Re-Orgs Are Good

Usually my blog posts come from one central idea – often a statement, something like “radio uses Twitter wrong”. I then sit down and try and back it up with some evidence or just have a bit of a rant. For example, often the RAJAR ones start with a belief, that I quickly research, and then find out is completely wrong. They’re usually the RAJAR posts where I say “nothing much has happened”. The other posts that I don’t tend to write are the ones I think will get me into too much trouble – I’ve got to eat after all. Then there’s ones that will just get a load of grief for me ‘missing the point’. I’m sure this will be one of those.

At the moment there’s lots of talk about re-organisation in the radio business. Whether that’s the Myers report on how the pop networks should be structured, the impact of DQF or the way Global Radio’s changed how they deliver localness.

Normally the re-organisation never goes down well with staff, the notion of why it’s doing it is challenged and the end result questioned. ‘Change’ is often seen to be part of “all that management bollocks”.

Which is a shame. Because change is an opportunity. For everyone.

If you start anything new, you think about how to achieve a goal, design a plan and then you execute it. It then might go right or it may go wrong. Whilst you’re enacting it you alter things – it’s something that’s new and you need to be able to react.

An athlete, after reaching this point, usually makes continuous changes to refine their processes to make things more efficient to generate a better result. Quite often it’s about simplification – taking unnecessary things away and focusing on the goal.

Organisations often go in the other direction. After you’ve deployed a new way of doing things, the positions get fixed. Over time things evolve but the change usually is additive and comes when you need to react to something. Someone adds additional responsibilities to their job or you make some alterations to deal with new competition. It’s rare that we spend our time refining and getting better at achieving that first objectives.

Small companies do re-organisations all the time, but they’re much less noticeable. When there’s four of you working in an office, you have much greater visibility on your business. The result is roles and responsibilities shift to meet the company’s changing demands. If they don’t then it’s likely the business will disappear. There’s rarely a need to sit down and explain the bigger picture as you all live it.

Large-scale reorganisations are often about meeting a new (or adjusting an old) objective and then working out the best structure to deliver it. Sometimes, of course, that is about money. We have to do x and we only have y.

For me though, an opportunity to reset an organisation to be focused on the world today and building for today’s future is something that should be grasped with both hands. Are we doing the best for our customers? Is the system we run at the moment the best one? What do we already know we should change?

Of course there is a human cost to any change and I’ve seen, first hand, when that’s been handled in a good way and a bad way. Similarly as well as companies handling it well and less well, the same can be said of team members as well. None of us have an unalienable right to do the same jobs in the same way forever.

In radio I think we need to be focused on our consumers and customers. For the BBC they’re the same thing, for commercial radio it’s slightly different. But, we have to look after those customers/consumers in the best way we can within the budget we’re given.

Now you can argue that the commercial organisations pay their Directors too much, or want to deliver profit margins that are too high and at the BBC you can talk about the horrific waste there is ‘in other departments’, but they’re both things out of your control. You can only look at doing the best job for the money you have.

Structure is a means to and end. The end being delivering value for audiences. We are often merely caretakers of organisations that our listeners love. Our role isn’t to preserve the organisation it’s to make sure we do our best to continue to deliver the things that they love.

In an ideal world, we would all be like the athlete. Making iterative changes to do a better job at reaching our goal. In the absence of that, re-formulating what we do every so often is no bad thing.

Least Worst Options

I was reading Mark Ramsay’s piece about Pandora. If you don’t know, Pandora is a (very popular) streaming radio service in the US. It’s something we don’t really have in the UK. I imagine that’s because of a combination of different things – music rights, early Spotify deployment and a strong existing radio product.

One of the Pandora hot topics is whether it’ll start hitting existing radio operators revenue and audience. It’s getting some audience traction and better yields on advertising – ie a thousand Pandora listeners generates more revenue than a thousand analogue radio listeners.

Personally, I think it’s getting these revenues because it’s ‘hot’ and there’s limited inventory. Longer term the thing that will make it truly successful is the ability to target really narrow demographic types. If you want a 21 year old in New York or a 50 year old in Santa Monica you’ll be able to drop your add into the platform and it will serve it to the right people. I imagine, at the moment, there isn’t enough demand (or understanding) from the ad agencies to be able to develop that much creative to really take advantage of it. However, should agencies want to go down that route, Pandora will be in a great position.

It’s something that Absolute Radio talked about with their new streaming options. They’re asking users to register so they can do similar things.

Quite often the discussion about platforms and new services is whether they’ll ‘kill off’ older ones – the analogue radio killer, the iphone killer, etc. I think often it’s the wrong kind of question though. Just because something new comes along, doesn’t mean what’s gone before it vanishes. If that was so, radio – around 100 years – would be long gone.

