The Future of Radio: Threats, Digital Trends, and Broadcasting

Introduction

What is the future of radio? Does radio have a positive future with a wide-open range of possibilities, or are there significant stumbling blocks ahead? What technologies and competing sources pose the greatest challenges? What will it take for radio stations to convert to digital technologies, and why have they not yet done so? These and other questions are explored in this paper.

Current State of Radio Broadcasting

According to a report called "The State of the News Media" by the Pew Research Center, traditional AM and FM radio "still dominate the audio landscape," but there are "growing signals that raise questions about its future" (Olmstead, et al., 2011, p. 1). Olmstead reports that "large majorities of Americans continue to listen to AM/FM radio each week" — in fact, nine out of ten adults in the United States listen to AM/FM. That said, surveys show that "most Americans point to newer technologies" as having "more impact" on their lives, even though Americans spend less time with those new technologies (Olmstead, p. 1).

In the Pew Research Center survey, results show that for the first time Americans say they are listening more to "online-only outlets like Pandora or Slacker Radio" than they do to streaming content from existing AM/FM stations (Olmstead, p. 1). This may be partly because AM/FM stations that stream still air their commercials ad nauseam, while Pandora and Slacker were, at the time, largely commercial-free.

HD Radio had "failed to take off," Olmstead continues. Only a small percentage of listeners tune in to HD Radio, or are "even aware it exists," and as a result, fewer stations are investing in making that transition. While HD Radio remained flat in the market, AM/FM revenues for 2010 rose 6% over 2009 (Olmstead, p. 1). The continuing growth of revenue for AM/FM radio could be threatened, however, if audiences continue migrating to online alternatives like Pandora — because AM/FM revenue depends largely on advertising, and when station ratings fall, advertising dollars follow.

National Public Radio (NPR) — which Republicans in the House of Representatives voted to defund earlier in 2011 — "continues to be a growing source of news for many Americans," Olmstead writes (p. 2). NPR's expansion is driven partly by the fact that commercial radio is eliminating news programming outside the largest U.S. markets. The NPR audience grew by 3% in 2010, reaching a total of 27.2 million weekly listeners.

While the percentage of Americans who read newspapers dropped by 16 percentage points between 2000 and 2011, Pew data shows that the percentage of Americans using AM/FM radio dropped just 3 percentage points over the same period (Olmstead, p. 2). However, those listener statistics may be shifting. Early in 2011, Pew research found that "fully 84% of Americans over age 12 report using a cellphone," and because cell phones are "almost as ubiquitous" as radios, increasingly powerful smartphones will be used as audio devices — a trend that portends "a potential for reducing AM/FM listening" (Olmstead, p. 3).

Polling conducted by Pew further underscores this shift: 22% of those surveyed said AM/FM radio had a "big impact" on their lives, but 54% said cell phones had a big impact, 44% cited the iPhone, 45% cited BlackBerries, and 49% said broadband Internet had a "big impact" (Olmstead, p. 4). The number of Americans who listen to online radio in their cars "doubled" over the two years prior to the survey. About 27% of Americans said they were "very interested" in hearing Internet radio in their cars in 2010, up from just 10% in 2009; 6% of respondents reported already using cell phones to listen to Internet radio in their automobiles (Olmstead, p. 6).

The economics of AM/FM radio showed improvement at the time of the Pew survey. While the audience was shrinking somewhat, total revenue for traditional radio rose 6% in 2010, reaching $17.3 billion — up from $16 billion in 2009. Though some of that rise may be attributed to an improving economy, total advertising revenue for "all U.S. media was up 3% in 2010," meaning radio outperformed the broader market (Olmstead, p. 10). About a third of Americans told Pew they receive "some news" through the radio, down from 38% in 2008 and well down from 43% in 2000 (Olmstead, p. 12).

Public Radio: Political Threat to Funding

One significant threat to radio broadcasting in the United States is political, stemming from the conservative majority in the House of Representatives — including members associated with the Tea Party movement — who have argued that public broadcasting serves a liberal agenda and should be defunded. Public radio and television fall under the umbrella of the Corporation for Public Broadcasting (CPB), which supports 900 public radio stations. According to the CPB, however, every public radio station is locally owned and operated, providing "programs and services responsive to the needs of their communities" (CPB).

Congress has mandated that local public radio stations maintain "autonomy," meaning the CPB cannot own any public radio stations but may offer programming, which independent stations may accept or decline. Each station produces approximately 40% of its own programming and conducts its own fundraising. The federal government provides about $28 million annually to the CPB to supply programming to those 900 stations nationwide.

Despite this, the House of Representatives approved legislation on February 19, 2011, that "cut all financing for the Corporation for Public Broadcasting for the year 2013" — the first time the House had passed such legislation (Jensen, 2011). Author James Ledbetter explains that a broadcasting system partially funded by "congressionally controlled money provides the ultimate hot-button issue, a grandstander's dream" (Ledbetter, 1999, p. 10). In 1995, when Republicans controlled the House, Congress "held more hearings on the budget for PBS and NPR shows than it did on budgets for Medicaid and Medicare," programs with budgets more than 100 times that of the CPB.

Throughout the 42-year history of public broadcasting, the taxpayer subsidy has "repeatedly been used as a club with which to clobber" the very commitment public broadcasting represents, Ledbetter continues. "Like a dog that has learned to flinch at the mere pantomime of the master's lashing," public broadcasting leaders have learned to steer clear of provocative subjects that might draw criticism from conservative lawmakers. Colorado Congressman Doug Lamborn, a Republican, said the February 19 vote in the House "reflects the will of the people" and that it was time to "get our fiscal house in order" (Sullivan, 2011). Lamborn called the vote an "historic step," arguing that "so many media outlets are available to people we don't need a government-sponsored media anymore" (Sullivan).

The U.S. Senate ultimately rebuked the House vote, allowing public broadcasting to continue — for the time being. However, Florida Governor Rick Scott vetoed his state's $4.8 million appropriation for public broadcasting, meaning each of Florida's 13 PBS stations lost approximately $87,287, according to Elizabeth Jensen writing in the Media Decoder blog at The New York Times.