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Rick Shaffer: Old AM radio model is broken
- Thread starter mvcg66b3r
- Start date
The bad news is that internet radio isn't profitable either. Even the biggest internet radio service, Pandora, is losing money. So while it may be attracting new advertising, it isn't enough to overcome the high cost of music royalties. In fact, the way the system is set up, there is no way to overcome that cost.
The interesting part of the story is that listenership to the most popular FM stations hasn't declined at all. But advertising money is being spread thinner.
So it depends what you want to use as the measuring stick: Profitability or Audience. This article chooses profitability, while ignoring that the internet also isn't profitable. So the new model is broken too.
The interesting part of the story is that listenership to the most popular FM stations hasn't declined at all. But advertising money is being spread thinner.
So it depends what you want to use as the measuring stick: Profitability or Audience. This article chooses profitability, while ignoring that the internet also isn't profitable. So the new model is broken too.
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Indeed, in the next year or two, many new cars will not include AM stations on their radios.
Anything concrete on this? I've seen plenty of predictions over the past couple of years, but AFAIK only a couple of models have dropped AM from their entertainment systems.
The old model of so-called terrestrial radio — which you tune into in your car on your way to work — can’t be sustained anymore.
And yet the esteemed Mr. Eduardo keeps telling us that only 30 percent of all listening is in the car. So is this just an assumption on the part of the writer or do others in the biz dispute David's number?
Anything concrete on this? I've seen plenty of predictions over the past couple of years, but AFAIK only a couple of models have dropped AM from their entertainment systems.
The old model of so-called terrestrial radio — which you tune into in your car on your way to work — can’t be sustained anymore.
And yet the esteemed Mr. Eduardo keeps telling us that only 30 percent of all listening is in the car. So is this just an assumption on the part of the writer or do others in the biz dispute David's number?
The writer makes a number of assumptions, including the one that the "old model...can't be sustained anymore." That assumes radio companies continue to use the old model.
What we have to look at is which part of the "old model" can't be sustained. Is it the technology? Is it the cost of the FCC regulations? Is it the staffing? So there are a few choices to consider if you're going to accept the assumption that the old model can't be sustained.
In the case of CBS, the company has steadfastly held on to some very expensive formats as revenues have declined. They have steadfastly held on to full local staffing when a lot of their competitors have found cheaper ways of operating stations. They no longer own a syndication company, while two of their biggest competitors offer syndicated content to other stations. There are lots of ways CBS, or the new operators of their stations, could change the old model of doing radio in order to make it more profitable.
The only actual production vehicle I know of without AM is the BMW electric car. It's around $80 k well equipped, and won't sell more than a few thousand in the US. The dealer network has been receiving lots of complaints about the lack of AM as the more affluent and thus older buyers like their news, sports and talk on mostly AM stations.
Are there any other no-AM cars, or is this just a rumor?
As to listening location, we can get home-car-work listening statistics right out of any Nielsen diary market report... about 200 markets. And the PPM, which only measures "home" and "away" shows over 30% of listening quarter hours in the home.
As home radios decline (many millennials do not have them at all) the percentage of listening to OTA radio at home and at work may decline, but things like this take years and years to be statistically significant.
The Boston article errs in many other ways, starting with the writer's lack of business understanding of an "impairment charge" as opposed to a "write-off". It's a hack piece by someone who wrote with know knowledge and lots of false assumptions.
If the FCC wants to revitalize AM, they have to address the audio quality of AM radio. It simply can't compete with digital audio.
But that isn't how paradigm shifts work. The lead-up can take years but when an inflection point is reached the effect is swift and sudden. The typewriter, the adding machine, vinyl albums, cassette tapes, landlines, incandescent light bulbs and the desktop computer were deeply entrenched tools that all but vanished seemingly overnight. Nobody involved with those technologies wanted to see it coming. AM radio is no different. We're nearing an inflection point.
They're not going to manufacture what people won't buy. And people just won't buy standalone radios anymore. And I thought the FM chip was being fought (and disabled, if it's in the phone) by the cell-phone carriers, not the consumer electronics industry.
My phone (Moto G2 - about 1 year old) has an FM chip. Works great, just wish it was HD capable.
Hate to tell you but there are still a ton of desktop PC's out there and, although they are not selling in old-time quantities, they still sell a bunch. Take a look at Intel's chip sales to get an idea (be careful to separate the server chips from the others though).
Also, many people are keeping their landlines as a filter. I give my mobile number only to my personal friends and responsible businesses. Everybody else gets the home number (which is connected to a recorder). The home phone gets all the BS calls.
