Published Dec 16, 2004

It’s not just the content owners who have completely lost it; that old-line content distributor, radio, seems to have gone completely off the deep end as well. Radio has been losing listeners to the internet and to digital media players, like the iPod, for years. Now, apparently, radio’s hopeful that the security issues that portable hard drive media players pose will doom them to extinction, leaving only radio for behind.

The article linked above suggests, rather reasonably, “Corporate America has always seen data security as a pressing issue and the introduction of portable devices that can store vast amounts of data represents yet another threat that must be addressed” But then it takes that too far: “A ban on iPods would only reinforce what our industry already knows - that radio remains the most effective, least obtrusive, and least harmful medium available”

I’m very sympathetic to radio. It’s a medium that has been very successful over a period of decades and is undergoing an uncomfortable transition. But looking for its salvation in the security threat posed by pervasive posession of portable hard drives is pitiful indeed. It’s pitiful in three specific ways:

  1. From a security point of view, banning iPods is no security at all
  2. Waiting for iPods to wither away of their own accord is an entirely passive approach
  3. Banning iPods falls well short of an actual business strategy

I’ll review these at a bit more length below. And, since I’m not much for whining without being positive as well, I’ll suggest a few strategic responses radio might want to take.

Security

I’m tackling this topic because it’s the shortest. As the article linked above suggests, “Any device that can be easily connected to the USB port and can download data poses a threat.” This doesn’t just mean iPods (and similar products like Rios, Archos’s products, Dell DJs, etc.), it means those flash-based thumb drives (I bought a 128MB one a few months ago for $29.99), it means portable hard drives, it means digital cameras, it potentially even means cell phones (my year-and-a-half-old Nokia can easily exchange files with my desktop, and I have 128MB of memory in that too). Now, imagine you’re in charge of security for a large corporation. You have two choices:

  • You can ban these products, and try to ensure that no employees bring in, say, a portable flash drive that’s smaller than my car keys
  • You can install software on your computers that secures sensitive data

Which one do you think will work better? Which one do you think employees — who own cell phones and iRivers, and most of whom don’t want to steal your stuff — will like better?

Passivity

Actually, this will probably be the shortest one to deal with. Who in their right mind has the following thought process:

  1. My opponent’s product is threatening the success of my product
  2. People seem to really like my opponent’s product
  3. My opponent’s product has a problem
  4. Neither my opponent nor anybody else will ever find a way to solve this problem
  5. Therefore, my business is safe!

Number 4 above seems particularly wishful. Business is all about solving problems, and has been forever; it’s a safe bet that someone out there will solve the problem you can’t. Cars are expensive and only for the elite? Henry Ford invents mass production. Clothing is laboriously handmade by every family? The English and Dutch invent textile factories. Can’t send non-Roman characters over the Teletype? Japanese figure out how to make cheap, fast, good faxes. Waiting for others to fail is never a good business plan.

Not A Business Model

As stated above, this is really a corrolary to the passivity point. Virtually every industry has some plan going forward, whether it’s an official vision put forth by an association or simply a general agreement on the direction of market forces. The steel industry is moving towards smaller, faster plants. There’s no airline industry planning association, but Delta and United and Continental are all trying, or have tried, to launch low-cost, short-haul subsidiaries. What’s radio’s plan?

  1. Have all radio stations bought by Clear Channel
  2. ???
  3. Profit!

So What Could A Plan Be?

This is the point at which I’m put on the spot to add something positive to this rant. Let’s see how I can do! I’m going to take the following limitations as given:

  1. We need a plan that doesn’t rely on satellite
  2. Radio must remain commercial

Existing commercial radio does a good job of getting certain very popular artists and songs, and artists and songs that sound like those very popular artists and songs, in rotation. That’s not a bad thing; it’s a good way to get people introduced to music. A lot of companies do just that — GM starts you out with a Chevy, then moves you up to a Cadillac; Sony starts you off with a regular TV then moves you up to a WEGA; The Gap starts you off at Old Navy then moves you up to Banana Republic; and so forth.

Radio moves its listeners through segments based on, principally, age. But being old enough that the music you listened to growing up is on the oldies station doesn’t mean anything — it just means you’re old. Rather than moving listeners through a series of age segments, radio needs to move listeners through a series of increasingly targeted stations that deliver:

  • Greater listener loyalty
  • Demographics of a sufficiently high level of specificity to allow advertisers to make targeted buys (I’ve bought radio in the past, and it’s very much a “shotgun” medium, reaching all sorts of people at once — not a good buy unless you have a very large budget and are prepared to saturate)
  • An obvious “hand-off” path such that listeners can self-select to stations to which they will be more loyal and to which they provide a more valuable advertising property

This means a three-level strategy:

  1. A top level of broad Clear Channel-style stations that provide trend-conscious, younger, and browsing listeners the chance to get acquainted with a wider variety of top artists and songs on a single station.
  2. A second level of more-targeted stations that stick to one genre, introduce the listener to a wider set of artists, market events related to the genre and artists to the listeners, and provide more-targeted advertising that appeals specifically to the type of people who listen to that genre.
  3. A third level of very-targeted stations that play a smaller set of artists in a particular sub-genre. These will be the hardest stations to keep profitable but these stations should make a good profit by being in national, not local, networks that syndicate content and even DJs to stations around the nation and even broadcast that content through the Internet. These stations will deliver very targeted ad buys and so should command a premium price.
  4. If desired, these third-level stations could hand off to satellite radio.

This plan requires real work to pull off — stations need to be marketed to advertisers, more-targeted stations need to be publicised on less-targeted stations, and DJs need to spend a lot of time learning about specific genres and local music scenes. But it offers real potential for payoff, by building a very loyal set of listeners and defining reliable and useful advertising income streams.

That’s what I’d do if I was in charge of the world.