We continue our focus on FRAMES 2003 with an interview with Radio City COO Sumantra Dutta. At the convention, Dutta will be part of the panel during the discussion “Radio – The Second Coming”.
Can Radio get out of the high costs of license fees and ever make money?
The future size of the Indian radio industry can be assessed by estimating the future advertising expenditure of the country and radio’s share of the total advertising expenditure through global comparisons. Globally, radio accounts for about 5% – 7% of the total advertising expenditure of the country, with the US, Canada and Spain having exceptionally high figures ranging between 9 – 14% respectively.
With privatization, India is expected to follow this trend and the FM Radio industry’s share of total advertising expenditure is expected to increase from the current 2% to about 5% in the next 5 years.
Experience in other economies has shown that privatization of radio broadcasting leads to an increase in radio’s share of overall advertising revenues. In the UK, radio’s market-share increased from 3% before privatization to about 5% post-privatization. In Sri Lanka’s case, the market-share of radio has more than doubled from 7% to 15% after privatization.
However for private FM radio to realize its true potential, some urgent steps/ key issues need to be dealt with/ taken by the industry / Government:
* The private radio business is capital intensive and involves a high level of fixed costs including license fees, content creation, station costs, working capital and advertising. In order to ensure that the players don’t get buried in losses and the process of privatization does not become a non-starter, the industry and the Government together need to move to a licensing structure that is sustainable in the long term.
* Radio being free automatically makes it the choice of the masses. It is imperative to be able to provide the masses with news and not keep them away from it. Besides, Local news is one of the USPs of a radio station. Without it, a station is denied its true role as an active community participant. The Government should enable the private radio operators with the same freedom to operate freely and independently, within the limits of public decency and national security, as is given to television channels.
What the fledgling private FM radio industry needs is government support that will be the biggest enabler. With the government going the whole way in radio privatization, FM Radio will realize its true potential which in turn will allow a large number of private stations to enter this industry & broadcast freely.
The one critical reason that radio isn’t listened to in Indian cities the way it’s consumed in almost every other country is that the government had never permitted private radio operators to develop stations and formats that respond to the way people live today. Before the introduction of private stations in India, the amount of time the average Indian spent with radio was less than half an hour a day across the whole country. Yet in other countries around the world, in the developed as well as the not so developed economies, radio continues to capture in excess of three hours of listening per person, in spite of all the competitive media available today. Radio is where the consumer is. Good programming that is responsive to broad public tastes is a prerequisite of course.
With so many Radio stations and all of them sounding the same… what will be the differentiator?
The future lies in brand names not frequency. In a crowded environment it is the brand name, which will make audiences tune in. International experience shows us that while many dozens of different radio stations can compete and thrive commercially in cities far smaller than most Indian cities, individuals tend to listen only to two or three stations almost all the time. As long as there are so few stations in most Indian cities, differentiation will not be a problem.
However one can differentiate by selecting a niche to service or by providing a substantially better product to the same audience.
Is there a market for Fiction programming on Radio in India? Do you see it happening in the near future?
Post launching India’s first pvt FM radio station way back in July 2001 in Bangalore, Radio City has paved the way for the smooth entry of other pvt FM players into this business. Radio is a medium that since its inception has been pronounced dead many times only to revive and continue growing.
Whilst most stations are banking on music, we are the ones who brought the game format into radio with Radio City 91 FM Suno Aurr Lakhpati Bano, a derivative of the more popular game show on TV with Mr Amitabh Bachchan. Of course, this introduction fuelled similar game shows across stations.
Most of the formats you see on TV today in any part of the world including India are formats that have been first tried on radio, simply because radio came before TV. Of course, the reason why one doesn’t get to experience such programming on radio today is a bit of a cost-versus-revenue issue. Specialist programming for radio apart from music costs money and whether the advertiser will back it up with certain amount of advertisements remains to be seen. We believe that if programming and content are gripping enough, you will have more people tuned in to your station. Ultimately that is what advertisers want – more people. We will do all of that progressively.
