Inside Music Media

Mickey’s Monkey

2010-10-05T00:02:00.000-07:00

By Jerry Del Colliano

Yesterday, KGO/KSFO President & General Manager Mickey Luckoff finally got the monkey off his back that has been hounding him for the past three years.

Luckoff fired his boss -- Farid "Fagreed" Suleman, CEO of Citadel.

I’ve got the inside story for you on what happened and why – and why now?

After all, the newly non-bankrupted Citadel Broadcasting needs KGO and KSFO in San Francisco to continue to print money – the better to fund Suleman’s new deal.

You won’t believe the details on their relationship and what it was like for Luckoff to go from ABC management to Mickey Mouse management. You’d think previous owner Disney would have been the Mickey Mouse operator but it turned out it may have been Citadel.

Luckoff spent 35 years as the driving force behind KGO’s news/talk format working for ABC, Capital Cities, Disney and Citadel. He has won tons of awards. Raised millions for lots of good causes. Attracted and kept some of the greatest radio talent on-the-air.

When I spoke with Mickey yesterday I told him he should get an anti-nausea award for not getting sick to his stomach watching Fagreed mismanage the company.

The 74-year old Luckoff is upbeat. He’s getting married at the end of the year. Will write a book about his experiences. It’s all good now that he has ended his long national nightmare.

In a moment you’ll know the proverbial rest of the story. And when Luckoff wrote his resignation letter (you won’t believe it). Plus, the straw that broke the camel’s back.

I’ve compiled a list of eight reasons why Luckoff left his employ after three and a half decades.

So here is the inside story you won’t be reading in the happy talk press this morning:

1. Incredibly enough, Luckoff has only been in Farid Suleman’s company face-to-face only a few times in the three years that Citadel has owned KGO. Fagreed, as Suleman is known for being cheap with everyone else but himself, needed Luckoff to crank out revenue to help his tanking company. Suleman reportedly single-handledly wrecked some of the other ABC properties that Citadel overpaid for but he kept hands off KGO – until now.

2. Fagreed’s meddling was the main reason Mickey Luckoff surprised him with his resignation yesterday. As Popeye used to say, “that’s all I can stands, I can’t stands no more”. Maybe it was the hubris of his new long term deal with his investment banker bosses or Fagreed’s move to new palatial digs in Miami, but Suleman's moratorium on meddling ended recently.

3. What kind of meddling? Fagreed would send VP/Programming Scott Shannon who apparently sold his soul to the company store to tell Mickey’s programmers that his station didn’t sound like WCBS-FM in New York. Of course, Luckoff didn’t want it to sound like CBS-FM because his hot talk station was in San Francisco – not that a little detail like that would bother a consolidator.

4. Farid would apparently approve hires without consulting the boss.

5. Luckoff apparently got fed up with Fagreed’s perceived concept that people are basically worthless and mean nothing to him. After all, Mickey built the franchise the other way around based on people. And he’s taken good care of them along the way.

6. Suleman reportedly started going over Luckoff’s head and talking directly to his department heads leading them to wonder, who is in charge here?

7. There is also the allegation that Suleman told suppliers not to talk to the boss – that they had to go through him. A deal breaker in the end.

8. Luckoff wrote his resignation letter nine months ago and kept it in a drawer. When he attended the NAB Radio Show last week he found it hard to keep his mouth shut about what he was planning to do. Finally, he returned to the Bay Area and he had had enough. Nobody quits Farid making Mickey Luckoff the most admired “nobody” in the radio industry right now.

Mickey Luckoff survived four companies, numerous recessions and an earthquake or two and even the Arbitron People Meter that robs from the rich news/talk stations and gives to the poor repetitious music stations.

Maybe the seminal moment was when he watched Fagreed schlep through a pre-arranged bankruptcy with creditors taking over the company only to watch Suleman live up to his name Fa-greed when he inked a $43 million package for himself.

Not interested in replacing seven-year old news vehicles.

Or giving a raise to the employees who are helping to keep his bankrupt company afloat.

Or stopping the firing of talented people in tough economic times or rehiring them when the new ownership kicked in.

When Mickey Luckoff joined ABC to manage KGO in 1973 he took it upon himself to find out why some major advertisers didn’t buy schedules on KGO. He targeted Macy's and Coors (KGO was too liberal for the conservative beer company).

One day on the way back from calling on Coors in Colorado, Mickey Luckoff’s plane was hijacked.

At first the passengers were told they were going to have to land in Colorado Springs to repair the hydraulics system – a sketchy scenario to seasoned travelers.

Not long after, the pilot got on the public address system and said, “This airliner is no longer under the control of United Airlines”.

That makes twice that Mickey Luckoff has been hijacked.

The second time, by a bumbling interloper who took great American radio stations and personally led them into bankruptcy.

Both times, Luckoff lived to tell the story.

(Note from Jerry: Within days Inside Music Media will move to a paid subscription model now being tested – the kind I often champion for the media industry. Most of you have been auditioning me for up to four years now. I hope you have found my work insightful, deadly honest, entertaining and informative. I will continue on for you with gratitude to all my friends in this space – Jerry).

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6 Roadblocks to the Digital Future

2010-10-04T00:02:00.001-07:00

It is sure not the consumer getting in the way of the coming digital content revolution.

Consumers are gobbling up Apple products, Android phones and all types of digital content as fast as they come to market.

It is more than significant that outstanding content producers are struggling to make new media pay off for them. Apple has found a way – make the cool products that consumers will scarf up even in a prolonged recession.

But Verizon hasn’t come up with a good idea nor have the other cell phone operators beyond what they fell into which was text messaging at $20 per month. And who can live without text messaging?

The digital future is more than texting, apps and iTunes.

Apple isn’t even going to go there. Steve Jobs is smarter than that. Apple will continue coming up with the products and infrastructure and will charge content providers a distribution fee. And while some publishers have complained about Apple getting 30% of their subscription take, there has always been a distribution fee.

Radio stations have to maintain towers and transmitters and engineers (except at consolidated stations where they’ve fired most of them). Newspapers have printing presses. TV isn’t cheap to produce – production takes people and costs money.

For content providers, then, new media companies and traditional ones like publishers, radio, television, music and even film – there are some significant roadblocks in the way.

1. Royalties

Unless and until the record labels work out a fair compensation structure for the use of their music, there isn’t going to be a digital revolution in content. The labels remain under the mistaken belief that they can get away with forcing content providers such as Pandora to pay draconian royalties, but as long as they persist they are actually hurting themselves.

Once resolved, I can see radio and TV personalities using the iPad as their “transmitter” as they fully integrate music into what previously might have wound up on the airwaves. The sooner a deal that is better than streaming media has happens, the sooner we can get on with the digital revolution and in fact the labels can prosper. (I'm going to spend some time on this at my upcoming Media Solutions Lab).

2. Pay vs Free

Get used to paying for Internet content because as paywalls get erected, content that is unique, compelling and addictive will be an option for consumers. There will always be free. And I expect a lot of traditional-minded media companies to offer clunky paywalls that will fail. Inside Music Media switches over to a paid subscription model probably this week if final testing goes well.

Did you hear what Apple may be doing?

Offering a new subscription plan to newspapers that also see the iPad as the future printed newspaper replacement.

The speculation is that Apple will take its customary 30% fee for delivery and a whopping 40% share of all advertising from the publisher’s apps. And yes, Apple will relent and share its readership data with partnering newspapers. For that price, why not? If you’d like to read more about the Apple speculation, click here.

3. Failure to see that all digital must be built around social networking

This is a huge mistake. Simply aggregating good content, slick pictures, video and marketing savvy sites is no longer enough. We used to call that building a website.

Today, content providers must start with a social network and super serve that network of supporters who will want to talk to them and each other. It’s a different mindset. If it isn’t optimized for an iPad – of which 21 million more are expected to be sold to consumers in the year ahead – then it’s just a website and websites are out. That’s my prediction.

4. Monetization

I am often reminded of the late management guru Peter Drucker telling one of my media conferences before his death that the Internet will be successful – in 30 years! Why so long? Now we’re beginning to see why Drucker was the modern management genius he was. There must be an adequate way to monetize the Internet.

Porn sites found a way before Google sold search ads. There are web ads everywhere these days with success defined as one or two percent of viewers actually clicking on them to connect to the advertiser’s message – a low standard, indeed.

There are three ways to monetize the Internet right now. Ads. Paid subscriptions. And event marketing -- one of my favorite because few know how to do it and yet it is perfect for social networking.

I can see bloggers holding live events that have sponsors once or twice a year so that they will be able to charge less or nothing for their content. Of course – and let’s say it together -- compelling, unique and addictive content is a must.

5. Lack of adequate WiFi and finite cellular bandwidth

Bandwidth is being gobbled up by consumers using apps on devices that are becoming hogs. A few providers are charging more for bandwidth and if that continues you’ll see a slowdown of the digital content revolution we are all expecting.

WiFi must be universally available in a car, almost everywhere. The spectrum to make that happen may be coming available, but without "everywhere WiFi" and tons of available bandwidth from cell carriers, the revolution remains stymied.

6. Misunderstanding the next generation

No matter how many times I say it, only Steve Jobs does it – take the lead from consumers developing products and/or services. In the past, media companies had a monopoly on delivery. In essence, they guessed or in some cases researched their way into business. It is scary how little billion dollar media companies actually know about consumers. They know what they think they know and that isn’t usually accurate. To the student of students, success will flow.

Often we assume the digital future as a given.

This morning, you see the challenges as well as opportunities that lie ahead to content companies looking to go there.

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How Much New Media Must Radio Do

2010-10-01T00:02:00.001-07:00

At first, Bruce Reese’s comments made at Kurt Hanson’s RAIN Summit in Washington, DC this week startled me.

According to press accounts, Reese, the Bonnevile CEO, said, “I’m not sure I see streaming as a big revenue source, at least for our company”.

Say WHAT?

Bonneville is the one radio company actually making significant money from new media.

Even at this very moment – after years of recession – some 6% of Bonneville’s year-to-date net revenue and 8% of its net operating income are a direct result of digital endeavors.

Insiders at Bonneville say that the corporate edict is to grow those numbers in the year ahead while spending next to nothing to do it. In other words, Bonneville is just like other radio groups in that when it comes to new media, it throws nickels around like manhole covers.

I am a great admirer of the way Reese runs Bonneville, arguably the most employee-friendly company in radio. And while I don’t agree on his choice for NAB CEO, Reese is a smart radio guy who gets it.

That’s why I am wondering aloud why Reese is publicly throwing cold water on the notion that digital media is going to be a huge part of radio’s future prosperity.

If you consider new media advertising, you’ll note that during the almost three year economic downturn radio has lumbered through, only new media posted growth numbers in ad revenue. I believe when a full recovery is felt, new media ad sales will continue to outperform traditional advertiser options even as others recover.

So what is Bruce Reese up to when he talks about streaming as more of a promotional than revenue generator?

In fact, here’s five things Reese knows that I don’t think he’s sharing with his competitors:

1. New media as a promotional vehicle for stations – as Reese claims – is a dud. An out and out loser. Streaming cannot effectively drive users to terrestrial radio because they are different animals. The widely held belief on the part of radio novices to streaming is that it will increase listenership and revenue. As far as listenership, most experts agree a 3% audience spike is about the most that can be hoped for. As far as major radio stations streaming revenue, forget it. It just hasn’t developed.

2. New media’s future is not streaming. Young people do not have the attention span for radio online. Even Pandora is enjoyed with active participation and on-demand elements that keep its 50 million plus coming back again and again. But radio stations from several decades ago garnered better “average quarter hour” so to speak than Pandora does today.

3. Until a royalty deal – a fair and inexpensive one – can be worked out for radio broadcasters wishing to use new music in short on-demand mobile programs, the music option is dead. And with the guy Reese put in as CEO of the NAB (Gordon Smith), the radio industry is not getting any great discounts for new media royalties in return for $1 billion in additional annual terrestrial radio taxes.

4. Reese says Bonneville’s KSL, Salt Lake City was making money off classified ads before Craigslist. That’s good. But only a small component of what radio must do in its coming digital future.

5. Reese said if digital media is going to work, it is going to work fast. Partially true. This area is red hot but radio people don’t have much of a touch because they don’t understand it. To be candid, they think new media is a promotional tool for radio. Oops.

Let me reiterate, streaming, mobile content, social networking and other new media initiatives are not promotional tools for radio.

That’s exactly what is wrong with radio thinking when it comes to new media.

We want to cram radio into cellphones and iPads. But the audience has changed. Listener attention spans have declined. New mobile consumer products are being purchased as fast as they can be manufactured.

Even in a recession.

Recently I cited a study that showed today’s young consumers would rather buy electronic devices than clothes.

But radio remains the same and its top executives actually think that this red hot world of new media is its promotional tool.

Now here’s the clincher.

I don’t think Bruce Reese actually believes this for one minute.

I do believe the part where he says he doesn’t want to spend much money on new media, but then again – what’s new about that?

As far as the future of the radio industry, let me be blunt.

There is no future if radio continues to insist that the only major option going forward is some form of terrestrial 24/7 programming alone.

I’m sorry. It hurts.

But, 70 million young people have been raised on iPods and the Internet. They are getting along just fine without hit radio and the other goodies we can offer them.

Reese is shrewd. He’s already outpaced his brethren by working under the radar to advance new media. WTOP in Washington, the number two billing news brand in the country, is perhaps the best example of integrating new media with terrestrial radio that I can name and I expect that it will grow even bigger.

You see, in actuality, Bonneville is not betting the future on WTOP’s radio signals alone.

They are protecting their brands.

Putting content – separate and apart from the terrestrial signal – where consumers live today on mobile devices and online.

I don't blame Reese for not giving company secrets away to competitors.

So, after careful consideration of my friend Bruce Reese’s comments, I have concluded – if radio wants a robust revenue future, don’t do as he says.

Do as he does.

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NAB’s Phone-y FM Chip Diversion

2010-09-30T00:02:00.001-07:00

Before this piece is over I will try to offer you some rational and strategic conclusions about the current National Association of Broadcasters plan to needlessly expose radio stations to $1 billion in added music royalties annually to settle with the RIAA.

I’m going to name names.

Delve into possible motivations for you to consider and then offer a prognosis for what is likely to happen.

First, an update.

Any legislative action on this issue is dead while Congress returns home to campaign for reelection.

What’s ironic is that what the radio industry is likely to observe after election day is a Congress more sympathetic to the interests of the radio industry. Of course you know that, right now, Congress is about split evenly between defending the interests of local radio and standing up for the music industry.

Here’s what is likely to unfold:

You see NAB CEO Gordon Smith stand up before the NAB Radio Show and champion FM chips for all cell phones. Now that’s a popular issue with radio execs. FM chips are already in many cell phones and would have to be unlocked.

But the Consumer Electronics Association is bandying around a new study that shows “most” consumers surveyed are not interested in having FM tuners in phones and 80% do not support a government mandate to force manufacturers to put these chips into mobile devices.

I’d say the CEA got their money’s worth out of their own study. However, I’d prefer to use mine.

Look around.

See which young (or increasingly older) mobile device user is craving an FM chip in their mobile phone. Where some carriers offer it, it is not making a big splash. Where Apple features it on the Nano – the earth has not moved.

Can it hurt radio to have an FM chip on mobile devices?

Probably not.

Will it make even a small difference in radio listening?

Not likely – for all the reasons we discuss in this space not the least of which consumers use their phones differently than a Walkman and have different attention spans than portable radio carriers of the past.

And I’m not even mentioning the tremendous tide of repeater radio, syndicated and voiced tracked non-local programming. I guess I just did.

But the NAB under one of the most dangerous CEOs it has ever had – former Senator Gordon Smith – has retreated from his public insistence that radio had better make a deal with the record industry before the evil CRB gets involved.

That went over like a lead balloon with radio people – the vast majority of whom are against the extra royalty tax even if they can’t find one leader with the balls to stand up for them and lead the fight.

The NAB knows this.

Sly Smith is going to deliver a favor to his old buddy, Senator Orrin Hatch, because in my opinion Smith has more loyalty to Hatch than he has to a radio industry he hardly knows and certainly doesn’t understand.

Sly Smith is an able opponent.

That in and of itself says a lot. Your NAB CEO is radio’s opponent.

What’s up with that?

Thus, the talk you are hearing and reading about to divert attention away from this unpopular maneuver to settle with the music industry on radio’s dime by waving the FM digital chip flag.

Radio broadcasters are desperate for help to get into new media. They erroneously think streaming music on a cell phone is the way. The NAB is fueling that desperation. This guy Smith is good – at politics.

Gordon Smith is playing the FM chip card to divert attention to what he and the NAB are really going to do.

Here are my predictions – and they are in print and available until the end of time over the Internet. I’ll stand up. Hold me accountable. So let’s see if I am reading the politics and strategy right.

1. The FM chip issue will get nowhere in spite of the rah-rah talk by Smith and the NAB at their convention.

2. The move will be on to make a deal even as Congress leans more in the direction of radio’s interests after the November election.

3. No radio leader will step up to rally the industry’s interests – they are all weak. Advantage: Interloper Smith.

4. The NAB will cloak a vote on this issue with their executive board as being democratic by asking their "duly" elected representatives to poll their constituents. The NAB will never allow a direct vote by all radio owners using a third party accounting firm (NAB represents only 50% of America's radio stations) because the issue of more royalty taxes will overwhelmingly lose with radio people.

5. Cumulus, Clear Channel, Citadel and the other not too helpful owners will suck it up and support their man Smith. These highly leveraged companies can simply throw it on top of the other expenses that they routinely take on such as Farid Suleman’s new digs in a high-end Miami office building – even as he is squeezing the last penny out of employees and firing talented people.

6. The NAB will purport that the people’s will shall be done and that the radio industry wants to make peace with the record labels and then you can start looking to pay your share of the $1 billion. Did I say $1 billion? Read on.

7. $1 billion will go up to $2 billion and beyond once the cat is out of the bag. Bank on it.

The NAB has turned on its own before – successfully.

At the last minute, they helped attach a provision of the Telecommunications Act of 1996 which was aimed primarily to regulate the phone business. That add-on that even very aware radio people didn't see coming was the legislation to make radio consolidation happen. You see where that got us.

So, I call out the NAB for being the Benedict Arnold's that they are even if they like to hold warm and fuzzy radio conventions and rally the troops around patriotism, motherhood and FM chips in phones.

And I say this sadly but with all due respect – I really do – the radio industry has only itself to blame for allowing the NAB to hijack their future (again) without even a whimper of opposition from any radio executive resembling a leader.

Shameful.

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The Next Generation of Listeners

2010-09-29T00:02:00.001-07:00

I recently heard former Governor Howard Dean analyze the present political atmosphere as the establishment’s last stand.

Politics is politics and I’m going to try to put that aside in looking at something he went on to say that rings true if applied to the media business.

Dean, a Democrat and former presidential candidate, was criticizing his arch rivals the Republicans and the Tea Party movement. Again, not looking to get involved in all that for this purpose, he went on to say that the next generation would reject any attempts to restrict gay rights or attempts to impede immigration.

These are certainly two super charged issues and Dean’s comments reminded me of working with college students at USC.

We often look at the world through our own eyes and experiences. Radio people think there will always be 24/7 radio and record labels apparently think they can get the same high profits for selling music that they once earned for selling vinyl or CDs.

The generation that is now coming of age – Generation Y – is reshaping everything. It is strong in numbers at about 70 million and the last Gen Y’er has already been born but hasn’t made it to college yet.

If you’re looking for a political fight, you’re not going to get it here. My mother, a Democratic ward worker in her day, always reminded us that you’re not likely to talk anyone out of their political beliefs.

But there are some things worth considering about the next generation as it pertains to media.

1. They, indeed, have more open attitudes about immigration because they have likely embraced immigrants who are their friends in person and on Facebook. As a professor I can tell you that college students care very little about racial divides that talk radio obsesses over. They see the world in one color of humanity – a characteristic of which we parents should be very proud.

2. Sexual preferences are personal decisions that are openly supported in large part by this generation. Of course, there are exceptions. There is more lesbianism on campuses, more gay relationships. Gen Y is just fine with this. Listen to their music which is the soundtrack of their lives and “I Kissed a Girl” is more than a song, it is a marker of change.

3. Number one and two above means that the kind of issues – political and societal – that are the fuel of talk radio stations will never compel the next generation to become a listener. Howard Stern, radio's famous shock jock, means nothing to Gen Y. If they want shock, they’ll kiss a girl or dress like Lady Gaga or be Rihanna. This is fundamental to content providers who want to find the next way to engage an audience. Politics, intolerance that surrounds the immigration issue and restricting sexual behavioral choices will likely not fly with them.

4. The listener of the future is also very civic-minded. I have said this many times and yet media executives make short shrift of it. The next generation cares what their stars, singers and friends are willing to do to help the environment, lend a hand to others and build a better sense of community. Look no further than Facebook founder Mark Zuckerberg who gave $100 million in Facebook stock to the troubled Newark, NJ public school system after getting to know charismatic Mayor Cory Booker. As The New York Times put it, Zuckerberg has “no particular connection to Newark … But in July he and Mr. Booker met at a conference and began a continuing conversation about the mayor's plans for the city, according to people familiar with their relationship." The Harvard dropout did have a particular interest in civic issues.

The point being that understanding our own business is not going to be as critical in the emerging digital media world as being an expert at understanding the changing consumer.

To do so would mean adapting to their interests which are polar opposite from older talk radio listeners.

Extend this further and any station playing music is competing (poorly) with an iPod unless it provides live and local people that can relate to Gen Y the way baby boomers and their parents were able to relate to radio, TV and journalism people.

Steve Jobs – who took one college semester before dropping out – is the gold standard as far as I am concerned for understanding the next generation. He’s a complex man and no personal role model other than to see how he has built at least three businesses (including Apple twice) by having a better understanding of the youth market than any one else.

Jobs may have this ability in his DNA.

I am suggesting that the rest of us can acquire it by more keenly observing this revolutionary new market than only channeling the views and policies that worked before 2000.

Success in the growing mobile Internet is directly proportional to how willing we are to see it through the eyes of a young generation that has singlehandedly redefined much of society through social media and the Internet.

Former House Speaker Tip O’Neill is famous for saying “all politics is local”.

To adapt that memorable phrase to a media industry on the verge of monumental change, “all media is live and local” and must reflect the social, political and civic differences of the next 70 million listeners and viewers now coming of age.

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The New Listener’s Hierarchy of Needs

2010-09-28T00:02:00.001-07:00

In psychology there is a theory called Maslow’s hierarchy of needs.

Abraham Maslow’s 1943 paper A Theory of Human Motivation identified self-actualization, esteem, love and belonging, safety needs, physiological needs.

As today’s consumer morphs and technology spurs alterations in their behavior, it has occurred to me that the media needs of humans has not only changed but their needs and priorities are changing – important for content creators and marketers who want to follow them to the digital Promised Land.

It’s fair to say in the past -- say 1960’s and 1970’s – a consumer's media need primarily included radio and television. To have a radio to be connected to their rock and roll music and news and information. And then a TV to enjoy arts and entertainment as it developed in color.

Even in the 1960’s reading a newspaper was optional compared to, say, the 1940’s when consumers bought newspapers on the street corner to read “Extra” editions to learn about the latest war news. It’s debatable whether radio or TV would be first on the 1960/1970 hierarchy of needs list but suffice it to say they were interchangeable.

I thought you’d enjoy my view of today’s consumer’s hierarchy of needs in light of the digital revolution, new media, the Internet, filesharing, social networking and the like. Keep in mind I am observing the next generation because at 70 million strong and coming of age this is a bellwether group.

So here are Del Colliano’s Hierarchy of Media Needs as of this moment:

1. Text Messaging

Take away any other device, any other connection to today’s world of communication and a Gen Y’er could probably survive. Take away their cell or smartphone with its ability to text message and you have created tremendous anxiety.

Interestingly, text messaging is not content creation such as radio formats or that magazine articles offer – it’s a way to stay connected. Moreover, I believe texting is a replacement for telephone conversations in this generation. Parents of Gen Y’ers please observe, wouldn't your children rather text you then call?

The voice call is a goner. Skype with video is a keeper. FaceTime, the new Apple iPhone feature makes mere voice calls seem like communicating by antiquated telegraph.

The customary mobile carrier texting charge of $20 is assumed and accepted by everyone even if their parents are paying the cell phone bill. In other words, without the ability to text, today’s consumer is anxious and disconnected from their peer groups. Mobile carriers fell into this one because they provide nothing but connectivity and the next generation does the rest.

Still, text messaging is your silent competitor.

2. Facebook

One could argue that Facebook trumps text messaging and I would be up for that debate, but to live without Facebook in the world today is like living on a desert island all alone. Facebook is simple and because everyone is on it, it provides a means for communication that is extraordinary.

Facebook is texting institutionalized.

Facebook also allows for the self-absorption that permeates our society today and in fact promotes it.

Example: by counting and displaying how many friends one has. In reality, I have only had a handful of best friends in my real life but lots of acquaintances in my virtual world. Yet by counting and displaying the number, it redefines what "friend" really means.

Also, sharing pictures is simply the modern way of showing someone else a picture album or making them sit through a slide show – a digital improvement to say the least.

Facebook defines Gen Y and even though its founders have opened it up to everyone on the planet (over 65’s are the biggest group of new Facebook accounts currently), Facebook is the pivotal communications point.

By the way, when you look at the percentage of membership to Facebook compared to say MySpace or others, number two is a very distant number two.

Social networking will define Gen Y – not the technology that enabled it.

3. Filesharing

Record labels don’t have to be ashamed that they had their ears pinned back by an entire generation that broke into the record store and stole their music.

Filesharing has helped quench Gen Y’s thirst for music discovery that was not being fed by music radio stations. You’ll remember short playlists have been a staple of radio program directors to get ratings. When you sell out the listener for the audience research company’s methodology to win ratings, you wind up with unhappy listeners.

Don’t look now but the radio industry is doing it again – pandering to People Meter drive-by ratings knowing full well that listeners can find plenty of music on their own online and at the iTunes store.

4. The iPod

Before Apple invented the iPod, portable MP3s were not a threat to the record industry or radio. Apple made them cool, portable and intuitive. Apple's iTunes store was where music lovers could buy legal music for a reasonable price – 99 cents. Now, iPods are loaded with all kinds of music from differing destinations.

They are a portable jukebox or to the next generation what a Walkman might have been to the rest of us. The big difference is an iPod user is in control of the playlist -- when the music plays, if it plays and for how long it plays.

And no commercials.

5. The Laptop and Internet

The base station for all the above needs reside on laptops and connectivity to the Internet. From there, websites will go mobile on iPads and other portable devices. The iPhone and android clones have become enablers of the needs described herein. Without a computer and the Internet, arguably the rest of today’s needs for Gen Y could not have developed.

Before we end, look at what did not make the new consumers Hierarchy of Needs list.

Radio – it hurts, but only in RADAR studies can you find tons of radio listeners. In the real world, they are casual listeners at best just as station owners have in fact become casual programmers cutting live and local programming for financial savings.

CDs/vinyl – the record or CD is dead. Music is alive. The labels don’t seem to know the difference. The need is not for CDs. It is for music discovery.

Print – No way. Gen Y and many of the rest of us have become as disinterested in print publications in direct proportion to how interested publishers are in cutting expenses and firing reporters.

Someday soon you may see iPads on the Hierarchy of Media Needs. It is the killer app. Wait until you see how many iPads Apple sells at holiday time and next year (Full disclosure: I am an Apple shareholder). Still, iPads are on everyone’s holiday gift list.

In the end, let’s not make this the last time we actually think about today’s consumer’s hierarchy of needs because understanding it allows our creativity to be inspired and energized to meet them.

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Radio’s Believe It Or Not

2010-09-27T00:02:00.001-07:00

I love Ripley’s Believe It Or Not.

You do, too, from what you tell me because I have adapted the Ripley format to the sideshow currently going on in the business you and I love so much – radio.

On the real Ripley website you can find video of a couple being married by a robot.

A three year old Chinese girl who drinks liquor and smokes after surviving a car accident and a coma.

And a violinist who actually plays the instrument during brain surgery.

But I’ve got all that beat this time with what radio consolidators are up to – real life stories that are hard to believe but true.

In other words, Radio’s Believe It or Not.

• A Station That Requires Recycling Trash Over Programming

It’s not just the three big “C” consolidators who have lost their way, take Millennium Radio, please.

They apparently have serious issues with recyclables going into the wrong cans at their Jersey shore offices. It resulted in the VP of Engineering sending a stern email to the staff recently attaching a Monmouth County (NJ) Planning Board brochure about recycling detailing the rules of dumping trash.

Then the employees who just launched an AM oldies station and had a lot of format-related problems suddenly got a homework assignment:

“All Shore employees will be getting a “project” in their mail boxes, this project IS REQUIRED and will have to be turned in at a REQUIRED meeting next week (time and day TBD)."

As a horrified insider told us, the remote voice tracking is not working and instead of trying to work on doing better shows or fixing the rush job of segue tones, management mandated a recycling project instead.

By the way, the voice tracking is saving a $10 an hour live, local jock for Millennium.

Maybe it’s time for management to be recycled?

Just sayin'.

• Voiced-tracked Hurricane Warnings From Past Storms

Believe it or not, that is what American-owned Inter-Island Communications “Hott 107.5” in Bermuda (That’s right, two “T”s in HOTT) apparently did. This tip came from the Bermuda Weather Service where recent hurricane Igor brushed the island and had residents on edge.

But all of a sudden the weather service started getting calls from panicked Bermudians about “another” hurricane coming “this weekend” even though the nearest tropical storm was 1,900 miles away and not of immediate concern.

As it turns out, “Hott 107.5” the top rated station in Bermuda was replaying old weather forecasts. In a nation so sensitive to hurricanes, the most popular station on the island apparently let their local listeners down so they could save money and run an automated feature.

I don’t know about you but if owners are so hell bent to do voice tracking (which will eventually kill them off anyway), they can find a way to be responsible for what goes on their air so as not to panic the public.