What actually gets replaced are things that serve consumers better than what went before. Often they’re things that highlight products or services that we’ve ‘put up with’ or, have up to now, been the ‘least worst option’.

The iPhone was revolutionary because it showed up old feature phones or existing smart phones to be a bit rubbish. Its introduction necessitated the entire industry to revise its mobile strategy and now all phones really take as their baseline iPhone-popularized features – touch, apps etc.

Often these changes take companies by surprise, when really it’s just a combination of outside innovation and inside complacency.

I sometimes worry about complacency and UK radio.

In the analogue world we have some excellent stations, some average stations and some poor stations. However, providing they are solvent businesses, market forces do not have the same impact as in other sectors.

This is primarily because analogue radio has massive barriers to entry for new entrants. A combination of lack of frequency availability and the heritage position of many stations means that new entrants rarely get a look in. So my question for existing stations – are they doing okay because they’re good, or because there’s no one else able to compete with them?

Generally, competitive radio markets have better radio stations. When you really have to compete for audience and revenue two things happen – you work harder at being good and you sort out your positioning. You have a better focus because you need to have a better focus. This competition means there’s less chance that people listen to you because you’re the least worst option.

The world is definitely changing and it’s digital availability that’s caused many sectors to change and quite happily dispose of their heriatge operators. Whether it’s job ads or buying music, consumers jumped when there was a better way to do something and they could junk their existing least worst option.

I don’t know whether it will be Pandora-type services that gives radio an iTunes vs CDs moment. What I do know is that analogue radio’s barriers to entry are living on borrowed time. A mandated digital switch-over or not, the concept for today’s consumers of a limited FM dial being the basis of their radio choice is laughable.

As I talked about in a previous post, listeners are already stopping being analogue pure-play consumers. DAB, DTV and Online is a growing part of their consumption habits. It is now much easiser for them to dispense of their least-worst option and pick something that better suits.

If I was an existing analogue operator I would be worried that, to quote someone else, I was standing on a burning platform. How do I develop my business that harnesses the power of consumer change – hello, Autotrader – or crumbles underneath it – hello, Borders or HMV.

State of Radio – Q2/11

I’m a big believer in RAJAR. It’s a big survey that talks to  lots of people. When i’ve commissioned my own research, using a very different methodology the numbers are comparable. Also, i’m a big believer in trend being the best way to look at numbers. Of course, there may be oddities in any survey, but your trend line is the best indicator for how you’re doing.

This is why i’m not that bothered about the ups and down of the majority of well-established radio stations. There needs to have been a major change at a station or in a market before that’s interesting.

On the big changes front, for many of the new Capital stations this is the first book that’s all Capital, having jetisoned any residual numbers from their previous incarnations. If you look at the network as a whole it’s only a marginal change of hours up 1% and reach down 1%. Other than some hours declines, for the majority of the new Capital’s its been just about business as usual. Two though, stand out – South Wales and Birmingham.

South Wales has seen its reach drop 15% and its hours 20%. That’s quite a drop for the old Red Dragon and looking at (perhaps an unrepresentative quarter) could suggest that losing its Welsh position maybe hurting it. At the other end of the spectrum, Capital Birmingham has added 20% to its hours. Is this the benefit of ditching the legacy of being an urban station and being reborn as a pop one? Only time will tell.

The other big change – BBC 7 to 4Extra – has generated another 400k listeners to that service. Why? Cross-promotion and being part of a wider brand family. It’s now the UK’s biggest digital station.

I also think Jack in Bristol deserves significant kudos for dumping an under-performing format and replacing it with one that’s cut through. It’s been another record RAJAR result and it looks like there’s still some room for even more growth.

Big changes (like the Original to Jack flip) produce behavioural shifts, but then gradual change can have the same effect too.

Gradual change isn’t as fun or exciting though. The transition from the analogue to digital world for the radio industry is something that’s certainly taking its time. Our listeners have had thirty years of analogue commercial and BBC radio available in every device under the sun – kitchen radios, hi-fi’s, portables, car sets – and in every place they go – home, car, work or on the move. The ubiquity of radio in form and location means that 90% of the population use it and  they consume an eye (ear?) watering 24 hours a week of it. It’s the kind of media consumption that any other product or platform would kill for.

At the same time we’re offering listeners digital radio options too. Though, to be honest we’re making it quite difficult for them. For content we’ve gone from ubiquity – every station (in my area) available on every type of analogue radio – to one where we  put different stations on different platforms (just compare the line-ups on DAB and DTV), for cost we’ve gone from ‘free at the point of use’ to charging people based on usage for some devices (mobile data), for devices we’ve gone from every form factor being available cheaply (or often free) to one where you pay a premium and sometimes it’s hard to install (like in-car DAB).

