Radio and Records – What Went Wrong

I think it’s fair to say that most wide-eyed industry types know that the music industry and the radio business are in deep trouble. This happens to coincide with being in deep denial.

We may differ on the exact reasons, but it’s hard to argue that either radio or records is a growth business today.

The question is – what went wrong?

One thread that runs through both of these declining businesses is their executives inability to understand that a teenager or young adult today is not the teenager or young adult we know – or think we know. And certainly, young people today don’t resemble Baby Boomers.

It’s not helpful to use your children as a barometer for anything because we, as parents, have an influence on them – even if we sometimes think we don’t. They are, indeed, representative of their generation, but they live under our influence.

Let’s look further.

The record industry thinks that teenagers and young adults (the record buying core to their business) will buy CDs – will buy albums. That’s why they keep trying to sell these things to that generation. And, of course, they have it all wrong. And they’ve had it wrong from the beginning. CD sales are on a long, steady decline and the album has lost its magic.

Baby Boomers who run record companies are nothing like the Gen Yers who are confounding them. We think, as Boomers, that we understand revolution. We do when it comes to government and society, but this generation isn’t all about that. Visit a college campus and see how the Iraq war is not their war. They don’t seem to care.

But they do care about social interaction and the Internet.

To be connected is to Gen Y what protesting society’s evils was to Baby Boomers.

Look at the labels.

They think they can stop file-sharing, but file-sharing – illegal or not – is networking to the next generation and we already know that networking is everything to them. But labels see the issue as sheer piracy – which it is – and they can’t get past that and onto understanding a generation that can hack its way through the industry’s latest and greatest DRM protection.

The labels want to sell albums because the Baby Boomers who run the labels have both a romantic and financial tie to the album. We see it as a statement of art and music. Even the old vinyl album covers were in essence an art form. But the next generation isn’t as nostalgic or restricted. They see choice as more valuable – the ability to cherry pick the tracks – and listen to the ones they want when they want to listen.

Boomer record execs set prices. Gen Y likes free. Sometimes there is a compromise in between as Apple CEO Steve Jobs has discovered. That compromise is the 99-cent price point for a legally downloaded, digitally protected song. And what do record execs fight for? Variable pricing, a non-started with the Gen Y consumer they don’t really know.

Jobs is a Baby Boomer, but he is unlike his brethren who don’t understand that a teen and young adult today is not what we think they are. Jobs has their number. He knows what is important to them and he doesn’t judge his market by what he thinks a teen or young adult should be.

Radio executives have made similar mistakes misreading the next generation.

First, they didn’t even bother to program to Gen Y because they were too busy consolidating very valuable radio properties. Radio people assumed that teens would always listen to radio. They always had. But radio stations lost valuable years and when it occurred to some (and I mean some) that they missed their chance to be part of Gen Y’s entertainment regimen, radio’s future was already lost.

No one could foresee that the next generation wouldn’t be as they imagined. But that’s the problem – and now both the record business and radio industry have no future with this indispensable group of consumers.

All is not lost.

Music isn’t dead. The music business is dead.

Radio isn’t dead. Terrestrial radio is dead. Internet streaming and podcasting is alive.

The next generation didn’t kill radio and records. Radio and record execs assumed they knew the next generation of consumers and they were wrong.

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