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Why radio regulation needs to change

Today’s radio ratings – which again show marginal shifts in a tired industry – demonstrate that now, more than ever, this is need for an overhaul.

When they’re listening to the radio, Sydneysiders over 65 spend a quarter of their time listening to 2GB  – a chunk of that will be the wisdom of Alan Jones. A similar proportion of time is spent listening to Nova amongst 10-17 year olds.  Those in their forties are spending almost a fifth of their radio listening wedged onto WS-FM. It’s clear in the Sydney radio market the leaders in any age group tend to be a long way ahead of the rest. But why?

The answer is, pure and simple, lack of choice. Radio is a highly protected industry – no new entrants for close to ten years, and only 11 commercial radio stations (and six proprietors) for an expanding city of 4.7 million people.  

Perhaps that’s why the younger generation is getting jack of it. 10-17 year olds spent almost a quarter of their time listening to stations not covered in the mainstream radio surveys – including FBi, 2SER and a myriad of other community stations. 

That surely means community radio is a huge success. Well, not really. Most aren’t pitching to youngsters – many are staffed by an older crowd bringing in their record collections and searching for an audience.  Many of the presenters are over 65, trying to grab that 8 percent of time their peers are spending away from the mainstream surveyed channels.

Across all age groups 15 percent of time is spent listening to non-surveyed stations – that equates to a little more than 2GB’s share of the total Sydney audience, yet its spread across stations like 2SM (where John Laws is hiding these days), Sky Sports, SBS Radio 1 and 2, four or so metropolitan wide community stations, a number of ethnic broadcasters and almost 20 suburban community stations. All up that’s at least 30 channels sharing one sixth of the total audience – all trying to survive and many churning out unlistenable material, hour after hour.

Edison’s Share of Ear research shows that only 52.1 percent of listening time in the US is spent on AM or FM radio

Meanwhile, whilst radio changes not one iota, people’s behaviour is shifting. In the US last year a third of the population had listened to radio online (AM/FM stations online or content only available on the internet) each week. That figure has been sharply rising over the last few years, thanks to the penetration of smart phones. As 4G coverage expands and data allowances increase, expect that figure to keep rising. Helping the trend, Vodafone Australia has just announced Spotify subscriptions will be included in all new Red plans.

Edison’s Share of Ear research shows that only 52.1 percent of listening time in the US is spent on AM or FM radio – the rest is a mix of online, satellite and owned music. Sadly, data about online behaviour here is harder to source, but it’s likely to be a similar story.

The Australian answer to this rapidly changing environment is to keep the industry in its own microcosm – heading slowly towards obscurity. We all know that too much protectionism can be a bad thing when it shields you from reality. At some point you hit the wall and you didn’t see it coming.

So, now is the time for sweeping radio industry deregulation. We need more stations – as many as can fit across our airwaves – to help compete against the diversity of online.

Sure, it’ll hurt the incumbents, but shock-therapy is what’s needed. When 2Day FM believes $4 million per head is a suitable salary for Hamish and Andy to do their Drive shift in 2015, that’s a sure sign of an industry detached from competition. Over at Macquarie Radio Alan Jones is said to be on a similar figure, almost ten percent of the company’s revenue. With these kinds of figures it’s clear there’s plenty of room for more stations. And some existing commercial broadcasters will see it as a positive step – Fairfax Radio, for example, could acquire additional licences and create economies from sharing news services, executive salaries and other overheads.

The spectrum is there, waiting to be used. It’s home to community radio stations now, but that experiment has largely failed. With the clear exception of some of the youth channels, the audiences aren’t there and stations are struggling to survive, yet they sit on valuable spectrum. They should all be sold, with permission to sell advertising and run as commercial entities in their own right. Many will run back to back music – most are already doing that anyway. Some will turn to talk to survive.

The upshot will be, those unlistenable community stations will become commercial entities creating a diversity of opinions and audiences. There would be experimentation as companies try new formats, many acquiring a few stations to help arrive at the winning formula. And it will bring in new media proprietors – right now, too much focus in too few hands is a dangerous thing. Think about the influence Alan Jones has on society and how that would be diminished if competitors started stealing his listeners. 

Without this change the same radio executives will do the same things year after year, and their medium will slowly wither and die, thanks to the mollycoddling of the regulator. Liberal governments are all about engendering competition – bite the bullet Malcolm.

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