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Mar 04, 2005 | Articles

Spin factor - RADIO: Infinity, XM, Clear Channel, Sirius ... Is anybody ready to make radio cool again?
by Paula Parisi

Music radio, once a radical force in shaping popular culture, has become all but irrelevant -- or hadn't you noticed? The medium that brought us bell-bottoms, Jimi Hendrix and closer to each other through the acquaintance of mutual friends (DJs) has been turned into computerized wallpaper, a programmable backdrop whose cards are punched by format consultants.

Is it any wonder that the record industry is on life support, its pulsing blood flow reduced to an icy drizzle?

Other media have stepped in to replace music radio as purveyor of tunes to the masses: music videos; the opportunity to break acts through television or movies, of which labels increasingly have availed themselves (cool, but lacking radio's ubiquity); and Internet streaming and satellite radio, which ultimately could save the music business but remain in their infancy on an adaptive scale. But listeners also have become disenchanted with music radio itself, according to one of the industry's most-respected consultants.

"We all think that by doing research, we're delivering what listeners want, but in an effort to reach consensus with a large group of people, we cease pleasing passionate people and stop delivering enough variety for their tastes," says Guy Zapoleon, a consultant and former program director at Nationwide Communication Group. "Add to that the disappearance of the 'personality' and green personalities (who) haven't been coached, and we have some serious issues in radio."

Focus-group studies reveal listener discontent in several critical areas, including complaints about a lack of musical variety, too many commercials and meaningless on-air chatter. Unless radio addresses those and other audience concerns, Zapoleon warns, the medium "will continue to lose listeners and be primarily (for those age 30 and older) in a few years."

Those listeners, most of whom are old enough to be comfortable with purchasing music at retail, are indicating that they want more, better and more intelligently presented music -- which they are not receiving from mainstream radio.

"Music stations sound prepackaged and aren't giving any incentive to stick around," says Steve Wonsiewicz, who publishes the music industry-centered financial newsletter Sound Values and adds that listeners might stick around for a bad sports or news radio segment, "but won't (do the same) for a bad music segment."

In particular, children -- once considered the pillar of the commercial music business -- have fled radio for greener pastures.

"(Radio is) much more predictable, and kids have picked up on that," Wonsiewicz says. "They gravitate to what's new, exciting and edgy; radio just isn't it these days."

Instead of buying music for his two preteen sons, Wonsiewicz opts for video games. "That's what they want," he says. "(But) a 44-year-old father 20 years ago would be buying singles for his kids."

Of course, children and other radio listeners have migrated in large numbers to the Internet during recent years. Ironically, though, the medium that has done the most to hurt the music industry also offers its greatest hope.

"(America Online) is doing a great job of exposing new music," says Zapoleon, who believes that while radio still possesses tremendous potential, "the Internet (may) become the primary way to break music in a few years."

Internet music piracy is the primary culprit in the recent downfall of the record business -- but it is a problem that the labels saw coming.

"We talked about downloading in the mid-1990s," former Columbia Records and Capitol Records executive Burt Baumgartner says. "Egos were involved, and record companies couldn't agree on a unanimous downloading decision, (so they chose) to move like turtles on it. Times were great, money was flowing and we were selling CDs -- they didn't pay attention to (downloading) and just let it go."

Baumgartner believes that the record industry can rebound if it devises a consensus encoding system and stops worrying about its catalog material. "It's over; it's done: Catalog brought in a lot of money, but it's in the system, and companies won't be able to protect their old records," he says.

But Jeff Smulyan -- president and CEO of Emmis Communications, the nation's seventh-largest radio station owner -- does not believe that the Internet will salvage the record business.

"It will be impossible to aggregate enough listeners or viewers to make (the Internet) salable to advertisers, especially in concentrated areas," he says. "Therefore, it will never reach the aggregate masses necessary to sustain it as a commercial vehicle."

In addition, Smulyan notes, "everyone who uses the Internet believes they shouldn't pay for it -- that's certainly a challenging business model."