Vinyl records are making a comeback. Still plenty of cassette tapes around. Landlines aren't dead yet (they work during a power failure -- your cellphone won't after the battery dies). Incandescent light bulbs will be around as long as Walmart is around, at least in the more politically conservative parts of the country. Desktop computers are still the mainstay of businesses worldwide. I think we can stick a fork in typewriters and adding machines, though.
I have yet to own a cellphone with an FM chip, and those have come from Motorola, LG, & Samsung, with Verizon as the carrier. I'm getting a Samsung S7 Edge next week to replace my Note 3. Verizon didn't mention an FM chip and I didn't ask. We'll see if it has one.
But there is no rapid paradigm shift here. Millenials are not buying new home radios, but it takes exactly one year for the millennial population to get one year older.
So for every year that goes by, Millenials in the 25-54 crowd increase by 4%. Some of them do not have home radios, but will use radio elsewhere. So the impact on TSL is only one percent, give or take, per year.
Gen X and Boomers are using home radios, and actually replacing them in some manner or WalMart would not have an assortment of 'em in stock.
Millenials are, in their majority, still using radio. Just not as much as the under-thirtysomethings of a generation ago.
It took two decades at least from the introduction of the first Wang word processors until typewriters were almost totally replaced... roughly 1973 through the mid-90's.
Adding machines simply morphed into digital calculators. Same functions, newer techology.
As landtuna has said, desktop computers continue to be used worldwide in work environments. I have three at home and all do things no laptop currently manufactured could do as well or as easily. And speaking of radio applications, production studios, on air studios, network operations and such are all run off desktops that run whatever the users' choices are for digital storage and playback.
Landlines, as also said previously, are the only backup for power failures and many moderately destructive natural disasters. They have a much more hardened architecture than VOIP and cellular implementations; most are better for services like 911 as well.
Incandescent bulbs are still the only options in many specialty shapes and sizes, and for limited usage applications they are the most cost efficient. While I have a 100% LED illuminated home, the implementation cost was 25 to 30 times the cost of the cheapest "brandless" incandescent and that means many people will gradually adopt them over a period of many more years. Anecdotally, the folks I bought my home from 9 months ago did not have a single LED bulb in the place, and only a couple of bulbs were CFLs; it is likely they would have gradually made the switch, but it might not have been all done util perhaps 2000.
You are overestimating the speed of change.
I just bought a new clock radio for my bedside which is considered old fashioned, most people just use their smartphone. This one is very nice and I can stream everything from my phone using Bluetooth. The only thing this clock radio doesn't have is AM. This doesn't bode well for AM stations.
No one is saying they have to make stand-alone radios. One of the best sellers was the Walkman, combining a radio and tape player. Later they combined radio and CD player. Then they stopped inventing such combinations.
Nope. It's being fought by the Consumer Electronics Association.
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As one ages it gets more difficult to get a full night in the rack (as we used to say in the navy) so I shut my phone off or leave it downstairs where I can't hear it (and neither can my wife with her younger bat ears). So the smartphone alarm function isn't very useful to me. Wifey has a 20-year old clock radio (AM and FM) that has two alarms so she can use one and I the other if necessary.
Several years ago I bought a very small Sansa Clip radio which was FM only (which uses the headphone wire as an antenna so don't know why no AM) and, of course, my smartphone has only the FM chip (and also uses the headphone as an antenna). Both devices have music storage space so I find the need to listen to FM from either one unnecessary. It would be neat if they had an HD function as 93.3 HD-2 (KAZG) is the only FM I listen to these days. I have a 15-year old home stereo setup that has AM and FM built into the tuner but it has been years since that device has been powered on. We used to use it for TV surround sound but the sound bar works better and is Bluetooth friendly so no wiring running under the rug. The only "radio" I listen to these days (at home) is WCKE, an Oldies AM streamer. If the stream is broken or I am not on the PC I can turn to my Insignia HD radio. AFAIK, no one else in the family listens to any radio except occasionally in the car.
No AM. No FM. No static at all......
Because people stopped buying them. MP3 players with FM, too. Smartphones are THE consumer portable entertainment device now.
Verizon has made it 100% clear that they WILL NOT activate any FM devices that happen to be put in smartphones that they sell. I can't speak for the other companies, but I've been with Verizon for 13 years, and this policy is common knowledge. I was hoping that they'll change it with my new Galaxy S7 Edge phone, but after further review, I was told that will not happen, assuming that it even has an FM chip. Maybe the CEA is fighting it as well, but in the smartphone world, the carrier dictates what is activated and what isn't.
Want to hear your favorite FM station? TuneIn is your friend, and so is your data plan if you're outside WiFi range.
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