Rediscovering radio with Red FM and Magic FM's COO & director
What does radio give you that no other medium, app or platform can? That’s what afaqs! Reporter tried to find out this fortnight, through a freewheeling interview with Nisha Narayanan, COO and director, Red FM and Magic FM, a former radio jokey with All India Radio (AIR), who now heads a radio business and is also actively trying to bring about positive change in this space.
In fact, Narayanan started her career as an AIR RJ close to 25 years ago. After joining Red FM 14 years back, she was tasked with setting up the brand’s stations across the country. Today, the brand is present across 68 cities, with the latest addition being Agartala. Narayanan also heads the committee within the AROI (Association of Radio Operators for India) that’s working towards the creation of a unified measurement system to quantify the reach of radio.
But first, a quick look at the landscape: India’s radio industry is valued at ₹3,130 crore (EY-FICCI report, March 2019) of which private FM accounts for ₹2,400 crore. However, the overall share of this medium (that covers 52 per cent of the population) in the advertising pie (4.2 per cent) has stagnated over the last several years, due to a host of issues like lack of measurement, policies and a steady onslaught of digital platforms. All of this is compelling radio brands like Radio Mirchi – 98.3 FM, Red FM – 93.5, Radio City – 91.1 FM, and My FM – 94.3 FM to reinvent and scout newer geographies.
From the early 1900s till 1999, the only radio channel in India was AIR. Then, in 1999, the government began auctioning frequencies and radio was privatised. The growth of FM radio in India can be broadly divided into ‘phases’ I (1999), II (2005) and III (ongoing). Phase I added 21 private FM radio channels and 221 channels were added in Phase II. Driven by privatisation, zero reserve price and new markets radio grew well till the second phase. Reserve prices were introduced in Phase III and post two batches of auctions (2015 and 2016), the number stands at 381. High licence fees coupled with ‘unviable’ operational cost marred growth. Participants also complain that reserve prices for batch 2 of Phase III (mostly tier 2/3 cities) were decided basis the highest bid for a city in a similar tier, instead of potential (cities in same tier had different advertising potential).
Devoid of news and ‘public-service-like’ programming, FM stood for fun, music, colloquial, and bilingual sort of content that quickly connected with the nation’s youth. Competition grew as new players entered the space, but despite many years of FM’s existence, problems – like huge license fees, the lid on news/current affairs-related content, lack of measurement, copyright issues, high operating costs, etc. – persisted. Even today, radio is governed by the Indian Telegraph Act of 1885. Amidst all this reality, where does radio as a medium stand today?
Let’s start with some anecdotes from your early days at Red FM…
When I was setting up stations for Red FM (mid-2000s) in small-town markets like Guwahati and Bhubaneshwar, people didn’t know what FM was. We had to tell people that if they tuned radios in a certain way in their cars, they could listen to music. I’ve personally sat in cars of people I knew and showed them how to turn the radio on.
An RJ’s role was considered a hobby and not a full-time job back then. People knew announcers from AIR and VJs (video jockeys on television) but not RJs. In response to job ads, theatre artistes turned up for auditions with props like ‘gadaas’ and performed scenes from the Mahabharata in front of us. We had to choose from there. We picked up fresh talent, from across backgrounds – aeronautical engineers, airline staff and even people from Barista counters! If an airport announcement was done in an interesting way, I would hunt for that announcer, interview and convince him/her about why radio is an option. It was difficult, but satisfying.
FM also encouraged women, especially from smaller cities, to join since it provided anonymity. You could come in your pyjamas, it didn’t matter how you looked; if you knew the city, were wellread and had a good grasp over the language, you could do it.
The density of radio stations in India seems sparse in relation to the West…
Stringent regulations have limited the number of players to 35-36, which should ideally be at least 100 given our vast geographies. The radio industry is less than five per cent of the overall M&E (media and entertainment) industry, but it has the potential to go up to 20 per cent. All of us get enthusiastic and bid heavily at auctions, say `177 crore for a license in Delhi or `123 crore for Magic FM in Mumbai… then recovering that cost becomes very difficult. Allowing news and current affairs, allowing more FDI could make it a level playing field. Radio needs the same relaxations enjoyed by other mediums. Apart from policy issues, there is also the problem of lack of research and the absence of a proper currency on radio which stops it from quantifying reach.
