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Could it all come crashing down?

By Art Grainger
Posted 4 January 2015, 11.36am est
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Physics. If you have a structure and you allow the structure to erode, it will stay up for a while. The casual viewer will not notice much difference over a small period of time because the erosion and differences will be so subtle that most people will barely notice.

The erosion could be caused by lack of maintenance, unwillingness to invest and maybe just a need to cut costs, save money and ensure that any monies that would have been spent are being used elsewhere, such as lining the pockets of the structure owners (it's probably called "profit").

However, some people will notice the erosion, comment on it, have doubts over the structure's integrity and they may even feel a need to stay away from it because it's not as sound as it used to be. Over a longer period of time, more and more people start to notice and you have an accumulative effect of more and more people having the same feelings.

Then one day, due to natural laws of physics, the structure comes crashing down. It does so very quickly, in a blink of an eye. The people who owned it probably wished they had invested and spent monies on maintaining it - but now they're out of pocket due to monies owed, the clean-up bills, the liabilities and so on.

In 2014, I saw the gradual erosion of what was once a thriving local radio station in my area, with full local programming, a newsroom that was occupied 24/7 (putting out news almost every hour round the clock), a very healthy audience that meant it was much easier to count the poeple who didn't listen than those who did and a station that had its rivals bounce off it as if it wore a rubber suit because they just couldn't make any considerable damage to it at all. However, in 2014, the same station now lends some of its news output to Sky News at nights and weekends, its music policy centralised from outside of the country, there are increased amounts of networking (even from England) and there's been quite a few other means to shed off various bits and pieces of the very things that the station excelled in.

Granted, the slick 24/7 operation that it once was, with its wee golden gems of programming and other services that placed it No.1 in the area it broadcast to, did mean that it was expensive to run, which is not the ideal way to run a business in the short-term, especially when bills have to be paid and more especially when shareholders need to have bigger, fatter profits.

However, each decision to cast off something, reduce costs, sacrifice programming elements and so on seem to have an impact on the number of listeners they have. That station, which once boasted that every 2nd person in its service area was listening, can now only claim that its listener base is now less than every third person, despite its 40 year heritage and a brand that people readily identify as being their own station for their own area.

Unfortunately, this station is not unique. It's happening all over the UK, with more and more commercial radio stations, including very long standing heritage brands, reporting lower amounts of listeners, lower amounts of hours for those who are still listening and lower market shares, yet they still have the same level of local radio competition that they had only a handful of years ago, before this orgy of reducing costs and reducing the service requirements to the bare minimum that they can get away with, before somebody in regulatory authority gives them a telling off.

Erosion.

In any other kind of business, making radical decisions to ensure you have fewer customers would be treated with disdain. Making even more decisions to ensure that the customers you have left consume less of your products would ring alarm bells. Continuing to make decisions that do not arrest the decline (or erosion), for which it is easy to predict a trend of a forever declining customer base and declining amounts of consumption with those who are sticking with you, would send the shareholders, directors, management and others into a need for calling to question the decisions being made, for what could be considered as business suicide. Fine, they would make profits in the short-term, for hardly any cost - but at what point will it all tip over and finally come crashing down, when you have so few customers consuming so little that it just isn't sustainable anymore?

I see some commercial radio stations going in that direction - I just know when it would happen but when it does it could happen quite quickly.

Of course, it'll be the competition that's to blame, right? It'll be nothing to do with literally handing disaffected customers over to other operators because you could no longer be bothered or want to afford to provide the kind of service that you once did. In the case of commercial radio, it's all BBC Radio 2's fault, seemingly.

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Comments

2 years, 10 months ago

So you think Local radio should become more like BBC Radio 2 - a national station?

PRO2 years, 10 months ago

An intriguing post, Art, thank you. (Sorry that James Martin hasn't, quite, understood it.)

Yes, there is a point where they'll not bother any more. I think Bauer's TFM is one of those examples: a radio station that was compelling listening to me as Radio Tees, rebooted by the Metro Radio Group as a tremendously successful hit music station TFM, moved into an amazing, purpose-built, building (complete with windows shaped like Metro Radio Group logos!), before facing competition from Century and Galaxy and slowly declining. At some point, it was deemed unsustainable: and the entire radio station was shut. It now has split links with Metro FM.

I don't suppose it'll be the last.

I don't believe it's cost-cutting that's solely caused this. I think it's increased competition; but it's also, mainly, that the cost of radio advertising in 2015 is lower than the cost of radio advertising in 1989. In 1995, a £1.50 cost-per-thousand price was laughably low. Adjusted for inflation, that same spot should cost £3.00 now. But radio is still £1.50 cost-per-thousand, and that's a good price these days.

