google for president!

    Radio must go back to it’s roots.. Serve it’s communities and bring personalities back to radio. Hello Mcfly…What’s missing is creativity, personality heart and sole. Thanks to your leadership radio isn’t grooming it’s future stars, if anything it’s doing the exact opposite and killings it’s future. The bottom line is important, but when the bottom line is more important than the art you end up killing the very things that made radio great!.. Hey it’s ok… it’s before your time. so you’re forgiven..

    Before you guys ran evil empires, and were children….Wait were you children? I’ll save that for another time. Could you even imagine an ipod, computer or internet? I couldn’t.. Yet, today children by the age of five, “radio’s future” are already tapping on the key board. And by the age of 8, they’re downloading music from the web to their ipod. Music lovers want to hear what they want, when they want it.. And some day we’ll be downloading music from a wireless internet connection right to our automobiles.. I personally can’t wait..

    To the great one, Clear Channel radio really, really, sucks.. It’s so bad. I’d dump Clear Channel to any sucker who can still pass a credit check And for the CC Clones. Cox, Emmis, Citadel and want to be’s. Radio really sucks. Its time to sell radio while they still make suckers. It’s over boys..and time to pack the golden parachutes. Screw the employees…Oh I’m sorry.. I forgot you already did. Hey have you thought of running a mortgage company? I hear you can screw customers, kill an industry..and get huge bonuses..I think all of you are qualified and pefect for the job.. It’s great work if you can find it..

    “IT IS WHAT IT IS”