We are hopeful that the matter would be settled with the upcoming unified measurement system. An AROI committee headed by myself is working on it... But it will happen; it’s a matter of six months to a year.
Right, but the measurement issue has been there right from the start. It’s been nearly two decades...
It’s true. We are hopeful that the matter would be settled with the upcoming unified measurement system. An AROI committee headed by myself is working on it. But there is a problem there too. All of us (radio brands) claim the ‘No.1’ spot based on self-commissioned research. Unified measurement means there can only be one ‘No.1’. Another big reason has been the cost. Conducting aggressive research across the top 15 markets comes with a substantial cost (in double-digit crores). The investment even for a body like the AROI is very high. But it will happen; it’s a matter of six months to a year.
In the era of digital and on-demand music through apps, what equity does music on radio command?
With the coming of digital, today’s consumers aren’t looking at radio only for music as it is accessible across mediums like podcasts, streaming apps, etc. This leaves non-music content as the only differentiator for radio.
We see radio brands pushing content on digital, including videos by RJs. That’s interesting. What role does digital play in furthering the popularity of radio?
We are more like an entertainment company today with multiple touch-points on radio, on-ground and digital. A parallel digital presence helps build the brand and personality of RJs. It provides an opportunity for offtakes of radio programs, something that’s usually not possible on air. Say, a full interview can’t be carried on radio, but can be extended on digital.
While there are things that take place on radio and are amplified on digital, there are campaigns that are launched on digital first and amplified on radio later. Our own ‘Red Indies’ campaign for sourcing and supporting independent Indian music was seeded online. We have around seven million digital subscribers all put together. The goal, for now, is to reach 20-25 million. With presence in over 68 markets, we have the potential to do it.
You launched your newest station in Agartala recently. Talk about small towns as markets for radio brands…
Real growth lies in small-town India. The strategy is to be present in all capitals (of states). A pan-India presence provides better growth in both revenue and listenership. Radio is most effective in smaller cities/towns, due to limited choices in entertainment. Different players provide more options.
Even from a business point of view, growth in smaller markets is in double digits even when the overall market is down. The top 10 cities provide about 60-65 per cent of the revenue and smaller towns make up for the rest. The ratio is changing (in favour of smaller cities). Today, with the slowdown, bigger cities are hit first… the smaller ones are yet to see the impact. Because the need has always been there; there is a proper demand and supply situation.
Right. What drives your regional stations?
There is nothing more powerful than entertaining regional content. Also, while you create and deliver the content locally, it is also important to take note of the native population that is working outside, in other cities. It works beautifully if you are able to access that population and deliver content to them via digital. We created a separate Red FM Bangla channel on YouTube for Bengali content.
Jagran Prakashan’s MBL (Radio City) is set to acquire 40 of Reliance Broadcast Network’s (BIG FM) 58 stations. This would make MBL the single largest FM radio network. How does it affect the rest of the industry?
Consolidation is a business call, but with this, the number of big players boils down to three or four. For a competitive market, you need more companies to participate. It will happen if the policies are better. A license for Saharanpur can’t cost `16 crore like Chandigarh (which is a better performing city). When we bid for Dehradun, there were five frequencies which were put up for auction; only Red FM got the license (at `16 crore). How can we make money in Dehradun? I will be really optimistic and say that we’ll get there. And now, the closest C town to Dehradun is Saharanpur which is also set to carry a similar price in batch 3 of the Phase III auctions.
Could you shed some light on the cost of operating an FM radio business today?
There hasn’t been much of a change in that area. Royalty has been a major concern and the issue hasn’t been sorted. The rates of PPL (Phonographic Performance Ltd) and the IPRS (Indian Performing Right Society) are phenomenally high. The international standard is around two per cent of the revenue; we end up paying up to 10-11 per cent. Seventy per cent of our costs are fixed costs that include, license fee, interest to the government and infrastructure.
The royalty issue also bars playing radio content as is on digital mediums. The Red FM India app has no Bollywood music and only has snackable Red FM content. The only music that we have started putting on the app is indie (independent) music.