• HD Programming That Is Off the Air for Weeks At a Time

One of my “repeater reporters” fighting for truth, justice and exposing the sham of consolidation, took a ride within 100 miles of Springfield, MA – in all directions to check out HD radio.

This radio pro held nothing back after buying five HD radios:

“Reception sucked. Programming sucked. I don't know where two of them are. I don't care. I also spent more than a year visiting retailers every month to see what the reaction is. It isn't. I've stopped that since retailers have stopped carrying all but aftermarket stuff for the car. Even those have dwindled and will continue as carmakers integrate everything into a main control center.

“By far the best one is the Sony Tuner. The HD sucks like all of them but the analog is the best I've ever seen. Even as good as the Sony is, technically, it gets used for a few minutes every few months. There's nothing to listen to.

“Did I mention the stations don't care, either? The Clear Channel stations here often have digital down for days, even weeks, at a time”.

The shame of it all is that in spite of questionable technology, HD radio failed because the final system came to market too late and then radio operators showed potential HD listeners what they thought of them by ignoring HD programming.

• Lew Dickey Thanks the Wrong Programming Team

Nobody ever called Cumulus CEO Lew Dickey stupid – maybe dark and uncaring, but stooped? Not Lew.

He sees other major groups dropping formats left and right to switch to tight playlist hit radio formats that the People Meter just eats up. These stations get played in public and PPM wearers pick up encoded signals whether they are listening or not.

So Dickey gets the improved ratings for KCHZ, Kansas City that he was looking for and the first thing he does is issue his team this congratulatory memo:

“Congrats to Jan (Jeffries) and our talented team in KC led by Maurice Devoe on winning this important Top-40 battle in KC through product innovation. Innovation in all aspects of our business is core to our culture of continuous improvement and the only way we will build a sustainable competitive advantage. Our “I” concept is just another example of Cumulus innovation driving success”.

Innovation?

Dickey didn’t get that one past his employees who snagged Uncle Lew on this disingenuous memo.

Turns out Dickey needed to credit CBS for discovering the high cume/high rotation/PPM hit radio format.

They were the innovators – not Cumulus.

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What Radio Should Be Doing on the iPad

2010-09-24T00:02:00.001-07:00

Okay, we’ve talked about the future of the iPad for years now. That’s right, I told you, my readers, it was on the way over a year before it was introduced by Apple CEO Steve Jobs.

Now on to what radio, the record business, publishing and TV should be strategizing.

First, this quote from The Economist that I think sets the stage:

“THE advertisement for Newsday’s iPad application starts blithely enough. A man in a shirt and tie sits in the kitchen, reading the New York newspaper on his tablet computer. He turns the device on its side and watches the live feed from a traffic camera. Then a fly lands on the table. The man quickly raises the iPad and smashes it down, shattering the glass. The ad implies that the iPad is superior to old-fashioned print in all sorts of ways, just not every way. It is a joke—but also a good summary of how newspaper and magazine outfits have come to feel about Apple’s product in the eight months since it was unveiled”.

It hasn’t even been a year since Apple’s iPad has been in the hands of consumers with so many options and already the iPad promises to be the content delivery system of the future with all its advantages and a few disadvantages. Some analysts estimate that over 20 million iPads will be sold in 2011 alone.

You’ll see the expected ego fight between media titans and Steve Jobs. I’m betting Jobs will out maneuver them. He just knows what works with this new generation -- not that his ego is any smaller.

Sports Illustrated got in early with impressive graphics.

You’ve all heard the story of Wired selling 24,000 paid apps at $5 a piece the first time it tried paid subscriptions.

But as The Economist points out, Time is starting to hold back content from its free website. This is the sign of a confused plan going forward.

HBO is going to try “TV Anywhere”. Their own Hulu. It won't work.

Nor will individual sites by TV networks or content producers who want to control the delivery system. It would be as if a TV network could have previously aired content only over its own televisions. Without diversity from -- yes, competition -- that model would never have worked.

Rupert Murdoch wants pay walls up even on local newspapers that aren’t very compelling, addictive and unique. He's laying an egg with that one.

Don’t even go where The New York Times is going in January – a metering system that will punish readers of The Times who read a lot and let the casual reader see a handful of stories for free each day.

All these ideas are worth trying, even though in my opinion, few of them are going to work.

At least there is the recognition that the iPad has already been adopted by consumers as their TV, radio, newspaper and movie screen. Perhaps you saw this coming if you were the parent of a college age student who started watching “TV” on their laptops a few years earlier. Now with the iPad, those laptop TVs just got smaller and even more portable.

Needless to say other consumer electronics companies are rushing to get into the space Apple will occupy as chief transmitter of content to cool devices. And no doubt clueless media executives like NBC Universal’s Jeff Zucker are going to continue to insist that 99 cents for a TV show is too little.

In fact, consumers think it is too much.

What a disconnect.

Sadly, the radio industry is trying to play catch up with old fashioned websites and doesn’t understand that radio will have to reinvent itself as audio, video and text rolled up into an iPad. That terrestrial radio is still a viable business for now if it is live and local but it will not be the same business on a portable consumer electronic device like an iPad.

So, with that in mind, a few observations about what radio, the music industry, television and publishing can do to optimize their inevitable iPad presence sooner rather than later:

1. Don’t duplicate -- innovate.

That is, restricting traditional media’s efforts as brand extension to an iPad will fail. I’ll say it again. Trying to cram TV onto an iPad just to deliver it to millions of mobile devices will not maximize the audience or profit potential.

New content will need to be developed for iPad delivery. However, media outlets with solid brands can use their expertise in creating new and separate content in these brand areas for iPad delivery.

2. Think of the iPad as a mini-website and you’re done.

I’m afraid that’s what media executives think. The iPad is its own experience not a small website. In fact, while you can view your favorite websites on iPads, it is the handheld experience that begs for innovation.

Sports Illustrated is on the right track. Look to the major pro sports to figure this out first. I’m betting they will get it right as well.

3. Everything starts with social networking.

The thing that scares me the most about media executives (besides their affinity to imitating Gordon Gekko) is that they are missing step one – start by building a social network.

I take this advice seriously. My new paid subscription website which will debut in about two weeks or less is built for the members and their interests first. The topics, the presentation, the two-way communication – it all matters as much if not more than the stories I write.

For media execs, take heart that social networking is the revolution that matters most and in 20 years when historians look back, they will not recognize the advent of the Internet alone or even the mobile Internet. It will be social networking that will be looked at as the digital revolution.

In present terms, to those who can differentiate between the Internet, websites, filesharing, streaming and the other distractions that confuse sound strategic thinking, will go the victories.

The iPad is a cool portable device but its real purpose is social networking enabler.

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After FM, Where Does Radio Go?

2010-09-23T00:02:00.001-07:00

You’ve no doubt been reading about the rush that has been going on of late as owners are porting their AM radio stations over to FM.

Bonneville was one of the early pioneers of moving AM brands to FM because, frankly, listeners have migrated over to FM. In fact, they migrated a long time ago.

It is remarkable but one thing has not changed – listeners will listen to AM radio if they want to hear what the station is broadcasting. These available AM listeners do tend to be older and the move to FM makes sense if a brand is worth protecting.

Stop right there.

Fast forward another five or ten years and ask yourself where will great FM radio brands be connecting with audiences then – online, on cell phones, iPads or still on the FM band?

While moving valuable listening brands from AM to FM appears to be a no-brainer, one has to wonder why it took 20 years for this migration.

There are several interesting points:

1. A great brand is a great brand and while an FM signal doesn’t guarantee an audience without excellent programming, being on FM is not enough without an excellent brand (not repeater radio, heavily voiced tracked stations without community presences and live and local operations).

2. I believe even young listeners would have found the AM band if they had a reason. It was the radio industry in its infinite wisdom that assumed that FM would be for music because it is in stereo and AM would be for news/talk because it is mono. Actually, that assumption helped start the migration decades ago when young listeners actually knew what an AM station was. Ask a college kid now and you might find that you are horrified with their response. Did it have to be this way?

3. A solid FM brand does not need to be streaming on the Internet. Period. The very successful WBEB-FM, Philadelphia owner Jerry Lee stopped streaming because it was a poor return on investment (i.e., royalties). And, he was only picking up a very small amount of listening to add to his number one ratings. Over a year since Lee pulled the plug and WBEB is still number one in the Philly PPM. No stream.

4. Study a guy like Lee and I do because he was my first employer in radio. Lee in essence has become a mega millionaire many times over with essentially one radio station – 101.1 – not even a great signal. In fact, a lousy one. Lee flirted with owning WFIL-AM after its heyday and then dumped it. He returned to one FM station – over-the-air – and a license to print money even today. Even in a recession. Even while everyone scrambles around to dabble in new media. How could that be? Blaise Howard and a series of great GMs didn’t hurt. PDs like Chris Conley and Chuck Knight. Bill Moyes as a researcher spending a lot of his time successfully fending off competitors like Greater Media most recently.

I know what you’re thinking.

Jerry (me), make up your mind. Should radio be in new media or remain a pure over-the-air venture?

My mind is made up.

Radio should offer the best product and service to its listeners. Owners should invest in research – they don’t. In marketing – very little. In advertising/promotion – are you kidding, who wants to spend that kind of money. That’s how Lee has done it for decades, still does it and no one has figured it out.

Very few want to pay attention to him.

Lee, now in his seventies, is a man of many interests but he never sold out to the consolidators even when they could have made him richer. He has a passion for the process of being number one. I’ve known him a long time and I can’t say he has ever lost his interest in radio.

One station – that outperforms others by far.

So, what it tells me is that if you want to observe Lee, you can learn a lot. And you’ll also find your answer about radio’s role in the mobile media world.

Shall we?

• Terrestrial radio should by and large be live and local. You have to spend money to make money. Must do research. Must advertise. Test music, etc. The goal is to build a strong brand and defend it.

• It does not follow that streaming is the future because as Lee well knows (because he is a shrewd dude), consumers don’t listen to computers or for that matter cell phones and even iPods the way they listen to radio. In other words, a radio format doesn’t work on a telephone. Even an iPod is not a Walkman. It is an on-demand jukebox that consumers use to jump around from song to song even before it ends. Cell phones are not radios and no one can make them become one. A car radio isn't even a car radio anymore, it is an "entertainment center" that shares its time with drivers who are texting.

• The mobile Internet requires new content delivered in shorter segments that put the user in control of their on-demand entertainment. Radio is used to a hot clock and 24/7 broadcasting. The mobile Internet is waiting for the next Bill Drake to draw a mobile hot clock on a napkin at the new age equivalent to Martonis that will consist of short elements of content – video, audio, text with social networking.

Therefore, a great terrestrial radio brand works only on terrestrial radio.

And mobile Internet content – even inspired by a terrestrial brand – will only work if it is separate and apart from radio formatics that embrace short attention spans, on-the-go living and connectivity.

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Consumers Now Spend 50% of Their Day With Media

2010-09-22T00:02:00.001-07:00

In the 1950’s and 1960’s radio and television broadcasters and publishers could never imagine a public whose appetite for what they do would be so great that it consumed half of their waking hours.

Today we have evidence that the Internet, cell phones, Apple and social networking have created addicts out of people of all ages.

In fact, all of this growth in media consumption has happened within the last two years and far exceeds media demand for three decades prior.

There are hard cold facts to back it up.

A new Ipsos OTX study of 7,000 online consumers spanning a wide age range of between 13 and 74 confirms that among those surveyed people are now spending half of all their waking hours with media and have increased their media consumption by a whopping hour a day over the past two years.

To put that in perspective, they spend more time consuming media than working or sleeping.

What’s more, eliminate the 74 year olds from the study and focus on the younger demographics and the media consumption number would likely be over 50%.

I want to take a look at the ramifications for content providers, but first let’s just put the facts in perspective:

• 24% of those 7,000 surveyed own a web-enabled smartphone as cellphone ownership declines from 81% to 65% since last year. Obviously, you see why I have proclaimed this decade the decade of the mobile Internet. Consumers always show us the way if we will but observe their habits.

• TV, an industry that I warned is next to feel radio’s generational growing pains, is in big trouble. As of this writing, about 33% of primetime TV viewership takes place online. What’s worse is the TV industry thinks selling short ads is the answer and fails to understand what would make a more profitable subscription model work. Watching TV is now influenced by TiVo and DVRs as well as online video – an increase of 49% over last year.

• Social networking sites – the kind you and I have discussed here in this space every week – are driving the consumer appetite for all kinds of media. Traditional media execs have a hard time swallowing the concept that Facebook visits, game playing and even texting are their competitors.

One more thing.

This survey was conducted only a couple weeks into the start of the iPad era. One could probably assume that the iPad sales that ensued and the addiction that usually results will help create a nation of media zombies who are always connected and rarely engaged in what I call the analog world. This has serious sociological repercussions most of which Steve Jobs and media executives could care less about.

Light-emitting devices such as computer screens, cell phones and iPads disrupt sleep patterns which eventually lead to a decrease in melatonin that promotes healthful sleep and produces Serotonin that affects our moods. Antidepressants are often used to increase Serotonin in depressed individuals. How will such rabid media use affect society? I’m interested in this and if you are we’ll revisit the topic another time.

Back to the 50’s and 60’s.

Imagine if a radio program director back then could find a way to hook their listeners up to a transistor radio and have them communicate back and forth, never turn it off and have a direct channel into their psyche.

That’s what we have today.

We thought that Clear Channel was the ultimate neurotransmitter and that network television was the medium civilization could not live without.

But not so anymore.

Our lives may have been changed more by Apple than any politician, mentor, teacher, role model or scientific advance because Apple makes the devices we crave and feeds the need for content through its iTunes store. Other electronics firms and cell carriers then follow and the trend proliferates.

So let me lay it all out for media companies and future media entrepreneurs in content and music:

1. The new gold standard is 30 minutes -- if that. You’ll have to make your content ready to be interrupted or it will be discarded by a distracted consumer.

2. Someday soon, all content will be offered up in modules – short models (read number 1 above). Consumers will have to choose whether they want to hear a personality’s bits divided into options and then decide which ones to hear on-demand. It’s now about the sum of the parts – not the whole.

3. Commercials as we know them are dead. So are print and Internet ads, but don’t tell Google – a traditional media company if there was ever one disguised in new age concepts. Social networking will track down consumers so you had best work on that concept rather than broadcasting messages consumers will increasingly ignore. Pandora can reach you in Dover, Delaware on your mobile device.

4. Everything you do will have to contain video, audio and text.

We are moving to a world where there will be no more television, radio or publishing as we have known it.

The rules are changing.

The question is -- do you want to stay ahead of these rapid consumer changes or try to grow the status quo and put major media businesses in peril by the time next year's statistics will become more compelling?

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The Future of Rock and Roll

2010-09-21T00:02:00.001-07:00

Great, great piece in The Sunday New York Times Magazine a few weeks back by Rob Walker writing in the “Consumed” column where he asked the question, “Can the value of music reside in a lamp (or stickers or a sculpture)?"

Walker’s piece to me begs the question should artists get rich by selling stuff just because music sells stuff?

The author asserts that the future of rock and roll is merch.

If he is correct, the record labels are in big trouble because as Pogo says, “I have seen the enemy and it is us”.

The labels are adequate at best with merch and arguably leaving a lot of money on the table because they don't understand the new consumer and their devices.

Walker makes his case by pointing out:

“The Ramones sold more T-shirts than albums (and you can buy a T-shirt that says so). And box sets for superfans have become increasingly elaborate and pricey artlike objects. But merchandise is gaining momentum, and it’s not hard to imagine a time when a fan buys a sculpture, home décor item or other tangible good and gets the music as a kind of free soundtrack accompaniment”.

That according to the vice president of Sub Pop Records, the value of shirts, caps, key chains and other items may be worth more than the recorded songs themselves.

Nine Inch Nails is a group that is king of the expensive boxed sets, rap artists are coming out with clothing lines as quickly as they can, and Walker reveals that Stones Throw Records actually sells an espresso blend in the image of rapper Madlib.

There is jewelry (DJ Irie) and sex toys (Rammstein, the German metal band).

Don’t forget magnets, buttons, stickers and remember that Lady Gaga is skilled in all areas from singing, performing and product placement.

So Rob Walker concludes:

“In other words, the aura of music has been imbued in objects (and services, cruise lines, life insurance, etc.) for years. Artists know as well as anybody that music sells stuff, so why shouldn’t they sell the stuff too?”

If the future of rock and roll is merchandise, then only a handful of artists get rich and the rest struggle or continue to starve.

But then again, that’s how it has always been in popular music – the few get the maximum reward for their talents and the rest get teased to continue seeking their dream.

If we continue to judge music by platinum “records” that do not even exist in reality and by a few cash-savvy entrepreneurs, then the music industry is indeed doomed.

I see it another way.

The value of music to the consumer is about the cost of one single text message.

I can prove it with a little help from the labels. Price all your music at 5 cents and consumers will have no downside to paying for almost everything they sample. You'll get rich on volume if you could get over the 5 cent part.

There would be no downside.

No reason for piracy to exist although peer filesharing would and must continue because free tasting is as old as marketing itself – a good thing.

The dream of many rock and roll artists that is in reality achieved by only a few is exactly what is wrong with the music industry and has been for decades (unless of course, you’re one of the few who makes it big).

In the age of the Internet, mobile access, filesharing – and even in the absence of affordable 5 cent tunes – everyone again has a chance to be judged on his, her or their talent.

If Michelangelo painted the Sistine Chapel for merchandise opportunities or on the needle in a haystack hope that he would get wealthy beyond his dreams, then civilization would not have enjoyed his work of beauty for all the many decades it has survived.

So, don’t look to how to continue the paradigm of the music – that you wish to make it big in order to make your music.

Indeed, it’s the other way around – and the digital world we live in is finally going to help correct the inequity.

Yes, a few artists will always find a way to merchandise themselves into riches, but now the playing field is level and everyone has access to the music loving consumer.

The labels no longer dictate who gets that chance.

Radio does influence which three new artists get their chance to get airplay every week when a new playlist is drawn up. But radio is less critical than ever to popular music. Certainly not what it was just ten years ago before the digital revolution.

iPod-toting consumers are in the process of taking back popular music and to look to the old model of fat cats making artists wealthy beyond their dreams is as old as the notion that young people wait for Tuesday to hear those three new songs a hit radio station adds to their playlists.

To paraphrase the Danny and the Juniors song of the 1950’s – Rock and roll is here to stay, it will never die. It was meant to be that way – though we now know why.

The artists.

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Cumulus Sues Ex-GM for $1 Million

2010-09-20T00:02:00.001-07:00

Here’s an inside story you won’t find in the happy talk press.

The Dickey family is channeling its mean genes in what appears to me to be a retaliatory strike against a manager who had the audacity to – well, quit and get a better job with Cox.

Kristin Okesson left the Dickey Dynasty as manager of the Danbury, CT and Westchester, NY clusters. Let’s do what they do before you see the next episode of an HBO original series – recap.

Previously on Entourage (Lew, John, Gary Pizzati) …

The Dickeys took Okesson to U.S. District Court in Bridgeport and in a court opinion handed down on April 22 of this year, the judge interpreted the employment contract at issue largely in Okesson’s favor. She wasn’t ordered to stay away from previous Cumulus customers in Danbury.

The judge did prohibit Okesson from helping a fellow employee to spring from his imprisonment and was told not to solicit Cumulus employees directly. She also had to return some items in dispute that were alleged to be confidential.

And that was it.

Until now.

Cumulus has alleged that Okesson has done Cumulus dirt to the tune of $1 million large even after henchman Gary Pizzati testified twice under oath that he could not identify any damages that resulted from Kristin Okesson’s departure.

Now Mr. Mean Genes himself is asking the judge for a pre-judgment attachment on her home for $1 million to cover the possibility – as remote as it seems – on the odd chance that Cumulus prevails in court.

As if that were not enough, Cumulus wants to seize Okesson’s bank accounts – that’s right, checking and savings even though that action could create a financial nightmare for Okesson, her husband and children.

So, on October 19 and 21st the matter will be before Her Honor Judge Holly Fitzsimmons in Bridgeport who will take testimony and then subsequently render a judgment. Certainly Okesson is sweating it out – and considering that Cumulus has not been able to identify any damage due to her departure on the record, their legal action appears to be retaliatory.

Wait until you hear what pissed them off.

You don’t leave the Dickey boys.

And boys they are apparently because Okesson has filed a gender discrimination suit against the boys club. More on that later.

Pizzati, who has apparently rethought his sworn testimony, is now also alleging that 13 Cumulus customers are spending less money with them directly due to Okesson’s departure. Apparently it’s now scorched earth because Pizzati actually fingered the 13 advertisers.

And many of them are not happy.

Okesson has about six affidavits saying the reason these advertisers are not spending with Cumulus now is because of the economy. Several more affidavits are in the mail and other Cumulus advertisers have reportedly agreed that it’s the economy, stupid. Counsel for Okesson doesn’t rule out that all 13 may actually repudiate the Cumulus accusation that Okesson is in fact a one-person recession.

Pizzati implicated the Cumulus advertisers even though he admitted on the record that he never asked a single one of them about the situation. In other words, it appears Pizzati just made it up.

Even the currently employed Cumulus sales manager in Danbury in his sworn deposition reportedly said the losses were due to the economy in essence not backing up his boss.

Pizzati claims an over $800,000 loss of business in Danbury and Westchester, the markets Okesson managed, between July of 2009 and March 2010 directly attributable to Okesson.

Then he wants $140,000 more for the 13 lucky advertisers who he says pulled back their spending because the Cumulus general manager left.

Oh, and $100,000 plus in legal fees.

Boy, those Dickeys sure get mad when a female employee leaves them before they can fire her.

As mentioned, Okesson filed her gender discrimination suit with the EEOC against none other than Gary Pizzati. Okesson is asking the EEOC for permission to sue privately for discrimination.

Okesson is alleging retaliation for filing the EEOC claim midsummer which is allegedly why Cumulus came back with the $1 million lien and strategy to freeze her bank accounts.

Let’s make sense of all this (if possible):

1. To me it is mean to act in what I think is a punitive way against an outstanding GM who was quickly hired by Cox – another thing that I think sticks in Lew Dickey’s craw.

2. It sends a lousy message to Cumulus employees many of whom don’t like working for Dickey and who want to leave as soon as they can find another job.

3. Naming advertisers – especially without consulting them – in Cumulus litigation is a breach of ethics in my opinion. The advertisers are being used as pawns to build the Cumulus case. I can tell you if Cumulus competed with me in a market I managed, I’d tell all their advertisers to be careful when you do business with them. You could wind up as an accessory to a court case as an unexpected consequence of paying them for advertising. This is just bad sales strategy in any economy.

4. The real story is the discrimination suit against Pizzati that Cumulus obviously does not want to see proceed. It could launch a lot of similar discrimination suits (and I predicted that Cumulus would spend the next few years in court on employment matters) that could be costly and embarrassing.

What has happened to the radio industry?

Why are some big CEOs behaving badly?

However as bad as this is, I can end on a happy note – and a very encouraging one.

Okesson who left Cumulus now works for Cox, a recognized excellent employer with a good record of employee relations.

Cox could have stood back and let their valued new hire dangle in the wind on her own as she spent all her money to fight what could turn out to be frivolous lawsuits.

Instead, Cox is picking up Okesson’s entire legal bill – all of it.

There are still great operators left in radio and when they put their money where their mouth is, it gives all of us great hope.

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4 Bold Media Predictions

2010-09-17T00:02:00.000-07:00

By Jerry Del Colliano

Predictions are just teasing unless they turn out to come true.

The Clear Channel demise – predicted.

Consolidation destroying radio – predicted (during their glory days yet).

The rise of digital media and a new generation – yes, that’s one of the reasons you read me.

So, I’ve got four new ones that I’d like you to tuck away in the back of your mind. You may agree or disagree or be startled, but you’ll see why they will have such a great impact on the music and broadcasting industries.

1. ABC Television will be sold

News chief David Westin resigned recently. Some say he was tired of firing people. Others say he is leaving because new owners are coming.

I say, that, too!

Here’s some inside info:

Westin is suspected of leaking the news of his departure to The Washington Post. Then ABC rushes out the PR that says Westin was expected to leave all along. My sources say b.s. to that.

No replacement is waiting – unusual if ABC knew in advance. Westin is staying on to the end of the year, that long goodbye not necessary if ABC knew of Westin’s plans in advance. Disney owns ABC and doesn’t customarily handle things like this.

Disney is cutting the life out of ABC News. Huge newsroom reductions, searching for ways to make news gathering cheaper through cutbacks or alliances with others. ABC News is – to put it frankly – decimated. Bureaus here and abroad – none. No investigative of documentary units – too costly, not necessary in their view.

As an industry insider poignantly put it like this:

“Reality is that Disney has decided to invest in the Marvel comics characters instead of news. At least they skipped the part about anointing Spiderman as World News Tonight anchor.”

Who would want to be president of ABC News now as they are depleting their assets?

Prediction: ABC Television Network gets sold. Disney’s chief shareholder is Steve Jobs.

2. The New York Times will stop printing

Okay, I’m cheating.

Times Publisher Arthur Sulzberger Jr. told a London audience last week that "We will stop printing the New York Times sometime in the future, date TBD." He was answering someone else’s prediction that the Times will go out of business by 2015.

When The Times publisher comes right out with it, why contradict him?

In fact I believe Sulzberger will be wishing he wasn’t printing the New York Times before then. It’s expensive. Costly unions. Gathering news isn’t cheap.

The best reason is that fewer people read newspapers every day.

I picked mine up off the front step at 2pm yesterday – having read it all before I went to bed the previous night. (Why am I still getting it? There’s a good question. I don't have a dog).

The Times will introduce a pay model next year that will fail – metering readers use of content and charging for it when they read too much. To put that another way, making your greatest fans pay the most.

Prediction: The New York Times will stop printing and I’ll raise you – they will stop metering readers. This critical misread could cost them the franchise.

3. Advertisers will spend more in new media than traditional when the recession ends.

Is that going to surprise radio, television and print. Traditional media is expecting a big gain when the economy comes back.

Let’s go to the tape – even in this prolonged recession, digital media spending has increased.

Last week Pepsi announced its experimental online campaign that replaced Super Bowl sponsorships last January is back. The Pepsi Fresh Project was considered a social media experiment. Local community causes went to Pepsi online to seek money for their projects and the public voted who should get it.

Pepsi announced it will expand the project to Europe, Latin America and Asia as well as continue in the U.S. and Canada.

What recession?

Media buyers will weep when they see that Pepsi will spend $1.3 million a month for this year’s Refresh project. They have the money to also buy Super Bowl spots but this money is being taken away from traditional media nonetheless.

Pepsi certainly isn’t alone in beefing up its new and social media budgets even in advance of an economic recovery.

Prediction: Traditional media will languish until and unless they get back in the idea business instead of selling spots.

4. Twitter will replace radio and TV for Breaking News

During the Discovery Channel hostage situation, Twitter broke the story beating all traditional news platforms. Social media is a way to get the word out fast.

When USC has a campus emergency, students and faculty receive instant text message updates. Since everyone has a cell phone, there is no need to hope that radio or television will spread the word.

During the San Bruno fires in San Francisco last week, news stations like KGO and KCBS rose to the occasion – after all, free media such as radio can be very beneficial in public emergencies. But all stations should have been responding to this local community disaster.

Here’s what a radio insider from San Francisco wrote:

“I have been part of stations who fielded calls, gave information, suspended music and aired callers and got in our Vans and went to where we could help.

“What I heard, in summation, the 2 top news stations (KGO, KCBS) did a great job even with a smaller staff than they used to have.

“All the FM stations ran tracking as usual or if they had someone live they broke in with ‘Call the Red Cross to help donate money or blood and get the info from our website now here's Rihanna’.

“I'm frustrated because I know what it could be and should be. There was more on Facebook last night. That has become the new "Town Hall" (CNN does a great job of using FB and connecting it with their site. We need to be all over that kind of outlet).

“Think of when there is an earthquake, where is the first place people used to go? radio ;I felt a rumble’, ‘I felt a roll’ now we are on Facebook in 2 seconds. BUT people still want to hear a human voice. If we link those things people will feel intimately connected”.

Prediction: A human voice can be on mobile Internet devices and that’s the new breaking news.

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Hits Without Radio and Radio Without Hits

2010-09-16T00:02:00.000-07:00

By Jerry Del Colliano

In the past week, there have been two examples of what happens when an artist decides to market without radio airplay while another tries to get airplay she believes she deserves based on Billboard progress.

Both are fascinating and revealing and I thought you would enjoy hearing about them.

The Bed Intruder Song.

The story of a crime that happened in "singer" Antoine Dodson’s family.

Dodson did an interview with a Huntsville, AL TV station after an intruder broke into his family’s house and attempted to rape his sister.

The video interview became popular because of Dodson’s dramatic delivery style in which he talked to the audience as well as the person who attempted the rape. Dodson used colorful language and raised the ire of TV viewers who complained to the station. The station defended Dodson and said that censoring him would be worse than his graphic style.

The video went viral in the form of the Bed Intruder Song some have called the one awesome use of Auto-Tune ever. Auto-Tune is software that can make speech sound like singing. The Gregory Brothers turned an angry rant into a pop song that has sold about 100,000 copies on iTunes and is 94 with a bullet on Billboard for the week of September 18.

The YouTube video has been seen over 20 million times before some genius took it off -- I am scratching my head here.

All of this with little to no radio airplay. The subject matter is a deterrent to over-the-air radio but still – this is an example of a song taking off without a record label, promotion teams and radio station airplay. It’s all viral.

Then, there’s the dilemma of singer Arika Kane.

Her fans are really mad that she can’t get any airplay on Sirius XM Heart & Soul channel for “Here With Me”. I don’t believe I’ve ever heard of artists having a public spat with satellite radio over airplay let alone caring.

