You might imagine that people would listen to the radio more during a recession. Instead, the decline in U.S. radio is continuing.
The number of people listening to the radio isn’t going down. Most people listen to the radio at least a few minutes every week, and the listener count is going up, almost keeping up with population growth. But people are spending less time listening. Total listener hours are down 4 percent from a year ago, continuing a decade-long decline.
Radio stations cut back their advertising minutes by as much as a third in the last two years to try to attract more listeners, but it only slowed the decline. In the meantime, advertisers are cutting back. Radio advertising revenue is down 10 percent from last year and the industry expects it to fall another 10 percent in 2009. That forecast may be wishful thinking, though. These are some of the factors acting for and against radio in the coming year:
For:
- Fewer new cars and fewer car radios being replaced by digital music players.
- HD radio, a new technology making radio sound better.
- The digital television transition which will leave some TV viewers without TV reception.
Against:
- The satellite radio consolidation killed off half of the satellite radio channels a few weeks ago, likely leading to a net loss of subscribers.
- The economy, as advertisers are forced to cut back more.
- The financial crisis, as the strongest radio advertisers are in the financial sector.
- Demoralized pundits amid a political shift that is draining listeners from political talk radio.
- Bankruptcies that could occur among the financially squeezed radio broadcasters and advertisers.
It might sound trite, but the only answer for radio is cost-cutting. Nearly half of the people in radio are there to sell advertising. As revenue declines, the productivity of that side of the business will have to improve.