When I worked for the Metro Radio Group, a gobby American called Dave 'Giff' Gifford came over to give us sales training. One thing he said: "Your listening figures right now are the highest they'll ever be. Get used to that." He was wrong. For a while. He's tremendously correct now.

2 years, 10 months ago

Don't need to apologise for me JC though I did slightly grab the wrong end of the stick.

John Myers made a great point about this in a recent blog... if only petrol prices worked like radio's!

2 years, 10 months ago

Well James, you may have grabbed the wrong end of the stick but your comment is still worthy.

Just as I have friends in the radio industry and other friends who are radio enthusiasts, I also have many more friends, work colleagues, family members and people-I-know who cannot be described as radio enthusiasts in any way. They simply stick the radio on at a station of their choice and consume it in the way they want to. It's the latter group of people who I pay more attention to when it comes to comments I hear about radio, which they will say to me because they know I know a lot about the subject.

Of that latter group, a comment I have heard quite a lot from them over the past year or so has been along the lines of "Why am I hearing so many English presenters on a Scottish radio station? I might as well listen to Radio 2." That needs to be noted.

It's even more interesting that when it comes to choosing between a bunch of English presenters on a local (Scottish) radio station or a bunch of English presenters on a BBC national radio station - they choose the latter, as if the former is perceived as being an inferior product, even though the talent pool of supposedly great presenters based in London and the rest of the UK ought to be enough to fill a 24 hour schedule with great, compelling, entertaining radio.

Also, over the past few years I have noticed a change. In my daily routines, I visit a number of business establishments. Many of them have radios on in the background, as they have always done, for which a PRS logo will be stuck on something in a corner of the room. Not so many years ago, those radios were almost always tuned to either Clyde 1 or Real Radio, with Capital being heard on the very odd occasion. These days I hear a few of the same radios still tuned to Clyde 1, whilst a small number that were tuned to Real have been re-tuned to Clyde 1. I have once heard Capital in a fast food take-away, I only once heard Heart (in a small clothing shop owned by a couple of 40 and 50-something year old sisters). Many of those radios have since been re-tuned to Radio 2 - and that is a big deal!

It's even more of a big deal wen you consider that whilst the commercial radio stations have made drastic alterations to their programs, formats, names, service requirements, news provision etc, Radio 2 has continued to do the same thing that it has been doing since 1999. Apart from the occasional changes of presenter filling in program slots that have always been in the schedule, as well as changes to specialist shows when one show gets to the end of a series and another one takes over (and latterly changes to programs thru' the night), Radio 2 still looks and sounds the same that it has done since 1999. Even its station idents haven't changed all that much since that time. We still have the same presenters in the some of the same slots that they have been presenting since that time. Radio 2 has not seen the kind of radical overhauls that commercial stations have put themselves through - yet it's attracting listeners, whilst the commercial radio stations are losing theirs. Does that not correlate?

PRO2 years, 10 months ago

I love how these threads are all spinned into a commercial radio bashing session. I might as well read Digital Spy for that.

2 years, 10 months ago

Radio 2 has had a radical overhaul though under Jim Moir and later Lesley Douglas. Also, if people are turning to Radio 2 in protest at English voices on commercial radio, that doesn't make sense. Why would you abandon a station that broadcast from England off peak, for one that broadcasts from England all of the time?

Maybe that's something that Devo Max can address; an increase in the minimum hours in the home nations. So on the back of breakfast and drive, X amount also has to be made exclusively for that country?

2 years, 10 months ago

James (Cridland), if the cost of advertising is the same now as it was in 1989 - then hasn't commercial radio under-valued itself? Perhaps the business model used by commercial radio has not been diverse enough to earn extra revenues when on-air spots were not drawing in enough. Myopia?

Competition is a fact of life. It's up to businesses to provide something that is distinct enough, with a USP that sets them apart from the competition, then they can see if the costomer likes it or not and evolve accordingly.

I have helped to set up quite a few businesses in my time, some of which are still going, operated by other people, which gives me a tremendous sense of pride. Another thing that gives me a sense of pride is that whilst I was creating those businesses, I also created concepts that I reckoned would set me apart from the competition.

I have created many concepts and continue to do so, not just for entertainment, businesses and radio but also for community projects that I had been involved with. Consequently my name appears on very many things, including village signs, plaques, copyrights and even motions in the Scottish parliament.

I once set up a mobile disco company. I decided to create a concept for it that would set my company quite far apart from other disco companies. Other disco companies would turn up with music, flashing lights and if you were lucky the DJ might have had a personality and wore a shirt and tie.