Kane’s fan club has a page all set aside to petition Sirius XM for their decision. The reason the fan page alleges Sirius XM “banned” the song was – well, you read it:

“Specifically, BJ Stone of "Heart and Soul" has confirmed his personal decision not to play Arika Kane’s records. According to the program director, the reason for the ban against Arika Kane’s record is because he believes that a White artist should not be singing an urban song”.

Sounds a bit sketchy.

Nonetheless what kind of media world are we living in when fans organize to get airplay on satellite radio and unlikely hitmakers like the Gregory Brothers don’t need a record label or radio to promote their record.

It’s the new world of radio and the labels.

In the previous iteration, the labels discovered the stars, oversaw the recording of their material, promoted it to radio and radio played the hell out of it -- for free.

In the new world, the labels can’t afford to take chances signing future music stars so they divert their attention toward suing customers, intimidating college universities and trying to get a new royalty tax imposed on radio.

That is – the labels have taken their eye off the ball.

And radio is failing to respond to the major generational change that indicates that young people crave music discovery as opposed to very short listed hit music stations. They can’t see why an iPod is more attractive to a Gen Y’er than a radio station that plays the same things over and over again every hour and a half.

It’s always worked before.

You may be surprised to know that program directors will go to their graves insisting that the repetition they got away with for decades still works in an age when young people carry their own music collection in their pockets.

This should be a wake-up call for everyone.

Listeners are now disc jockeys and they don’t need radio’s People Meter. They have their own. It's called an iPod.

The long held belief that repetition of a handful of songs will please this growing on-demand audience no longer applies. Yes, repetition of music certainly has its place, but radio must wake up and understand that they are not the only source of new music as they were before the digital age.

Meaning?

They can’t add two or three songs and play the hell out of the rest of them when their audiences have other places to go to seek new music, fresh artists and learn about their favorites.

That used to be the role of radio. We keep talking about the day the music died, but the music hasn’t died. It just keeps getting repeated.

What died is the personalities that live local radio stations offered with music loving djs who gave people of all ages a reason to listen to radio.

The difference between hit radio stations and your iPod is that your iPod has the music you like. You can play it over and over again or not.

Today I have offered you more evidence that digital age consumers are going on without radio and the music industry.

It doesn’t have to be that way. But it will be until some people wake up.

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Howard Stern, Digital Media Pioneer

2010-09-15T00:02:00.001-07:00

Adam Carolla may be able to attract 400,000 podcast downloads and not make money, but Howard Stern can.

Sirius Satellite Radio listeners who have to lumber through the negotiating period running up to every Stern contract expiration are used to the game.

Talk that Stern will not be back.

That he’ll return to terrestrial radio (not likely).

Just do three days a week at Sirius for the same money and on and on.

Howard Stern is one figure who could make it in digital app-dom if he wanted to do it.

But stop!

I have not lost my mind. I’m betting he will be back with Sirius and a deal will be cut and all will be fine. However…

What makes Howard Stern an ideal candidate to marshal his audience and direct them to the digital space is his ability to create unique, compelling and addictive programming unlike other talkers of his ilk.

Stern is too smart to do a radio show online. At least I hope he is.

Stern understands that the best way for him to make the switch is to offer his bits in separate units that can be accessed as needed or wanted on mobile devices. He was born to be on iPads and there will be over 20 million more of them sold by the end of 2011.

Wise enough to smell money from event marketing, merchandising and other non-traditional ways.

Don’t rule out subscriptions. As you know I’m betting that pay is an alternative to free going forward for compelling content. Stern could get paid subscribers for a reasonable rate. If the NFL can get over $400 for its online football package – and it does – Stern can get a dollar or two a month from his loyal fans.

Self-promotion? Who is better?

If he thought he was free to speak and act on Sirius, imagine what the Internet would mean? There could be archives where his entire career of bits can be broken down into segments that can be accessed on-demand.

What’s more, Stern is likely to be the beneficiary of viral marketing. That is, how easy would it be for a happy Stern fan to give a seven-day trial to a friend (over 21) and get them hooked?

Stern may come away with a way to do his Sirius show for a while longer, but he would be wise to get the rights to what he does, chop his past programs up and then do separate material made for mobile listening for his paid subscribers.

Do the math, 400,000 listeners times $1 a month is $400,000. Or almost $5 million from that alone for a year not counting events, merch and so on. But I think he could get more than $1 a month. He could also do commercials, but I am not a big believer in radio commercials as a revenue tool for the digital world.

Howard Stern would also have to make everything he does from now on a video podcast – let the consumer choose whether to listen or watch.

And heavily employ social networking in everything he does and I'm not just talking about Twitter and Facebook.

I can see Stern on an iPad live once a day taking messages and texts from fans in real time and collecting valuable contact information. Then making the content available always and forever to paid subscribers.

This concept will work for anyone.

Just find your market and decide whether you will do free or paid.

If the content is unique, compelling and addictive, then you can consider charging a price that the market can bear.

Digital content delivered as a list of choices not a “show” can work for small audiences or large ones. Coin collectors could appreciate an expert on that topic with all the elements we’ve just described as available to Howard Stern.

Music is problematic until royalty issues can be revisited – that may be a long time. Imagine what you can deliver to people anxious for music discovery. In fact, the labels could be in that business. But they don't have a clue about the digital future. They just keep replacing execs who are just as out of touch as the ones exiting.

Howard Stern is big enough, bad enough and smart enough to pioneer one more thing before he hangs up his headset – paid on-demand digital marketing done right for his legion of fans to support.

This is the new broadcasting that will partner with terrestrial radio. Smart media execs will pursue it.

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iPods, iPads, Kindle and Radio

2010-09-14T00:02:00.001-07:00

When was the last time you bought a radio that wasn’t attached to a car?

Have you ever purchased an HD radio anywhere – not as part of an auto entertainment center that came with your car?

Ever buy an iPod Nano for the FM Tuner?

Own a Kindle and an iPad? I just bought a Kindle because it causes less eye strain when reading at day’s end. That’s two new readers. No new radios.

The other day, one of my readers wrote that his 60-plus year old father has become an avid fan of Pandora. When Pandora founder Tim Westergren talked to one of my USC classes a few short years ago, he surprised a lot of students with the number of older people who loved Pandora.

Things are changing rapidly while the radio and music business remain the same.

Radio fights for more FM chips in mobile devices. Yet few people of any age buy an iPod Nano or other available mobile device to listen to FM radio.

And do you know anyone under 35 who listens to AM radio anywhere at anytime? I’m sure you’ve noticed the rush by some radio operators to get their excellent AM programming on the FM band which means they are now only 15 years behind the consumer.

Maybe you saw the figure recently that indicated Apple will sell an additional 21 million iPads in 2011 – that’s in addition to the many million they have sold since the early part of this year.

What it all means is that radio runs the risk of being excellent on devices that consumers do not buy. And that the radio executive assumption that simply making a new age device a radio is dead wrong.

Station owners can play the People Meter game and shut their remaining jocks up. They can put a watered down morning show on-the-air and try to believe that their listening went up because the format was better. In fact, the listening went up because of the drive-by nature the PPM carriers picking up encoded signals.

My radio buddies who have settled in the Phoenix area dined at the beautiful and sumptuous hamburger joint Zinburger at the Biltmore Fashion Square last week. Lunch started at 12 noon and the last of us left around 4 pm – our usual short radio lunch.

Believe me, we observed that the strange music that was playing over the restaurant’s speakers would have been credited to us for four and a half straight hours had we been wearing a People Meter and had it been a radio station playing encoded music.

We weren’t and it wasn’t.

But how scary – and common – is radio listening picked up by technology that is misleading at best and unusable as sales information at worst.

Some thoughts:

1. I don’t know about you but I’m moving Inside Music Media to an iPad optimized format within weeks because I want to have my work available where 21 million more people will hang out by the end of next year. Radio should do the same. Hell, everyone in the media business should be looking to embrace the iPad.

2. Even though some of radio’s big groups are cranking out pretty unremarkable repeater radio these days to save money, virtually every market still has some real good live and local radio stations left – especially in medium to small sized cities. If cheap broadcasters continue to lag behind on listeners preferences for entertainment and information, they will soon be broadcasting to themselves.

3. It does not follow, in my view, that even if radio stations get their formats streaming on mobile phones, iPods and 21 million new iPads that consumers will use their favorite devices like a radio. That may make sense to us – after all, we love this business and love format radio. But consumers do not see radio where radio sees iPod.

4. Shorter attention spans must absolutely be factored in to what radio stations must consider if they want to follow consumers to their favorite devices. That is, it is fast becoming impossible for young consumers to spend the time to listen to even Pandora, their favorite personalized radio, uninterrupted and for long periods of time. And when Apple allows multi-tasking on their iPod and iPad devices, watch and see how few people have radio playing in the background.

The answer is get into the mobile content business.

Don’t shut down your radio stations especially if they have a brand, some personalities, local involvement and/or a significant following.

In fact, radio is doing the absolute worst thing it could do to listeners who still listen to a radio for radio – they are putting out a pretty bland product.

Additionally, assuming that any listener has to listen to the radio to hear music is living in 1984.

Now music is available everywhere – on all devices.

News, information and live personalities are not.

Ah – you’ve caught me!

You think I am saying play local radio on a stream that can be picked up on mobile devices.

Not quite.

Here’s the secret to the future: make programs full of personality, locality and reality separate and apart from your terrestrial radio stream.

Ignore this advice and don’t be surprised to find nobody is home to listen when your talent, programming and local brand is being aired.

On the other hand, follow the listeners who are left to their devices and you will be launching the Digital Age of Broadcasting.

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The Prognosis on Talk Radio

2010-09-13T00:02:00.001-07:00

Would you believe that to a young person – heck, to a young adult – their talk radio is actually texting, Twitter and Facebook.

Glenn Beck and Rush Limbaugh are not on their radar screens let alone their radios.

All this is no big revelation as most of my readers know. Talk radio has been aging for as long as baby boomers have been aging which is longer than David Crosby’s face.

Talk radio formats deliver older, over 60 listeners like nobody’s business and while there are still advertisers who target older listeners, most advertisers are looking for younger demographics.

A good talk station delivers a higher average of late 40’s or 50 year olds but many do not. Some well done syndicated radio shows attract younger demos but then the old standbys run the numbers up – the age numbers along with the ratings.

Don’t get me wrong.

Talk radio is one of the formats that will be remembered in the Second Golden Age of Radio – post TV. It has a unique place in our history and you would be very wrong if you read anything into what I am saying that detracts from that national treasure.

What I want to address is that the talk audience is beginning its decline – some obvious reasons and some not so obvious ones.

Inside Radio, my former publication doing some great reporting of late, published a story late last week about how the average talk or news/talk station saw a dramatic decline from 4.6 (12+ average quarter hour) in its four final diary surveys to a 4.0 in April-July People Meter ratings – a 13% audience loss. Some 40 stations in 18 markets were in the study.

First, the obvious.

That damn People Meter may be making Dan Mason happy at CBS with his low talk hit radio station franchise, but the drive-by listener is not likely to pick up a talk radio encoded signal in, say, a restaurant.

So if I can argue that music station B-101 in Philadelphia had a dominant audience with under a million listeners when diaries were utilized, then I can certainly point out that well over a million listeners today is the benefit of People Meter technology – again, taking nothing away from that great station.

But there is more.

Older listeners – the kind talk radio still delivers in great numbers --- have nice long attention spans the better to sit through rants, raves, stop sets and promos. It’s all worth it to them to hear their favorite talk show host.

But young demographics have other alternatives.

Don’t underestimate Facebook.

Facebook has for the first time surpassed Google as the online place where Internet users spent most of their time according to a comScore research findings.

In August, online users spent 41.1 million minutes on Facebook, or about 9.9% of the total time spent online compared to 39.8 million minutes (9.6%) for Google and that includes time spent watching YouTube videos and checking Gmail.

Younger listeners have many alternatives and diversions.

They also have shorter attention spans that make today’s talk radio harder for them to digest in their lifestyles.

And there are sociological issues beyond attention spans that count including the nature of Gen Y, for example – civic-oriented by nature and less confrontational than some of the political talk show hosts. In fact, they dislike the very debate and the way it has been conducted on talk radio --- one of its strengths with older listeners.

The Inside Radio coverage included a quote from Journal’s Group Director of Programming Tom Land as saying:

“The PPM has forced us to cover 4-5 topics per hour instead of one,” as Arbitron says the average listening occasion in PPM markets is only ten minutes.

Well, increasing the number of topics may actually help older listeners as well, but there are not 4-5 strong topics an hour which weakens the talk format.

“In focus groups where dial testing is used to measure talk topics, listener interest wanes after about three minutes on a good topic and after about 30 seconds on a poor topic, according to TRN’s Phil Boyce”.

The myth of Gen Y is that they have short attention spans and the reality is that all of us have increasingly short attention spans.

In a nutshell:

Older listeners continue to gravitate to longer radio listening sessions in traditional listening locations guaranteeing an older skewed demographic.

The People Meter does not provide the drive-by listening advantage that hit radio stations get when they are played in public and their encoded signal is picked up by meter wearers who may or may not actually be listening to the station their device is recording.

Attention spans have deteriorated in the general population providing an extra challenge to a format that always did well in attracting long listening periods.

Alternatives – some of them as non-traditional as Facebook, Twitter and texting – satisfies a need to connect and usurps time available for traditional talk programming.

And sociological changes – a large younger generation that sees little appear in political programming, controversy and that while very civic takes a quieter approach.

For these reasons and more, I sadly give talk radio 7 years max before it becomes as endangered as smooth jazz. And more erosion is likely with the aging of the population.

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Pandora Takes On Local Radio

2010-09-10T00:02:00.001-07:00

It’s time that the radio industry took Pandora seriously.

Over 60 million subscribers and counting. Loyal listeners who sound like Apple fanatics when they describe the music service.

While Google is getting ready to offer the iTunes store some competition thanks to its popular Android mobile platform, a handful of streaming music services are quietly rising up and winning popularity.

I mention all of this because once a new service converts a listener from radio to streaming radio, it is harder to get them back.

Richard Harker, one of my favorite radio researchers, made a tantalizing point a number of months ago when he asked if Pandora had more listeners than, say, B-101 in Philadelphia. His argument being that a typical Arbitron PPM shows B-101 with a cume of around 1.6 million and Harker figured that Pandora’s Philadelphia listeners total half of that stations weekly cume.

Pandora sure isn’t killing local radio – yet.

But alternative music services that can be streamed and enjoyed by local listeners get to be a potent competitor. How would you like a radio station to sign on across the street and attract half your estimated weekly cume? Ask Greater Media how hard it is for a local station to do it. They tried to cut into B-101’s audience and were forced to retreat.

Here are some focus points to consider:

1. Pandora – no matter how you choose to do your math – is siphoning off x number of radio listeners to their version of customized radio. And they are doing this in the weakest of situations – little car presence. True, you can rig Pandora to work in a car and autos are on the way that have a dedicated button, but there are costs involved and poor audio in some cases. Still, the vast majority of Pandora listeners cannot hear it where they hear radio – in the car.

2. It’s hard to hear Pandora in your house. Oh, you can listen on your laptop and there are ways to once again rig it so you’ll hear Pandora through the speakers of your stereo, but it’s not seamless.

3. Pandora is running commercials. Either become a paid subscriber and skip the commercials or listen to tasteful short spots. No 8 unit stop sets. Starbucks, Lexus, Budweiser, Chase and AT&T were sponsors who helped the service go commercial. Not a big threat to radio’s ad revenue for sure, but competition that could grow. According to Billboard, “At any given time, there are 500 simultaneous targeted advertising campaigns on Pandora, with 45 of the nation's top 50 advertisers spending money on the site”.

4. Pandora extends advertising to the iPad, iPhone and features video and audio elements that are interactive with users – all without leaving the Pandora app. Pandora does target marketing to gender, age, location, music type, time of day – after all, they know their subscribers by name and their whereabouts.

5. Pandora launched 100 genre channels just in case you get tired of your customized channels and they are very good in my opinion.

6. Pandora influences record sales -- read more here. This is bad news for paid streaming sites that have never really taken off. It is a victory for free music although it’s not free to Pandora which pays huge royalty fees to stay in business.

Pandora founder Tim Westergren signaled his intention to go after national and local radio dollars in a Billboard article.

"Our intention is to build a radio business that looks a lot like the traditional radio business, with a scalable mechanism for selling national and local advertising so we can do everything from big, branded national campaigns to local pizza joint specials. They can be delivered as graphic ads, as audio ads, as video ads. We're pitching big ad agencies who have historically bought broadcast radio and pitching them to shift that money to the Web."

Perhaps you can see why I believe that just as the music industry has no choice but to take a different path if it is to remain viable, the radio industry must adapt as well.

The major owners and influence on the future of broadcasting believe their models are national as well. They do national programming and pipe it to local transmitters and towers. But the local nature of radio has been lost over the past few years of cost cutting.

The large radio operators argue that the RADAR study of total radio users doesn’t lie – that over 225 million radio listeners tune in every week and that number keeps growing. There are many responses to that claim not the least of which is how long can local radio continue to grow when in essence it is only local in name. The effect of drive-by listening resulting from People Meter ratings is another contributing factor that might inflate the listening.

One must conclude that the best thing radio operators can do for themselves in the wake of successful competitors like Pandora, satellite channels in cars and other music services is to do what they cannot and will not do – dig into their local communities, go live, flood the air with local personalities, get involved in civic causes, bring news first by building credibility and –

By pioneering the way to the digital future with whatever consumers crave on their mobile Internet devices.

Local radio is terrestrial radio’s domain until they give that claim up – which they are doing now.

It’s a mistake.

No national competitor can hurt local radio more than operators who let their local franchises get away.

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The Social Networking of NFL Games

2010-09-09T00:02:00.001-07:00

Hey radio, you ought to be doing this.

The NFL Giants and Jets are building a social network around a single event – a football game – that lasts only during the game and that includes only those paying customers who attend.

Interested in getting in on this? I think radio can and should be moving to special event social networking.

When Jets and Giants fans go to East Rutherford, NJ to see their teams play, they will have a second game going on – in their hands, on their iPads and mobile phones. It's fascinating because after paying all that money to buy a ticket to see an NFL game, these fans will have their attention diverted to other media.

You don’t have to look far to see where this is already happening.

Just go to a sporting event – any event, really – no one puts down their cell phones. During the hockey playoffs, every time a player crashed into the glass smashing an opponents face, there was often a fan on the other side of the glass texting. Hey, they’re not going to let two huge hockey players skating right at them at top speed stop them from texting.

The Giants and Jets will offer fans who attend their games a free app for their phones this season so that they will be able to see replays, get stats and view snippets from other NFL games in real-time.

One catch.

The app will only work at the new Meadowlands Stadium and will only work for one game at a time.

A piece in The New York Times previewed what is ahead:

“Over the next few years, stadium officials say, the applications will provide fans with statistics on the speed of players and the ball, and fantasy games that will allow them to pick players and compete against other fans. A real-life game no longer seems to be enough”.

The NFL is dealing with the inevitable which is the best seat in the house at a football game is in your house on an easy chair. The NFL knows if it wants fans to show up, it will have to change and offer more or else they may not continue buying tickets. The NFL is always very smart about these things because the X factor is the next generation which may very well stay home and watch on a mobile device while doing other things at the same time.

The new Meadowlands Stadium has spent, according to the article, $100 million on new technology. They’ve hired a TV exec to oversee game day production for the fans.

For fans who do not have phones (try to find one), 2,200 TVs with 48,000 square feet of screens have been installed around the stadium. Some 500 wireless antennas have been added to handle the demand which is thought to be under 10,000 of the fans. Probably more as it catches on. Other teams will likely follow suit.

NFL attendance was down about 3% last year perhaps recession-related and TV viewership is up.The Jets and Giants are charging license fees for season ticket holders ranging from $1,000-20,000 per seat plus the cost of the tickets which could be $90 to $700 a game.

Cisco and Verizon are providing the technology for the virtual football game experience.

What the NFL is doing is what radio should be doing now. Offering apps for people attending client events that are sponsored by the station and for concerts and other shows.

Where radio once did remotes with vans and air personalities, it may now want to produce a happening using a dedicated app that can only be accessed at the sponsor’s location with lots of useful information changing hands, not the least of which could be winning prizes or getting random buy signals – or what I call, discounts.

In assessing the NFL’s move one thinks of all the technology involved.

But when I look at it, I see all the content that is involved along with promotion, same day production and social networking.

And the opportunities to collect fans’ email, phone numbers, Facebook links and Twitter addresses seamlessly.

That’s what the radio industry does – create content.

I’ve been pushing radio executives into thinking about redefining what radio is. Of course, there is still 24/7 terrestrial broadcasting, but there is also separate content streaming, mobile content, blogging, mobile video and content and social networking.

If you want to be in a growth industry, it is in a sense on the 20-yard line just beginning to move the ball.

I believe this is a game you’ll want to get into.

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RIAA to Radio: $100 million now, $2 billion in 10 Years

2010-09-08T00:02:00.001-07:00

Mitch Bainwol, the Chairman and CEO of the RIAA, is out of touch with the NAB.

NAB CEO and former senator Gordon Smith is assuring the radio industry that if station owners settle their suit with the music industry now instead of fighting to keep radio free of additional royalty taxes, that the radio industry will only have to pay $100 million – only.

That the $100 million would be safely protected in a legislative statute and that the Brooklyn Bridge is also for sale.

However, Bainwol isn’t making it easier for Smith to schmooze his new constituents.

He shot off his mouth to a Nashville audience recently and I quote:

“Ten years from now we will have $2 billion in revenue from [radio] listening.”

To borrow a phrase from Agatha Christie's super sleuth Hercule Poirot, "Please to reread the last line".

Who do you want to believe?

Smith, who is disingenuous at best when he allows the labels to pick your pocket for $100 million a year.

Or Bainwol, who arrogantly and accurately knows exactly what he is talking about.

Recently, I wrote a piece about how Italian radio stations were bamboozled into going for the 1% royalty tax solution. Their initial deal expired with the labels who now want – you guessed it, 2% in new radio taxes.

That was fast!

There are many issues on the table, but the important ones are:

1. Record labels should pay radio for exposing their music for free.

2. In the alternative, radio stations should charge labels to play their music if a tax is imposed by the NAB and RIAA announcing the legal phrase that pays – “Paid for by Universal Music” after every song. When labels get airplay for free, they think the airtime is not worth anything. This will change all of that.

3. Consumers want to test music – that’s what music discovery is all about on the Internet. That’s why music will be free until the labels can price it for what the market will pay. I suggest that number is 5 or 10 cents a song – the cost of a text message – and make money by volume.

4. The NAB needs a radio woman or man as CEO – someone who knows how onerous paying even $100 million a year is to most medium and small operators -- who can’t do as large consolidators can easily do -- absorb the expense as part of more debt. To consolidators, $100 million here or there is nothing – that’s why so many have been bankrupt or in financial hot water.

5. Gordon Smith is a former senator who has more compassion for his dear friend Senator Orin Hatch than he has for the industry he supposedly serves. Hatch, a musician of sort and advocate for the music industry wants a deal and look who is coming to dinner – his new favorite lobby group headed by Smith. (Remember, the beer guy who ran the NAB off course. He preceded Smith. This is not brain surgery. Get a radio person to run the radio lobby).

6. The CRB as bad as it is, is not the bogeyman that the NAB says it is. True, the CRB imposed draconian royalties on streamers. Pandora pays 50 cents of every dollar for music royalty and that’s just not right. But for years the NAB has told its members that hundreds of Congressmen are on the side of local radio operators. Even came up with some cockamamie Local Radio Patriot Act title to win support. Now, were they lying? Did they lose the support of Congress for local radio? Or does Gordon Smith unilaterally (with the help of a small group of NAB board members) decide the future for the radio industry? Either way, Smith should be fired for selling radio out the first full year he was on the job.

7. Be suspicious – very suspicious – as to why the NAB is pushing this thing now when Congress is about to change hands in November arguably electing more representatives who would be more favorable to radio's concerns. Why now just before a critical election that will likely bring more support to radio's long held position that it should not pay this new music tax? I reiterate: can you say Gordon Smith loves Orin Hatch more than he does radio.

8. Piracy is the labels' issue – I’m not feeling sorry for them. Many young performers can’t even have a shot at making it in the music industry the way the labels run things. Piracy to the labels is free promotion to artists. Ask my friend, the credible record industry analysts Steve Meyer who hit it on the head in a recent newsletter: “The only thing that will reverse the downward trend is more albums by more artists that can sell multi-platinum quantities. More Eminems, more Taylor Swifts, more Lady GaGas, more Lady Antebellums, more Susan Boyles, more Justin Biebers, etc. Imagine how much worse album sales would be down if it weren't for those artists and others who sell in big quantities. It's obvious that people still buy a lot of music in big quantities when they find value in buying an album that has more than one or two good songs. It's also obvious they have no problem BUYING hit songs in huge quantities online either. Ask the Black-Eyed Peas who have sold more than six million downloads of "I Got A Feeling (Tonight's Gonna' Be A Good Night)"”.

To word it in a way a politician like Gordon Smith might understand:

“Gordon Smith, wrong about royalties, wrong about the CRB and wrong for radio”.

And in terms the rest of us would understand, there is Rudy’s Dan Devine pumping up his Notre Dame seniors before their last home game:

“Remember no one, and I mean no one, comes into our house and pushes us around."

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New Stupid (and Smart) Radio Tricks

2010-09-07T00:02:00.001-07:00

There are so many smart radio people in this business who know what they are doing and who even help their misguided employers do the best they can.

That’s why every once in a while I have to share with you some things that are real life actions by radio CEOs that show you the gulf between the people who work for them and their bosses.

So thanks to my “repeater reporters” who expose the folly of repeater radio, feast your eyes on this:

• Charging clients who help radio stations

As amazing as it seems, one of my readers told this story:

“Maybe you have written about this, but do you know what stations are charging someone who is giving them a free rock cruise? It's called a vendor fee. They want $750. Is this now a common thing?”

So now radio is like US Airways. Pay the freight for a station promotion and then you get to pay for your bags a second time -- if you know what I mean. The radio version is you pay the freight on the rock cruise and then you kickback a fee to the station you’re helping.

• No owner liked to take a radio station dark – until now

You’ve no doubt heard that Cumulus signed off an AM/FM in Louisville unceremoniously because it was an economic burden. That’s funny. Others were able to run them successfully. Good luck selling them. If the buyer doesn’t ask the question why is Cumulus getting out and trying to overcharge for these properties then they deserve to be saddled in debt of purchasing them?

Today, if a consolidator considers a radio station (or two) an economic drain, they sell them. But they can’t even wait to sell them intact. Must pull the plug and let everyone go. Is that necessary?

As one of my bitter Cumulus employees explained, “you can’t screw up a station that’s turned off”.

• The Miami Heat imitates radio

Lebron James sells seats so the Miami Heat NBA franchise fired 30 people in their sales department as they sold out that quickly. As one of my readers in the market pointed out, “Shortsighted as ad sales and sponsor sales get neglected and Miami fans are fickle.....”.

In radio, consolidators have been thinning the ranks of their sales departments for years now. Then taking away accounts and giving them to managers who get lower commissions. And did I mention sending local accounts to national headquarters to save money?

Mel Karmazin had it right: hire more salespeople to increase sales. But today, consolidators think radio will sell itself. Citadel wizard Farid Suleman wanted to thin his ranks a few years back because he argued that a lot of radio accounts renew automatically and shouldn’t require a commission be paid to the originating salesperson.

• Clear Channel upgrades station security

You may remember that Tucson police were called to keep the peace at the Inauguration Day Massacre at the Clear Channel cluster.

Now, it seems Clear Channel has gone overboard trying to make the facility stronger than Ft. Knox.

Listen for yourself:

“The ‘security upgrades’ were put into place in early to mid-2009. They started with a bulltproof glass enclosure for the receptionist's area, then kevlar around the main entry door from the lobby into the building.

Key card only entry points were added at multiple entrances, doorways and even closets throughout the building, and finally... a 16 camera CCTV system was installed with 2 of the cameras watching the parking lot, 1 watching the lobby, and the rest watching the employees.

Large flat screen TV's are now mounted in the front office and the Chief Engineer's office which display the multi-camera feeds 24/7. You can also log on to the intranet and watch the camera feeds as well.

Talk about overkill for a group of stations that run in automation most of the day. That, and the fact that very few people are even left to work there - roughly half the number that were there just 3 years ago. Empty cubicles abound.

Newer station facilities come with a similar security setup already in place, Tucson was 'catching up' with the others as a preventive measure. I know of other markets in older facilities though that have not gone to these lengths”.

There may be no job security at Clear Channel, but bulletproof glass – they've got plenty of that security.

• Ford has a better HD idea

This fall when the Edge is driven off car dealer lots, it will have HD radio in it as well as iTunes tagging. Apparently Ford is more sold on HD radio than radio CEOs who continue to program their HD channels like they are cable channels at 3 am – with unremarkable garbage.

It’s scary to think that a major radio advertiser is allowed to walk the plank with HD radio when you and I (and almost everyone else including every radio CEO) can save them the embarrassment.

HD is 20 years too late. Will not work. Will never be an asset and I’d be very concerned that a good radio advertiser is about to have a bad experience with radio. In fact, Ford is planning to advertise on HD Alliance stations which are really stations from hell with no audience.

Don’t do this to a major radio advertiser.

Let's end on a "smart" note and (surprise!) it comes from a local broadcaster -- C.J. Jones, Managing Partner of Low Country Radio:

"In February of this year my two partners and I closed on our purchase of WWJN-FM (now WLHH-FM) Ridgeland, South Carolina which covers the Hilton Head Island (market). Arbitron shows the market as #213. The facility also covers much of the Savannah metro but our mission is to super serve the Hilton Head market.

"Our programming is local, no satellite and we program the Greatest Hits of the 60's, 70's and 80's plus local news, a meteorologist and local traffic reports. As the other Hilton Head licensed stations became "corporate" they migrated to cover Savannah and basically abandoned the local market.

"In our 6th month we turned a profit, in August we increased revenue by better than 30% over July and we are going into September with more revenue pre-sold than we entered August with".

