The Electric Commentary

Monday, July 26, 2004

Radio Killed the Radio Star

The Carnival of the Capitalists is up (via Instapundit, as usual).  The best of the bunch deals with Clearchannel's consolidation of radio and how it has cannibalized the entire music industry.  The good bits:

These far away programmers -- and their greatly reduced playlists -- ultimately equaled less fans.

Clearchannel didn't only hurt radio -- they drew first blood from the recording industry also. Music fans only buy what they hear; Less music on the radio meant decreasing purchases of CDs. I'm convinced that the ever shrinking national radio playlist caused by radio consolidation is one of the key factors in the declining CD sales nationwide.

The recording industry's solution was, of course, to sue people who downloaded music.  Assuming that the recording industry succeeds in this endeavor (if you think that that is impossible, read this, also via Instapundit) they will have destroyed millions of dollars worth of free advertising.  I think that the recording industry fundamentally misunderstands what it is selling.  It is not selling CDs, but music.  And music is a nebulous thing.  It is a consumer good in and of itself, but it is also its own advertising.  You hear a song, and you like it.  You want to here it more, so you buy the song.  The recording industry is attempting an unnatural act: to separate the advertising aspect of the song from the product aspect of the song. 

Recording artists have given away free music as long as music has existed.  Radio was the ultimate free commercial for the music industry.  It was of slightly inferior quality, thus leaving a demand for a higher quality permanent version.  Now they have run into technology, and like any industry that has been defeated by technology, they seek restrictions on progress. 

Their problem is that the advertising portion of music can now be made permanent in the consumers' hands.  The dual aspects of advertising and consumer good can no longer be partitioned by the recording industry.  Their only hope to remain a salient business is to adjust, and to give consumers more than they can currently get for free. 

In Barry Ritholtz's post he states that the following will fill the void:

1) Internet;
2) Satellite Radio;
3) iPods;
4) P2P

What these all have in common is personal choice.  When Clear Channel destroyed the local music station they narrowed the already limited spectrum of musical diversity on the radio.  These options provide the user with whatever that individual user wants.  Any technology that fails to give listeners as many choices will die, whether they pass protectionist laws, or consolidate into larger and larger entities. 

Many (including me) complained when Sony and BMG merged into a "grotesque abomination" that they were attempting to monopolize the industry.  Now I'm not so sure.  I think it was more a matter of survival than of dominance. 

Dinosaurs get bigger.  The rest of us evolve. 



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