The concept I created was that my mobile disco company would not necessarily have a personality DJ wearing a shirt and tie (though that would be good) but would in fact be pushed into the 21st century by being built around a website (before the days of social networking), for which the website would provide a photo gallery for each event that I did. The website also had a forum for people to discuss not just the event but any subject that took their fancy. At one point I even provide online games for people to play and cartoons for people to laugh at. My website also contained lots of local community information, including a fully comprehensive list of all venues (with contact details) in Lanarkshire, a list of taxi and coach companies, I even had lists of other companies that could also provide for parties (buffet companies, bouncy castles, clowns, magicians, hypnotists etc), all of whom agreed to be listed on my website for free. I even listed other types of entertainers (live bands, cabaret singers etc) for free, so that even though a person who was googling for those other entertainers and NOT looking for a disco would find that information via my website, therefore pushing my brand and business.

Even during the event, I had a moving message sign, for which I would put people's messages up on the sign for a few minutes at a time. I also sold glowsticks on the night, party hats, balloons .... even prints of the photographs I took (I took 3 or 4 photo printing machines with me). It made my business one of the biggest disco operators in the county.

During that time, costs were spiralling, especially with hikes in fuel prices. However, at no point did I under-value my business. My costs to the customers simply went up in tandem with increased costs to me, ensuring that my profit margin stayed the same and I was able to pay my dues. At no point did I consider cost-cutting or shedding any part of the services I provided. Granted, a small number of my potential customers could no longer afford to have me - but the rest paid the increased price and I was never short of business.

2 years, 10 months ago

Martin, you can call my posts commercial radio bashing if you like. I am merely giving examples of things that I have noticed the PUBLIC are doing, which seems to be reflected in the downward trends of the listening figures that can be seen on this very website. So, it's not just one person's opinion that you might not like - it is something is actually going on and is bigger than my attitude towards commercial radio.

I guess your retort is typical of the mood I see from people who are so close to the radio industry that they cannot see the bigger picture. Step back from it and take a really good look - because it's not hard to notice.

James (Martin), Radio 2's radical overhaul came in 1999 (that's 16 years ago) when it moved away from being an easy listening service aimed at over 50's, to a soft-AC, classic hits service aimed at the same demographic that it originally was intended to broadcast to when it was formed in 1967. I know that because I programmed the music on an RSL station (Avon FM) in 1997 to play the kind of music and have the sound of what Radio 2 became in 1999 (albeit I modelled the music policy on that of Lancaster's station The Bay).

2 years, 10 months ago

The problem though, is surely that as your costs increased further Art, more and more and more of your customers couldn't afford you. Then even less could. And then you get stuck.

(I have no idea what happened to your business, I just followed on from your post)

Everyone tends to live to their means too, so in the 90s, stations were probably rolling in it, spending it, and living well. Then they effectively got repeated pay cuts over 2 decades.

I actually agree with you - they probably do undersell themselves but even if every station cartel-style upped advertising rates today, how many could deal with the immediate drop off in revenue?

2 years, 10 months ago

Good point - but the rate at which more people would not be able to afford to have me after I increase my price would take considerably longer than keeping my value at the same price whilst my bills spiral upawards. As inflation goes up, so do inflationary costs - but at the same time many/most people also get inflationary rises that go up in tandem. I don't think anyone would be getting paid the same wage now as they did in 1989!!!!!! If they are, they're clearly in the wrong job or are ne'er-do-wells.

If it ever came to a point that the balance of affordability with my customers and my increased price was meaning that I was not getting as much business as I could, I would have had to find means to diversify and find other revenue streams to stay in business - or simply close (or face the prospct of keeping on going but getting into debt at the same time, if I took the very bad decision to cut my price and sacrifice my profits). As it happened, diversify is what myself and my business partners did. Those business arms are still operating, even though I'm no longer involved.

I actually stopped doing the discos for reasons of health (back-ache) and also because I couldn't expand quick enough to cope with demand (although I did manage to get 4 units on the road at times). For some reason (which seems to be a peculiar thing about the mobile disco industry), I could not get other willing DJ's to do anything more than play music and have flashing lights - they simply did NOT want to spend any time taking photos, update websites, put up messages on electronic signs, sell merchanside or do anything that took them away from being merely Dave Doubledecks with a bit of waffle on a microphone. Sad, really! This also applied when I explored the opportunity of selling the brand and concept as a franchise. However, I continued to use my skills for other projects. The mobile disco business did not close because it was not successful, it was quite the opposite, in fact.

2 years, 10 months ago

Enjoyed the thread, thanks.
But what do you consider more, Art? ILRs, CRs, or both?

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