The radio industry is poised to make its next big leap as radio stations gear up to implement the Phase 2 licenses. The metros have been covered and it is now the turn of the smaller cities to experience FM magic. Radio City has been a pioneer in the FM boom with the first ever FM station in India- Radio City, Bangalore set up in 2001.

Five years on Radio City CEO Apurva Purohit details the changes in this dynamic industry and all the challenges it's yet to face in an interview with Sujatha Shreedharan from Indiantelevision.com

Excerpts:

The Phase 2 bidding has seen the major networks, including Radio City, expanding their footprints to cover mini metros. What are the unique challenges one would face when it comes to setting base in a small local setting?
Clearly, when we had decided to go in for the second phase of bidding we had decided to restrict ourselves to metros and mini metros only. Essentially what we were saying is that we will go for the top 15 cities where we have over 70 per cent of the advertising revenue and they are in certain tone and manner and feel similar to the large towns we have been operating in.The only exception is the whole Maharashtra belt which includes Ahmednagar and the smaller stations. And this is a call that we took because networking is allowed only in these cities which means you set up your network in Ahmednagar and run Sangli and Nanded from that station. We took that call because we wanted a network station in our portfolio. Also Maharashtra is a rich state and works from the advertisers perspective. We also believe that our SEC A and B market are not dramatically different in these regions whether it is in terms of sophistication, exposure to media or even exposure to FM. They may be at different life stages but in terms of consumer, percentage of SEC AB population, income level or education or even ethos they are broadly similar. Also you must remember that we have been running the Lucknow FM station for five years. We have the experience of running a FM station in a mini metro and we hope to translate this experience into other smaller cities.

What about the language and flavor of these upcoming FM stations?
Radio City does believe in typically adapting itself to the local flavor. At the same time you must remember that we are positioned as a premium, up market SEC AB kind of stations. Therefore our language mix does tend to be different from the typical mix than a mass station is concerned. For instance in Bangalore we do run a lot of English, Hindi and Kannada whereas the other stations are typically Kanada stations. In Chennai, we are very much English and Tamil. In that sense, the kind of RJ talk will be focused on the premium market.

What about a city like Pune?
You know Pune is culturally very similar to Mumbai, so that is the kind of mix one is likely to find. Of course it will be adapted to the local culture of Pune which is rich in theatre or Marathi music.

With the setting up of stations in mini metros, Radio City will now look at dual competition - from existing network players who are also setting up their stations as well as from single city players. How will you tackle that?
Certainly the local players have taken a single city or selected a particular city because of various reasons like their already established status in say print or publishing. So they are very focused and are able to get into a mass position because they are local. Besides radio while it may have a national brand, does tend to also try to be local. So there is competition. Big, small, single city networks - they are equal competition. The other thing is that I think the position we have taken which has evolved over the last five years is differentiated not only from single city players who are local or mass but also the network player. What I am trying to say is that single city players tend to take the bottom end of the pyramid - local, regional, SEC ABC, while network players have taken the SEC AB kind of position which is mass but on a network level. Direct competition is therefore the network players, while local stations tend to be competition to players like RED FM.

What about advertising revenue accruing from mini metro stations?
In fact content is where you could say that differentiation gets greyer. As far as revenue is concerned, that's a no-brainer since we are trying to get ads from the corporate clients and large national players. In that sense the local players are no competition. The question to ask is - Is the advertiser trying to buy radio because you also have print or is the advertiser trying to buy a good network which is either number one or two. We are very clear that we as a network focus on the right kind of network in 15 of the top cities. In revenues there is no competition. As far as content goes, there will be competion with local players.

A few years ago, differentiators were perhaps easy to identify within the few radio players. With the numbers growing how does one still hold on to or reinvent that differentiator?
I think the whole industry is in a state of flux. My opinion is that now, when the newer players come in they will have to recognize that if they want to grow the listenership pie they better come in with different options. The newer guys have to come in with different languages or different formats and personally if you ask me that is not happening right now. All the newer guys have really not lived up to our expectations of trying to build a differentiator and as you are rightly saying therefore today there is a mass of similar feel players. You could also say that there are certain brands which have been there for five years and therefore they have equity and there are others which are just entering the market and they are broadly similar. You must also remember that the investments in brand building have happened only recently. Before this the whole industry was struggling to find its own feet. In that sense the industry is still very nascent in terms of trying to build an image for itself. Given those kind of issues and challenges, we have been trying to portray Radio City as a brand, say, which is different from a Radio Mirchi perceived as a more aggressive and in your face - teeny bop kind of station to our more softer, slightly older 25- 30 years, premium listenership. And that has developed over a period of time and is becoming clearer only over the past year or so. Sure, the differentiation worked in a non competing market. Today, however, you have to take it to the next level and we at Radio City are doing exactly that- pushing this whole process of identifiable branding to the next level.

