RADIO

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RADIO

• Inside the market

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Although it was originally thought that radio
would kill the recorded music business--another
case of premature paranoia--as you can see from
the graph below, just the opposite happened. Most
people cite hearing music on radio as being the
primary reason they buy a particular CD. 
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Radio fought against the insurgence of TV for
several years. A few AM radio stations,
especially in the smaller markets (broadcast
areas), started losing money and eventually shut
down. Most survived, but found that advertising
dollars had suddenly been diverted toward the
expensive TV medium. Radio had to change, and it
did change, primarily by specializing its
programming. First, many stations started
dividing listener days into dayparts, or
programming segments that correspond to typical
listener activities.
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Dayparting
Here is how a typical dayparting approach works

• morning and afternoons during drive time news,
  weather, and traffic reports are emphasized
• early evenings there will probably be a younger
  audience featuring pop music and request lines
• late night radio may get into more avant-garde
  fare--music with lyrics not suitable for general
  audiences, or call-in shows that regularly wander
  into racy topics

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As competition between stations increased and
audience survey methods became more exact,
station program directors looked for other ways
to get an advantage over their competition.
Many stations used a play sequence based on the
clock. It was posted on the wall right in front
of announcers, and they were required to follow
it on an hour-by-hour basis. Here is one example.
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Approaches to Radio Formats
Although appealing to audience segments by
programming specific formats may have worked well
in midsize markets, in the larger cities there
were more radio stations than music formats. The
question then became how to make your
station--regardless of its format--stand out from
the rest. First, station program managers looked
for ways of developing unique music and
personality mixes. (Their jobs, like those of
football coaches, depend on a winning season. In
this case this means high station ratings.) To
further specialize, the major formats were
subdivided "rock" became "soft rock," "hard
rock," "contemporary hits," etc.
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The chart below lists the most popular formats
that have developed. The larger the slice of the
"pie," the more listeners.
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Satellite Radio
In November 2001, a new digital service was
launched in the United States that offers more
than 100 programming choices and doesn't suffer
from some of the reception problems of
terrestrial AM and FM radio stations. At the same
time, heavy rain, thick trees with high moisture
content, tunnels, etc., can momentarily block the
satellite signal. The first fee-based service to
transmit digital signals from a satellite was
called XM Radio.  In the first two months of
operation XM Radio signed up more than 25,000
subscribers. A similar service from Sirius
Satellite Radio began in 2002. 

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In addition to far fewer (or no) commercials
(depending on the service), the new services
offer a much wider choice of digital-quality
programming. Many people feel that the decline in
radio listening in the United States in recent
years is due in part to "commercial clutter."
Many AM and FM radio stations now devote almost
one-third of their broadcast time to
commercials. Below is an XM receiver (left) and
the home audio equipments needed to receive
satellite signals (right). Combined, these will
cost the consumer roughly 250 not counting the
monthly service fee.
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Depending on the supplier, the monthly fee for
the new satellite radio services ranges from 10
to 15. In addition to a wide variety of music
and original programming, the new services
include familiar programs from radio networks and
programming services
The nation's 12,000 AM and FM stations have not
only taken notice, but through the National
Association of Broadcasters (NAB) they have
launched various efforts to protect their turf by
"controlling" the development of satellite radio.
It's much too early to predict the impact of
satellite radio.  However, it's being assumed
that drivers who spend more than 30 minutes a day
commuting to and from work will be willing to pay
for a much wider range of music and programming,
and relief from the commercial clutter of
standard AM and FM stations.
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Radio and Media Conglomerates
A large percentage of U.S. radio stations are
owned by media conglomerates. For example, Clear
Channel Communications owns 1,225 stations in 50
states. The whole CCC enterprise is run by one
man Texas billionaire L. Lowry Mays (whose
profits went from 74 million to about 8
billion--a 100-fold increase--in ten years.)
When a few media companies get too much power,
allegations of unfair control often emerge. For
example, according to The Los Angeles Times,
(Feb. 25, 2002) Britney Spears alleges that CCC
stations have refused to play her records because
her company didn't hire CCC as their tour
promoter.