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Radio Killed The Radio Star, Part One

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Part One: The Music Industry Doesn’t Have A Clue, And The Government Isn’t Helping Either

Remember when it was just video killing the radio star? Today, it’s the Internet and satellite and the iPod and, let’s be frank, general boredom with the medium. Does radio have a future in a digital world?

This was the topic of a SXSW panel called “The Future of Radio” (perhaps it’s a sign of the times that the podcast doesn’t seem to be online yet, but the video is — link below). Panelists included moderator Kevin Smokler, Celia Hirschman of Downtown Marketing and KCRW, Roman Mars of WBEZ, Elise Nordling host of Indie Pop Rocks from SomaFM, and Tim Westergren of Pandora, bringing together lifelong radio listeners, public radio professionals, Internet radio stars, and purveyors of social networking applications.

Before the session started, I eavesdropped on a conversation between two long-time radio professionals. At one point, the man said, “I’m very, very interested in podcasting.” And I’m thinking, “So you should be, so you should be.”

(I’m going to note that while the session kept returning to radio, the discussion was as much about the way the music industry does business as it was about radio. The two are so closely related, you can’t discuss one without the other.)

Celia Hirschman began by noting that while radio is the single most important tool the music industry has had for increasing artist visibility, the people who run music companies don’t know what’s happening on the street. Music executives are “not in the same business as consumers.” That the music industry only knows one structure is the biggest obstacle faces today: the inability to react rapidly to change is the industry’s biggest problem. Well, that and old-fashioned ideas about how people interact with their media.

Smokler noted that when Pandora was launched, he wrote a long, cranky letter to Tim Westergren because the service didn’t do what he wanted it to do. For example, the licenses allow the listener (like me) to only skip a certain number of songs per hour. So I need to sit through a bunch of stuff I don’t want to hear because of legal limitations. If I just wanted to browse without listening, well, the limit in skips prohibits that. I’m not likely to go back in a hour to see what songs I might like if I like the song “Beyond Belief”.

Westergren responded by saying that licensing structures create inherent limitations in the service he can provide to his customers. Nordling commented that these restrictions affect her ability to respond to listener requests — she can’t even play a requested song until 20 minutes after the request is made (stations are also limited the number of songs they can play in a row by an artist and pre-announcing songs). These restrictions turn away listeners; if the music industry were serious about their business, the last thing in the world they’d want to do is send consumers running.

Both agreed that one key problem facing their industries is the DMCA. Designed to protect copyright holders, the act also limits new media’s ability to interact with customers. The DMCA states that delivery services can’t replace commerce, despite the fact, as Westergren noted, Soma and Pandora lead to commerce. Because labels continue to wallow in the notion of “hits” and slotting, they are in actuality limiting artist exposure.

The fact that this is same as it ever was did not escape the audience. Right now the biggest obstacle to increasing online exposure to new music (and those lovely associated sales) is the music industry. They got what they wanted in the DMCA, but its leading to unexpected results: radio is losing listeners and consumers are bypassing traditional mores.

In Canada, the Canadian Association of Broadcasters and the Canadian Radio-Television and Telecommunications Commission are seeking smart ways to work with new media. The CAB…

…believes that traditional radio could lose between 4.9 and 8.5 per cent of its listeners by 2010, with revenue losses of between $13 million and $39 million.

The CRTC has said that the rapid changes in digital technologies and distribution of media — such as music and other programming— have “presented the radio industry with new opportunities, but also new challenges.”

It cited satellite radio, file-sharing and downloading, podcasting and audio streaming on the internet as “new and more flexible alternatives to the traditional practices of purchasing recorded music and listening to radio broadcasting.”

Reason six to move to Canada: similar discussions do not appear to be underway in the United States.

There’s a revolution going on, the problem may be that the music industry will lose the battle long before they realize their fighting.

Panelists:

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