And you probably won't be surprised to hear that they are currently getting more involved with the Internet and other forms of digital distribution -- must be one of my readers!

See, who says Lew Dickey has all the brains?

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Where Is Apple’s Music Cloud?

2010-09-03T00:02:00.001-07:00

Steve Jobs made a lot of product introductions this week.

He relaunched Apple TV. Refreshed the Nano line. Launched Ping for iTunes, a social network all about music. He’s on fire.

But the one thing you didn’t hear from the Zenmaster is news about the launch of Apple’s new cloud delivery system for iTunes.

In a recent chat with an Apple store employee, I talked about the cloud and said I can’t wait for Jobs to introduce it. As most of you have frequented the Apple store know, employees cannot discuss what Steve Jobs may or may not do. They’ll cut you right off and move on to another topic.

But this young person told me he would be surprised if Apple came out with the cloud now or anytime soon. I was taken aback until I heard his reasoning. Basically, until WiFi is everywhere seamlessly, launching cloud delivery of music content would have to depend on the inferior AT&T mobile network and therefore it would be a failure.

Let me be clear.

Steve Jobs did not buy Lala and close it down to waste upwards of $75 million. Apple bought Lala to get at its cloud technology. Believe me, the day will come when Steve Jobs will stand up in his jeans and mock turtleneck and announce that the cloud has arrived.

But not now.

Traditional thinking is that the record labels are holding the announcement up because they are unwilling to adjust music license agreements already in place with Apple. I’m not so sure. I am certain that the labels don’t get it, but that doesn't mean Jobs cannot legally launch the cloud under the existing agreements. The cloud will allow iTunes users to access their music and more from anywhere without having to do a time wasting download.

What is fascinating to watch is that Apple can do almost anything – except Apple TV, it seems – and succeed because it has won the faith of consumers who are more tuned in to a Steve Jobs sales pitch than the president of the United States speaking from the Oval Office.

This creates quite a problem for streaming media companies like Last.FM or even wannabe subscription plans like Spotify. Ironically, consumers seem to reject Rhapsody and other paid all-you-can-eat streaming services so why could Apple be the one to pull it off?

Some 160 million iTunes customers who have signed up and frequent the music site are at the ready for anything Apple does. And as I previously mentioned, there is a lot of goodwill between Apple and their customers which makes new product introductions have an air of credibility from the start.

What fascinates me is that Rhapsody and Spotify deliver everything in recorded music to subscribers for a monthly fee but Spotfy hasn’t really launched here and Rhapsody is experiencing declining subscription numbers. Even Rdio, the most recent hopeless case in paid music streaming, has launched to a thud.

That would lead a reasonable person to conclude that in the world of the mobile Internet there is free and nothing else.

That appears to be true. Consumers do not want additional monthly fees to saddle them. Why not free music because it is so easy to steal.

But Apple might do what Rhapsody, Spotify and Rdio have not been able to do – get consumers to pay for access to the cloud.

Yes, Apple starts with 160 million prospects.

And, who wouldn’t like to hear their iTunes library anywhere instantly from the cloud?

True, Apple customers are used to paying a reasonable fee for all services Apple. This would be another service and if priced right could succeed.

While free is easy, using Apple’s paid intuitive interface is easier.

Apple could get consumers to do what they have thus far refused to do for any other streaming subscription service.

There is no competing with a company with that many prospects. If Apple made it cool as well as easy, the chances for success would increase.

Apple is in a very good place.

They are working behind the scenes on a cloud approach to delivering iTunes stored content to consumers, but Apple almost always does not do what it cannot deliver. That would be suicidal.

The coolest rock star of all, Steve Jobs, is really an old time salesman.

He knows that to do repeat business you have to win the confidence of your customers. Solve their problems. Make things right. Make them believe everything you offer is the latest and greatest.

Apple more often that not exceeds its customers expectations because it does not introduce products that are not yet ready for prime time.

Such is the case with the game changing cloud availability of music through Apple’s growing and dominant online music store.

But when the day arrives, Apple's customers will have already said yes a thousand times in their own minds.

It reminds me of the master sales trainer Tom Hopkins who taught that when a prospect asks, “do you have it red?” to not answer right away but to say, “would you like it in red?”. Hopkins goes on and advises that if you get a “yes” on that, don’t just break out the red whatever, but say, “Let me make a note of that”.

Building up desire is part of closing the sale.

When it comes to cloud computing, Steve Jobs is always busily at work building up desire for what surely will be a music revolution.

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Apple Creates 160 Million Matty Singers

2010-09-02T00:02:00.001-07:00

Apple CEO Steve Jobs did it again yesterday when he announced more product and service upgrades for his products.

Radio people are no doubt celebrating the fact that the new Nano will still have an FM chip in them although Touches and Shuffles will continue to have no FM. It may be a moral victory but the Nano/FM has not really increased radio listening.

But focus for a moment on the brilliant move Jobs has made in the area of social networking for music.

Now there is Ping for iTunes.

From day one there are 160 million card-carrying iTunes users available to share music preferences and passions.

Jobs calls it "Facebook and Twitter meets iTunes ... but it's not Facebook, it's not Twitter. It's a social network all about music."

And all about the music is the message.

The record industry has forgotten that and the radio industry has become obsessed with refinancing and cost cutting or else they would be doing it in their own unique, tried and tested way.

So Ping for iTunes, which to this former program director is today's Tuesday new music countdown for music discovery that radio used to do, will make note of and share listener’s musical habits and then pass them along to friends for them to (using an old radio term here) decide whether the music and artists are “hot or not”.

Steve Jobs, not prone to mistakes like Facebook founder Mark Zuckerberg tends to make, will allow Ping for iTunes to be an opt in feature. Exactly what his young audience wants. It will now be easier than ever to spread the word on new artists and songs that listeners have discovered.

In essence, it’s like having 160 million Matty Singers, the fabled and great Philadelphia record promoter whose passion to gain airplay was not limited by anything I could name. And I ought to know, since Matty often camped out in my office with a Ping of his own to share enthusiasm.

This gets better.

Artists get their own pages so it’s just plain easier for a critical mass of iTunes converts to find out more about their favorites. Of course, these artist pages can cross link back to iTunes to sell special remixes or products that might appeal to the consumer.

iTunes listeners will also be able to follow their favorite groups Twitter-style on Ping.

As an article in the LA Times pointed out immediately after the Jobs announcement, CBS’ Last.fm does everything that iTunes Ping is designed to do.

“Last.fm tracks your iTunes playing habits and publishes them on a personalized Web page, and listeners can become fans of one another. But Last.fm has never reached that tipping point of popularity. With Ping, all this information can be tallied in-house”.

Can you even image how Apple will eclipse Billboard and the other old school “charts” for reporting music popularity? Just as Apple has invented and enabled cherry picking of music from albums, Jobs gives more power to the people.

Keep that old historic phrase in mind -- power to the people – exactly what traditional media companies tend not to do. They tend to seek power for themselves.

I can see an iTunes Ping report that show popularity of plays but it will also be able to provide valuable information about how passionate listeners are about their music.

And they are.

New information is out that shows in spite of the popularity of paid apps and mobile games, more than half (56%) of iTunes users say they buy only music (Source: NPD Group study, 3,862 respondents). And while almost all iPhone and iPod Touch users have downloaded a free Apple app, 82% say they have paid for music on iTunes.

Are the labels listening yet?

So the new iTunes Ping will keep track of a lot of information and listeners will be able to see who their friends decide to see in live concerts.

Social networking meets Apple.

There are two issues emerging that deserve serious thought.

One, Pandora and other streaming or personalized music services have and will continue to erode radio stations that opt to drop formats for PPM-friendly hits. These Internet streaming services are very good and in many cases better than the average hit radio station who often have no local reason for existing.

Two, that radio stations had better not waste another minute entering their own specialized social networking area by hiring experts who love and know music in various genres and people who can do what streaming services and iTunes cannot do – entertain the local listener.

Radio will live or die on whether it can get back to its local roots.

So far, the big companies have tightened up and nationalized their radio stations. That is a mistake. These stations cannot compete with Apple or Pandora, but Apple and Pandora (so far) cannot compete with local radio.

If there was a wake up call from our friend Steve Jobs yesterday, it was not to launch a holy jihad for FM chips, it was to warn what will surely happen if radio continues to ignore its own unique social networking abilities utilizing local experts and personalities that local listeners can respect and relate to.

And you can take that to the bank.

Steve Jobs will.

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How Italian Radio Fights Royalty Taxes

2010-09-01T00:02:00.005-07:00

The other day when I was writing about the NAB plan to surrender to the music industry over a radio tax, one of my readers wrote to tell me about what is going on in Italy in a similar situation.

I thought you might be interested.

It might also serve as an example of how the U.S. radio industry can stand up to the RIAA that has suddenly crawled into bed with your very own NAB.

Mark my words, a handful of “elected” NAB board members are going to saddle the radio industry with $100 million in new royalty taxes after employing a fear campaign that is, sadly, being led by Gordon Smith, NAB’s ex-senator and soon to be ex-NAB chief if that royalty tax goes through.

Over the past few months hardly any new music from Italian artists has been played on Italian radio stations.

WHAT?

I know we Italians can be stubborn.

But the principled (now that's a better word for stubborn) Italian stations are shutting the new artists off the airwaves to protest the exorbitant rights fees that the labels are asking radio stations to pay.

Sound familiar?

The tax part -- not the station reaction to the tax.

I am told by a source:

“From what I understand a rights fee has been in place to labels but the agreement ended in'06 and no new agreement could be reached. Here is where it gets interesting: The Italian labels that are subsidiaries of global labels have had their International label counterparts not allow Italian Radio to play any music or to interview international artists, including all of the International artists touring in Italy.

“So when Train was recently in Rome they were told during the interview by the station talent (who is bilingual) that they were not allowed to play their latest single because the label prohibited them in retaliation for their protest to rights fees, so Italy has not heard their new song.

“The Italian label PR guy went berserk that the talent shared the label ban on playing any new international artists. So the band said if you can't play our songs we'll give you the OK to play us singing the song live...Gotta love the labels that are holding artists hostage to radio stations without the artist knowing about it...”

Our NAB is playing with tempest in a teapot with fear mongering that the CRB will come get them and that the industry is wasting its money fighting this futile fight. Wasn’t it the NAB that reassured its members for years that it had everything under control and Congress was on their side?

This is not a retreat. It's a surrender.

So in Italy the entire local radio market has ground to a halt when it comes to breaking new artists while negotiations get nasty between the sides.

Contrast this to Benedict Arnold Smith, a radio outsider at best, asking a “town meeting” last week how long does radio want to spend its money fighting the music industry when it can pay a real low, low price like $100 million to settle?

To Smith apparently all of a sudden fighting against the royalty is no longer cost-efficient. That may work for an ex-senator with no radio background, but owners know better.

Now look closely at the Italian situation where that danged 1% solution that Smith is throwing around has come back to burn radio stations. Once the Italian stations gave in to 1% -- guess what? Now the labels want 2%. Funny about that since the NAB sweeps that possibility under the rug.

Both sides in the Italian dispute had an agreement where the stations paid the same 1% of their revenue that NAB CEO Smith wants you to pay to the collecting society representing labels and recording artists. That deal expired in 2006 and since then the Italians have stepped up the fight and turned off access to their stations.

After all, radio is promoting music acts for free and breaking new ones. Why should radio be taxed beyond the publishing fees they already pay?

In spite of what the NAB says about their new best buddies, the RIAA, that 1% tax is now going to 2% if the labels in Italy get their way.

The Italian stations laid down “a claim” disclosing the record labels to claim no royalties at all on new releases that are sent to stations as promos. The outraged labels then decided to cut off their noses to spite their faces by not putting out any new releases.

I guess the lesson is you never want to get an Italian mad. Read this account of how the radio stations there are fighting for what is right.

EMI calls it all blackmail.

Call it what you like but there are a lot of lessons for American radio stations here.

1. Don’t let the NAB negotiate this deal. Gordon Smith appears to be buddying up to his old senate pals who support additional music taxes. To a man who has never run a radio station his NAB is playing with the house’s money – your house!

2. Radio really does have the upper hand. Don’t play their music and the labels cannot survive. This issue goes away that quickly.

3. Not one – not even one -- radio CEO is standing up in public to challenge the NAB or to lead his or her brethren to resist the screwing they are about to get.

It is so obvious that radio doesn’t deserve this tax.

Doesn’t deserve to be sold out by the NAB and the ex-senator running it.

But it is happening because until this moment no one is willing to lead.

Sound familiar?

That’s how consolidation took root.

So I ask – is there one radio exec out there willing to stand up and fight like the Italians?

One?

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Digital USA Today – No Way

2010-08-31T00:02:00.001-07:00

If everyone knows that the future is digital, then why doesn’t everyone know how to create content for the digital future?

The latest casualty appears to be Gannett’s USA Today where a decision was made last week to cut the work force by 9% on news of declining ad revenues and circulation.

USA Today used to be number one in paid circulation but now News Corp’s The Wall Street Journal has surpassed it with 2.2 million daily readers.

Wait a minute.

Is that the same Wall Street Journal owned by Rupert Murdoch who loves printed newspapers and who is forcing paywalls onto his print operations?

Funny about that.

Whether you agree with Murdoch’s politics or his style, he’s shrewd.

The ultra competitive Murdoch is now trying to rub it in the face of Arthur Sulzberger, Jr., the New York Times publisher who has successfully grown the local New York paper into a position of national prominence. Take note that Murdoch is doing a monthly Wall Street Journal Magazine to compete with The Sunday Times Magazine (at least their advertisers), a local city section to get in Sulzberger’s New York business as Murdoch pontificates about paywalls for the digital world.

My take is that Murdoch is using the paywall to keep subscribers paying for print publications. It’s a strategy not to give away the printed content online. That’s all well and good but Murdoch is not likely to be viable in the future with any of his brands if he cannot sell them to young consumers who don’t even use newspapers to wrap their fish. I don’t think they even eat fish – yet.

Along comes unpopular USA Today Publisher David Hunke who in July ticked his real journalists off when he wrapped the front section covering up the biggest stories in an ad purchased by Jeep.

I love what Neuharth said in The New York Times:

“If such a stupid decision is ever made again, I hope that will be the result. That would leave those who apparently don’t understand what a newspaper is to try to put one out without a news staff.”

So, USA Today is now spinning its failure to create and deliver content to its former audience in numbers that it used to deliver as a call to the digital future.

USA Today says it will now focus on its digital operations and will feature breaking news on its website. Hunke is so clueless, in my opinion, that he actually said that the new online USA Today will aim to post articles of breaking news within 30 minutes of happening.

All together now -- because I’d like to think that my readers know better -- what is wrong with his brag?

Of course, USA Today will be about 29 minutes too late. Twitter is faster for getting the word out. Facebook can do it quickly.

This serves as a great teaching point about why traditional media – not just those klutzes we know and love in music and radio – don’t get it.

Let me spell it out:

1. USA Today was called “The USA in an entirely different way” when it was launched. In color, in sections, inclusive of news from all 50 states, short articles before anyone ever heard of ADD. How does it live up to its mission in its latest digital iteration when any competitor can do the same thing?

2. USA Today was a great paper for under the hotel room door or on the airplane before takeoff. They knew it and developed lots of stories about travel and aviation. Tell me again how covering breaking news online with everyone else in the world will make USA Today be born again? Of course if that's all there is, it will fail.

3. The iPad is the new TV, radio, newspaper, magazine, record store – you get the point. Content must be optimized for the iPad or that content is not likely to find its audience in this growth sector.

4. And, content must be unique, compelling and addictive or else why would anyone need it? I believe in free and also in paid, but if you want readers to pay for digital newspapers, they had better offer something not easily delivered by their competitors. Michael Bloomberg, in my view, gets little credit for how smart he really is. Way back in the day he sold specialized information to business clients that needed his computer terminals. To this day, Bloomberg is a leader in creating great content and delivering it in relevant ways. NPR is another.

Why does this matter?

The digital frontier is not a fallback position for failed traditional media companies.

It encompasses a new set of rules and standards that are separate and apart from traditional media.

For example, and bear with me on this fantasy here …

• Radio will one day be delivered in “shows” ranging from minutes to hours on the delivery system of the day which so far looks like the iPad. They will be heard on-demand. No more morning drive. A listeners “morning drive” will be whenever they want it to be.

• Audio, video and text will be included in every communication so there will really be no radio, TV or newspaper anymore. It will grow into a hybrid.

• Music discovery will be done by consumers who become the new age disc jockeys transferring files to friends and recommending new acts. This isn’t so bad. There will still be a demand to own the music once it has been consumer-tested. However, you can see that record labels do not believe my last sentence.

The only reason all of this hasn’t come to fruition right now is because technology has not caught up (like in seamless WiFi) and royalty rules (as in fair priced licensing to streamers and mobile content providers) so it is acting as a deterrent.

Maybe that’s good because executive management hasn’t caught up or caught on, either which is why you and I have a better chance of succeeding with a new age digital business than the traditional media companies who have access to all the money.

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Radio’s Apple Store Solution

2010-08-30T00:02:00.001-07:00

Every time I go to an Apple store, I spend money.

Don’t even ask.

I always find things to buy there and I am so willing. I'm spending down my Apple stock profits.

But I also observe a culture and an approach that is so fascinating that I got to wondering what would happen if the troubled radio industry would look up and learn.

Okay, I was actually not in the Apple store Saturday, but Sunday as well and I don’t know why I am amazed but the place was crowded both days. I mean these are the dog days of summer in Arizona and it is over 100 and, yes, very humid. Monsoon season when smart locals try to take a vacation if they can.

Still the place was packed both days with demographics we in the media business can really appreciate. Young, very young, middle age and old. All there getting involved with Apple products.

On this trip something registered that I would like to share with you. Not just the Apple store as a great and prosperous retail operation – it surely is that – but also as an approach to people, customers and the company.

While I was at the Genius Bar, a young man walked out from the back of the store in North Scottsdale. It looked like he was going home, but no, he was in fact leaving for good to go back to school.

Spontaneously, his fellow associates broke into an enthusiastic and loud round of applause led by store managers as well. The applause was so sustained, I don’t think you or I have experienced such clapping even after making a freebie personal appearance for our radio station employers.

Then, the customers joined in and clapped. It was too noisy to even talk to my Genius, but the real genius was the Apple leader who understood how feeling appreciated is the best motivator for employees.

Not money which costs companies money, but appreciation which is free.

I thought of radio employees who have lost their jobs during consolidation over the trumped up excuse that their employers could no longer afford them. And of those poor Cumulus employees who write to me privately even under threat of execution by the Dickey family that they hate their company and can’t wait to leave.

Not so at Apple.

Employees love to work there perhaps in part because they get a heavy dose of appreciation as an on-the-job benefit. I am not naïve about all of this. I am sure there are unhappy Apple employees out there, but they are harder to find than unhappy radio people.

The young man who helped me Sunday was interested to learn of my relationship to the radio industry and proudly whipped out his iPhone to show me an iHeartRadio app. I was very impressed.

He loves JohnJay and Rich at 104.7. Couldn’t identify the call letters but then again no foul, he didn’t have a People Meter on either. I learned that he only listened in the car and didn’t care for the station the rest of the day. What this young man wanted was what radio can’t seem to get rid of fast enough – personalities.

He tuned in for the personalities that radio is firing.

Would he be surprised to learn that his favorite Phoenix-based morning show was syndicated elsewhere putting other local personalities on the unemployment line? I didn't have the heart to tell him.

When he flipped through iHeartRadio for me this nice young man said he likes to listen on-demand which he reminded me he can do. But without JohnJay and Rich, he’s pretty much out of listening to radio unless he had to.

An Apple employee knows better than anyone that as long as WiFi is not consistently available while he is in the car and while mobile carriers charge or threaten to charge more for using the inferior 3G, he can still be a radio listener.

Unfortunately, if and when he can get an Internet signal consistently without additional cost, he’d probably leave his favorite radio personalities unless they follow him. And he is through with 24/7 broadcasting – like his generation, he wants on-demand.

It reinforced my belief that morning drive is whenever consumers want it to be and radio companies are killing themselves by letting personalities go. In fact, they should be hiring more for that day when seamless Internet follows this on-demand generation around.

This Apple employee told me that he can spend an hour and a half with me because his job is to show customers what Apple has to offer – not to close sales. It is a different mindset. In fact, I wondered why we don’t go back to that in radio – showing solutions (online, on-air, on the phone, in social networks) and become experts at showing, well – solutions.

Too many radio sales groups are beating the phones to sell spots and not solutions and believing the economy will return and so will radio budgets. That may be partially true, but when those budgets increase the new media components will increase with them.

One last thing.

He loves Steve Jobs – that flawed, quirky icon who runs Apple like a personal fiefdom. Respect for the company – for the management and its policies – that’s what he and others at the Apple Store have.

They don’t begrudge Jobs for being worth billions – and growing – every day but in radio we get sick to our stomachs when radio CEO's make huge paychecks.

Perhaps its an issue of competence or lack of it.

Or maybe that Steve Jobs has inculcated in Apple the belief that he cares to take a lead in designing new products, having them well represented to customers and institutionalizes the value of respect and appreciation to those employees who do not earn billions.

Could radio learn from this?

Visit the Apple Store and you’ll lament the missing element in today’s consolidated radio – that is exactly how great radio companies operated before the “enlightened” era of consolidation.

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6 New Mobile and Digital Trends

2010-08-27T00:02:00.002-07:00

Have you heard about what Sears is doing?

Sears Auto Center is conducting a marketing campaign online for drivers all across the nation this summer.

Their mission: Take $1,500 for gas, food and lodging and make a video introduction of yourself with those going along with you then Tweet, blog, report to Facebook and video your adventure.

Some think Sears has pulled off a TV reality series without TV for the new age for pennies on the dollar.

Sears Auto signs have to adorn participating cars and they will use social media as content along with pre-recorded video introductions.

“Exploring My America” consists of 21 teams on week long trips to places like the Appalachian Trail, the Dixie Overland Highway and Route 66 from Chicago to LA. Each car (sorry, winners have to use their own) gets a $500 tune-up at Sears Auto Center and gets equipped with a video camera and WiFi card to help the images keep flowing at exporingmyamerica.com.

Sears reportedly received 100 video auditions by the beginning of July. Online viewers do the voting. Each week from July 11 through August 28, viewers are voting for their favorite team after watching online photos, videos and reading blog entries created on the road. The winning team gets $500.

Earlier in the year Pepsi bailed on the Super Bowl and did a community activism promotion where local do-good groups could receive some of the millions they were offering. Again, online voters determine who gets the money for their community campaigns.

Increasingly, advertisers are going on their own to use the Internet as an alternative to traditional media.

Radio could be and should be doing these promotions which sound very much like radio promotions from another day. Radio got lost in its own robo world when it relied on ticket giveaways and texting contests. It may be time for a rebirth of local radio promotions that may (or may not) reside on the station’s airwaves.

There is an audience out there that is worth harnessing and radio people have the talent to find it. Note the sports teams that are starting to treat their venues as social networking opportunities by tying them together during the game.

Broadcasters feel comfortable broadcasting 24 hours a day, seven days a week and letting the audience catch them.

It’s obvious that content providers are going to now have to catch consumers where they live and work in other ways.

Five other interesting trends to keep an eye on:

1. Now people over 65 are adopting Facebook at a faster pace than any other age group – 6.5 million in May alone and more than three times from a year earlier according to comScore. Young demographics were indeed the earlier adopters.

2. Americans have increased their time on social networking sites by 43 percent, while their use of email has declined by 28 percent according to Nielsen. Some 40 percent of American’s on-line time is spent on social networks (22.7%), online games (10.2%), and e-mail (8.3%). These categories increased from 37% a year earlier.

3. An analyst for Simba Information says Americans use e-books at a rate much slower than it thinks. But there will be an estimated ten million e-readers out there by the end of the year up from only four million a year ago. Reading books electronically could be ready to take off but don’t count the Kindle out. Apple’s iPad has eye fatigue issues (not good for serious readers). There is also distraction from mail, the Internet, video and other things with the iPad that further complicate the segment. Color Kindles are on the horizon.

4. Streaming music subscription services continue to be rolled out even though no one service has caught fire. The latest is Rdio, a social music service that offers an unlimited streaming of seven million songs to computers and smart phones for $9.99 per month. Consumers can purchase tracks for 99 cents. This product and others such as Rhapsody seem built more for the record labels than a consumer. The labels insist on doing subscriptions their way which is why it will take Apple to stream your iTunes library from the cloud to make subscriptions work.

5. Android has become the number two smart phone behind iPhone (now 34% of the market). Blackberry slipped to third place within the past few weeks and RIM’s new iPhone-acting Blackberry isn’t selling all that well. It looks like a race between Apple and Google on this category. Global shipments of mobile phones running Google’s Android system grew 886% in the second quarter from a year ago (source: Canalys) and Apple is continuing to sell iPhones as fast as they can make them. Canalys analyst Pete Cunningham says, "By 2013, smartphones will grow to represent over 27 percent of shipments worldwide, with the proportion in some developed markets in Western Europe surpassing 60 percent and 48 percent in North America."

The first ten years of this new century were devoted to the Internet.

The next ten will be about the mobile Internet.

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Digital Overload

2010-08-26T00:02:00.001-07:00

A recent article in The New York Times was a fascinating study of what happened when a group of scientists took off for the Grand Canyon without their mobile devices for an analog vacation.

Cell phones did not work. There was no Internet access. This trip was an unscientific beginning to what I believe is going to be required research in the future on how heavy use of digital devices and other technology affects our brains.

There were five scientists in the group – some believers and some skeptics, as the article pointed out.

What they were searching for is the answer to the question, does heavy technology use inhibit deep thought and cause anxiety? Can getting away from being connected – such as camping out in the Grand Canyon – help?

There is no doubt in my mind observing young students at USC that depriving them of mobile connectivity causes extreme anxiety. Young people often sleep with their phones, waking up to respond to text messages at times and then returning to sleep even if that sleep is of poor quality.

Students are smart. At the peak of their learning ability. Yet many are tired and as students in bygone eras did, turn to caffeine to stay awake.

Study of the impact of heavy digital use on the brain is the focus of the National Institutes of Health which now has a division to support studies of the parts of the brain involved with focus.

Broadcasters, mobile streamers, content producers and musicians will surely have an interest in their findings.

All of us from the content providers to the end users are experiencing increasing anxiety from digital overload. How simple and perhaps therapeutic it was to only have a radio to listen to on the way to school or work. Now, we text while driving, get the traffic and weather from our phones, check email and other things while making the same commute.

In the 60’s, a listener might curl up with a radio and listen to Jean Shepherd on WOR from 11:15 p.m. until midnight with no other distractions. Now, 45-minutes is a long time to commit to any kind of content.

We cannot begin to understand the most important thing of all unless we study the consumer - how is the end user able to receive that which we create?

Back to the Grand Canyon.

These five scientists experienced a form of withdrawal that ended on the third day. They called it "Third Day Syndrome". I recently experienced some of this myself on vacation at the beach. Those first few days were brutal. I sat there looking at the ocean doing everything I usually do at a desk with digital devices nearby. What a waste of a view.

Here are some observations from the Grand Canyon digital experiment:

1. At least one scientist arrived at the conclusion that he may be turning to his cell phone in moments of boredom. You and I may experience the same thing. I am wearing out my pockets pulling my iPhone out and pushing it back in. Am I bored? Students told me they liked to hold their cell phones in their hands. Made them feel better – more connected as they could glance down for messages and respond in kind.

2. Sometimes the cell phone was used so the user could be anti-social. That’s interesting as mobile devices allow us to be connected by Facebook and Twitter to other "friends" who are not in our company. Could we be shortchanging those around us?

3. It was observed that clear thoughts were the benefit of getting away to enjoy nature without the use of digital devices.

4. One scientist said he could now understand why teenagers decided to text while driving even putting themselves and others in danger.

5. Maybe digital stimulation leads to poor-decision making. Ever since I have owned my iPad and used it to read books at night, I have been getting lousy sleep. I Googled the phenomenon to find that others are having the same problem. Turns out the light emitted from the brilliant iPad screen even at the lowest settings disrupts sleep patterns. I went cold turkey for two weeks with better results. Now I ordered a Kindle for late night reading as much as I like the iPad better. Kindle digital “paper” does not produce the overstimulation of the iPad.

6. Most wanted to eliminate the digital overload to the point of seeing an improvement but not necessarily beyond. This may be the most interesting side effect of all. I, too, want as much digital stimulation in my life without getting brain weary, sleep deprived, rude to others or distracted.

In the end, consumers will have to learn to manage their digital lives better than they do now.

This adds an extra dilemma for content providers who are still new to the game.

But it also presents great opportunities.

The next Jean Shepherd could tuck you in with a 20-minute monologue developed for nighttime digital use whenever your "nighttime" is.

Radio will be used the way toothpaste is now used.

Squeeze your favorite morning personality out of your mobile device and use it on-demand in your “own” morning drive. Hopefully, you won't also spit it out like toothpaste.

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The FM Chip Is On the NAB’s Shoulder

2010-08-25T00:02:00.001-07:00

Emmis CEO Jeff Smulyan is a great guy. Good to his people and very smart. And a USC Trojan – what more can you say?

But he is dead wrong on the issue of mandatory FM chips in mobile devices.

The NAB is pandering to Smulyan to win his support for their imminent sellout to the music industry which I call the NAB Radio Tax.

Smuylan believes FM belongs on billions of mobile phones. It wouldn’t cost phone manufacturers much to include an FM chip on cell phones but they are not rushing to do so.

They know better.

Consumers don’t want their phone to be an FM receiver. Radio does.

Just look around. There are cell phones with FM chips out there already in lesser numbers and they are not being used as radios. Consumers – if we would only observe them – use their cell phones for other things.

Cell phones are not a modern day Walkman in spite of what Jeff Smulyan thinks.

That’s the problem with radio CEOs today. I am sorry they paid all that money for those towers and transmitters but the world has changed since.

