BY KURT HANSON
For the past several days in RAIN, I've presented my view of the future in which radio will soon find itself. It's a future in which there are at least five "bands" of radio available to consumers (AM, FM, satellite, DAB, and Internet), in which wireless broadband Internet availability will be ubiquitous, and in which the vast majority of consumers will be carrying some kind of a multifunction device (e.g., a sophisticated cell phone and/or PDA) which will be able to access that wireless Internet.

You can read the previous installments in last week's RAIN here, here, here, and here. (And if you'd like to see a preview of the speech on which this series of articles is based, "The Future of Radio," and you're in Las Vegas for the NAB convention, come by Gordon Biersch Brewery Restaurant tomorrow at 4:30pm.)

In this future, consumers will have access to a much wider range of format choices and they will have the ability to trade off high spot loads for accepting reduced stationality elements (i.e., no DJs or news) or for paying a monthly subscription fee. Advertisers will also see benefits (including tighter targeting, accompanying visuals, and perfect trafficking).

But if a theory espoused by Harvard professor Clayton Christensen is correct, the leading broadcasters in this future might not be today's current set of broadcasters (as described in "Part 4" of this series.).


The future will be here before we know it —
in fact, lots of it is already here now!
My concern at this point is that you may think I'm talking about some distant science-fictional future. But the truth is that everything I've "predicted" in this series of articles is happening in the real world RIGHT NOW.

In a very real sense, the science-fictional future of our childhood is already here. We're already carrying communicators as powerful as Napoleon Solo's or James T. Kirk's. Airports (including Schiphol in Amsterdam, pictured at left) already have what look to be 3-D holographic TV advertisements . The "Memory Stick" in my VAIO is the size of a small stick of gum and holds more data than a 10-pound disk drive I bought not too many years ago.

In terms of the future of radio specifically, most of the elements are already in place. Thousands of channels of niche-formatted satellite and Internet radio are currently being broadcast. Hundreds of thousands of people are subscribing to Internet radio. Tens of millions of people already have DAB radio signals in their markets. Millions of homes and offices and tens of thousands of public locations already have wireless Internet access. And millions of PDAs in people's hands right now have the features that are sufficient to access that wireless Internet.

And realize when new technologies finally "break through" into a given market, they break through quickly. For example, the chart at right shows the penetration of cell phones on college campuses: Once the infrastructure and pricing and cultural influences were in place, they exploded from almost no college students to almost all college students in a four-year period!


"Disruptive" technologies offer huge benefits
for early entrants
There are no great risks to being late with "sustaining" technologies — i.e., those that make existing products faster or better. For example, if Emmis decides to wait to broadcast in digital in Chicago until most of the other stations have already made the switch, they will be able to catch up quickly and no harm will be done.

However, there are huge advantages to being early when it comes to a "disruptive" technology — i.e., one that starts out as "worse" on most traditionally key attributes and for which, initially, new markets have to be found — according to Christensen.

The first firms to successfully develop a disruptive technology in an industry typically end up being the new leaders in the industry if the technology develops to the point where it satisfies the needs of the mass market.

But there are powerful forces that typically prevent an industry's current leaders from getting involved in developing a disruptive technology:



The picture above shows radio group heads on the dais of a recent radio industry conference. Are any of them committing resources to developing this disruptive technology? No, they are not.

There's a logical reason for the behavior. Christensen writes, "Small markets cannot solve the growth or profit problems of large companies... Rational managers can seldom build a cogent case for entering small, poorly-defined, low-end markets that offer only lower profitability."

As a result, will they be the leading radio broadcasters in the fast-approaching future? Well, if the technology which consumers eventually embrace is a disruptive one (as opposed to, say, "HD Radio," which is a sustaining one), the theory says, "Possibly not."

Yet Internet-delivered radio has potentially huge consumer benefits. Already, it can offer consumers "Now playing" information, "pause" and "skip" buttons, a link to buy the CD that's playing (e.g., from Amazon), and incredibly super-niche channels (e.g., not just Pop Standards, but a channel of all-Cole Porter-written pop standards).

But the market isn't clear yet. Who will listen? Where? What models will work best? No one knows. We're in the trial-and-error phase. And if broadcasters don't participate in this phase, by the time the market is "big enough to be interesting," it may be too late.


How soon will the future arrive?
My final key point is that the future is bearing down on us with surprising speed. To see a vivid example of this, take a look at the development of the Palm PDA.

Remember what the devices' capabilities were like when the "Pilot" debuted in 1997. Then take a look at the design and features of the Tungsten series devices today (five years later).

Now project that same rate of improvement out five years into the future. Try to imagine what a Palm circa 2007 will look like and be able to accomplish. Personally, I could have never envisioned a Tungsten series Palm back in 1997, and I'll bet I can't imagine what a Palm from the year 2007 will be like. (It's a failure of imagination on my part.)

But it's clear that it will be pretty amazing if the rate of progress continues.

And we're only talking five years here! That's nothing! (To me, Cyndi Lauper is a "new" artist — and she's been around for 20 years!)

Yes, yes, it's true that Wi-Fi, for example, is not rolled out successfully yet. Questions remain about billing procedures, pricing, future standards, etc. Ubiquitous wireless broadband Internet is clearly not here today.

But in five years? Heck, I wasn't even using the Internet five years ago! A lot can happen in that pretty short period of time.


Gretsky: "Go where the puck is going to be"
Wayne Gretsky is generally considered to be the best hockey player of all time. When he was asked what made him so successful, he said, "Other players go where the puck is. I go where the puck is going to be."

There are some great opportunities to be had right now, both in terms of broadcasting and in terms of services that could be provided to broadcasters.

One or two of today's leading broadcasters may take advantage of some of these opportune — or maybe not! — but in any event there are lots of opportunities left for firms who are currently not radio broadcasters... and for entrepreneurs.

Imagine you could go back in time to the late '60s or early '70s knowing what you know about the soon-to-arrive rollout of FM. Of course, you can't. But you may be in an analogous situation today if you can envision what the future of radio might hold and choose to position yourself somewhere to take advantage of it.

This is the final installment of this series. RAIN's "The Future of Radio" 5-part series began here.

If you're planning to attend NAB 2003 in Las Vegas (April 5-10; details here), we hope you'll join us for our RAIN reader get-togther. We've reserved the patio of the Gordon Biersch Brewery Restaurant (about a $4 cab ride from the Convention Center) tomorrow, April 8th. This year, we've also reserved a private room for the U.S. debut of Kurt's "The Future of Radio" speech for those who'd like an advance look at it. (Please note we've moved the time up a bit. The presentation will now be at 4:30pm, and cocktails at 5:00pm.) See you there!