Radio is perceived as in-car entertainment. Did the recent slowdown in auto sales have any impact?
Research suggests that the maximum radio listenership (70-80 per cent) across all cities and towns is on mobile phones (feature phones). A small part of it (10-12 per cent) happens in cars while commuting, but most of it happens at home.
The problem lies elsewhere. Most smartphones today do not have functional FM receivers. And feature phone users hopping on to smartphones get cut off from FM.
As far as competition with the OTTs and music streaming apps goes, we aren’t even participating. The TRAI and the ministry have to come together and try and make better.
How has advertising on radio changed? Is there a new breed that will drive growth in the near future?
Radio caters to about 4-4.5 per cent of the ad pie. We’ve been there for the last 10 years. The industry has grown, the spends have grown, but the overall share is still the same. And as key consultants suggest, the share is going to drop further, while the overall spends will go up. Today, if we are a `2,400 crore industry, we could be a `5,000 crore industry in the coming years, but the share is set to decrease. Therefore, it is important to not just be a radio station.
While traditional categories like telecom, government, FMCG and BFSI have been advertising, we are witnessing aggressive advertising from a lot of e-commerce and OTT platforms. On the one hand, there’s the conversation around the effectiveness of radio and on the other, there are digital-first platforms like OTT coming on board. A lot of organised retail advertisers have taken to radio advertising and so have SMEs.
Our in-house creative team creates jingles, promos, compositions, copywriting or campaign ideas for brands that advertise with us.
How has advertising on radio changed at the local level?
We categorise advertisers into retail (local) and corporate (national). Earlier, 70 per cent of my advertising was from retail brands. The equation became more 50-50 with expansion. In smaller towns, the challenge is to get as many retail players on board. At the national level, the plan is to tap into national clients (advertisers) and maximise spends in terms of maximum reach on one network.
Have radio ad formats evolved too?
There used to be a lot of ‘concept selling’ (educating advertisers) of radio ad space. Today, radio is part of any media plan and we don’t need to sell the concept/effectiveness. From FCT (free commercial time) driven plans, today, it is more content, innovation and idea-driven planning. A lot of promotion happens outside of FCT by RJs and other formats. FCT is used only to support and amplify that idea. We now also offer digital. Advertisers see more value in a combined package.
Last, talk about Red FM as an advertiser. What role does your agency Wunderman Thompson play here?
Most of the work is done in-house... I’d say 95 per cent of the ideas are generated in-house. That’s because, the in-house teams understand the medium well; there is an immediacy to the medium. Also, executing ideas in 68 towns is an operational nightmare.
(This story was first published in our magazine afaqs! Reporter on December 1, 2019.)
Sometime in the early 2000s, I wrote a fan letter of the ink-on-paper variety to Fali R Singara, a radio jockey with a lovely voice, who hosted a late night show on… I don’t even recall the name of the channel! Till today, I don’t know what Fali looks like, how old he is, where he’s from… nothing. Cut to the present – this monsoon when rain lashed Mumbai, I, like many of my fellow frustrated Mumbaikars, laughed along as an exuberant RJ Malishka parodied, sang and danced about the city’s potholes in a video that was shared across WhatsApp and other social media platforms.
This change in the way RJs engage with listeners, and the scope of their influence, is noteworthy, both in itself and because it is symptomatic of the transformation radio as a medium has undergone over the years. I’ll admit, we at afaqs!Reporter have not been particularly prolific with this beat, but this fortnight, we decided to look at the past, present and future of radio, through an interview with Nisha Narayanan, COO and director, Red FM and Magic FM.
Our line of enquiry went thus: What is the relevance of radio in the era of music apps? If I go to YouTube for songs, Google for local traffic updates and elsewhere for podcasts, what is the preserve of radio? What content can radio offer that no other app can? When a radio brand tries to engage people online, is it a means to an end – (to re-direct them to the radio channel) – or an end in itself – (brand awareness and such)? How does the role of radio change across cities and smaller towns? Has the equity of the radio jockey increased or decreased over the years? These were some queries we went to Nisha with… and came away with renewed interest in this unique acoustic medium which brings old world charm to a mad new world.
Ashwini Gangal, Executive Editor