Richard Harker, one of the best radio researchers for years, wrote a blog recently warning the radio industry to be careful what it wished for.

Harker citing Nielsen research, tells us that good old fashioned email still takes up almost a half hour of every consumer’s mobile hour. Compare listening to music at less than two minutes an hour and you can see where Richard is headed here. He calls for an end to robo programming, voice-tracked nonsense and unremarkable content.

I believe that the radio industry will have some big decisions to make in the next few years.

Radio executives will have to decide whether to get into the mobile content business in a meaningful way or hang on to a technology that is rapidly falling out of favor. The radio industry hastened its own demise by cutting personalities, moving away from live and local programming and serving their communities. An entire generation (Gen Y) grew up without radio as a key element in their lives.

This brings me back to the FM chip.

What do AM broadcasters think about this FM chip? Are they not broadcasters, too? And HD proponents who missed the boat a long time ago argue why not HD?

Smulyan and the NAB are making a mess out of what really is going on which is the sellout of radio to music industry interests in return for $100 million more in royalties. The NAB spin machine is cranking out talking points in consumer as well as trade publications. And CEO Gordon Smith, the ex-senator, has taken to lecturing you on how much more money do you want to spend on fighting with the music industry. The fix is on.

The NAB includes empty promises like FM chips to sweeten the deal which they intend to make with the RIAA. They will do this without widespread support as most radio station executives are against the NAB’s aggressive position to cut a deal even before the upcoming election that will likely change Congress to be more in favor of preserving radio’s immunity from such a tax burden.

The NAB uses scare tactics like – how would you like to have to negotiate a deal with the evil CRB like streamers had to do. The CRB is a bad idea, no doubt about it, but no radio tax is likely and what’s the rush?

Radio’s FM chip problem is that it is all a fantasy.

Sounds great to think of billions of cell phones as radios, but it will never happen. The major consumer products and mobile industry is against it and they have real lobby groups not what the NAB has turned into -- impotent.

$100 million in annual increased taxes for stations sounds like nothing the way the NAB is throwing your money around.

Except for one thing.

Consumers have and will continue to reject a mobile phone as a radio and $100 million a year is just the starting point. It, like other taxes, will go up and never down.

In other words, you are about to be had once again by your National Association of Broadcasters, the people who were instrumental in tacking on radio deregulation to the Telecommunications Act of 1996 with little warning to most radio operators.

Maybe it’s time to put a person who has actually worked in a radio station as head of the NAB. The last guy was from the beer industry and Gordon Smith is a former senator. Both pretty unimpressive at exactly the wrong time.

Tying FM chips and other perceived “benefits” to an onerous tax of $100 million more radio dollars (for starters) is misguided.

I’ve got an idea for you straight from one of my readers.

He said, if the NAB turns Benedict Arnold on its own constituents one more time and signs off on a music royalty tax of any kind, the NAB members (about 50% of all radio stations) should take 100% of their annual NAB dues and apply it to paying the NAB Tax and pull out.

Then stay home and take a pass on the NAB events and conventions, and put the travel savings, hotel and food costs that they were going to spend with the NAB toward the NAB Tax.

I'll bet the NAB would think twice if their Radio Tax effectively put them out of business instead of you!

I’ll make it one better.

Start doing it now and send a message to the NAB – no added music royalty tax now or ever! If you live up to the boasts you made for the past few years that Congress was on radio's side then maybe consider rejoining them as a member later.

After all, that’s why you have a trade association – to lobby on your behalf.

If the NAB were half as competent as other lobbies, say the NRA, they would be working night and day to scare the living hell out of local politicians who dare not vote against a local broadcaster if they want to be reelected.

The FM chip is on the NAB’s shoulder.

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Lessons From My Digital Vacation

2010-08-24T00:02:00.001-07:00

Every year I return to the New Jersey beaches where I vacationed since childhood to contemplate the year ahead, set priorities and observe how consumers use media in a changing world.

After my years of being a professor at the University of Southern California I have changed a lot of my views and beliefs about the music and media business. As you know I write about it in this space, but thought that you might like to see my thoughts on challenges and opportunities ahead.

Here are a few observations:

1. Only ten years ago you couldn’t go to a beach without hearing boom boxes everywhere with the local radio station blaring. These local stations had a stronger signal than many of the more distant larger stations and they made their money (especially in New Jersey) in a three-month period of time. Thus, lots of commercials – stops and starts – and local content. For the fourth year in a row I did not spot one boom box on the busy beaches I attended. Instead, lots of iPods and almost everyone (no matter what age) had a cell phone that was in clear view.

2. The debate on the FM chip for mobile devices is troubling because as I have been saying, young consumers do not use their mobile devices as radios. This could be a chicken and egg thing. What comes first – the listeners if radio gets live and local or do listeners have to have FM capable mobile devices to bring radio to their cell phones?

3. Kindles and iPads populated the beach. My wife brought her iPad but I did not. The iPad is fantastic in normal light and not so easy to see in bright sunlight. Kindles are easier to read in the sun. Older people seem to have Kindles. Younger folks iPads. Kids will use anything to play games. But I saw one family playing Scrabble on a beach blanket the old fashioned way and they seemed to be enjoying each other.

4. I had to mail a postcard and asked a young store clerk where the nearest mailbox was. He looked at me as if I had two heads. Now I understand why. It took me another day to find a mailbox on the 18-mile Long Beach Island. Okay, it was the first postcard I have sent in probably three or four years, but still, if you can’t readily find a mailbox in a resort, snail mail is over for the next generation.

5. Just a few years ago you had to get to the local WaWa (our convenience stores) early to get a printed New York Times. No more. They’ve got plenty of newspapers no one is buying including the Sunday Times. I love newspapers. Took journalism as part of my communications school education. But they are dead on arrival. KYW Newsradio's website (CBS) or Philly.com (Philadelphia Inquirer) kept me up on local news.

One day I tried to go cold turkey and not bring my iPhone to the beach. I hovered around it and plugged and unplugged it trying to make the final decision. Then I detached and left it in the charger. I was miserable. I understand fully why we are addicted to mobile devices for better or worse and I will share some thoughts with you on digital overload shortly.

My students and young people in general cannot be without their phones but I submit that older people are getting to be the same way.

Texting while driving?

Absolutely. Everyone does it. This is not a young person’s guilty pleasure anymore although I observed many shore vacationers on bikes texting while peddling. The government says texting while driving is more dangerous – more dangerous – than drinking and driving yet more people text than drive drunk (I think. I hope).

So, the world continues to evolve and observing consumers as they embrace new media can be fruitful.

Let’s be specific.

1. If I am a radio station, I’ve got to do better. Must be live and local. Do not need to stream my station but do need to be in the mobile content business. I expect to have to say this until I have no voice left because broadcasters are sitting right there looking at these assets they bought that provide what consumers are using less and less – 24/7 programming.

2. If I am a news organization, I’m going to invest heavily in mobile news content. This is the successor to newspapers. You might argue that there will always be newspapers. I have come to accept that newspapers – even online – are not a growth business. News content presented to groups of like-minded people (say local) will eclipse general delivery. That is the perfect marriage of social networking and mobile content.

3. If I am a new recording artist, I am watching consumers wander onto planes, into restaurants, down the street with their ear buds implanted in their ears. I want to be on their mobile devices. It is no longer a requirement to hammer a radio station until I get airplay. It is more important to find your fans in the mobile space. Record labels have let you down. Time to take control of your music and deliver it yourself to consumers.

Steve Jobs is the ultimate observer of media use by consumers. He leads them by following their sociology. The content creators need to do a better job studying how drastically their listeners and users have changed.

This leads me to conclude that there are no vacations from mobile media.

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Fa-GREED!

2010-08-23T00:02:00.001-07:00

Late last week my old buddy Jim Carnegie broke the story that Citadel CEO For Life Farid “Fagreed” Suleman accepted with humility a $43.5 million stock grant from the puppets he calls directors.

It’s all right out there with nary a blush for all to see in the Citadel 2010 Equity Incentive Plan which rewards company managers.

Suleman gets 1,901,042 restricted shares, half of which vest on June 3, 2011 and the other half on June 3, 2012. If you’ve got your calculator out – and he does – multiply $22.875 per share which was the price of Citadel stock when the grant plan was filed recently.

Suleman’s radio “wife” Judy Ellis gets $2.288 million on the same two-year vesting plan and CFO Randy Taylor and VP/General Counsel Jacquelyn Orr (both get 80,000 shares) and Sr. Finance VP Patricia Stratford gets 56,250 shares.

Fagreed also saw to it that his new board was well taken care of with Jonathan Mandel, Paul Saleh, Gregory Mrva and Doreen Wright receiving about $1 million each on the same basis.

One thing is true about Farid Suleman.

He takes care of his own self.

Maybe two things.

He is shameless.

Citadel has been laying people off for years along with other consolidators. They have all been crying about the economy. Then, this pretender to the throne gets the people who put him into his job basically kicked out (Teddy Forstmann). And he files for bankruptcy in a pre-arranged filing that was rubber stamped by a court.

That wipes out the debt from a company he clearly could not run and puts it in the hands of the creditors who apparently don't care – and get this – are so happy to have him running their company they give him a sweet deal to continue with great salary, benefits and complete with golden parachutes at the ready.

A few years ago I nicknamed Suleman "Fagreed" because he has proven again and again that he is taking care of good old number one first. This one-time second banana to Mel Karmazin may not be able to run a radio group, but he sure can earn a salary for doing it.

Over the years I’ve criticized the likes of Suleman, Lew Dickey (Cumulus), Clear Channel (Mays, Hogan et al.) and the other fat cats for not really caring about radio.

There is an underlying group of pretenders such as Radio One And Done who can’t run a company either but these folks aren’t as shrewd as the big dogs apparently. Radio One is frantically looking to refinance the debt it couldn’t afford and other consolidators who have not already gone bankrupt have no choice but to throw themselves on the mercy of, well -- the bankers without whose permission this could not have happened.

This is not going down well with the rank and file.

One said, “the inmates are running the asylum”.

I’m hearing Suleman is moving the company headquarters to Miami to save taxes. Never underestimate the power of a bean counter.

In today’s radio, these stories never seem to stop.

Dickey has more schemes than Carter has liver pills to turn his media empire into a personal monopoly game. His mean spirited management does not sit well with many of his own employees. Cumulus has a class action lawsuit against it and requires questionable non-competes from employees who have no choice but to sign in a bad economy not to mention a few personnel issues.

What is odious is what happened to a great business that was fortunate to have fine people working in it.

The mentality that thinks of only the guy at the top and not the employees who make the company work is sheer greed – like in Fagreed (but not limited to him).

In today’s radio industry, repeater radio, voice tracking and demoralized sales staffs are top priorities.

The radio industry as run by investment banks has less to do with how profitable they are than the value of their real estate. It’s like a Monopoly game where Park Place might allow you to build five radio stations on it because one day some sucker is going to come along and land on it with money to make the owner yet another profit.

But there is a big difference between the board game and today’s “game” of radio.

In radio, the assets have to be worth something – presumably more than the buyers paid. When they let key people get away and pawn off unremarkable national programming instead of live and local radio, their franchise value goes down (or as we say in Monopoly, the price you pay for their hotels and houses are worth less like, say, Baltic).

No mobile or Internet strategy.

Isn’t that amazing?

It’s as if this investment bank game of radio operates in a void skipping the Internet, social networking and generational media.

Some Citadel managers have been forced to fire others, cut their salaries, take away health benefits, uproot families, heap stress on marriages in an impossible attempt to help their bosses avoid bankruptcy.

You see, we had it all wrong in the first place.

Citadel was not bankrupt.

Its leader was morally bankrupt.

The handful of greedies that have hijacked the radio industry should be viewed with shame, not as conquering heroes.

Thank goodness there are small and medium market radio owners who still care about the industry and their people. But when major owners act out of greed in a time of economic uncertainty, it’s a long road back thanks to the black eye they have heaped on terrestrial radio.

In the meantime, we'll have to wait another month for Michael Douglas to reprise his role as Gordon Gekko in Wall Street 2 to help us understand the close relationship between fantasy and reality.

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The Cumulus Path to Peak Strategy

2010-08-20T00:02:00.001-07:00

It’s hard to figure Lew Dickey out.

He’s a very bright guy who, in my opinion, over the years has gotten hard headed when it comes to adapting to new ideas and trusting radio professionals who are qualified, working and on the ground.

Take Lew’s Path to Peak strategy (as he calls it).

Employees will tell you that this is the thing he and his minions are trying to beat into the heads of his managers. It’s Lew's brainchild but Gary Lewis and Gary Pizzati, his loyal partners, are on board.

You create a path back to a station’s peak years looking to return to the revenue that existed previously.

That’s a good thought except that we have had a recession, hundreds of managers and sales execs have been fired and new media has taken off not just with youth (who companies like Cumulus have by and large ignored) but with older demographics as well.

Here’s how a person familiar with Path to Peak describes the game plan:

“Send out to all the markets the amount of 'capture and hold' new revenue they must acquire every month to get them back to peak billing within 24 months. That's on top of your current budget. It's really quite marvelous math work, that makes it look so easy. If you would just capture and hold (the hold being the most important) an extra $5,000 a month, you would be back to your peak in 24 months”.

Simple enough except there is no new investment in on-air product or for that matter retention of personalities popular with local advertisers.

Nor is revenue from new digital media a potential contributor because Cumulus, like other major radio groups, does not budget even 3% of its total operating budget to new media.

Path to Peak appears to be built on the simplicity of getting salespeople on the streets and talking to their advertisers. As incredible as this may seem to other groups that would never talk to advertisers in such a demeaning way, Cumulus allegedly wants a face-to-face conversation to take place where the salesperson explains to the struggling local business that Cumulus has been carrying THEM for the last two years.

Here's how an insider explains the directive:

“We've made price concessions and lowered our rates to be accommodating to their needs in the tough economy, so they should appreciate that fact and gladly pay more going forward. But John (Dickey), my ratings are down less than half of what they were back then. Doesn't matter, it's about rates and more "coverage" (people) in the market”.

So you can’t argue with the sentiment, let’s get back to our peak earning years before the recession, but what is apparently not going down well with some Cumulus people is that the company has created the very impediments to increasing the billing over the new few years.

I am told:

“All Cumulus employees are required to sign an "exclusive employer" agreement. Meaning while you're working for the Cumulus empire you will not work for anyone else”.

Asking employees who feel they are working for a mean-spirited company to sign a non-compete is a tough task even when these very employees presumably need a job. Even that is changing. Saga is hiring excellent Cumulus people away as Cox has done. Many disgruntled Cumulus employees tell me that getting out is on their “A” list this year.

Bonneville, the antithesis of Cumulus in employee relations wins enthusiastic cooperation on all corporate edicts. Plainly put, Bonneville employees trust their employers.

In addition to the human relations tough stuff at Cumulus, the seemingly unfair compensation standards that the Dickeys apply to themselves that their employees do not enjoy sticks in their craws.

For example, on the top of page 16 of the Cumulus 10-Q this little -- discussed gem:

" In March 2010, the Compensation Committee of the Board of Directors reviewed the three-year performance criteria established in March 2007 for the 160,000 performance-based shares of restricted stock awarded to Mr. L. Dickey on March 1, 2007. The vesting conditions for those restricted shares required that the Company achieve specified financial performance targets for the three-year period ending December 31, 2009.

"The specified threshold was not achieved, however, the Compensation Committee determined that in light of the unprecedented adverse developments in the economy in general, and the radio industry in particular, it would be appropriate to modify the performance requirements and extend the vesting period so that Mr. L. Dickey would retain the ability to achieve vesting on those shares of restricted stock if the revised performance criteria is achieved.

"Effective as of March 1, 2010, the terms of Mr. L. Dickey’s 2007 performance-based restricted stock award of 160,000 shares were amended to provide that those shares would vest in full on March 31, 2013 if the Company achieves specified financial performance targets for the three year period ending December 31, 2012”.

It goes on and on but you get the idea.

Some Cumulus employees feel that “Market Mangers, sales managers, and local staff's are terminated for not hitting their numbers. But when Lew misses his goal, the compensation committee determines that in light of the unprecedented adverse developments in the economy, it wasn't Lew's fault and he should be given the bonus anyway.”

Family fiefdoms are not new to radio, but when a few relatives get investment bank financing anything is possible.

Except winning the cooperation of your management and sales staff when you so badly need it.

The lesson:

No matter how smart you are or think you are, without the enthusiastic support of your people you eventually will be at their mercy.

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Music Second, Pay First

2010-08-19T00:02:00.001-07:00

Sooner rather than later, terrestrial radio stations will be paying what I call the NAB Tax – that special new fee for being allowed to help record labels expose their music for free while they make all the money.

We can cry about it if we want, but a royalty tax is coming to a radio station near you thanks to NAB.

Big consolidators can absorb the cost and write it off as debt, but mid-to-smaller operators are going to feel it on their bottom lines – certainly 5-10% erosion of profits in some cases.

As irked as radio people get when the labels come after them for fees, they also roll over and play dead when it comes to getting tough on airplay.

I can’t imagine that radio stations will want to sit still for this botched initiative by the NAB and then go passively into the night exposing the record labels’ best product while being charged an additional tax for it.

Auto dealers make a profit when they sell cars. Retail clothing outlets earn a profit for that which they showcase, sell and in some cases even advertise.

Only in radio, will this raw deal exist. You help the labels make money and get to pay for it.

Well, I’m about to be sick (again). In the past I have hammered away at giving the labels a taste of their own medicine. Perhaps now, we’ll be committed to fighting fire with fire.

The Del Colliano Plan should be inspired by the name MusicFirst which is the group leading the very successful negotiating fight for the record labels.

So let’s call our radio plan, “Music Second, Pay First” – kind of catchy, don’t you think? Maybe we can make it hit home to our friends in the music business. Now that we have a name, let’s see if we can come up with a basis for our strategy. Feel free to add to this on our Facebook discussion today.

1. Radio will gladly play the necessary big hits for record labels at no cost to them. We choose which songs these will be and we’ll dump them after they hit peak popularity.

2. Young people are not as nostalgic for “recurrents”or “oldies” so once a hit is done, it will be as if it never existed (for the purpose of selling the labels’ catalog, that is). May I show you a rate card for additional airplay?

3. Radio stations will play no licensed new music the day that a terrestrial radio tax is actually imposed without receiving payment for the plays. Let’s see now. In streaming, the labels charge per listener per performance. I like that. Let’s do that. And let’s charge an extra fee for mentioning the name of the artist. Okay. Okay. I’m starting to sound like a greedy music industry executive.

4. Radio stations will begin to integrate music using their best instincts from artists who are not licensed and who expressly give them permission to play their music for free. As long as they do, the stations can feel free to continue to air the music.

5. Start a Sunday night radio show devoted to all new music in your format’s genre. That is, with a real music authority and with interviews. No record label artists allowed even if they pay.

I’m just getting warmed up.

I started out writing this piece as a joke – you know to let off a little steam as I do from time to time when I feel outrage, but you know, it has kind of empowered me.

See, to their credit, radio people never thought like record execs – even when they were down and out (which many are). Radio could never have been serious about charging for airplay. Hell, we hardly got much legal paid advertising when the labels owed us more of that out of sheer gratitude.

And now that I have brought up the topic of gratitude – let’s put it out there. The labels have turned on radio to save their bacon. But ironically enough, whatever they extort from the radio industry in new fees will be offset by the many, many other poor decisions record industry execs have made over the past ten years.

They couldn’t see the importance of Napster.

Still don’t believe bullying consumers with lawsuits isn’t a deterrent to theft.

Wrong about paid monthly music services.

Ditto on getting ISPs to charge consumers for all the music they can eat.

And wrong about taxing radio to help them help themselves to profit.

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Gaming the People Meter

2010-08-18T00:02:00.003-07:00

It strikes me as somewhat ironic that the radio industry fought Arbitron’s portable People Meter unmercifully for many years dragging out its implementation.

After all, PPM delivers more radio listeners even if they really aren't listening.

That is, PPM delivers more radio listeners to some formats which is why many radio groups are racing to dump what's left of format variety for same-old-same-old formats that could play well with an increasingly defective ratings methodology.

And now, guess what -- radio groups really like PPM.

Imagine – close your eyes for a second – I walk into your office and pitch you a ratings service that doesn’t reside on an existing mobile phone or device, but on a bulky add-on that must be schlepped wherever you go. Then, I tell you it is so inaccurate (I’m crossing my fingers at this point – maybe even toes) that it picks up encoded signals even if the person carrying the meter device isn’t listening to the radio stations they like.

Would you pay money for that in this day and age?

Well, broadcasters are and they are being taken hostage by aliens who are gaining power over their radio stations.

Here's a real life example of a PPM carrier who was wooed with lots of money to wear a bulky People Meter while she admits that the only time it recorded her real listening was when she was in her car -- read it and weep here.

CBS was first to figure out it needed to do mass-appeal hit formats with just music and no real talk. A commercial-free day each week and no personalities at first. Later, a more music morning show.

Then others followed. Even Lew Dickey eventually figured it out and started blowing up Cumulus formats (as opposed to shutting them down like he did in Louisville recently). And I am sure you have noticed that hardly a day goes by that another station is dumping an established format for "PPM Hits".

Now we have the new term “going PPM”.

You have crazy PPM thinking like jamming commercials at the end of each quarter hour or stuffing them at the end of the :15 and :45 quarter hours. That strategy never worked during the diary days when spots were saved for the middle of the quarter hour and it’s insane to believe this kind of radio reflects something audiences want to listen to.

There are Arbitron consultants now as back then who make a living coming up with such wisdom.

It's time to ask the spiritual question, what would Steve Jobs do?

Maybe study the audience rather than the technology. Oh, what am I saying?

The geniuses that bring us PPM and the cult that is growing around it actually believe listeners listen to radio stations in a more equal fashion. I’ll tell you, if you can find any young people listening to a radio, they listen on-demand. If they want to hear a song, they listen. If not, they leave. What’s new about that?

Are we now saying dumping commercials at the end of one or two quarter hours will no longer work because listeners don’t like it (they don’t) or because programmers are trying to game their ratings technology?

Look, all this gaming is fine. There is nothing wrong with getting an edge on a competitor. But what is dangerous here is believing that it really works.

You’ll see less variety and we’re seeing it now as some formats become extinct – I’m thinking Smooth Jazz here, but there are many others.

The very oldies formats everyone was dumping in the diary days of not long ago are being embraced now that Dan Mason proved WCBS-FM in New York didn’t know Jack but it knew oldies (excuse me, classic hits).

Of course, in the PPM frenzy lots of folks fail to understand that WCBS-FM is an actual great radio station. It uses some of the tricks of PPM but the station has personalities who listeners like. Plays good music. Greatest hits.

Can we argue that WCBS-FM would never have been number one in the market as it was once (briefly) and always near the top – without PPM? I can. See, the old WCBS-FM, the oldies version programmed by Joe McCoy, was also a great radio station. When CBS management decided to drop it for Jack ("We play what we want" -- how un-Gen Y is that?) it made the decision based on the flawed diary ratings system. Did oldies/classic hits suddenly start working when PPM replace the diary or were we all wet to believe WCBS-FM was slipping?

We’re doing radio ass-backwards if you don’t mind me using a little Italian.

PPM shouldn’t drive radio formats.

Listeners should drive radio formats.

Period.

So,

1. Short-attention spans require stimulation so play music, a spot, music, a spot, etc.

2. Never do a long music sweep if you’re taking into account attention spans. I know it's heresy to some but it is true. Interruptions work today. The more the better. Please, please -- I beg you -- re-read #2.

3. Personalities riding the music like jockeys—hey let’s call them disc jockeys – are the best way to bring the many format elements together.

4. Want ratings – add variety. Audiences are different today. When radio lived and died by short playlists it was because the radio was the only place audiences could hear free music and we got to control the number of things they heard. Now, listeners steal music, preview it, look to peers, iTunes, YouTube and find more variety than radio can offer. Radio needs to address this issue.

So, enjoy the short-term perceived benefits of gaming radio to the already outdated technology of the People Meter.

The station that listens to their listeners gets the listeners.

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Hold Out for This Radio Royalty Plan

2010-08-15T00:02:00.001-07:00

The recent dust up over the NAB’s negotiation with the RIAA over more music fees for terrestrial radio stations has caused a lot of concern in the industry.

The NAB argues that the radio industry is under Congressional mandate to come up with a settlement for radio stations with MusicFirst which represents the record labels.

You can understand the angst on the part of radio broadcasters who have driven the sales of music through free radio airplay for many decades. And it is not as if you can expect owners to go down easily because whatever fees they agree to are likely to go up. This can be done by future legislation.

What’s really eating a lot of broadcasters is that they have been assuaged into believing that the NAB had taken care of the forces in Congress pushing for a radio tax. I am told by a source close to the NAB that radio never had a royalty tax exemption. I was surprised to hear that. Perhaps you are, too.

As I have written recently, the NAB got a little ahead of itself, in my opinion, trying to float a trial balloon to the industry and press when they hastily called a board meeting to report on the negotiations that I am told took place some six months prior with the RIAA.

While the NAB points out that there is nothing inevitable about the proposed settlement, I firmly believe that a tax on terrestrial radio is now inevitable and the NAB did not do its job in protecting broadcasters. On the other hand, the music lobby earned its dues by more effectively winning the very Congressional support that is now forcing the radio industry to its knees.

What’s more, it appears radio broadcasters are going to be made to feel – by its own NAB – that the deal it is currently negotiating is the best solution totally ignoring the fact that they are actually negotiating a costly surrender.

Lew Dickey doesn’t care. He and Farid Suleman, John Hogan and the other greedy consolidators can simply leverage the extra expense into their next inevitable loan at whatever high interest rate they settle on.

No, the burden of the NAB’s failure to defend its industry against this outrageous tax is going to fall squarely on the shoulders of radio operators – the mid-sized, small and local types who are the only backbone radio has left.

When it became apparent the NAB was losing the fight, I suggested in this space that they might want to explore ways to negotiate a deal that would give radio very favorable digital fees going forward. But the deal the NAB recently floated is about getting out from under Congress in one piece.

No fight left.

Keep in mind the new NAB CEO Gordon Smith is a former US Senator.

In a 1998 issue of CounterPunch, a political website, this is how they implicated our new NAB CEO with Enron:

"In Oregon, Enron lavished contributions on the state's congressional delegation, supporting both Gordon Smith and Ron Wyden. Neither senator uttered a critical peep about the Texas takeover of Portland's electric utility".

In all fairness, Smith later attacked Enron when it became apparent that Enron was going down, but never returned the money.

I'm not saying Smith is sympathetic to the RIAA, but the reverse -- that he is insensitive to the needs of radio operators other than the handful of fat cats who have backed his royalty capitulation. Peter Smyth stuck his head out of his corner office to back the big guy -- see it here.

In the meantime, Smith and his small negotiating board have won you a radio chip if you really care (or at least help in getting one from manufacturers) to appease Emmis CEO Jeff Smulyan. It’s an awful idea on its face if you look at how consumers use mobile devices in this country. Nonetheless, politics are politics and the NAB is in Washington.

Another NAB sales point for this awful deal: The AFTRA issue goes away allowing local radio stations to play AFTRA commercials on its local streams.

Another questionable victory.

Radio should be creating separate commercials for online advertisers not crying over AFTRA rates. Make money not excuses.

The big talking point you’ll hear in the NAB spin is that jurisdiction would move away from the CRB which has made a mess of streaming royalty rates in a draconian and unfair fashion.

And, of course, the rate is at 1% -- to start – which is the lowest they could go to trigger reciprocity in Europe.

If you like that deal, go for it because 35 NAB board members are likely to decide the fate of the terrestrial radio industry – at least when it comes to another $100 million in expenses from radio's profits. One CEO told me the NAB is polling its regional members on the plan. That's how out of touch the NAB is. Inside Radio did a poll that showed 85% of radio people do not support it.

I rest my case.

But I think there is a better way and I have communicated it to the NAB negotiating board. If you like it, you may want to give them their instructions instead of the other way around.

I get that the NAB lost the battle and a new tax on radio in inevitable. Don't rush to do a deal. When the new Congress is seated, there should be more support for radio.

But if radio people want to pay royalties then at least get something meaningful in return for it.

My major points are:

1. Terrestrial rate of 1% guaranteed for ten years and then changeable only with Congressional action. However, this is not the year to punish radio with the NAB’s failure to protect their back. The 1% rate would have to start one year from the agreement date. Medium and small market stations are dealing with a recession.

2. A much better rate than the 10% reduction in the current streaming rate which was all the NAB could get which amounts to .0017% per listener per performance rising to .0025% at the end of five years. Not good enough. You want an agreement with terrestrial radio, then you’ll have to do better.

3. No agreement will be finalized unless or until all radio station owners get to vote by proxy through a third party accounting firm on whether they agree with it. This is too important an issue for 35 people and an ex-senator to decide.

The NAB pushed for radio consolidation by tacking on language in the 1996 Telecommunications Act, a bill not intended for the radio business. It was done with the NAB’s help in the dark of the night as this performance measure is being commandeered.

Fool me once, shame on you.

Fool me twice, shame on me.

RIAA wants a deal. Needs a deal -- now.

NAB's version of the radio industry is rolling over and playing dead.

Oh, and by the way, I favor a little Jersey negotiating which would come in handy here.

While MusicFirst plays strategic games, how about the NAB getting together a group of the best and brightest communications lawyers to come up with a legal plan to charge record labels for airplay on their new artists.

Give them a taste of how hardball is played before the game is over.

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Gerrymandering Local Radio Sales

2010-08-14T00:02:00.002-07:00

By now you’ve heard that national billing has been carrying radio stations of late and the recession has so hurt Main Street businesses that local radio sales as a category is now uncharacteristically down.

That, too.

Turns out we’re forgetting one big thing.

Your friendly local radio consolidator has not only been busying firing (or “laying off” as they prefer to call it) local account execs, they are also gerrymandering local sales to become national.

Listen to this from a longtime sales person in one of the top 50 markets:

“I sell for one of the big 3 Cs … and our commission was cut in March."

