Can radio rule the waves again?

Dean Wilson, UK managing director at Active International, on the radio in the 21st Century: The licence-fee bankrolled BBC still rules the airwaves, people have almost stopped buying vinyl and even their “forever” replacement CD’s are in decline, digital music is de-rigeur…

Over recent years commercial radio has been the most challenged of all “old” media, perhaps with the exception of local newspapers.

It is clear many people’s radio listening habits have changed significantly, but it is still true much live radio is listened to alongside other tasks. The fact radio has become available in more ways – TV, internet, mobile – means listening has broadened.

Radio still accounts for over a quarter of all consumer time spent with media (source: Touchpoints). The medium took £523 million in revenue in 2010, up 3.3% year-on-year (source: RAB/Ofcom) and 2011 looks like another positive year of growth, not the inevitable management of decline forecast by some.

These figures suggest radio must still have strong influence and therefore a healthy future but what are some of the issues affecting commercial radio in 2011 and beyond?

Radioplayer, where all radio stations can be accessed online, is good news for listeners and lays the groundwork for the anyplace, anytime strategy adopted by dynamic media companies like Sky. If RAJAR figures that show nearly 30% of 15-24 year olds have listened to radio on their mobile become a growing trend, this will be significant.

Radioplayer, and the data capture that goes with it, may also finally flush-out a desire for audience measurement gatekeeper RAJAR to develop a more “digital” research methodology in place of diaries. Kelvin Mackenzie’s attempts to change the system when he was at talkSPORT some years back showed, not to established research standards admittedly, higher reach for many stations, albeit with lower average hours. This would make many stations more attractive to media planners.

The COI’s virtual retreat from paid advertising has hit radio hard but perhaps this is good for the media in the longer term. Reportedly, the COI spent £35 million in 2009, dropping to £7 million in 2010. However, when one advertiser, and their media buyer, accounted for such a significant percentage of your national ad revenue (over 10%) it is clear which way pricing was going to head.

Serious clients know there is no point driving prices down to levels where the media is unable to pay for itself, stifling talent retention, innovation and development, leading to loss of audience and the road to insignificance. The good news here is that in 2010 the agency buyers’ report covering every radio station saw increases in their average cost-per-thousands, and as a consequence, improved yields.

Absolute Radio, Virgin without the brand name, is reportedly up-for-sale. It is probable one of the established radio players will do the deal here, as they are the most likely to gain from synergies to make the business plan rock. Much opinion is focussed on UTV and the fit Absolute could have with their other radio assets, especially talkSPORT.

But what about music streaming services and the threat to radio? Perhaps history can give some pointers here.

The BBC light service is the only wireless available to 50’s and early 60’s teenagers, who’d heard the great rock’n’roll coming out of the US and were clamouring for more without the need to buy another pocket-money-busting piece of vinyl to play on dad’s gramophone. Along comes a brash and very un-BBC upstart called Radio Caroline, raising the jolly-roger to play tunes regularly absent on youth’s transistor radios. Caroline played songs brash radio-pluggers fed to station managers and DJ’s, adverts helped pay the bills. The law got involved to stop this piracy and the establishment BBC fought back by copying the format and tapping-up the pirate DJ’s, cuddly, chatty, chaps telling terrible jokes and playing worse jingles. Demand by businesses wanting more advertising than TV could supply, or they could afford, ensured licensed commercial radio was launched shortly after.

Fast forward to the 21st Century, the licence-fee bankrolled BBC still rules the airwaves, expanding the number of channels and their availability on different devices. People have almost stopped buying vinyl and even their “forever” replacement CD’s are in decline, digital music is de-rigeur, much downloaded from a semi-monopoly with a logo pinched from a famous skiffle-band. Entrepreneurs with no business plan enable people to get free-downloads and swap them amongst their friends. The government sides with big business, the digital-pirates are chased out-of-town and another wave of start-ups offer legal streaming. Pioneer Pandora fails to secure UK licences from the myopic record companies and now Spotify has been forced to abandon the free, ad-funded part of its freemium model.

This is not a strictly accurate re-telling of history, but it looks to me like current circumstances benefit legal, free, ad-funded commercial radio again.

One little thing, go online to radioplayer and search for “metal” (yes, I did have flowing locks once). You won’t find stations playing Black Sabbath, Motorhead or Metallica, just a Radio Hereford show featuring a local news item about a “spate of metal thefts”. Some fine tuning still to be done on the contextual search engine I think.