Wednesday, 3 December 2008
CBS Radio takes Yahoo! Launchcast - be afraid, be very afraid!
While UK radio groups are busy scrapping behind closed doors over the future of the DAB platform, the cost of their Arqiva transmission contracts and the intransigence of the regulator, elsewhere in the world the real 'future of radio' is being decided in boardrooms by companies whose individual revenues are greater than the earnings of the entire UK commercial radio industry. Today, CBS Radio announced that it will effectively take over Yahoo!'s Launchcast internet radio services from early 2009, much like its deal announced earlier this year to run AOL's internet radio. For us in the UK, it might be easy to ignore the fact that a 'turf war' is taking place in the US between CBS Radio and Clear Channel to own the internet streaming space. As David Goodman of CBS Radio said today: "This announcement, along with our relationship with Last.fm and other distribution partnerships, reinforces our company's position as the number one internet radio company in the world". That last phrase ("the world") emphasises that, although these two media giants are initially focusing their efforts on the monetisation of the US market for IP-delivered radio, it will eventually prove effective to extend their businesses into other territories at low marginal cost. For us in the UK, I think the days will soon be gone when we listened almost exclusively to UK-owned commercial radio, and when foreign involvement was restricted to occasional forays by Australian, Canadian and Luxembourgian (?) investors. AM licences and FM licences and the regulator and the ownership laws might have been able to keep those pesky foreigners from contaminating our radio industry in the past, but now there is nothing (except music copyright agreements) that will be able to stop either CBS Radio or Clear Channel from streaming their radio stations into every home in the UK with broadband access. I wrote about this phenomenon a few months ago and, if anything, the current advertising downturn will only serve to accelerate the process. Let's be clear here - I am not talking about us in the UK having to make do with a simulcast of WCBS that is five hours out of sync and is telling us about pile-ups on the New Jersey turnpike. Content is content is content and CBS knows that, whilst music is a global lingua franca, talk is strictly local. But they also realise that talk is expensive, whilst music (despite the higher online royalty rates) still comes relatively cheap. And here is the nub. Many UK commercial radio stations have reduced their speech content, reduced their local content and increased their usage of music over the last decade because, simply, music is cheaper. Their actions have now rendered them particularly vulnerable to competition from the likes of CBS Radio and Clear Channel who, at present, are only marginalised because they have no access to the AM/FM broadcast channel in the UK. If the pendulum were to swing towards IP-delivered radio, UK commercial radio would no longer just be in a 'bun fight' with the BBC for listeners. The sector would be fighting for its very economic existence. If you think this overstates the issue, then revisit what happened to the 'great' British car industry or those 'great' British record companies (now reduced to a dismal EMI). When markets open up to competition, players either evolve, adapt or die. The question now is whether the UK's largest commercial radio group, Global Radio, can itself struggle to survive long enough to face imminent competition from the emerging, heavyweight players in global radio - CBS Radio, Clear Channel and their ilk - whose deals such as today's are determining right now what we in the UK will be listening to on the radio tomorrow.