Here are a couple of other reasons local radio is down:

“MANY MANY local accounts are now national.

“The NSM often sells lower rates than us so naturally larger regional/local advertisers benefit from the savings. Personal relationships can’t trump the bottom-line in a recession.

“Remember NSMs are salary with only tiny commissions so no argument from the home office. BUT there is no local sales “personality” to become attached to. Kind of like repeater radio for sales”.

In other words, local advertisers don’t get the qualified sales professionals they used to get and whether the home office wants to believe it or not, the message that radio will work for them is not being reinforced where it needs to be -- on the street.

Cumulus, for example, created the position of Key Account Manager (or KAM) that the Dickey brothers used to funnel commissionable accounts from the sales people that earned them to KAMs who are paid a lot less just to manage them.

Manage them doesn’t mean hang out with them, or get to know their businesses or help them to use radio to solve problems. It’s a simple financial workaround that cuts costs at the expense of local sales relationships.

Also at Cumulus (and I am sure at other consolidators), local accounts are being taken back by headquarters so as to avoid paying the local salesperson’s higher commission rate. That is, national does it for less from out of town. Even if you don’t have a problem with Repeater Radio from elsewhere, apparently local businesses do.

So, local accounts going national by assigning them to someone who works at a cheaper rate is one way.

The other is, take back the local business and report it as regional or national.

This could be one of the reasons why local sales is hurting. Of course if you’re satisfied with using the recession as an excuse, go right ahead, but Apple didn’t. They grew their business during every month of the recession.

There is another reason why local sales are down.

Lack of experienced local salespeople.

Cumulus and others are happy to fire professionals for inexperienced sellers who never saw the inside of a radio station because they will work on the cheap. That apparently hasn’t worked well, either, if you’re looking at actual sales results.

One radio seller reminds us:

“It’s tough to recruit new people to a 100% commission gig when there is no gas allowance, no car allowance, no entertainment reimbursement, reduced commissions, long hours and weekend work for no additional compensation, “non-competes” and the same 2 wk vacation standard as the rest of the company”.

I guess what I am saying is that I’m not buying that local radio sales (reported as an industry) is down. There are too many ways consolidators have bent local into regional or national for their own purposes that it makes local look anemic.

How do I know?

Take a look at the mid to smaller radio groups. Their local sales are gangbusters. Some small stations must think they are Apple because they haven’t really had a recession. It’s hard to lose sales when local advertisers feel like part of your station. When they sponsor their favorite personalities year after year – at least in markets where there are still local and live personalities.

At first I bought the local downturn theory, but my readers have suggested this other nuance.

What is local today?

Who gets to define it?

How do we know when it is up or down? The rules are being changed in local sales as well.

So when consolidators predict a little rough spot ahead, they may be correct but when they say the rough spot is soft local sales maybe they should look at soft local sales strategies – theirs.

You can call it national, regional or local but local sales will be just fine as long as you give advertisers something live and local to sponsor and brought to them by people who live where they live.

Outsourcing local sales is and will continue to be a failure. It will leave lots of money on the table for new media local initiatives from non-radio companies.

That is the real problem – not just the recession.

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A Record Label Against Performance Royalties

2010-08-13T00:02:00.001-07:00

One of my former USC music industry students, Meredith Jung, sent me a quick note the other night to tell me that a Nashville start-up music label has come out squarely on the side of the radio industry in its fight against paying a music tax.

I thought you would appreciate the logic and clear thinking of this entrepreneur and hope that it will get everyone including the over anxious NAB to stand back and take a much needed time out.

The NAB for years has been selling soft soap about how the radio industry has nothing to worry about in the music industry's attempt to tax the very radio stations that give them free airplay and exposure for their new acts.

Then, all of a sudden with the hiring of a former United States senator (Gordon Smith) as NAB head and pressure from a handful of lawmakers on radio (not the labels), the NAB appears to be turning tail and running from this fight.

The NAB now says, in my view, never mind what we’ve been feeding you, we had better make a deal with the evil record labels before they send us to the big bad wolf (the CRB) and we lose control of what we’ll actually be paying.

While imposed rates are a possibility, I must tell you that I cannot find one person close to this situation who thinks radio needs to settle right now this minute. The NAB says all it is doing is floating a trial balloon, but even The New York Daily News a few days ago was making it sound like a deal is near.

This is curious because what gives the NAB the power to negotiate for an entire industry and then impose the new tax? It represents only 50% of all radio stations.

Second, the 1% additional that stations are supposed to be giving up to the greedy labels can easily be 5 or 10% of profits (that’s profits not revenue) at a time when profit is hard to come by.

One more quick point before I tell you about the record label that is on the side of radio broadcasters in this fight.

The record industry should pay radio – and I’m going to offer my plan for your inspection next week.

The Savannah Music Group is against its own trade association, the RIAA, the way radio should be against its own trade association on this matter, the NAB, arguing the proposed additional royalty tax that would force radio stations to pay performers and record labels would have unintended consequences for struggling artists – namely less chance of getting radio airplay.

Now, that record label is talking the way radio stations should be talking.

That’s what the NAB should be selling the RIAA in negotiations instead of treating the royalty tax like a health care compromise.

Independent and new artists could suffer from this tax thus making the benefits of a quick radio tax outweigh the risk of making it harder to break new acts.

Radio hasn’t been an easy place to get airplay over the past decades. The labels and program directors have kept the playlists tight. However, some stations may wind up augmenting their lists with non-licensed music and other measures that would make the labels rue the day they hit their brethren with this levy.

RIAA is anxious to get a deal done. Its constituents are in short pants. RIAA is leaning on Congress where it is fair to say it has done a better job than radio’s NAB rallying support. If I am wrong, then why is this sellout even being considered?

Especially now as fall elections will likely change the mix of lawmakers to perhaps a more favorable radio core of supporters.

Look at this quote in The Nashville Business Journal:

“It’s tough enough now to get songs on the radio as it is,” Savannah President Dave Gibson said. “We’re trying to get this company off the ground, and the smaller the playlists and the more stations that switch formats, makes it harder.”

Gibson wants an “opt-out” provision.

For record labels!

“Should a performance royalty be mandated by Congress, artists and labels must have the opportunity to opt out. If not, the major record labels win, and the songwriters and artists lose."

How about Dave Gibson for CEO of the NAB!

This guy makes sense and if this label exec can so effectively articulate yet another reason to give radio a break on royalties, why isn’t the NAB embracing him? March him up to testify before Congress. Think he may open a few eyes?

Instead, the fix is on to do a deal that radio will never live down.

The Internet didn’t kill radio.

Neither did Steve Jobs.

The NAB has done more to cause the mess that radio is in today than anyone else.

Consolidation – it helped tack it on the Telecommunications Act of 1996. Most radio executives never saw it coming.

And now, the gift that keeps on giving radio’s profits to greedy labels.

Lew Dickey can write this tax off as something else to finance and so can the other selfish radio groups among us.

But if the radio industry is smart – better rise up against your own trade association like Gibson is doing – the one selling you out while smart people everywhere from music industry students to independent label execs know that the music royalty tax for radio doesn’t just hurt radio but hurts everyone who isn’t a big four label.

If you want more of what consolidation brings you, sit and wait for a deal to be made.

If you want to take the decision away from Farid, Hogan, Dickey and the NAB, it’s time to not just sit there -- do something!

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Lessons from the JetBlue Media Meltdown

2010-08-12T00:02:00.001-07:00

So I was on a plane the day after JetBlue flight attendant Steve Slater pulled his Howard Beale (Network) imitation – "I'm as mad as Hell, and I'm not going to take this anymore!" and freaked out over a rude passenger.

Before the dust settled, I can tell you the flight attendants I chatted with were not too thrilled to get that kind of attention. Frankly, if you travel a lot, you see almost as many rude flight attendants as cranky, rude fliers.

By the time I landed, Slater had become a folk hero of sorts and a very good airline (unlike the one I was flying on) got its nose bloodied for no fault of its own.

It’s too early to tell what kind of image damage JetBlue will suffer but what is remarkable is the traditional and new media response to Slater's antics.

I’ve had time to mull some fears and concerns I see ahead for the media business because for a moment there I was reacting like a traditional media guy but today I’m thinking – okay, Slater is being hailed as a hero but JetBlue could also come out ahead as well.

And, the concern that all of us in a world of social networking – artists, radio stations, streamers -- are just this far away from having to deal with a nutcase that can gather social media support by just – well, creating a Facebook page for starters.

In the case of the “Freakin’ Flier” as The New York Post called Slater, instantaneously a Facebook page went up that quickly got over 50,000 fans to support him. There was a “Free Steven Slater” page, PayPal fundraising and sites that compared Slater to pop music stars seeking to make him more popular.

Traditional media including television hardly knew which way to go – you could sense they went with it for ratings but part of them knew they were cheating on the facts. What Slater did was dangerous (could have killed a worker on the tarmac) and socially beyond inconsiderate to his passengers, his co-workers and an excellent employer. Yet there was more to this story than the incident. What about the nerve it hit?

I even felt sorry for the crummy airline I was flying and their employees. To butcher the song “If Loving You Is Wrong I Don’t Want to be Right” -- if extolling Slaters virtues is wrong, how do I turn out being right?

In the radio business what happens when a singer is trashed or embarrassed beyond criticism of his or her work? Or when a local radio station has to face an “KXXX Sucks” social network page that can be easily accessed by media buyers on a Google search?

If it hasn’t already happened, it will.

My experience with the next generation is that they are not a mean generation. They spy – alright. But they are never going to go for attack politics. It doesn’t work for them. In fact, I believe their response to the freakin’ flight attendant is more youthful curiosity and angst than glorification of a bad dude.

It's a social networking expression of outrage.

And consistent with their generation, Gen Y will forget this guy faster than they are forgetting MySpace. This is important to keep in mind when responding to unjustified attacks in an age of instant social revolution.

JetBlue has kept its corporate mouth shut about this issue – probably on the advice of legal but maybe even because they are just smart enough to understand some of the things we’ve discussed here.

Nothing on their Facebook page and only three meaningless comments on Twitter.

And all this from a corporation that is very skilled in using both.

If your station is attacked or if a new age Randy Michaels sets up shop in your face on the most meaningful social networks, do you attack back?

In the pre-social network case of Michaels vs. yours truly, I did fight back and publicized everything he said and did as unfavorable as I felt it was. After all, he was the biggest, most powerful CEO in radio at the time. In the end he lost his job and his company bought my company as part of a settlement to drop my counter suit.

But, not responding can also be effective – don’t give the enemy any more publicity than they deserve. It’s risky – lots of radio station formats used to get attacked head on in past decades and they almost always lost their frontrunner's status. It’s hard ground to protect.

What to do?

The most important thing is what the JetBlue case teaches us and it is right before our eyes – yet it has not been fully noted.

JetBlue is considered to be a great operator. Consumer friendly. Communicates with its customers. Does right by them (each passenger on Slater’s flight will get a $100 coupon on JetBlue for having to put up with his mouth and actions).

That’s it.

Build a fine reputation because social media cannot make you that which you are not and cannot break you when renegades decide to put up a page.

Putting up a page is just a thing – something we do in our world of social networking.

But doing right by customers and audiences using social networking as a tool buys you valuable capital.

Ad Age quoted Steve Rubel, Senior VP-Director of Insights at Edelman Digital, as saying:

"JetBlue has done a good job of building a tremendous amount of relationship capital with the online community by embracing new digital platforms and communicating with people through them so they might not have to answer as many questions about the details of this incident. When a company puts itself out there as a company adept and active in social media, it gains social capital that it can cash in later on in a crisis or legal situation."

In the end, it's not so much about JetBlue.

It's about an angry public that now has a new "going postal" phrase ("sliding the chute") to let off steam about shabby treatment of employees! And, now they have ways -- fast and far reaching ways -- of taking their response public without the impediments and filters of traditional media.

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What’s Killing the Concert Business

2010-08-11T00:02:00.001-07:00

Billboard calls it the “Cruel Summer” because ticket sales are down and tour dates cancelled. It asks the question, “Can the concert business bounce back?”

Only a year earlier it looked like it was defying the economy providing the music industry with a rare glimmer of hope of late.

Billboard did a concert-goer survey again this year with the results unremarkable.

You know, concert-goers saying they hear about upcoming concerts from online/social network sites (63%) instead of radio (13%). Softball questions about how easy the ticket buying experience is (33% say easy and convenient, only 25% said a hassle but worth it). No tough questions about Ticketmaster and how much people dislike it.

That being said, the concert business is in real trouble.

The music industry is in bigger trouble and virtually everything music execs have done over the past ten years has backfired from suing consumers to stop pirating (it has actually increased every year) to seeking another music tax on the radio industry, the very people who made them rich for decades with free airplay.

Not to break anyone’s bubble, but radio programmers and savvy music people know that the universe available to attend live concerts has always been comparatively small. Even before Live Nation, the concert experience was a giant ripoff – the kind only a parent could support financially on a regular basis. The fees. The markup.

And in reality, the number of concert events even the most rabid fans attend is relatively small. In other words as big as the concert market has been in terms of dollars, it was that small when you factor in how few people out of the music loving population actually attend a live event.

Live Nation hasn’t made a consistent profit since it was purchased from Clear Channel, a consolidator that didn’t really know what it was doing when it bought into the concert business but sure knew when to get out. And the numbers are not paltry, Billboard claims last year Live Nation reported $2.5 billion in grosses – almost three times of closest competitor AEG and 41 million in attendance and 5,000 shows worldwide.

Nothing to sneeze at.

Yet, consolidation has failed another industry with two companies doing most of the visionary work and about all they can see is the traditional model – high fees to talent, large profits for themselves, too much reliance on a handful of superstars because the concert business doesn’t work without superstars. That, in and of itself, is a problem they don’t see.

If I hear Irving Azoff’s name one more time I’m going to be sick. Nothing personal, but can anyone think besides Irving? The concert business is an old man’s game and obviously long in the tooth. It could come back next year when the economy gets better but whether it will be a growth business again is what I question.

The music business is the same – same old white men. The concert business is down to a handful of old schoolers who are looking to the business they want to be instead of what consumers may want to support.

It’s business.

Not show.

It used to be show business – both.

The smartest dude in the world was Bob Sillerman who peddled SFX, the original Live Nation, to Clear Channel for about $4 billion so he could concentrate on Elvis. Has anyone ever noticed how fast and profitably Sillerman unloads companies that all have the “X” in the names?

Here’s what I think folks are missing.

The consumer has changed.

Just as in radio, print and even television traditional media folks do not understand that there is a new generation that holds the world in their hands most of the day. See how many pictures in People of celebrities photographed with their cellphones in their hands.

Tech gadgets are more important to them than even clothes or appliances. I know it’s true because The Wall Street Journal said so.

Seriously, there is a major shift in priorities for this generation and that may help explain why Apple has not had a recession when most other categories have. But the most deadly attitude traditional media companies can have is that once the recession ends…

You know the drill, things will get better as the economy gets better.

Yes, things will get better (duh) but a major sociological change has happened albeit during a prolonged recession and we’re missing it.

Even ballgames, sporting events and other venue driven activities are also subject to these major changes. One major market NFL team is producing an entire digital event for the people who attend their games almost as if they recognize that those attending the games are for a few hours an accidental social network. Smart.

There will always be a market for public events, but the nature of those events must change to cooperate with the inevitability of old tired concert venues running out of steam.

The music industry embarrasses itself by trying to force the same retro products on consumers who have enthusiastically and willingly embraced the mobile Internet and social networking.

Therefore, I conclude, if the concert promoters want to get people to attend live events they must change a multi-billion dollar business that is starting to erode. That’s not about to happen.

Some of my music industry students when they come of age may well have the answer if they keep their eyes off of Irving and focus on the consumer who would rather buy a mobile device than a new pair of jeans.

Or go to a concert?

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The Cumulus Sales Recognition Program

2010-08-10T00:02:00.001-07:00

Maybe Cox, Saga and other competitors have finally gotten to CEO Lew Dickey as they continue to attract current and former Cumulus sales reps.

Or maybe Dickey is just tired of being seen as a mean manager – tough guy who puts his bare knuckle business strategies ahead of touchy feely things that most employees really appreciate.

Now it has finally happened.

Dickey launched a sales recognition program that one Cumulus insider said “Lew hopes will make his employees love him again. What a joke and I doubt it lasts more than 3 months”.

Nice gets more than mean from salespeople and even when you have a sales force that is fortunate to be working, it’s always wise to use a lot of Dale Carnegie and a lot less of Lew Dickey, John Hogan and Farid Suleman.

I taught the Dale Carnegie Course for eleven years and there is never a day that I don't need it. Hell, we all need to put forth our best human relations skills.

One of Dale Carnegie’s rules is to give the other person a fine reputation to live up to, not to live down. There are many ways to do this not the least of which is how you regard those you work with. For example, most radio groups call their salespeople account executives but late last year Dickey took that title away from them and redubbed them “sales reps”.

Account executives or sales reps – you decide.

Dickey’s company was voted the worst radio group by almost 2,000 people who voted in a Best & Worst Radio Group poll here last year. With the competition stealing your best people away, maybe that’s the reason for this uncharacteristically warm and fuzzy Cumulus recognition program.

And by the way, how’s that hiring Cintas and non-experienced candidates for radio jobs thing working out while you are firing professional salespeople?

Here’s a look at the last ditch Cumulus effort to smooth some feathers even as many current employees tell me they are looking to get out.

Starting in July, Cumulus said it would honor one seller (either a “sales rep” or key account manager known as KAM) each month. To quote Lew, “These individuals will have elevated themselves amongst their peers through exemplary behavior and superior performance”.

Wouldn’t it be nice if Lew and his management team had the same lofty goals for themselves?

Anyway, here’s what the one lucky winner gets:

• Company-wide recognition

• Induction into the Hall of Fame of Excellence

• A plaque

• A $500 Amex gift card

• Invitation to the annual awards dinner in Atlanta (how about hotel and airfare?).

The winner will be chosen by the following standards -- absolutely no politics:

• Percentage of budget achieved

• Number of annuals sold during corresponding month

• New business booked to run during corresponding month – number and dollar amount

• AUR increase

• Number of new Elephant Accounts (the Cumulus big game advertisers) sold during the corresponding month.

Still with me? That plaque will look nice on your desk – at Saga!

• Number of accounts on-the-air

• A/R over 150 days

• Demonstrates determination, initiative, leadership, creativity, exceptional client service and dependability.

There it is.

But wait.

I’ve got a better idea.

• Stop the perceived intimidation.

• Be fair.

• Value your people by treating them like professionals and don’t cut their ability to make a living during a recession.

That last item really sticks in the craw of Cumulus salespeople because last year, the Dickeys took away hard earned accounts from sales professionals and created this KAM category that some argued served to siphon off commission-paying accounts to an anointed KAM worker who made less commission but didn’t do much of anything to earn the original business.

See, that kind of thing kills sales morale.

As does forced weekly meetings in front of Skype cameras with Atlanta. And forcing local reps to call on categories Dickey’s braintrust thinks is the future to new billing.

You can’t teach an old dog new tricks so I know that although Lew and his team read me from time to time by his own admission, he’s likely to operate as if he actually thinks this cockamamie employee recognition program will overcome years of being mean and petty.

To do that, Lew would need to fire himself.

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How NAB Threw Radio Under the Royalty Bus

2010-08-09T00:02:00.001-07:00

Remember NAB CEO David Rehr’s reassurance to his radio constituents that the NAB had their backs on paying more royalties to the music industry?

Turned out that his assurance is as gone as he was when the NAB Board fired him.

Radio likes to hear happy news. It’s in our blood. But in the case of music royalties the results are about to be fatal.

I'd like to share with you the rest of the story.

After the Radio Music Licensing Committee successfully negotiated an $80 million saving in ASCAP, BMI and SESAC rates for a financially-pressed radio industry, it appears the NAB is now going to give it all back by caving to MusicFirst and their demands for an additional performance tax.

What’s more, insiders who are familiar with the works of the NAB, politics and executive board say the recently announced plan that has a good chance of becoming a reality, was done in behind-the-scenes maneuvering in which some board members were not even consulted.

The plan appears to have been created by current NAB CEO Gordon Smith (a former United States senator) and Steve Newberry. I’m told that the fatal plan that will for the first time require broadcasters to give up their performance tax exemption has been derisively called “The Newburial Plan – the one that keeps giving forever”.

To be sure, not all NAB board members are in agreement with this.

It was supported by Cumulus CEO Lew Dickey who reportedly felt that radio needed to nail down this agreement so that capital markets can open up to radio.

Fat chance of that.

Entercom’s David Field, according to sources familiar with the action and requesting anonymity, is characterized as saying in effect if the board doesn’t support the “Newburial” plan, they shouldn’t be on the board. So much for free and local NAB elections.

The NAB plan is loaded with radio pork.

FM on cell phones to win the support of Emmis CEO Jeff Smulyan who is the loudest if not loneliest voice calling for a chip in every iPod or mobile device. Betcha lots of AM operators love the FM chip idea. Forget that consumers don’t use mobile devices like these used to use a Walkman. And most stations have a suitable workaround called an "app".

Still, the FM chip was to win Smulyan’s support.

On the surface, the announced blueprint of the royalty deal late last week was portrayed like a bargain -- $100 million a year for life. No increases.

Until of course that eventual day Congress votes to increase the rate.

As one informant put it,

“But the real thing is that broadcasters, when the legislation passes, will have legitimatized performers (actually record labels and they, eventually, will get the bulk of the rights) ....and just like ASCAP,BMI and SESAC, music first can now go to any store, restaurant, dry cleaner, dairy queen, etc that plays radio and demand a license for public performance”.

Presto, great minds think alike.

Look at this story in the Sunday New York Times on the music copyright enforces who will soon be given more tools to extract money from local businesses – you know, the ones that advertises on radio – to collect music licensing fees from them. Thanks a lot radio!

So much for democracy at the NAB as a small group apparently pushed through this plan without board understanding. Some state directors reportedly knew before the board did. More on that in a moment.

The former Senator Smith, your new NAB CEO, has to be admired for his dealmaking and political savvy. Let’s hope he knows what is best for radio because this appears to be a smoke filled room deal at best.

This is not just a $100 million giveback to the record industry.

Not just 1% of a reduction on streaming fees (which is how the NAB bought Clear Channel’s support).

You could say the fees are a percentage of free cash profit that some top executives think is more like 5-10% of their profits.

More inside details on this sell out:

Supposedly months ago Senator Orin Hatch, a friend of Gordon Smith) advised to just give him something”.

Of course, as you know, Congress looms large over this issue and radio does not have enough legislative support (thanks again to the NAB) to avoid having this tax imposed in a painful way.

There were rumors that the negotiation committee had a brainstorm to just put all the royalties paid to ASCAP and BMI on the table and tell Music First to divide them up however they wanted.

But, they forgot SESAC, a third party to radio copyright rates.

ASCAP and BMI went nuts or as one source put it “batshit” when the NAB proposed this. The idea was then dropped. ASCAP and BMI are mandated under consent degree to negotiate with Radio MLC to determine rates. I’m told as a third party that when Smith was reminded of this he saw no problem in the strategy of passing legislation that overrides the decree.

This gets messier.

Some group heads were contacted to discuss the settlement ideas. I know of some who were not contacted.

In essence the slick political strategy of Smith and Newberry pushed the need to settle or else threaten that Orin Hatch would change three words in the CARP bill and radio would windup in the dreaded Copyright Tribunal.

When word leaked that the NAB called to the state directors without all board members knowing, some state members denied knowing about it and later recanted that there was no deal.

The political strategy by Smith was brilliant if you're into political strategy.

According to a source:

“So.....in strategy...NAB executive committee started "calling" NAB Board members (now this was after the NAB called each director and told them of a mandatory meeting in DC...no phone call...an important meeting....no agenda and no topic announced till you get here)...each call was tailored made for the individual director

"You will only pay $2,500 per station"

"We will throw in ownership caps in this legislation"

"We will make this bill solve all open issues in radio".

This proposed settlement also makes radio look silly to the 261 Congressmen and 27 Senators who said they would fight for radio to keep its performance tax exemption.

And why settle now when Congress is changing – perhaps more favorably toward fighting the tax.

In the end, the board held a more than 3 hour meeting late last week and the negotiating committee gave them just two options: “break off negotiations” or “allow us to continue”. If I get that list, I’ll share it with you. You have a right to know how your local representative voted.

The NAB represents only half of all U.S. radio stations but the same trade association that helped pass consolidation on the tail end of the Telecommunications Act of 1996 aimed at telephone companies continues its destruction.

Let me be clear.

Radio stations should not be paying an additional tax to the music industry for all it does and has done to promote music, artists and sales (of which radio does not share in the profits).

Radio already pays adequate music licensing fees to publishers.

If a deal were to be made, to start by paying an additional $100 million a year on the backs of small broadcasters who can ill afford to pay it, you would think the NAB would go to these small broadcasters first and get significant concessions in return instead of what most radio broadcasters got.

Screwed.

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A Radio Station That Does Digital Right

2010-08-06T00:02:00.001-07:00

Bonneville is considered one of the best operators in terrestrial radio.

My readers, in a multi-month poll last year, far and away voted Bonneville the best, probably in part to the excellent way they treat employees.

I know Bonneville along with a few other radio groups is big into the digital future. The only disappointment is that they are not budgeting the kind of money it deserves. Their instincts, however, are awfully good.

Take, for example, KTAR-FM in Phoenix.

During the recent immigration law dust up here, KTAR-FM’s news and talk format didn’t just deal with business as usual on-air. It created an instant KTAR-TV stream.

Out went the nationally-syndicated talk shows – at least for the day, bowing to good local sense – but News/Talk KTAR also did a TV stream for four hours of live coverage available on computers and mobile devices (iPhone and Droid). In fact, I saw them claim to provide more on-camera coverage than local TV stations and that may well be.

But there is a greater point.

KTAR integrated social media to get the conversation going with their audience.

Phoenix is one of the markets that is going to lead other Bonneville stations in the digital area. WTOP Washington is also blazing the way.

Of interest is the multi-billion dollar advertising jackpot awaiting them. This segment expects to grow many times larger within less than five years. Online video is more than 10% of all Internet ad spending now and growing by the week.

As you’ve seen me write in this space, radio will have to redefine itself, getting away from only audio to audio, plus video, plus social networking.

And it is important that the programs being developed by radio stations are not just related to what’s already on-the-air. It’s about finding a new audience.

My wife, for example, goes to AZ Central online for all her local news here in Scottsdale first thing every morning. Then, to the Philly newspapers to see what crime and mayhem, snow and humidity we bailed out on eight years ago and being a Delawarean, she checks in with The Dover Post online when it updates every Wednesday.

You see, it’s all about local – really. Local today and where you have resided previously.

Many TV websites hardly make mention of their TV content on the web counterpart. That is because the web offering is not an extension of the TV content. It’s its own destination.

Yet foolish traditional media minds keep driving TV viewers to their website until a viewer is sick to their stomachs almost as if the TV viewer must be a fool to watch the TV show when you can watch what you want on-demand on their website.

The danger in doing digital offshoots of traditional media content is that the add-on (let’s say, a TV stream for a radio station) can only have limited growth if it is mainly targeted at terrestrial radio listeners. Yes, target them, but also use the web’s wonderful viral magic in finding new fans. After all, that’s how this blog has grown in the past four years – virally. That’s how I found you!

I’m often asked by readers to cite radio operators who are doing something noteworthy in the digital area. There’s not much out there that’s remarkable.

I mean, terrestrial streams hardly account for a few percentage points in the ratings and have questionable benefits.

Radio companies are now selling cheap ads on the Internet – that is, cheaper than the too-cheap ads they are already selling on-air.

$10-15 ads being hawked for Imus, Laura Ingraham, Neal Boortz, Dr Laura, Lou Dobbs. It’s all wrong and headed down.

Let’s straighten a few things out:

1. You’re worth what you think you are worth and that goes for adventurous Internet experiments. When I converted Inside Radio to a daily fax, I didn’t know how much to charge for an ad at the bottom of a faxed page of content. It had never been done before. If I thought no one would buy it, what’s the use of doing it. Instead, I figured $1,000 an ad ought to be a good business and it took eight months to find the first advertiser who turned out to be John Tyler at Satellite Music Network. But John wanted an ad a week, a three-year contract and page one. As soon as I signed him, I raised the price to $2,000 for page one. And demand drove it even higher. The message: charge premium prices for digital. Please re-read that last line.

2. Digital is not a terrestrial radio add-on, it’s what you want to put a nicely priced ad on. I can promise you, anyone who doesn’t heed this advice will miss the Internet revolution part two – mobile content.

3. Look to consumers to see where they are listening and watching and then follow them. Your programmers and talent and marketing people can lead you. For those of you who enjoyed the growth of radio, you’re going to enjoy it all over again when radio companies create new separate content for the mobile space.

If I stood before the programmers, managers and marketers of Bonneville, CBS or Emmis at a brainstorming session, I would inspire them to use their radio know how as they step into the digital future.

Offer the best live and local programming on your terrestrial signal and create new and separate content using our unique skills for different social groups.

Where content and marketing must be created together in real-time.

Where listeners live and how to understand their changing preferences.

And the wisdom to know the difference.

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Would You Pay for Twitter and Facebook?

2010-08-05T00:02:00.001-07:00

A new USC Annenberg Center for Digital Future study found that 49% of respondents in their most recent survey used Twitter, but no one – 0% of those polled -- said they would pay to continue using the micro-blog site.

Director Jeffrey Cole said, "Such an extreme finding that produced a zero response underscores the difficulty of getting Internet users to pay for anything that they already receive for free”.

Of course, if someone asked me when the first pay road was built if I would pay to travel it, I would have said no.

My mother refused to pay for cable television because she believed TV should be free – you know, over the airwaves. It didn’t mean that she didn’t value television but just didn't want to pay for it.

Twitter will remain a free service because the beauty of Twitter is to form a social network with a group of people of your choosing and beyond.