We’ve also done all of this whilst continuing to provide radio that they’re used to, is still free and works on every device.

Looking at it, it’s amazing that anyone’s decided to listen to radio on DAB, Digital Television or the Internet.

But they have. They’ve decided that they want something more than what’s provided on analogue – be it choice, coverage, quality, ease of use. Now they haven’t decided to opt-out of analogue (even the most ferverent digi-phile still uses analogue in someway) but they’ve added a chunk of digital ‘to fix’ their radio listening.

Sometimes people who work at (predominantly) analogue radio stations dismiss the need for digital – they talk about it not affecting them – that their digital listening is small and not growing. They often forget that analogue and digital needn’t be mutually exclusive.

Our listeners are more than comfortable being multi-platform – listening to some stations on analogue devices and some others on digital ones. In probably most households the analogue device consumes the majority of listening, the digital the secondary.

I think all of these things hide quite fundamental changes. Though, as I started to dig through some of the data, you start to see how our listeners are building a new parallel structure of listening.

The availability concept can be demonstrated by NME Radio. Its been on and off a number of platforms in its short life. However, the reach over this time stays pretty static. Why? Well, listeners need to be aware of the service and then if it’s something they would like to listen to, they then seek it out – however they can get it. The circled area is when NME was nationwide on DAB. A small reach increase, but a massive hours jump. Why? The awareness doesn’t change, but suddenly a lot of these listeners can get in on a device they have more access to – their DAB digital radio – a device that’s much easier to listen for a decent length of time on (no fighting those in the house who want to watch Eastenders on the digital TV).

The dominance of analogue radios for primary listening points can be seen in the chart below. This shows platform consumption over a weekday. Breakfast and daytime is dominated by analogue radio, which then, like all radio drops away as we get into the evening. DAB (the red) and DTV (the green) grows – I’d wager these are  people opting out of traditional listening to consume non-analogue stations.

Availability of listening on digital devices is strong – over 40% of people listen to some type of digital radio each week. It’s interesting to see how Absolute have used their new stations to repair and then grow their total hours. At a time when there have obviously been issues for their main service, they’ve weathered the storm by bringing new products that are bringing significant hours to their business.

In fact the impact is such that they are transitioning into a predominantly digital business:

The thing that Absolute are actually benefiting from is wide digital radio reach but a low number of new mainstream choices for listeners.

This latent demand can be seen by the next chart – this is the Eagle TSA and analogue/digital reach. It’s not stacked, so the blue is analogue at just under 500k listeners, with digital at around 250k. Now this is a TSA where the local multiplex hasn’t switched on yet – so the Eagle only exists in an analogue (and internet) environment. For an ILR The Eagle’s doing quite well at the moment, but what I’d be worried about is that, at speed, the TSA are listening on devices that I don’t broadcast on. As these radio listeners transition from the devices being for secondary consumption to primary consumption the competition in the marker (even if we assume they’ll be on digital) will be severe.

If ever there was a need for evidence that there’s the ability for swift change is to look at the success of the transition of Radio 4 Extra from BBC7. Adding 440,000 listeners in one quarter isn’t about gradual development of new platform listening – its 440,000 digital listeners ready to switch into content that’s been promoted to them.

Last chart for today is one showing analogue vs digital hours for the BBC’s national stations:

To me this is the bell weather. The BBC’s national stations are available everywhere and the services have high awareness. There’s a mix of analogue favourites and new digital stations too. Taken as a whole a third of their output is now consumed digitally.

If unlike the BBC and Absolute, your output isn’t being consumed digitally at a similar pace then I think you have a problem. The audience is tooling up to consume more radio digitally – both to new and existing stations. Well over 40% listen digitally, the barrier isn’t the idea, its just a physical issue –  analogue sets are currently occupying the places that generate the most consumption.

If I owned or worked at an existing analogue station it’s not whether my reach was up 2% or that Capital nudged ahead in the market – it’s whether i’d built a brand that was going to be consumed by digital listeners – because that’s who my listeners have become and there’s far more competition on that dial.

What are you listening to?

No, not a RAJAR post. Maybe one of those later.

This has been around a while – a guy, Ty Cullen, in New York stopped people in the street and asked what they were listening to on their iPods.

Here’s the video:

There’s also another one that’s been done, this time in London…

I think what’s lovely about these is that people are, generally, happy to tell the questioner what they’re listening to. It’s also really great to catch people in the moment of consumption and how they’re pretty much all smiling when they share their secret passion.