History
Radio in the Digital Age
Defining Features of Radio
Organization of the Radio Industry
Ownership in the Radio Industry
Producing Radio Programs
Economics
Feedback
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RadioChapter 7© 2009, The McGraw-Hill Companies, Inc. All rights reserved.1CHAPTER OUTLINEHistory Radio in the Digital AgeDefining Features of RadioOrganization of the Radio IndustryOwnership in the Radio IndustryProducing Radio Programs EconomicsFeedback2HISTORYHeinrich HertzGuglielmo MarconiReginald FessendenLee de ForestWorld War I -- US Navy takes over patents 3Big BusinessAfter the War, corporate America saw radio’s potentialRCARadio seen as wireless telegraphyFew thought of broadcasting to wide audienceDavid Sarnoff, “radio music box”4Mass AudienceFrank Conrad began broadcasting from his garageKDKA, Pittsburgh, 1920RCA, GE, ATT started radio stationsRadio listening became a national crazeRadio found its role as a broadcast medium5Better ReceiversBefore 1926, radios were bulky, filled with tubes and batteries, and hard to tuneBetween 1925-1930, 17 million radio sets were sold6Radio Goes CommercialEarly broadcasters were stores, newspapers, schools, businesses, not broadcasting companiesRadio stations needed revenue sourceATT station aired first “toll” broadcast7NetworksAllows stations to share program contentCuts costsAllows advertisers to reach larger audienceFirst network was NBC (actually two networks), then CBSAmos ‘n’ Andy8Government RegulationInterference was major problemRadio Act of 1927Federal Radio CommissionDefined AM bandStandardized channel designationsAbolished portable stations9The Depression: 1930-1940Radio fared well during the DepressionFederal Communications Commission (FCC) created in 1934Regulated all electronic communications10Birth of FMMid 1930s, Edwin Howard ArmstrongFrequency modulation (FM) superior to amplitude modulation (AM)Demonstrated to RCA, which was more interested in developing TV than FMDevelopment hampered by World War II11Radio ProgramsDuring Depression, people wanted diversion and escapeAction-adventure programsThe soap operaNetwork radio news grewLive coverage of special eventsCoverage of World War IIEdward R. Murrow12World War IIRadio thrived during World War IIAd revenues increasedNBC divested itself of one network (became ABC)13Innovation and Change: 1945-1954FM Technically superior to AM, but struggledSpectrum location changed in 1945TVChanged content, economics, functions of radioSpecialized radio formats were introducedClock hour14Growth and Stabilization: 1955-1990Number of stations more than doubledPayola – record producers bribed DJs to play certain musicFM emerges and evolvesFCC non-duplication ruleNational Public Radio begins, grows to 160 affiliated stations by 198015Radio: 1990-PresentTelecommunications Act of 1996Unlimited station ownershipSame-market ownership increased to 8 stationsFlurry of mergers and acquisitionsA few group owners dominate the industryTalk became hottest AM formatFormat specialization increased on FMCompetition from satellite radio, Internet radio, iPods16RADIO IN THE DIGITAL AGERadio stations slowly entered the digital age, but they may be speeding up17Web sitesEarly radio station web sites simply streamed broadcast contentNow, sites contain additional information and servicesStations use web sites to generate revenue18High Definition (HD) RadioHD radio improves signal quality of terrestrial radio stationsFM sounds as good as CDAM sounds as good as FMCompression allows stations to send multiple programs simultaneouslyFree to receive content, but HD receiver neededBroadcasters and listeners find the technology expensiveCurrently there is little additional programming19Satellite RadioXM Radio and Sirius RadioDigital radio services to car or portable receivers for home useLocal channels for major cities with weather and traffic informationXM and Sirius would like to mergeExclusive programming (Howard Stern, Oprah Winfrey)Churn – subscribers don’t renew20Internet RadioTraditional broadcasters stream signals on InternetInternet-only stationsSpecialized music formatsTarget listeners dissatisfied with traditional radioBiggest challenge is financialMust pay royalties to writers and composers, plus performers – broadcast doesn’t pay royalties to performers21Mobile RadioMobile radio on cell phones Vast potential audience22User-Generated ContentPodcasting – recording an audio program and making it available for download23DEFINING FEATURES OF RADIOPortableSupplementalUniversalSelective24ORGANIZATION OF THE RADIO INDUSTRYHalf a billion working radio sets in USAbout 13,500 radio stations25Local Stations, Nets, and SyndicatorsLocal radio stationsNetwork radioDominant 1930-1942Today’s leading networks: ABC, Westwood One, Dial GlobalSyndicated programmingStar-based programs: Rush Limbaugh, Sean Hannity, Tom JoynerAbout 50 companies provide specialized shows for syndication26AM and FM stationsAmplitude Modulation (AM)Signals travel further (especially at night)Vulnerable to interferenceClear, Regional, Local channel classificationsFrequency Modulation (FM)Better sound qualityLess vulnerable to interferenceThree classes reflect station’s power: A,B,CAM-FM distinction is not applicable to digital radio27Station FormatsFormat: consistent programming designed to appeal to specific audienceAttracts advertisers wanting to reach that audienceThree basic format categoriesMusicEthnicNews/TalkFormat HomogenizationVoice Tracking28Noncommercial Radio1945 -- FCC set aside frequencies 2007 – about 2400 noncommercial stationsUniversities, private foundationsFunded by gifts, grants, donations, underwritingNational Public Radio (NPR)Public Radio International (PRI)29OWNERSHIP IN THE RADIO INDUSTRYTelecommunications Act of 1996Flurry of mergers and acquisitionsIndustry controlled by a few big companies, including Clear Channel, Cumulus, and EntercomBy 2007, there are signs that this trend may be changing30PRODUCING RADIO PROGRAMSThe departmental structure of a radio station depends on its size31Departments and StaffGeneral ManagerProgram DirectorAnnouncers and DJsSales DepartmentNews DepartmentEngineering Department32Putting Together a ProgramMusic formatFormat wheel (format clock)Talk formatTopics geared to local audienceRequires more equipment and technical expertiseAll-News formatAlso uses programming wheel and cycleCostly: Large staff and many technical facilities33ECONOMICSCompetition from satellite services and devices to play iPods and MP3 players in cars.Drive time audience, time spent commuting are both increasingRadio is cheap to produce and distributeRadio lends itself to target marketing34Sources of RevenueRate card: station’s advertising feesThree sources of commercial revenue:Network adsNational spot adsLocal ads35General ExpensesFive categories of expenses:TechnicalProgrammingSellingAdministrationNews36FEEDBACKThe radio industry seeks feedback about audience size and composition37Ratings and SharesArbitron major provider of radio ratingsSurveys 280 markets, about 3,000-4,000 people per market asked to complete diaryRating: ratio of listeners to a particular station to the total number of people in a given marketShare: ratio of listeners to a particular station to the total number of people actually listening to radio at that timePeople Meter: Arbitron and Nielsen Media Research. Automatically detect and record exposure to radio. 38Radio Audiences575 million radio sets in US1/3 of these in carsOn a given day, ¾ of adults will listen to radioAverage person has radio on 3 hours dailyListening highest during drive time (6-10 am; 4-7 pm)As people age, they prefer different formats39