Taken literally, paid social network services will not work on the Internet. I wonder how Facebook would have done if the same question were posed. Somewhat higher than 0% I imagine, but I don’t think the numbers would have been impressive as 500 million people now use Facebook.

I keep hearing Peter Drucker in my head when he told radio executives that the Internet was going to be a major deal – in thirty more years. Without a pay model or an effective ad revenue model, Drucker will turn out to be right as he usually is.

The USC survey of 1,981 Internet users also found that half "never" click on Internet advertising with 70% saying they find it "annoying." Although 55% said they would rather see web advertising than pay for content.

And on and on …

You can see why media companies are reluctant to bet the ranch on the Internet and digital beyond when an obvious revenue model has not emerged. One could argue that no one listens to radio commercials in six-minute stop sets and that would be a fair comeback.

But the issue going forward is how do you monetize the space that consumers clearly claim as their favorite way to get entertainment, information and stay connected.

When Rupert Murdoch ordered his News Corporation publications to put up a paywall, The Times of London lost at least 65% of its online readership. I am surprised that it wasn’t more because a lot of the information in daily newspapers is available for free elsewhere. As long as this is the case, it will be hard for newspaper publishers to charge for that which is readily available at no cost.

Publications such as Newsday construct paywalls to keep their print readers from defecting to online where they don’t have to pay for the content. So the theory is that some publishers – perhaps even Murdoch – feel the paywall will be a success if for no other reason it will hopefully stem the loss of paying print readers from becoming online freeloaders.

Then you have Wired and other niche publications that are finding their subscribers with apps that allow readers to access their favorite publications where they like to read – on iPads, Kindles and mobile devices. This area shows real promise.

The New York Times thinks a metering system that will start charging you after a certain number of stories in a given month will work. But a meter will punish readers like me (and perhaps you) who read The Times extensively.

There are a few significant points to consider:

1. Online advertising is not that effective – click through rates are awful and that low standard allows media buyers to prostitute any digital publication’s rate card.

2. Search is a good business for the few, the proud and the monopolies such as Google and Microsoft.

3. If all that is available to businesses is the “freemium” model postulated by Chris Anderson then even the 30 years Peter Drucker predicted for the Internet to come of age as a business is too optimistic a date. Ad revenue from banner sales and the like will not be enough.

What is more likely is that there will always be free but there will also be paid. There has to be paid for the Internet to become a growth conduit.

To be free, advertisers will seek eyeballs and that business has been clearly established. Perhaps, as the USC survey seems to indicate, readers will continue to prefer free even if they have to put up with videos starting in the corner, ads creeping across the screen and other distractions. But don’t confuse these tactics for effective.

The idea of joining advertising with content may have run its course.

TV shows with commercials.

Radio formats with stop sets.

Maybe in the future it behooves Coke, Nike and maybe even Main Street local businesses to use YouTube videos, social networking and a lot of creativity and skip the non-paid content. They are doing it already. In effect, the ad becomes the content.

Paid content – the kind radio talent can produce – could be a strong attraction. Think about it – most listeners get ten (at most) different formats in the average radio market and some of them are really not all that different. What would it be worth to you to have exactly what you wanted to hear? There may be a price you would be willing to pay for something unique, compelling and addictive.

Unique, compelling and addictive.

My standard for paywalls.

Twitter and Facebook for free – they can channel those eyeballs into revenue and better them than us. It’s a tough business selling on the cheap.

But my very favorite magazine on my iPad – well, that’s worth something.

My favorite music media blogger on my digital device of choice – we’ll soon see.

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The Promise of Cloud Music Streaming

2010-08-04T00:02:00.001-07:00

Talks are on again between the record labels and Spotify, the European streaming music service looking to expand to America.

Billboard is reporting that after previously failing to persuade the labels to license music for the Spotify service using the “freemium” model, the major labels are all ears to see if Spotify can convince them to do a deal for an end of year launch.

The labels never really cared for Spotify’s free model and Spotify is desperate to get started in the U.S. because Apple has its stream coming in the not too distant future and services like Spotify have not done well.

Spotify is so desperate that they claim to be open to a short-term deal with the labels. That’s a deal I wouldn’t make. But they have no choice. The labels are playing hardball.

The hardball matches their hard heads that may also get in the way of allowing Apple to offer music on the cloud. There is considerable debate as to what is going on with Apple and the labels over this issue. You’ll note that Apple relented on its long-held one-price (99 cents) for all downloads policy and the labels got their way – or as I like to call it, fewer downloads for less revenue.

Apple’s stream – the one I believe Spotify fears most – is likely to make a consumer’s personal iTunes library available anywhere at anytime through various mobile devices. That is, the music is there for the taking.

The real question is whether Apple needs a new agreement with the labels to do this. Right now, the labels are so destructive you cannot point to one single strategic decision any of them have made in recent years that was good for them individually or collectively.

Spotify has more than 7 million users around the world with only 500,000 of them paying about $15 per month for the premium version.

Rhapsody, which also has a more traditional subscription service, is down to about half a million subscribers at this point and declining.

This is not exactly a boom waiting to happen.

Unless, Apple can convert many of their iTunes users into streaming fans for a monthly fee.

Look to the way Apple handles the consumer cost of being connected to the Internet on the mobile iPad platform.

AT&T again, but iPad users only need to subscribe to the service month-by-month. No long-term commitments or discounts. I get an email telling me the next month’s AT&T iPad service is about to kick in and I have time to cancel anytime if I’d like. This may be part of the Apple strategy with streaming audio.

Pay as you go.

Don’t pay and you can’t access your music library on your mobile devices, but you still own what you bought and can listen on other devices.

I think Apple is up to other things, too.

I would not be surprised to see the iPad become a Crestron or TV remote that eventually works with Apple TV. Now that move could make Apple TV go from a Steve Jobs admitted hobby to yet another big business.

So, we would be able to watch TV on our iPads but also communicate with Apple TV and watch our television shows and movies on-demand right there on a big HD screen.

Apple TV right now is burdensome. I don’t like it. Takes too long to download content. But with a stream, all that changes. Buy “Gossip Girl” and have it available for your viewing pleasure anywhere and on any device that can access that stream.

You own it, but you store it on the cloud.

That’s the future and it explains why Spotify is so terrified of not being able to launch in the United States in a timely fashion.

A bigger issue is whether Spotify is necessary at all?

My view is that Pandora survives anything Apple comes up with because it uses a well thought out music genome to identify a listeners musical preferences. That in and of itself is cool and will never go out of style.

For everyone else there is choosing your own music and storing it on the cloud.

I can tell you from working with young people that while they like their iPods, they are also bored with their iPods. Ask and they will tell you.

If this isn’t a wakeup call to the radio industry to reinvent itself, I don’t know what is.

Consumers need another music service like coffee drinkers need another Starbucks.

Pandora is golden.

Apple’s cloud will eventually be a smash hit.

Now who is going to entertain people on mobile devices with short-form, personality and expert-based content?

Music.

Talk.

Information.

It is likely not going to be a radio company because they can't see this, but radio is the perfect incubator for new media content.

I’ll bet you some former radio employees will jump into this void and see the next growth business ahead – mobile entertainment not just music available everywhere on-demand.

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iPad Procrastination

2010-08-03T00:02:00.001-07:00

The iPad is the new Walkman.

No, it’s more than that.

The iPad is the new Walkman, TV, newsstand, bookstore, Wii and communication center all in the palm of your hand.

For some reason, traditional media companies either don’t get this or don’t want to believe it. After all, acknowledging that Apple will be hosting their content in the foreseeable future is a scary thought to them.

There is no time to waste in understanding the changes that will have to be made to keep up with – well, your consumers.

They are buying iPads as fast as Apple can make them. Hardly anyone doesn’t want one. It’s a matter of when they get the money. Over three million sold in less than three months and there is no reason to believe this demand will recede any time soon. Keep in mind that Apple has defied the recession and continues to do so with computers, iPods, iPads and iPhones.

How big is the iPad already?

• iPad is Apple’s third largest business in less than one season next to iPhones and Macs.

• The apps that work so well on Apple mobile devices have generated nearly $1.5 billion in sales since their June 2008 launch.

• In less than three months on the market, half of the Fortune 100 companies are either reported to be testing or launching the iPad for service, sales and other business functions.

• The iPad will eventually have competitors although I don’t see anyone overtaking Apple’s dominance in this area (Full disclosure: I am an Apple shareholder). Other iPhone or mobile devices easily work with iPad apps.

So what’s the delay?

Media companies are hanging on to what they’ve got -- what they are familiar with.

As I mentioned earlier, no one in traditional media likes to hand Steve Jobs 30% of their revenue just to get access to his commerce tools. They would rather have the greater expense of owning the towers, transmitters, printing presses, bookstores and what not.

Record labels are particularly bitter and yet Jobs has triumphed and the labels have been made to look like prehistoric operators who have the one thing everyone loves (music), but don’t seem to know how to distribute it to a market that has clearly moved on.

Traditional media companies don’t like to risk moving their content to platforms that they don’t fully understand. If you bought a radio group for billions of dollars, you wouldn’t be so anxious to adapt to the fast growing mobile market while you’re in over your head in debt to pay for the stations.

But there really is no time to waste.

Look to the record labels and do the opposite. They have let Apple break down their albums for easy cherry picking by consumers and yet they don’t understand that the album had died a long time ago. The onset of the CD emboldened record execs into making them think the album would never die.

It has.

Both creatively in some (not all) cases and as a means for consumers to access music.

If media companies, then, are procrastinating on embracing the iPad, here’s how to accelerate the process:

1. Move right now to optimize your non-digital content for the iPad. This will be different than designing it for a computer or laptop and takes some creative thinking, but from now on the litmus test for delivery of content is how does it work on an iPad.

2. Social networking is at the heart of an iPad. Who needs magazines delivered on a handheld device if you can’t talk to the authors directly or communicate with others reading the articles. The feature on digital books that shows you what others are underlining is one of my favorites. Cliff Notes in the digital age.

3. All audio will need video. All video has audio. Both will need text and social networking. This is the Holy Grail of iPadding.

4. New content must be created by traditional media companies separate and apart from what they do at their day jobs. This content – preferably short-form – does not even have to be consistent with what their main business is. For example, if a radio station plays the hits, it can also maintain a sports blog that listeners can access. The deciding factor is monetization.

5. There are three major ways to monetize iPad content in my view – banner ads, event marketing and/or paid subscriptions. That means new ways to look at content creation before you do it. And it means attracting the kind of people who can sell this content not as an add-on but a standalone.

Many interactive opportunities and the revenue they suggest will be missed if the iPad does not become the major focus on every media company. I'm focusing on that right now. While challenging, it presents so much promise and I will share with you my experiences after Inside Music Media – iPad-style is launched this fall.

The iPad is the great liberator from gatekeepers (other than Apple).

In the past, if you wanted to do a show, you needed to find a radio station to broadcast it.

Now, do content on the iPad and you will not need a radio station.

This is not taking anything away from radio or TV when it is local and live. That's a business -- a good one. But this is as well and it can run in tandem with traditional media or it can stand alone.

No one is in your way.

Nothing can stop you but a lack of trust in the mobile future and should that be a problem there is reassuring evidence all around us increasingly living their lives in real time, on the go and connected to each other.

Procrastinating is detrimental to your brand.

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The Verdict Is In On Non-Local Radio

2010-08-02T00:02:00.001-07:00

What’s wrong with local radio sales?

There is no doubt that all businesses are affected by this long and bumpy recession, but lately radio operators have been posting pretty nice profits by and large.

We are half way through another difficult year, and something very interesting is going on.

Radio operators are profiting as a residue of years of financial cutbacks – lower operating expenses giving them exactly what they were looking for.

But the windfall is primarily coming from national business and while this is good, it creates a big question mark about where radio is going to get the local revenue to make up for years of losses.

Analysts are saying companies like Cumulus are doing better in their big markets where Cumulus Media Partners operates a privately-held group of stations. Their public company on the other hand, Cumulus Media, is the small and medium market division that has been pillaged by management to make it a virtual repeater radio operation with strategic decisions handed down from Atlanta headquarters.

In the small market Cumulus entity, growth is not nearly so dramatic – basically flat -- as CEO Lew Dickey said in an analysts call last week.

Everyone had predicted an up year but perhaps you’ve noticed the blowback on how “up” the year will actually be. Again, the industry can blame the recession, but at Apple even AT&T and faulty iPhones cannot stop growth – to the hell with the economy as an excuse.

What’s worth investigating is the detrimental effects that are now surfacing related to the non-localization of radio.

Radio companies can point to all the positive signs they see such as strong national business, expected political advertising this fall and a digital surge but local sales revenue is not in their projections.

What is happening is that firing local personalities removes a reason for local businesses to reduce or walk away from their radio schedules. In other words, it is easier to cut radio from local ad budgets when that radio is not a popular personality who may have been entrenched in a local market.

But just as devastating is the widespread extermination of local sales staffs at a time when local radio stations actually need more salespeople to get more businesses to come back and spend. Radio CEOs traded that away for the short-term profits that they are now posting.

In essence, there is no one home to sell radio advertising and lure local businesses back – or better yet, to help local businesses through the recession with affordable advertising solutions.

To make matters worse, the powers that be at these leading radio companies have seen fit to cut sales commissions (Clear Channel and Citadel come to mind), take business away to avoid paying commissions (Cumulus) and offering a disincentive to professional salespeople that they don’t need at a time like this (all of the big consolidators). It’s hard enough to overcome a recession but to overcome a company-imposed recession based on lower compensation – now that’s the wrong strategy at the wrong time.

Plus, strategies like dictating from headquarters what accounts local salespeople should be pursuing are proving to be misdirected. Top management is so far removed from the street that all they can see is health care and financial accounts so they want to redirect what is left of their local sales forces to these “growth” categories.

Obviously, none of this has worked if you study the earnings reports that are coming out lately. That’s why even analysts, the lap dogs of the investment banking industry, are asking, “what’s up with that?”

Wells Fargo Analyst Marci Ryvicker’s first question on the recent Cumulus second quarter conference call was all about the company not mentioning its local sales revenue situation. Lew Dickey and CFO J.P. Hannan came off like they swallowed their tongues.

The reason?

Their obsession with firing talent and salespeople have led to this predictable result. You do remember, we predicted it -- yes?

But let’s not dwell on the consolidators’ playbooks. There is a solution.

1. Hire three times the local salespeople you now have – that’s right, the ones with experience that are sitting on the sidelines. Don’t look now but Saga and Cox and the generally good operators have been doing this – cherry picking experienced professionals. The more qualified salespeople, the more local sales. Done. Of course, I’m getting carried away because consolidators may have to give up the short-term profits they now bragging about – the ones delivered by cutting expenses.

2. Put an outstanding sales manager in charge (or let the one you already have) make the decisions on the ground and let him or her direct the local sales force to pursue the best prospects. It’s nice that corporate loves more health care money but things sure look different from the street level. Go with the street.

3. Sell local solutions that also include new content for mobile and Internet – that industry is growing right through the recession. Just streaming a terrestrial station is like leaving money on the table. You need to create new, additional content.

So there you have it.

Do these three things and local sales revenue will go up – right now, in the middle of this awful economic downturn.

Smaller companies interested in operating instead of leveraging debt are doing the three important local sales strategies mentioned above. But what makes headlines is when the handful of consolidators who control America’s best radio real estate can’t successfully operate, they opt for short-term solutions and then cover their mistakes by purchasing more debt.

Remember that new Cumulus company that Lew Dickey kicked off with great fanfare? You know, the one with $1 billion in capital it hadn’t and still hasn’t raised.

Ostensibly, the mirage company was created to buy radio stations and groups, but as I said then and reiterate now, they haven’t purchased one single station.

You know why?

The majority of any money they raise will go to buying down the massive debt that they continue to amass.

Mark my words.

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Radio Tactics – Hot or Not

2010-07-30T00:02:00.001-07:00

You would be surprised (or maybe not) to see the emails I get from people in the radio industry confirming management tactics that defy the imagination.

At the same time, on occasion, a broadcaster or two connects with their local market to distinguish themselves in an era of poor management.

It’s all available to us for learning purposes.

Take what a Cumulus employee said about a new company policy that tightens the noose around the necks of local salespeople.

Cumulus Rate Alert System

Last week Cumulus implemented a new rate integrity system from its bunker in Atlanta.

Keep in mind that Cumulus has the philosophy that all local sales should be driven by national "brains". Cumulus uses Skype cameras at sales meetings and account execs are required to follow the book exactly as the mothership writes it.

Now, apparently, Cumulus has established “floor rates” set for all markets and when an order goes into the main system back in Atlanta with rates that are below the “floor” level, it sets off a literal "Big Brother" email alert to none other than the Dickey Brothers, Jonathan Pinch and Gary Pizzati.

One reader said:

“According to my sources, 2000 alert emails were generated the first day alone!

Keep in mind that none of the Dickey Brothers have had to rely on local selling to make their living. They were, after all, born into the right family.

In a month that saw Citadel cut sales commissions by 50% at one of their clusters, do strategies that seem to demoralize account executives accomplish their mission?

Hot or not?

Larry Wilson’s Local Initiative

His Alpha Broadcasting Portland stations did a “Paint the Town Clean” promotion recently that would warm the hearts of radio enthusiasts who think radio needs to get down and local real quick.

Personalities and staffers worked with the city to paint over graffiti. That public service initiative isn’t new to radio, but it is sure new to radio in the middle of consolidation. The stations teamed with a paint company (I wouldn’t be surprised to find out it was a sponsor) and they got listeners involved.

Now I know this promotion didn’t come from central command and you can’t make listeners think that they might win something that is simultaneously being offered to many other stations, but is this promotion in this day and age hot?

Guess the Missing HD Radio Station

Okay, it wasn’t a promotion in Hartford but it really happened.

Here’s a reader account:

“It's not just CC that is downgrading engineering.

"I bought a new HD clock radio for my wife because the CBS 50K AM in Hartford doesn't come in well where I am due to poor ground conductivity and interference. They stream the AM signal on their FM HD2. Last week, my wife said the radio didn't go on. I checked it and no audio. I checked everything, then tuned up to HD3 and it worked fine. HD1 also worked fine. Then I realized that there was simply no audio on HD2.

"Yesterday, about a week later, I checked again and still no audio. I called the station, was connected with someone in engineering, who first said he wasn't the engineer for that station, but asked why I was calling. I told him, and he walked over and checked, and said "Oh Yeah, there isn't any audio". Last night when I checked, the signal was back on HD2”.

It’s one thing if listeners don’t notice HD radio. They never really took to it anyway but it’s amazing -- no feed for a week and no one at the station noticed.

People Meter Panic

Have you seen that Cumulus is now imitating another “C” broadcaster – this time, not Citadel or Clear Channel, but CBS.

CBS was first to build People Meter hit radio stations that attract huge cume in Los Angeles, New York and Detroit. Keep in mind People Meter numbers do not necessarily reflect listening but it’s the only ratings game radio broadcasters have these days.

While Myrtle Beach is not exactly New York in size, Cumulus is using its new format “I” (The "I' must stand for Imitation of CBS). The "I" format is also on Cumulus stations in Dallas, Nashville, Indianapolis and Pensacola. You get the idea. The recent format changes are on Cumulus stations that are not performing well so imitating CBS means nothing to lose.

Hit music.

Few if any jocks.

Even “Commercial Free Mondays” like CBS used to do it and “10 Songs in a Row Every Hour”.

Radio operators are figuring out how to place nice with the People Meter. CBS got out in front. But "I" radio is a direct ripoff.

Not hot and not even cool.

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Salary Cap Radio

2010-07-29T00:02:00.001-07:00

In most major league sports, team owners have to work under the constraints of some kind of salary cap.

The term, I believe, is “capology”.

The motives on the part of the team owners are to keep salaries down and in essence prevent future George Steinbrenners from buying a championship while smaller market teams could not compete.

Of course the players reluctantly agreed to salary caps during labor negotiations but some agents have found ways to work around it.

What a perfect idea for the consolidated radio industry – I’m talking about you Clear Channel and Cumulus and Citadel.

In the case of these owners, there is no cap – just an ever shrinking budget which forces their minions to fire key talent and remove assets that wind up actually hurting their stations.

So how about a salary cap for radio – in particular these three companies – one of whom voluntarily filed for bankruptcy, another facing $18 billion in debt it can’t repay in two years and the third singing “It’s a Beautiful Day In the Neighborhood” while its debt piles up.

Are you with me?

Open minded?

Here is salary cap radio. I'm counting on you to weigh in a Facebook discussion to hone this thing. Dickey, Suleman and Hogan are listening.

1. Each market gets an annual budget for its local properties and like sports teams that get their cap limit from the league, the markets get it from their home office. Let's say, $30 million for a cluster of stations in Anytown, USA.

2. The market manager (if he or she hasn’t already been eliminated at which point corporate divvy's up the money) sees to it that the manager running each station gets to spend the allotted budget.

3. There has to be a manager for each station. Sorry, if you won’t do this, I’ll take my marbles and quit. Come on! You have to have a local manager. Just deal with it.

4. The manager gets to decide on how he or she wants to spend the money. That means if she wants to hire a morning team, she can do it. If she needs to run cheap on all-nights, then that is her decision. She has to work within the salary cap. (By the way, her salary is not in the salary cap – just as it is not in the salary cap of sports teams). Do you think Farid likes this yet?

5. Say a station manager wants to hire Dave & Geri for five years (as they should have done in Grand Rapids where they remain very popular), the structure of the contract can allow for the station to take a bigger cap “hit” in the early years of the contract and less in the later years. That’s why you need an on-the-scene manager – to know whether the station will be successful enough to grow the salary cap in ensuing years. In the case of Dave & Geri, local management let them get away and now their audience is following them on their podcast. Can any station afford that kind of listener defection?

6. You need a minor league just as sports teams have. Sometimes you are paying so much for key talent that you have to bring up a minor leaguer who has great potential for a look-see. Maybe you keep them for a while or send them back to another station. When I was a PD in Philly, I always had minor league stations from which to siphon talent – in upstate Pennsylvania. And they often became future big market stars at low prices (at first).

7. Sorry, your sales professionals and other employees including clerical (if any) must also be considered in your capology strategy. Don't forget sales, marketing and promotion. And, engineering when you divide the money up.

8. The difference between this and traditional budgeting is that budgeting involves cutting back whereas capology requires a deft hand at weighing which talents should get the most money to bring the best results.

9. Mobile, online and social networking must also be a cap expense. Some managers really do get the importance of online revenue growth and they are best suited to determine how fast and how much should be spent on new media. By keeping the decisions local, the money can be invested more wisely. If I’m running a local station, I’m looking to spend at least 25% of my budget on the future – or as I also call it – new media. The first year I may not have my morning talent signed to a ten-year contract yet but I can get those expenses under control.

If stations do well with their ratings and ad sales, then they get rewarded with a higher cap next year – the better to invest and shore up the local franchise.

Alright, maybe I’m no John Hogan but will you at least give this salary cap idea a try?

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The Ultimate Chart – Number One with a Bullet

2010-07-28T00:02:00.001-07:00

When I took over as program director at a major market top 40 station, the first record promotion man to visit me walked in, sat down (with the door open) and pulled out a checkbook.

He said, “how much do you want?”

It’s not like I was naive about payola, but his frankness was still disconcerting.

Maybe because I am an east coast guy I am not that always so trusting.

Don’t get me wrong, I liked (maybe even loved) those Runyonesque characters who pushed program directors to play music they were paid to work.

However, I didn’t always believe them.

When they sat in my office and pulled out Billboard to show me the “bullet” the record they were working "earned" this week, I would take the magazine and page through to see if their label bought any full page ads. Maybe the label bought the "bullet", I thought.

I told you I was not that trusting.

However, I, like a lot of program directors, lived and died by local research that our stations conducted.

Still, creative record promoters would bring free albums, gifts or God knows what to the various record stores in the listening area so that these stores would report hyped sales that exaggerated the record's real sales performance when the station called.

Listener input was important but I caught the labels paying people to call in and request their songs over and over again. All's fair in love and the record business.

It was all part of the game.

I liked Radio & Records because I could track what other stations like mine were adding and how songs were moving up and down the charts. But at no time did I ever believe music charts like the ones in Billboard really mattered to anyone other than the labels and the artists.

Still true today.

Which is why I was so pleased to see my friend Eric Garland of Big Champagne debut The Ultimate Chart based on online streams and social networking services – not just sales and airplay.

Now this chart has the potential to mean something to everyone – after all what is a music chart in this day and age that doesn’t adequately factor in online and social networking? That’s right, Billboard.

Here’s how The Ultimate Chart does it.

They measure legitimate music services such as YouTube, MySpace, Twitter and Facebook. The strategy is sound because there are so many more things that are relevant to what makes music successful than primarily record sales and airplay. There is also television, ring tones and other ways to judge success.

If you study The Ultimate Chart you will see discrepancies between the results they report and Billboard – as it should be.

In a recent New York Times article on The Ultimate Chart, the writer said,

“For the week that ended July 11, Billboard’s Hot 100 had Katy Perry’s “California Gurls” at No. 1 and Eminem’s “Love the Way You Lie” at No. 2. The Ultimate Chart, measuring the week to July 13, had those songs in reverse order. But No. 3 on the Ultimate Chart — Shakira’s World Cup song, “Waka Waka (This Time for Africa)” — is a distant No. 39 on Billboard; the Ultimate’s No. 4, Eminem’s “Not Afraid,” is No. 11.

The most notable disparity is Justin Bieber’s “Baby,” which is No. 5 on the Ultimate Chart; on the Hot 100, the song peaked at No. 5 in February, but fell off the chart entirely in June.

That would seem to indicate the continued popularity of the song — or at least of Mr. Bieber — on social-media networks even if downloads and radio play have cooled. For artists and record companies, that extra attention can mean the difference between a blip and a long-lasting hit”.

Being number one can also be a disadvantage – I’m speaking of Billboard now.

While they play with their methodology, Billboard has not seen fit to embrace the Ultimate Chart’s approach. Billboard several years ago relented a bit when it started factoring in AOL and Yahoo in their chart compilation but have been slow to reflect the radical swing to online and social networking influences.

The labels show a willingness to look at all type of data that on the surface would indicate that they, indeed, have open minds.

In reality, record labels only use the data that helps them sell an artist or product. So if it were delivered to them by Charles Manson and it showed upward growth of their artist(s) then the chart is good.

I’m kidding – I'm kidding.

What this Billboard challenge tells us is what we’ve been saying all along – that the music industry has changed even if the labels have not.

Consumers can like an artist, cherry pick a tune, go to a concert (or not as the concert industry is beginning to find out), buy merchandise and more without having to have a top ten song.

In the music industry, a song that has earned its “bullet” in Billboard shows the most growth.

Example: debuting on the charts at #39 with a "bullet" is euphoria.

Number one with a "bullet" means the song is so big it is not yet out of juice – something we see a lot less of these days.

With that in mind, Eric Garland’s Big Champagne if it successfully turns the focus on how real people consume music and not how the record industry wishes they did, then I would say it earned a number one with a "bullet" for The Ultimate Chart.

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Finding Radio’s Lost Generation

2010-07-27T00:02:00.001-07:00

The radio consultant Alan Burns came out with a study recently that concluded “radio is in danger of losing its future adult audience”.

Note Burns said “future adult audience” not young audience which radio has arguably already lost.

This notion is not new to those of you who meet here at this space every day. We’ve been warning of these dire consequences for years as radio companies ignored their product for foolish cutbacks.

They fail to fully understand the new listener – their technology and sociology.

In the Burns study, almost half of all women and nearly three-quarters of early adopters would buy a different cell phone if it contained a radio receiver.

I’m not buying it.

Radio is not a main attraction on a cell phone which is why Steve Jobs has been stingy with putting the FM chip in his devices.

For some reason we in radio have a hard time seeing that consumers have changed. We are still trying to offer them what we’re comfortable offering them – 24/7 broadcast radio.

I agree with Burns when he says, “the more like a jukebox we become, the more we’ll lose audience to digital alternatives”.

Absolutely.

Yet those of us who believe this are already speaking to the converted. Even as we speak, more morning talent is being cut loose to make way for voice tracking.

My friend Bill Gardner, the outstanding morning talent is leaving JILL-FM in Los Angeles because of -- I'm sad to say, automation. What is it about voice tracking that owners do not get? Listeners don't like it but owners love the money it saves.

So here’s the real story:

1. Personalities like the ones being fired by radio stations are the antidote to iTunes. Especially if these personalities are music trendsetters. The very thing that differentiates an iPod from a radio is the thing radio executives apparently do not value enough to keep them employed – on-air, live and local personalities.

2. Radio as it is now configured is not a major influence on musical tastes as it once was when it had no digital competition and before filesharing. Come on – playing the same tunes over and over again ad nauseum does not directly address the more potent competition – music discovery by peer group and online websites. Pandora and peer-to-peer filesharing is today’s music discovery not top 40 radio.

3. On-demand listeners will continually opt for short form “radio” whatever that turns out to be. In other words, entertainment that has a beginning, middle and end and that can be carried around on mobile devices or eventually available from the cloud anywhere. It can be consumed on-demand. This is anti-radio 101. Keep fighting this and in a few years some consultant will tell you what we just said right here.

4. Local is what is missing from radio. An iPod is impersonal. When iTunes updates its music offerings, it’s the big Apple out there for everyone to see and hear. Radio works best when a local personality debuts the local playlist assuming it has new music on it. We don’t need more national. iTunes is good for what it is, radio doesn’t need to aspire to a poor imitation.

5. The iPad is the new radio, the new television, the new magazine or newspaper, the new book and maybe even the new computer for some folks. If you believe me, then everything we do should be built around the iPad – not old technology. That means radio will have to have video available alongside. Personalities who are live and visible. Just jiggering new playlists or bending old formatic beliefs as a concession to a new age will be met with failure.