Meanwhile, radio remains a solid business, if not one that can boast of spectacular growth. Last year saw a 6% increase on 2001 figures -- with revenue estimated at $19 billion by analysts Miller, Kaplan, Arase & Co. -- and first-quarter 2003 billings reflected a 2% improvement on the comparable 2002 period.

"There's a certain resilience out there among the advertising community, particularly the local ad community," Radio Advertising Bureau president and CEO Gary Fries says.

Theoretically, radio's advertising-on-the-cheap business model is viable, even during these financially challenged times.

"Tough times breed upticks in advertising," Fries says. "Radio would be in the most trouble when stores have all the business they need and products are moving off the shelves."

Fries also believes that station-ownership consolidation has benefited the radio market.

"It's made a dramatic improvement in the overall product," he says. "The top three stations in a market might not be any better than they were before, but the 10th, 11th and 12th stations are contenders. The bottom 25% of stations has noticeably improved, which has actually given listeners more choices."

Why, then, does it not sound that way? Why has music radio devolved into what often seems like mind-numbing sameness, whether it be rock songs, pop tunes or the sophomoric banter of hosts?

Most industry figures interviewed for this report deny the existence of ironclad playlists that push corporate agendas by requiring stations to play only certain songs. Zapoleon, whose Houston-based Zapoleon Media Strategies consults about 30 stations in six radio formats, claims that neither consultants nor station-group owners operate with standard playlists. His company's "suggested rotation list," Zapoleon says, is based "strictly on (Nielsen Broadcast Data Systems airplay) numbers, callout (research) and upward-moving songs in the top 100."

He notes, though, that "lists can become tighter, depending on the group (program director's) power base."

There is no question that the corporatization of radio has had a chilling effect on its imagination and creativity -- and therefore on its "fun quotient" and selling power.

But despite all of the knocks, Wonsiewicz says, record labels believe that radio remains the place to break music. "They need a full-frontal assault, and that's what radio gives them," he says.

Mike Kinosian contributed to this report.

Beam me in

Not long ago, FM program directors fought tooth and nail with station general managers to adhere strictly to a maximum of eight commercial minutes an hour. But the likelihood these days of locating stations with such "format clocks" and ambitious philosophies is similar to that of finding teenagers who prefer pay phones to cellular.

But for demanding listeners who feel alienated from commercial radio and can afford it, satellite radio is picking up the slack. For a monthly fee, satellite consumers can listen to a virtual smorgasbord of formats -- from pop to hip-hop to classical -- with little or no commercial interruption.

Sirius Satellite Radio and XM Satellite Radio are the main players in this space. The former celebrates its first birthday next month with 100,000 subscribers, a number the company hopes to grow to 300,000 by year's end.

Subscriptions cost $12.95 a month from Sirius, which offers 60 commercial-free music channels and a library of more than 500,000 songs, and $9.99 a month from XM, which boasts about 500,000 subscribers.

"We (hope to be) right around 1 million subscribers -- or 3 million listeners -- at the end of the year," XM chief programming officer Lee Abrams says.

Both companies have inked deals with car companies that load their subscription services into new models: Sirius has pacts with DaimlerChrysler, Ford, BMW and their associated brands; and XM has an exclusive deal with General Motors and has been working with Honda.

But XM takes an on-air approach slightly different from that of Sirius, accepting advertising and playing within a more conventional format realm -- including some DJs that can be characterized as aggressive.

Sirius vp programming and market development Larry Rebich says satellite and terrestrial radio cannot really be compared because "they're two different animals. Sirius would compare to radio in the same way that HBO or Showtime would compare to broadcast television. Our business model makes it possible for our programming to be different."

Rebich and Abrams believe that the approach now taken by commercial radio broadcasters leaves ample room for opportunity for their firms. Abrams characterizes as "absurd" the fact that enormous amounts of music and countless artists receive no commercial airplay. "BB King closes down the (1996 Atlanta) Olympics in front of a billion people on television; Wendy's and Northwest Airlines use him on commercials," he says. "He's an icon who can't get arrested on (commercial) radio."

-- Mike Kinosian