What's that, you say? Another article predicting doom for traditional radio? I mean, sure, you've heard the argument many times before: Traditional radio stations will have a hard time competing with XM Satellite Radio (NASDAQ:XMSR) and Sirius (NASDAQ:SIRI), which have more and deeper offerings, or portable music players, which offer a completely customized listening experience. Actually, I think that assumption is flawed -- after all, radio stations and record companies had no problem growing their audiences through the rise of MTV and the Walkman. In fact, they were able to grow in part because of the new melodic distractions.
But I think it's different this time. The reason that terrestrial radio and the majors are doomed as it stands now is that the avid music listener is starting to crave a specialized listening experience that the older establishments aren't built to provide.
Today's music fans are spoiled. There are hundreds of genres and subgenres of music, and thanks to the Internet, many folks are just starting to realize all that is out there. Just as cable television opened up a whole new world of specialized televised content beyond the major networks, the same thing is happening to music these days. Last month, I went to a Green Day concert, but I didn't really go to see Green Day. The rock trio put on an amazing show as it turns out, but I went to check out the opening band, My Chemical Romance. I hadn't heard the band played on the radio, and I don't pay much attention to the music video channels these days. But after hearing three different songs by the New Jersey band on Sirius, I bought the CD, liked it, and eventually bought tickets to the show.
I know that I'm not the only one going through a personal musical renaissance. In my youth, I was fortunate enough to be in a band that got signed to Sony's (NYSE:SNE) Columbia Records label. We put out the synth-based dance-floor pop that the market craved at the time, but after selling just 35,000 copies of our first two singles, the economy fell apart and Sony purged the lesser artists on its roster -- Paris By Air included.
Satellite radio and online music sites have reawakened my appetite for music. I have bought more CDs in the past year than I have over the previous five years combined. But I'm not buying the multi-platinum CDs that the record labels are pushing. I'm left unmoved by the mainstream popsmiths who drive home the biggest profits for the record labels -- any by the local radio stations that play their hits, over and over. The majors are not built for the bunt single; they aim for the fences. Yet now that everyone is able to tap into more specific niches through Apple's (NASDAQ:AAPL) iTunes Music Store, satellite radio, and online streaming specialists like Live365.com and subscription sites like Napster (NASDAQ:NAPS) and RealNetworks' (NASDAQ:RNWK) Rhapsody, the only way to play the game is to go for the singles instead of the homers.
I'm talking about things like revenue-sharing, where the artist and label share in more of the revenue channels in exchange for more favorable royalties for the artist. I'm talking about terrestrial radio taking a more grassroots approach, showcasing local artists over the nationally forgettable pop star of the month. Loyalty may be the one thing to save the FM stations and the major record labels, but it's a two-way street. If they want listeners to stick with them, they are going to have to give the consumer something truly distinctive that's worth sticking around for.
Tune into some of these other related stories:
- XM has led the way for satellite radio by laying claim to 8 million ears.
- Three years ago, I advised artists to forget about recording contracts.
- Maybe traditional radio won't die without a fight.
Longtime Fool contributor Rick Munarriz thinks it's cool that Sirius broadcasts The Motley Fool Radio Show four times over the weekend. He does not own shares in any of the companies mentioned in this story. He is a satellite radio subscriber.The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
