The Pain of Change

Michael Hedges August 27, 2009 (Follow on Twitter)

Change swirls around us; at times profound. The media world reflects it, feels it and gives it light. All of this change – new media, old media, business models, revenue streams – frustrates the great media minds and we lesser mortals. “The majority of change over the last 20 years has been incremental rather than the exponential change that's happening now and the transition is painful,” says one broadcast marketing executive.

When Rupert Murdoch faced the financial community recently with dismal half-year results for News Corporation his frustration – and pain – was palpable. The web engages more and more people but revenue hasn’t followed. His conclusion is to end the “free nonsense.”

Easy for him to say, yes?

Digital media platforms are everywhere and on them people can find everything, anytime, anyplace. The effect of the content explosion in this century’s first decade is compared, in terms of reach, with the invention of the printing press, radio and television. In compliment, new media offers people-to-people connection beyond the telephone. “Today is not yesterday,” a philosopher said in the 18th century.

While no media platform has been exempt from change, radio broadcasters feel it profoundly. Audience surveys in the UK, Sweden, Italy, France – nearly everywhere – show marked increases in listener activity on digital platforms this year. Whether by mobile devices or the internet people are using new media in compliment with old.

Like other digital radio platforms, internet radio has had a laborious birth. Early interest was almost entirely confined to hobbyists with a bit of money and a lot of patience. Most were chased away by confiscatory rights fees and marginal revenue from advertising. In time most all radio broadcasters embraced, however reluctantly, the internet platform.  Many now are looking toward mobile platforms. Joining Rupert Murdoch, all are looking for revenue streams.

Mike Agovino is co-founder and COO of Triton Media Group, a US-based provider of revenue solutions for internet radio broadcasters. Prior to founding Triton, he was President of Katz Radio, a leading radio sales house.  He exchanged thoughts about new media, revenue and change in an email correspondence earlier this month.

“In 2006 we launched Triton with many of the "lessons learned" from that first experience still fresh,” he says, “and we try and keep the learning curve just as steep.“

Everything he says points to change: “We work day in and day out with radio stations of all sizes and shapes from big groups to small local operators and probably the biggest thing we try and do is get people of every job position to understand that the nature of their position has changed forever and that it will never go back to the way it was.”

A decade ago, internet radio was a fools paradise. The difference between then and now, says Agovino, is broadband. “The limitations of the experience a decade ago have mostly been eliminated and that makes all the difference in the world. As broadband has first achieved ubiquity in the office place, and as traditional radio enjoys a large "in office" listening audience, it's only natural that internet radio is achieving scale initially in the work place.”  Several studies show day-time internet radio usage increasing, tied to workplace availability of high-speed broadband, which has brought out music rights and license fee collectors.

“I don't think there's any question of ‘if’ internet or IP radio will eventually become the primary distribution channel but ‘when’,” he muses. “It will be very interesting to see all of this unfold. No doubt ‘choice’ will create a highly fragmented marketplace and technology stands to democratize many of the elements. Much of the consumption will be on-demand rather than live and great entertaining content will always be sought out.”

“Just as radio was the original ‘portable’ medium, internet radio is putting a near limitless array of choices in your pant pocket,” he adds. Radio broadcasters felt the crunch as Apple’s iPod and other music players peeled off music-only listeners. That phenomenon, too, has changed as recent research is showing a trend toward streamed content over direct downloading. Perhaps the music police are having an effect.

Agovino sees technologies still changing with distinct usage patterns evolving. “ In the long term the mobile space will echo the desktop space--individual clients and programs will increasingly be moved to the web browser. On the desktop we see this with everything from email to video games. On the phone, people gravitated to applications due to the greater functionality, but as the mobile web browser becomes more powerful this will be less of a factor.”

People, he says, will always choose convenience. “Consumers won't want to open 10 different apps to browse radio stations, but they would open 10 different links within one browser.”

All that is lovely, but as Mr. Murdoch would ask, “Where’s the money?”

“The desperate need for revenue has pushed some of the early leaders in the space to target legacy buy-sell channels in order to capture low-hanging fruit. While this is understandable it needs to viewed as strictly a remnant revenue stream and the leaders in the space need to establish real value by targeting customers who understand interactive media.”

“Even in this economy, there is plenty of money out there. The most difficult part is getting (broadcasters) to understand that, for the most part, it is not in the places they usually look for it. Most people in radio have spent their career operating in a very stable environment. The majority of change over the last 20 years has been incremental rather than the exponential change that's happening now and the transition is painful.”

Change is painful. Walking out of the gym one morning this week with a Swiss banker I asked how things were going over at the old bank. “Bad,” she said. “Bad this week, bad last week, bad the week before that. Everything is changing.” So it is. And so it has been.

“Today is not yesterday,” wrote Thomas Carlyle many years ago. “We ourselves change; how can our works and thoughts, if they are always to be the fittest, continue always the same? Change, indeed, is painful; yet ever needful; and if memory have its force and worth, so also has hope.”

Carlyle was also the first to call economics “the dismal science.”

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