Will The Internet Kill Radio?

NETflix

Unlikely As Consumers/Users Value Free Content

Will the internet kill off “regular” over-the-airwaves radio?  I’ve been asked this question dozens and dozens of times in the last decade.

My answer?  Uh, no.  And one big reason is radio doesn’t cost you (the listener) anything.

Though broadcasters do continue to face challenges in adapting to an ever growing mix of platforms and options consumers have, one thing remains true with radio – ya can’t beat free!

NETflixCosts of media and content delivery continue to come under scrutiny.  The most recent example is this summer’s investigation by the Federal Communications Commission into Netflix’s dispute with major internet providers Comcast and Verizon.

(Actually, the consumer/user is already paying twice – TWICE – in the Netflix cost model.  First, there is the subscription cost; this is what you pay to have access to the content you want.  Then there is the delivery cost; this is what you pay your internet provider to deliver it to you, no matter how fragmented via buffering, when you want it.  Compare that for a moment to what a consumer/user pays, zilch, for content and delivery over-the-airwaves.)

Now the FCC is questioning how the consumer/user will be impacted being stuck in the middle of two industries – the content provider (Netflix) and the delivery provider (the internet provider) – at war with each other for increased profits.  Will the additional costs Netflix is paying Comcast and Verizon for more direct access to their networks be passed along to consumers/users?  Eventually, that seems likely just as how shipping costs from Amazon are paid by the buyer…

Compare this delivery method to a system of roads and highways, that is kind of how the internet works.  The Internet is made up of a series of networks, or imagine roads, that are all connected to each other the way local roads connect to larger state and interstate highways that criss-cross the nation.  So when you order a video from Netflix, or send your friend an email, the information is broken into pieces and sent over multiple networks until it reaches its final destination.

TOLL ROADThe last mile, which is the only portion controlled by internet providers, is like the beltway that surrounds a city along with all the smaller county and city streets and roads that lead to individual homes.  Sometimes a faster, more direct route might be a Toll Road; but you pay extra for that.  Such direct access is similar to what Netflix is paying the big cable/internet providers.  Long term, such costs get passed along to customers.  So ultimately consumers/users will pay the freight; quite literally, if you follow the roadway analogy!  (And if you’re counting, that’s the 3rd such time in one sole media consumption the user will pay.)

So where is radio in all this talk of content delivery and cost?  Back to that great four-letter word, free.

For consumers/users, over-the-air-radio costs nothing.  Zero.  Zip.  Nada!

And for stations, radio content is also very cheap to deliver – not necessarily to produce music or talk shows or live sports, but cheap to deliver.  The real cost all streaming providers face compared to the efficient distribution cost of over the air broadcasting was explained in detail during a speech by Emmis’ CEO Jeff Smulyan to the Economic Club of Indianapolis.

As long as this attractive cost model – focused on free for the consumer/user, while being cheap to deliver – remains in place, then radio will have a prominent place in the media landscape.