Could you explain how you plan to do so?
It is a little premature to say that, except that the intent is very much there. But if you had to look at international examples certainly there are differentiations that could be built in at the psychographic and demographic segment. Even demographically, what an 18-year-old youngster wants is different from what a 25- year-old youth wants although they may fall under the similar youth category. So if there is a difference in the kind of music they aspire to hear, they must be given that. And the radio that pushes this difference will be the radio station that stands out in the long run. I think where people have failed is that they have tinkered with the branding or marketing story but have done nothing different with the product. At Radio City we are very clear that we will only talk about the differentiation when we can actually demonstrate it in the product. No one has made that differentiation although we have tried various innovations. With Mughal-e- Azam or Babbar Sher or more chat shows. But we believe that we can really fine tune the product far far better.

Is there a sense that this overdependence on Bollywood by all FM stations is the real cause of similarity in programming?
I think that there is Bollywood and then there is an equally vibrant music industry although we tend to put them all in the same basket. But if you remove the animal out of the Bollywood cage, then you will realize that there is almost a 100 years worth of beautiful music. It's just that a lot of it happens to be mostly from Hindi cinema. Ultimately it's the music of the nation. All of us are using popular music and that is a fact of life. We are ultimately mass stations aren't we? If we were niche stations we would have jazz. But it's not fair to say that Indian radio stations are equal to Bollywood and therefore 'Che!' They are not different. Internationally also all mass stations do look at popular music. Almost 80 per cent of international stations play popular music except that they are able to differentiate themselves in terms of appealing to a particular target group or by playing only a particular 'sound'. Unfortunately in India, we are yet to go to that second level. This can be due to various reasons- nascent industry, unsound policies. Besides how old is this industry? About five years old. Out of which four years we spent struggling to stay afloat. It's very easy to beat up this industry with the 'Bollywood tag'. But we've barely stabilized over the past two years. So there's no doubt that the differentiation has to come and will come. And it will be led by pioneers like Radio City. If you ask me, even within the context of popular music you can differentiate.

How long do you think this process of evolution will take place?
According to me FM started evolving last year when the government announced regulatory corrections and a fresh package. Look at the growth since then. We have grown in stations. The number of players in each city has also increased and even in terms of content - you have an Indigo which plays English music or a Fever FM which experiments with format radio. So one phase of evolution has already happened. The second phase of evolution will start now where players like us really chart out our different positions which will happen in the coming six months. Then there will be an era where there will be more consolidation and regrouping. Some players will fall by the wayside, some players will push ahead. In the next year there will certainly be a lot of consolidation. Then there is the station setup, scaling up. A year ago radio city had about 100 people. We are now looking at having about 300-500 people in the next few months. Isn't that a spurt? The natural evolution in any other industry would have been ten years; we have done that in three years.

Do you believe that there is bound to be a clutter with the number of radio stations coming in?
I don't think there will be a clutter, but in the frenzy to launch radio stations I believe that learning will not happen as it should. Learning and qualitative inputs. There is no luxury to actually test market a product or try a pilot launch. Now you say, lets launch first and we'll figure out in the market if it needs to be changed.

There is a huge debate over the tools used to measure listenership and advertising on radio. What does Radio City turn to?
Of course the first thing that this industry needs to do is set up a robust currency to determine advertising and listenership. There is a strong movement towards it and sooner rather than later it will have to evolve. We prefer to use NRS and then we have Synovate which does our brand research for the last three quarters. We are just waiting for the industry to stabilize before we declare these findings publicly. We are looking at listenership understanding, listenership pattern in different cities, psychographic and demographic pattern.

Is the industry complaining about the FDI regulation in radio which allows for only 20 per cent foreign equity?
Currently we are happy with whatever the government has allowed considering we spent five years working hard to convince them. We are quite ecstatic about what we got. I think the government itself needs to realize that the industry is in a state of buoyancy and it must give whatever impetus it can - news and current affairs license, networking, multiple frequencies or FDI. Quite honestly, the first three rather than FDI.

Is Radio City looking at multiple licenses and what kind of stations would you be interested in?
Yes we would. But for now it would be like blue sky gazing. We would look at news and current affairs, different genres of music, spirituality or even different languages.

Is there a worry about lack of a sizeable talent pool to choose from?
Talented and skilled people is something all radio stations are worried about. Where does one get trained people from? You have to do your own training. Fortunately we realized sometime ago and we have invested reasonably in increasing the skill set. Since we've been here for five years, we have had a large number of people working for us. Even then it has been a challenge for us.The other problem is of course being attractive enough as an employer for a talent pool to come to us. We try to build ourselves as a brand which is informal or a fun place to work. Very 'un media' is how I would describe it.

Can you give a comparative understanding of how radio looks - 2006 versus 2007?
In terms of the ad pie there has been no dramatic change. While there has been a 30 to 40 per cent growth, there will be no big change since the new stations have not been all set up and operational. Between 2005 and 2008 one is looking at doubling the industry. It will grow from 2.5 to a minimum 5 per cent simply due to geographical coverage area. In fact we would have more than doubled if there were far more genres on offer. It won't go up to a 60 per cent unless people start segmenting and providing different products. If I were a new player, that's a question I would ask.