It is always worthwhile to take a look at what the investment community thinks of an industry when assessing its status. Not always right by a long shot, but it’s usually a decent indicator of that industry’s health. With that in mind, I try to look at what investors and their advisors are saying about radio on a fairly regular basis.
Rick Aristotle Munarriz of the high-profile investment website The Motley Fool finds the rumors of radio’s imminent demise to be grossly exaggerated. He responds to The New York Times article I wrote about a few days ago, and brings up some interesting points that I had overlooked.
As Internet connectivity reaches out for the highway, there are still concerns that will limit its adoption and subsequent growth. Highest on this list is the price of connectivity, a severe barrier in these economic times:
Connectivity doesn’t come cheap these days. Music developers aim first for Apple‘s (Nasdaq:AAPL) pricey iPhone before trickling down to other devices. A monthly iPhone plan through AT&T starts at $70, and that’s for just 450 voice minutes and no text messages. The pricing schedule ramps up quickly, topping out with a $120 plan for unlimited minutes and texting. AT&T does offer attractive family plans for additional lines, but we’re essentially talking about a device with a limited audience in terms of affordability.
I can attest to this as an iPhone user myself. Add in the fact that the coverage is spotty, particularly in high density areas like New York City, and you begin to see the picture. He also addresses the new trend of mobile hotspots. While these can potentially enhance in-car Internet access, the one he reviews carries a hefty $60 per month price tag after purchasing the unit. Not exactly a small subscription fee.
So in all honesty, it’s hard to imagine more than half of the country paying $100 or so for smartphone plans, or $60 a month for mobile hotspots. The potential market is big enough to dent terrestrial radio, but it won’t obliterate AM and FM altogether.
An astute observation. As bandwidth expectations and more sophisticated handsets increase, I think we will see these prices escalate rather than decrease. It is, as I stated in my prior post, great to be able to get my hometown and college radio stations from halfway across the country. It is also lucky for me that I am one of the ones who can afford to do so, a proposition that becomes much more expensive when you take it on the road.