Written Jan. 24, 2011 by Tom Webster in Content + Marketing with 0 Comments
I fly a lot, and have done so for the better part of two decades. I remember the days when the domestic carriers used to provide meals as a standard practice. Today, food on short-haul flights has disappeared completely (I suppose peanuts are "food," technically) and are increasingly only offered as a paid option on longer flights. We have grown to accept this, because the airlines have largely chosen to compete on price, not value. We have a new "floor" for service - and today, when an airline chooses to offer what would have been considered barely adequate 15 years ago, we are pleasantly surprised. We are, however, literally a captive audience. The airlines maintain control over a scarce asset - rapid transit over long distances - and we have little choice but to accept the each new low as a necessary evil; the status quo to which we are resigned.
This is not necessarily what the market desires. It is, however, what the market has become accustomed to. Therein lie the seeds of opportunity. Conventional wisdom dictates that the domestic carriers, as they are currently structured, cannot be competitive if they both meet price expectations AND serve an edible meal on flights. The airlines, saddled with enormous capital overhead, accept this conventional wisdom. The airports, on the other hand, jump the gate, so to speak. Airports all over the U.S. are gradually upgrading their food offerings to include gourmet box lunches, upscale eateries and healthy grab-and-go snacks. These are opportunities lost by the airlines, but gained by airports and other savvy entrepreneurs. Nature abhors a vacuum.
The same is true with the media. This month, broadcast radio giant Clear Channel began quietly laying off local news journalists. I say "quietly" only because the news hasn't made the headlines as much as some of their previous bloodlettings, but it appears to be the first move in yet another round of consolidation, centralization and cost-cutting for America's largest radio company.
It's easy to criticize Clear Channel, as well as a host of other radio, TV and print "institutions" that have been rapidly abandoning local content in favor of centralized content factories. Indeed, when traditional media began to rapidly consolidate in the mid-1990's, the FCC held a series of public hearings for communities to voice their discontent over the failure of local broadcasters to adequately serve their communities of license (and, in case you didn't know this, radio stations don't "own" their frequencies. We do.) If you'd like to make your vocabulary more colorful, you could do worse than study some of the more passionate comments in the transcripts of those hearings.
Today, there is very little local content on radio. Local news coverage (especially in markets out of the Top 20) is nonexistent, and as a percentage of content, the overwhelming majority of what passes for 'local' on these stations are the advertisements and the weather. The FCC never really did finish what they started with the localism initiative, but a good clue can be found in this editorial from last week by FCC Commissioner McDowell, in which he noted:
...all of us should be asking why the [FCC] needs to devote scarce time and resources to reviving any old localism rules at all. Broadcasters today face a level of competition for audiences that was unimaginable 40, 20 or even 10 years ago. They must adapt to meet the needs and desires of their communities if they want to stay alive...The Internet alone makes a mockery of the notion broadcasters have power to act as “gatekeepers” to wield “bottleneck control” over news, information or entertainment programming. That old notion is the premise upon which the original localism rules stood, but a fondness for history is not a good enough reason to steer the FCC’s rules back in time – and in the wrong direction.In other words, don't look for the FCC to 'enforce' localism. Broadcasters will provide it if and only if it makes good business sense. Today, it does not make good business sense. When traditional media companies served as the gatekeepers for local news and information, that information had a certain value driven by scarcity. The Internet has thrown a significant spanner into that works, and the ability to distribute and access this information cheaply has inspired an entire generation of gate-jumpers and obviated the need for printing presses and broadcast towers.
Today, according to Pew, the Internet has jumped Radio and Print as the main source of news for Americans, and TV's #1 position is in jeopardy. Indeed, while TV is number one overall, the Internet is essentially tied with TV amongst college grads, and both cable and broadcast news programming have seen sharp declines.
Because the costs for disseminating information have plummeted, the tower-and-printing-press models for news and information are now operating at a competitive disadvantage. Indeed, when corporate lobbyists for traditional broadcasters go before Congress and argue that they can't remain competitive AND provide a full suite of local news and information services, I believe them. Their towers, and their debt service, hang about their necks like Coleridge's albatross.
So local media has settled to a new bottom. They cannot make money with local content, so we have grown accustomed to non-local content - music, NPR, Rush Limbaugh, whatever. It's the new floor. An empirical view of this would lead you to believe that one cannot make money providing local news and information. I don't believe this. What I do believe is that existing terrestrial broadcasters cannot make money providing local news and information. This is not the same thing as saying that local news and information cannot be monetized. To the contrary, the appetite for local news - in markets from Kaline, Texas to Wichita, Kansas - remains as strong as ever. What is needed, more than ever before, are the gate-jumpers. If you saw the existing market as the potential market for a local news/information media outlet, you would convince yourself that there was no such market - after all, your newspaper is failing, your TV station rebroadcasts Friends, and your radio station is nearly 100% non-local.
What many local broadcasters are today, in fact, are middlemen. Whether they rebroadcast music, Sean Hannity or All Things Considered, the vast majority of radio properties (public and commercial) in this country are in the business of rebroadcasting other people's content. They are, to be blunt, middlemen. The Internet punishes middlemen - ask anyone who worked as a stockbroker or a travel agent in the '90s. There's no future in this.
What this might lead you to believe is that local content is not lucrative. You can't make money staffing a local news service, with reporters and competent editors. You can't make money focusing on local music. You can't make money with content provided from local sources. For traditional media, as long as they constrain their thinking to their presses and towers, this is true. And, since so many of the inputs we have in local markets come from these sources, it's tempting to believe that local programming is a dead end. I don't believe this is true. The fact that your local radio station, with its enormous infrastructure costs, onerous debt service and crippling overhead can't make it work, doesn't mean that you can't make it work (or, frankly, that they couldn't, if they thought more like entrepreneurs and less like broadcasters.)
In short, we've settled for the bottom in local media. We've grown comfortable with the received wisdom that local news and information are not lucrative. After all, we have all of this data that local media sources are failing. What I would suggest, however, is that empirical data is not the whole story. This is what thinking outside of the box really means. Gate-jumpers focus on the problem - the fact that the desire for local content remains strong, even as the providers of that content continue to weaken - and recognize that the diminishing amount of local content is not a result of weak demand, but weak suppliers.
This is what restauranteurs and entrepreneurs recognized in the airline industry - just because the carriers can't make money serving food doesn't mean that people aren't hungry. They jumped the gate. There is still a tremendous demand for mass appeal local content - music, news, information, etc - and I'm not even talking about niche content. As traditional media sources abandon even the lowest common denominator local content, there is a natural tendency to think that it can't be lucrative - otherwise, they'd be doing it, right? But the reasons why they can't do it (physical capital, bad debt, overextension, and unimaginative management) are not good reasons. Now is a wonderful time for new media content creators to fill that gap - again, a gap created by fiscal irresponsibility, not by lack of demand - and create mass appeal content. Empirical evidence would have you settling for niches. Thinking things through, however, might open up other possibilities for gate-jumping that might not have been possible even 5 years ago.
Remember - data isn't evidence until you pass judgement. Prior to that, it's information. If you avoid making assumptions about what empirical data suggests, your mind is open to what it does not suggest. Gate-jumpers look at the constraints of airlines - and media companies - as opportunities. Go and do likewise.