6. In the past if you wanted to change format, you’d hire a consultant or PD to do it. They would build a local station and if it was good and if it fit a need, the station would succeed (and if you could hear it). Today, if a radio company really wants to rebuild for the future, all it has to do is start with the concept of social networking. That is, build the new “radio station” (which will soon be misnomer in the digital world) around this group of like-thinking people. Then you service them, talk to them, put them in touch with each other in a way they could not achieve elsewhere. Oh, and do it all for an iPad. Three million sold in less than three months and Christmas is coming.

My advice would be to stop thinking of radio in a traditional way.

Think of radio as the perfect and I mean perfect liaison to new media. We know how to do content professionally, we can do video. Although we don’t impress in social media, we’re capable of learning.

If you wanted to create a scenario for the potential of new media, broadcast radio has all the tools (especially if you rehire the squandered local talent) to come up with whatever the marketplace wants.

That’s the can-do attitude radio should have.

Not clinging to the past and not trying to slightly modify the past for the present.

Listeners are way ahead of radio.

Go follow them because radio has the ability to give today's more demanding listeners exactly what they want even if it is in a different form or in a different space.

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The Sale of Clear Channel

2010-07-26T00:02:00.001-07:00

Recently there has been speculation that Clear Channel is petitioning the FCC to allow letting groups own 10-12 stations per market and other remedies designed to further deregulate radio.

Clear Channel is owned by Thomas H. Lee Partners and Bain Capital – two investment banks.

They overpaid for Clear Channel at $24 billion. Later tried to get out of doing the deal and then, faced with the legal consequences, decided to go through with the purchase of radio’s largest consolidator.

Investment banks do not really own anything just to operate them.

They buy companies.

Leverage the debt.

Then turn around and sell what they bought for a profit.

When they can’t sell for a profit, these investment banks usually make fees – lots of them – so the process of selling off the individual parts can also be profitable. That is, they win even when they lose.

I believe Lee and Bain’s Clear Channel is no more ready to sell the company than, say, than Lew Dickey’s Cumulus Broadcasting is ready to start acquiring stations.

The tricky Lew Dickey knows that he will never get what he paid for his stations or his company. The age of consolidation has passed and while owners were making money they were wasting their assets – the people, the talent, management, sales ability – that could have made their investments grow in value.

Is the push to get the feds to further relax ownership limits a precursor to selling companies like Clear Channel?

Clear Channel is not worth what it was when Randy Michaels first put the stations together.

And while the argument has been bandied about that more monopoly – not less as in the merger of Sirius and XM Radio -- could be justified because radio doesn’t compete against radio any longer. It competes against all media.

Yes, Lee and Bain will exit someday.

Not today.

And they will do it with or without further relaxation of ownership rules. In fact, don’t be surprised if some stations will be sold off for spectrum space as the new media needs of cell phones and mobile devices gobble up spectrum.

You’ll note that Clear Channel continues to donate crummy AM stations to minority interests.

What a joke.

Give away properties the minority owners cannot possibly run profitably and take a tax write-off in doing so. You notice Clear Channel is not exactly giving away KISS in Los Angeles for a tax write-off.

The speculators are missing a bigger point.

There is an exit strategy developing right now, but it is the one being considered by Clear Channel employees.

Take a look at this email I received chronicling what some Clear Channel people are getting ready to do:

“My friend, along with many other employees in this cluster (in the Southwest), are all creating exit plans. They have goals to be out of there in the next 8 months. The reason? Past experiences and observations.

Although this market is meeting and passing its goals, which is never enough, the fourth quarter cometh.

When I say the sales department has met or exceeded their goals, what was that great classic "Nothin From Nothin Leaves Nothin?", you can do the math. The market has been down as much as 18%. CC lowers the rate to create volume, market goes up, sales has to go in and sell value, buyers say value, what value? In a nutshell they have increased there (sic) sales to meet their goal of 3% increase over this time last year.

I firmly believe two things. 1. they want to expand the number of stations allowed because they cannot sell the excess without taking a hit and 2. you will see significant reductions in work force by the end to the year. It is the Clear Channel way.

Everyone is still in denial. Both owners (CC) and the employees. The smart ones are going to bail”.

So we know that investment banks eventually sell that which they bought and usually they make money one way or the other.

The real damage could come as Clear Channel and other major consolidators lose the people they need to avoid further and continued shrinkage of revenues.

You’ll note even the rose-colored glasses of analysts are foggy these days.

People have come to understand that an old media business that has done virtually nothing but cut costs for 12 years is depleted and worth less than when the properties were assembled.

It reminds me of management guru Peter Drucker who keynoted one of my industry management seminars before his death. He told the audience of radio managers that it is the seller who makes out like a bandit in most company sales not the buyer.

Drucker’s words ring true today as we see radio pillaged by incompetent managers who under fear of losing their jobs were required to slice and dice a perfectly good live, local cash flow machine.

In essence the consolidators have effectively devalued their very own assets.

The sly Lowry Mays knew all of this.

And you'll notice Lowry got out in time.

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New Stupid (And Smart) Radio Tricks

2010-07-23T00:02:00.001-07:00

Motivational author Bob Nelson says, “You get the best effort from others not by lighting a fire beneath them, but by building a fire within”.

Unfortunately in radio these past few years, consolidators are screaming “We didn’t start the fire” louder than Billy Joel sang it.

A lot of what has passed as good management and smart strategic thinking has been ill-advised and mean-spirited.

So we find ourselves 12 years removed from the origins of radio consolidation and three years since draconian cutbacks have compromised most live and local broadcasting.

On that note, here are the latest new stupid (and smart) radio tricks being played in our industry.

Citadel Cuts Sales Commissions in a Recovery

Okay, maybe it’s not a big recovery but go figure what this strategic move does to morale and the bottom line.

Citadel stations in Birmingham, for example and in particular WJOX (said to be the only one making money), are reported to have cut commissions very recently by – well, you guess.

How about one-half!

Insiders say this came from the new GM who has been there only a few months.

Here’s an in-market account:

“I know it affected the top billing station, WJOX, it went to 9% direct from 12% and 7% on agency from 10%. WJOX is supporting the others in the cluster so I guess they need the money to make the month."

Who is supervising these geniuses?

You guessed it again, Judy Ellis, Citadel CEO Farid Suleman’s radio wife.

Cutting commissions to save money at the start of a recovery – as we used to say in Philly – stoopid!

WTOP Employs New Media to Cover a Rare DC Earthquake

This Bonneville top-five billing combo doesn’t own the all-news franchise in Washington by just cranking out headlines every 20 minutes.

When a rare earthquake – okay, only a 3.6 but the biggest ever measured in Washington – hit the nation’s capital recently the usual calls came in, but also tons of emails, texts, tweets and posts on their Facebook page. Immediately, WTOP got a snapshot of where the tremors were felt – a robust flow of information. A powerful demonstration of social media as a news gathering tool not just a chatterbox.

Smart, that Jim Farley.

Clear Channel Lobbying Hits Nearly $1 Million (Every Three Months)

How’s $940,000 – up from the last quarter of 2009 and up from $760,000 compared to the first three months of last year. Those folks at Lee and Bain sure know how to cut back, don’t they?

First they pay Randall Mays to go away as CFO and sign him to a lucrative part-time employment contract plus hire a new man meaning Randall really doesn't go away.

Then, they make Mark Mays go away at the end of this year by giving him a lucrative new contract to stay -- a contract that pays Mark Mays millions to do 20% of his current work.

And, he gets to buy the Gulfstream jet he now uses. First right of refusal if anyone outbids him. Plus, Lee and Bain will hire a new man (probably a man).

They keep trimming local radio staff.

Eliminating engineers.

Cutting costs.

Hey, you have to lobby, don’t you?

This is a model takeover company that should be studied by Harvard Business School, but I’m going to say – not so smart as a good radio operator.

Michigan Looks to Outlaw Broadcasting Non-Competes

House Bill 5750 sponsored by Representative Fred Miller.

The bill would prohibit an owner or operator of a broadcast television or radio station from requiring certain employees (primarily "on-air talent") from signing non-compete contracts or agreements.

House Bill 5750 would amend Section 4a of the act (MCL 445.774a) to create an exception for contracts or agreements between a broadcast industry employer and a broadcast employee or prospective employee. "Broadcast employee" would mean any employee of a broadcast industry employer except for those providing primarily sales or management functions.

California has led the way on this and there are other states that protect talent from greedy owners who think it is smart to limit the living professional broadcasters can make because they are no longer working for their former station.

Very smart.

Farid Suleman as Convention Co-Chair

Radio Ink turned to Farid “Fagreed” Suleman to be co-chair of their December convention in New York City saying the event “will benefit from his valuable insights into what top executives most need to know and understand in these complex times”.

Hello?

This guy ran Citadel into bankruptcy and walked away with a lucrative new employment contract.

If you want to know how to eradicate shareholder value, help the previous investors who hired you lose their stake in the company and screw hundreds of employees out of their jobs and get a promotion, you won’t want to miss it.

The Radio Ink event is usually smart.

Choosing a bankruptcy loser to show us the future – out of touch with the radio industry.

The CBS Media Player that Replays Commercials

Last week CBS Interactive Music Group and CBS Radio released a new streaming media player at Radio.com. It integrates 130 radio stations and Last.FM. A proud CBS news releases boasted better functionality and more ad placement opportunities, but the last line of the release is the real kicker:

“Users will also be able to scroll back to commercials they missed”.

Now that’s the real killer app! Replaying those cool commercials.

The CBS Interactive people are at least trying even though you get the sense that it’s still all about the terrestrial stations and not about separate new content.

Let’s hope some PR flak who doesn’t get it wrote that sentence and if so he or she gets a "stoopid" the way they say it at 3rd and Shunk in South Philadelphia. No one -- zero -- is going to replay a radio commercial.

If the radio industry is going to recapture its live and local radio magic, it needs more smart strategic management decisions.

Think of it like this.

iTunes revenue in the first quarter of the year was $1.1 billion.

Clear Channel’s was $623 million for the comparative period.

iTunes revenue is only 7.9% of Apple's total revenue while radio represents half of Clear Channel’s revenue.

iPad revenue is forecast by at least one analyst to be $1.95 billion in the third quarter of this year.

Live, local radio is still a good business but repeater radio is not.

Radio with new media content and social networking as a separate tandem is a growth business.

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The New Media Content Revolution

2010-07-22T00:02:00.001-07:00

I am often asked by readers to suggest some ways they might start thinking about entrepreneurial ideas for the new media content revolution ahead.

It’s one thing to learn from the mistakes of consolidators in the music and radio industries and their predecessors in publishing and TV but the best way to see actionable growth ideas for the future is to study sociology along with the emerging technology now.

Here are a few ideas I thought might interest you:

1. Textbooks Out, iPads and Kindles In

Gabe Hobbs’ Hobbs Blobs tells us that Clearwater High School in Florida is planning to eliminate all textbooks by the start of school this fall. That’s 2,100 students at an estimated expense of $600,000. It was all over the front page of the St. Petersburg Times touting the first-in-nation high school to go paperless.

Gabe wisely projects that radio might want to find a place on these new age textbooks because students will have 3G connectivity.

24/7 formats will probably not be the answer but if my former associate George Michael, the WFIL legendary teen personality, were alive, he might say – get into the high school news business. Maybe even the Clearwater High School news business.

For those of you fired from a perfectly good radio job by the stupidity of consolidated managers, they will never do this, but you might.

Hint?

2. Virgin to Publish In-Flight iPad Magazine

Richard Branson is a crazy man and that’s why we love him. Fly Virgin Atlantic and you’ll love him even more once his new “Maverick” iPad-only inflight magazine becomes available to passengers.

Virgin will save the trees and target their upscale international audience with content on entrepreneurism, technology and travel.

Branson’s daughter, Holly, will head the project that will likely reduce traditional publishing costs and start playing to what is likely to be planeloads of fliers with electronic devices on their laps.

First iPad-only issue comes out in October. Then iPhone and android device editions will follow.

Hearst sold 12,000 downloads of its Popular Mechanics app since it was released in early July. Wired has been ringing up monthly app business since it dumped paper. Esquire; Marie Claire; O, The Oprah Magazine; Food Network Magazine; Cosmopolitan and Harper's Bazaar are next.

This is what we’ve been talking about and for those of you who attended my Media Solutions Lab last January – the future we saw together then is arriving now which prompts the question – why aren’t you in the multimedia business?

And that’s what it really is or is destined to become – not simply print, or video or audio. It’s everything wrapped around social networking. The paid model is here as an addition to free. Ad supported Internet is alive and well but there are not enough ad dollars nor will there be to support a wide range of entrepreneurial ventures.

I’m going to do some special segments on the opportunities ahead in multimedia content creation at our next Media Solutions Lab January 27 (save the date). In the meantime, take a close look at your area(s) of expertise and start conceptualizing a new model built around – the iPad, America’s new entertainment and information device.

3. Paywalls Are Coming

News Corp’s Times and Sunday Times is getting ready to start charging for content. It has erected a paywall that even Google’s web crawlers cannot surmount

Revenue from online advertising is not enough.

Hulu launched a premium TV service for $9.99 a month for full seasons of TV shows and other content. That’s really aggressive and may not work. Who knows what the sweet spot is for monthly subscription pricing.

Even local newspapers like The Tallahassee Democrat, a Gannett paper no less, is charging for the online edition. The Wall Street Journal almost always has charged and The New York Times has a cockamamie metering concept that it will introduce in 2011 although I believe The Times model will fail because it tends to punish heavy readers.

This publication – Inside Music Media will go to a pay model by early fall -- $99 for a year, $14.99 per month.

Radio stations that could offer specialized short-form music programs, experts on music discovery by genre and news and entertainment could also find a lucrative pay model if the content has certain elements.

This is my criteria for success.

To succeed with a paywall the content must be unique, compelling and addictive.

If all three of these criteria are not met, chances for success diminish.

For example, if a radio station offered a website and music-enhanced discovery site around hit music, it would likely fail unless it has content not available elsewhere that consumers would be compelled to read so they could become addicted to the product.

Classical music buffs who are left with nothing on terrestrial radio could get several hours of music a day ported to their electronic device of choice with outstanding, exquisite content and expert context may very well pay. You might also monetize through ads.

Local will be a big area.

Will someone please do this before I do?

Zip code Newsradio.

Type in News-08003 and get all the news for Cherry Hill, New Jersey. Not fluff. No repackaged news from other sources or it will fail. Unique, compelling and addictive. Social networking for that zip, video, pictures, text.

If the content exists somewhere else for free, you’re through.

There are many new opportunities cropping up for new media. It is important to understand one thing more than anything else – the consumer.

Your target consumer will tell you what they want, will use and maybe even pay for.

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Grading Radio’s Best & Worst Strategies

2010-07-21T00:02:00.001-07:00

There are a lot of questionable moves being made out there in the media world these days.

Companies propped up by hubris and investment capital and overleveraged are doing some odd things.

And then there are seemingly free strategies that may cost their companies money in the future.

So here are a few that we can learn from:

XM as an Active Stock

Now that is the work of the greatest radio salesman of all time, Mel Karmazin.

Let me explain.

Wall Street is gushing all over Sirius XM because his previously conservative “guidance” to analysts has been exceeded for the third time this year. Either analysts are dumber than we think or they just play along.

So Sirius XM suddenly earns a “buy” rating as these lemmings are impressed with the conversion rate from those who had free trial satellite radio subscriptions to paid.

Or as the great salesman was quoted:

“That percentage rose from 44.3% to 46.7.%" making the just-ended second quarter "the best quarter of gross additions, deactivations and net additions since the merger of Sirius and XM in July 2008.”

Keep in mind that this is a company that was knocking on the door of bankruptcy not long ago.

And if that doesn’t put it in perspective for you with all this talk about Sirius XM on the “most active” list, the day it earned that status their stock went up just six cents to just one dollar. One buck. Yesterday Sirius XM closed at 97 cents.

Sirius XM is a virtual platform in the mind of its great sales CEO Mel Karmazin.

Grade: F for effort. A for Karmazin.

The NPR Rebrand As Everything But Radio

Only a newspaper executive like Vivian Schiller (NPR’s CEO) could waste the time and effort on distancing NPR from its real name National Public Radio.

What NPR was good at was accessing new media platforms and all that was done by radio people who preceded Schiller’s regime. No name change was warranted. Many called NPR "NPR" and some still called it National Public Radio. Whatever the expense – whatever the negative value of distancing radio from its radio roots, name a benefit that equals the risk?

Let’s call this dust up “Mourning Edition” and name it after Schiller’s bad strategic move.

Grade: F like in if you just put your name “radio” on the paper, you would have gotten an “A”.

Clear Channel Engineering Like The Culligan Man

Clear Channel is apparently tightening the screws on that non-essential art of engineering, you know, keeping the station on-the-air like it's supposed to be.

"Requests for non emergency repairs, new equipment, etc, will be sent from PDs, managers, etc., to corporate engineering on the official CC corporate engineering discrepancy form. Corporate engineering will determine the best course of action and will dispatch people and resources as needed."

It appears local market engineers no longer have control – that’s surprising, isn’t it? No one else at local radio stations these days seem to have control of anything in the era of bean counters.

In essence, as one of my readers pointed out, local engineers have become repair people. This also apparently eliminates the regional Directors of Engineering.

This wouldn’t be to save money, would it?

You can expect more engineering layoffs once this is in place and perhaps the model will eventually be one engineer bouncing around from market to market when there are emergencies.

Can you imagine what would happen if groups like Clear Channel would put their minds to innovating content the way they brainstorm for ways to cut operations to the bone even if it threatens the very signal on-the-air.

Grade: A for innovative way to save money and hurt yourself.

New Ways to Pay Morning Talent

Tom Taylor had a great piece recently about a Clear Channel experiment to come up with a new way to pay morning talent.

As I remember it, a so-called 30% test was being imposed in at least one market. That is, if the budget for the morning show is more than 30% of the revenue, there must be cuts made.

Tom reported that he has heard of some two-person morning shows getting cut down to one personality.

This idea of tying paychecks to revenue sounds like a Lee and Bain kind of thing – the mentality of an investment bank stuck with being an operator. And it’s oh so dangerous because half of anything is still half – isn’t it?

Here’s a better idea f0r Lee & Bain:

If your morning show brings in 40% of the station's revenue, sign those people to a long-term contract and keep your costs down just like sports teams do when they are operating under an expense cap. Spread the talent expense over a longer period of time while preserving that talent to attract audience.

If your morning show team brings in 50% or more of the stations revenues, get with them and their entourage and find out how to grow the shows popularity and invest more money (sorry, I know that hurt).

Under 40% revenue coming from the morning show, let the local manager have one year to fix it without interference from corporate. If they fail and you haven’t butted in, you can fire them. Most good managers would readily accept this responsibility (but remember I said "haven't butted in").

Under 25% revenue coming from the morning show means you’re carrying Don Imus or some other free import. Stop it right now and do something local.

Grade: Clear Channel’s idea “F”. My idea “A”.

One final thought.

It has been my experience that hands-on operators when allowed to work in an atmosphere of approval and acceptance can come up with more marketable innovative ideas than a handful of CEOs or bankers.

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The Music Internet Like It's 1999

2010-07-20T00:02:00.001-07:00

Prince is nuts.

He’s on something or he’s in denial.

Or he is a more savvy businessman than his ridiculous public comments give him credit for.

Prince recently told the Daily Mirror over in the UK that “The Internet’s completely over”.

Thank God he finally shared that with us. I was under the false impression that Apple was selling mobile devices as fast as they could make them partially to access the Internet on the go.

Now I’m going to have to make my iPhone and iPad into ash trays – and I don’t even smoke!

Of course, Prince is no different than most of the music executives he loathes. He may say the Internet is over but the four major label execs wish it were over. That’s close enough.

Let’s get back to the days of CDs.

Hey, vinyl is coming back.

In the embarrassing example of a great artist who should keep his mouth shut except when he sings, Prince is going to stop downloads entirely for his next album and plans to put his money where the fish go, in a newspaper, by reverting back to the tactic of stuffing a CD in copies of the Daily Mirror.

Seems like Prince is irked because the starving artist can’t get an advance from his starving record label so he’ll just give away the CDs.

Prince is one sly fox.

Have you been following the demise of the concert touring business – what I tipped you about a long time ago? The last bastion of a healthy music industry is headed for life support.

No wonder Prince comes up with stuff like:

"The Internet's like MTV. At one time MTV was hip and suddenly it became outdated. Anyway, all these computers and digital gadgets are no good. They just fill your head with numbers and that can't be good for you."

That’s right, Prince. The Internet is like MTV.

See, Prince’s end game is to continue to make money touring and he has to know that those days are numbered. So, just like a Wal-Mart 15-minute special, Prince is giving away his music to get fans into buying concert tickets.

That train has left the station and is headed to the junkyard.

This summer has seen so many canceled concerts and trouble brewing for concert promoter Live Nation.

Prince demands fans remove photos of him from their personal sites and has threatened to sue YouTube and eBay.

It doesn’t matter if you don’t like the way Lady Gaga dresses for a Yankees game. She sure has street smarts and cred.

Gaga embraces the power of free as a promotional tool with free downloads and look-sees on video sites.

Prince embraces the questionable power of tabloid newspapers to give away his music recorded on yesterday’s technology.

Gaga encourages sharing while she then goes on to sell more entire albums and downloads than anyone else.

Prince spits in the face of YouTube and free-access sites.

My friend, the outstanding music industry analyst Steve Meyer, linked to a story where Prince’s contemporaries beg to differ with him.

Meyer said in a recent piece:

"Back in July 2007 Prince distributed his Planet Earth CD in the Sunday edition of London' Daily mail newspaper. Back then I wrote about here in the newsletter and said, "Sunday circulation of the Mail is estimated to be between 2 to 3 million. That means that's how many copies of Prince's new album will be distributed in one day. In essence, Prince sells a couple of million albums in one day. Not a bad day for the "Purple One" at all. The financial information about how much the Mail paid Prince for this deal was not disclosed, but I would imagine Prince got a nice big fat check”.

Ever get the feeling you’re being had?

Prince, who notoriously has been at odds with his labels (think “the artist formerly known as") is at it again.

Prince sells to the newspaper to distribute his CDs and they pay him to give away his CD as a loss leader. Then uses the wide exposure to promote his concerts.

The Internet is not over.

And Prince is not over.

What is over is the CD business and soon, the concert industry at the hands of folks like Live Nation.

It’s great to make fun of Prince when he says stupid things that we know are not true, but at the heart of it all is a hurting music industry that has been left to shrivel up by the big four labels.

The labels don’t get that free is their friend.

They don’t get that taxing radio will hurt them further.

That they are leaving money on the table by predator pricing of royalties for streaming services that could be generating more free interest that turns to sales.

That the concert business they promote but from which they do not benefit is not enough to keep big artists with them in the future.

That 360 deals are really 180 deals because music is now a commodity. Artists will not be able to look forward to careers with recording as their main effort and record labels are the least likely to have the skills to manage a singer or a band’s career.

Oh, and MTV isn’t dead.

It changed.

And that’s what the music industry must now do or face further erosion.

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If Clear Channel Could Own 12 Stations Per Market

2010-07-19T00:02:00.001-07:00

Here’s Mark Mays’ argument to the FCC.

We want what Mel’s having.

Mel Karmazin, CEO of Sirius XM Radio, convinced the government to allow him to merge Sirius with XM – the only two competing satellite services – thus making them one monopoly.

The Mel argument was that satellite radio wasn’t just competing with satellite radio but with every form of media entertainment out there.

He won.

Now Clear Channel is back at the FCC again after four years and proposing ownership “tiers” exactly to their monopolistic liking.

Increase the number of stations a company can own from eight to 10 in a market that has between 55-64 total radio stations (hey, I thought you said radio competes with all media and not other stations).

In markets where there are 65 or more stations, Clear Channel would respectfully like to own between eight and 12 stations. It argues that this type of move could “jumpstart” the terrestrial radio industry (wait a minute – you mean jumpstart Clear Channel, don’t you?).

And then they have the nerve to argue that “Easing the local radio ownership limits, at least in the largest markets, will recapture investors’ interest in radio broadcast companies. It will also stimulate the long-dormant market for radio station transactions.”

I have not heard anything about the listener – the consumer or the advertiser. Just consolidators.

Talk about a sense of entitlement. You don’t have to blame young people, just greedy old people who run consolidated radio companies.

But sit down for this argument:

“Broadcast radio remains one of the least consolidated of the country’s major industries.”

How comforting.

Is that why radio consolidation has been such a colossal failure?

Clear Channel took 102 pages to tell the FCC “None of these powerful competitors are limited in the number of outlets or program streams they can provide”.

And they are looking to hit it out of the park.

Abolish the limit on the number of AM or FM stations a consolidator (predominantly Clear Channel) can own.

Make it possible for grandfathered clusters to be sold as one transaction.

Don’t worry, The Evil Empire is very concerned about minorities (which is why I guess they hire so few of them as managers). Waivers for anybody who helps stimulate the number of minority and female-owned stations.

I can just see this image of Clear Channel execs with they fingers crossed, hands behind their backs hoping nobody at the FCC compares the number of stations they used as incubators for minority ownership when compared to the 99% better ones they kept for themselves.

Clear Channel seems to think that there is an atmosphere for deregulation in Washington which is the most amazing thought I have heard in an Obama Administration. But, hey, whatever helps you become bigger and badder.

Look, as my readers know, Clear Channel must repay $18 billion in debt in a few short years or face bankruptcy. They generate about a billion in revenue each year. Isn’t going to happen.

What are these people thinking – Clear Channel can’t buy more stations!

Or, can they?

Of course, they can.

More fees, more money for Lee and Bain, the investment bankers who are running the group into the ground currently.

Fees for everyone.

That’s entertainment!

In a more sobering moment, all radio would need at this point is more consolidation. In fact, it needs less.

Radio needs re-regulation – redistribute these hundreds and hundreds of radio properties to people who will definitely not run up $18 billion in debt while cutting local programming and putting talented professional talent, sales execs and managers out of work.

In a way, you could also make an argument that if Clear Channel isn’t careful about what it wishes for, that they may get it. In addition to fathering Repeater Radio, they have absolutely no clue how to interface with the new media competitors who they are comparing themselves with in the digital space.

Putting streaming radio stations on the Internet hasn’t done it audience-wise or financially. And beyond that, there is nothing digital that Clear Channel (or for that matter any other consolidator) could call a growth component.

Clear Channel doesn’t even budget even 3% of its annual operating expenses for the new media arena in which it claims it wants to operate.

Just more stations.

More cost cutting opportunities.

More monopoly.

Some people have a hard time understanding how investment bankers could want to get bigger when they are so upside down with debt from what they presently own.

Don’t confuse consolidation for radio broadcasting – you know, serving listeners and advertisers.

Leveraging money is their game.

When you run out of things to buy, you create more thus Clear Channel's present plea to expand ownership limits for radio stations.

I don’t know whether Clear Channel will succeed or fail in their attempt. And I have no idea whether they will even get some accommodations from the FCC. I suspect not, but in another day and in another political arena, Mel Karmazin did.

What I do know is that smaller operators and some medium size groups are beginning to separate from market leader Clear Channel in how they run their stations these days.

Once they copied the leader. Now, they seem to be looking (even if they are not investing) in new media as an equal and separate tandem business for the terrestrial stations they own.

They are rehiring morning personalities for their terrestrial stations. Taking another look at how to regain a local edge.

This is good. Very good.

Clear Channel’s intentions.

Bad.

Very bad.

Except for them. But isn't that what consolidation turned out to be.

Monopoly.

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The 2-Minute Radio Listener

2010-07-16T00:02:00.001-07:00

Arbitron VP of Programming Services Gary Marince, according to Inside Radio, told the Jacobs Media Summer School at the Conclave in Minneapolis that the average radio listening occasion lasts ten minutes.

And, the most frequently occurring duration is only two minutes.

Marince was quoted as warning “against over-promoting an upcoming feature or teasing the wrong features”.

Again we are getting lost in the rating device of the radio industry's own creation – The Portable People Meter.

Why do you think listeners spend so little time listening?

One reason is the technology that Arbitron employs to generate PPM numbers. They encode radio signals. Then build portable devices that respondents carry around on their bodies. These devices pick up any encoded signal it “hears” and thus reports it as true listening.

So, if you’re 75 years old and love oldies, but you walk past an encoded signal wearing a meter that picks up an r&b/hip-hop station, then you are Ludacris listener whether you really are or are not.

Putting that little slight of hand aside, the real message is that radio is simply catching up to consumers in general who have shorter attention spans and want what they want when they want it.

Remember when I shared how my USC students rarely listened to their iPod tunes all the way through – they listen to as much as they want or can and then move on. Teaching the next generation requires new skills as well. You can’t just stand there and talk no matter how interested they might be. Heck, everything is changing.

A world in which short attention spans dictate content.

The media business has a difficult time understanding the changes that are taking place. Radio CEOs just want new media to go away – and take that Internet with you – and everything will be fine. And take the recession with you at the same time. That’s the real problem!

No, I’m afraid it isn’t.

Traditional media was slipping before the recession and now when you are hit in the face with clusters of two-minute radio listeners, it should serve as a wake-up call.

What to do?

1. Not voice tracking. That’s a poor person’s iPod programmed by someone in corporate radio. Yet radio CEOs keep opting for cost cutting measures like voice tracking and it is hard to find a radio group these days that doesn’t use voice tracking at sometime in their broadcast week. Don’t do it, is my advice, or say hello to the one-minute listener "occasions" in a few years from now.

2. Put personalities back on the air. You can see some personalities getting hired back by radio groups that are concerned with the vanilla programming that obviously isn’t very compelling. Personalities who keep up a tempo that cooperates with increasing short attention spans are probably the best defense against wandering listeners.

3. Consultant Alan Burns, speaking at the Conclave, points to his research that says 25% of all women who listen to the demographic’s core adult contemporary or CHR stations feel that the stations do not understand them. Imagine that? Listeners now actually want to be understood! Of course they do and Burns says this type of disregard leads to audience erosion. Good rule of thumb: understand your consumer. Apple does. Even when they make mistakes.

4. More interruptions. Stay with me here. Study our society's inability to concentrate and by trying to get listeners to listen longer you are actually going to lose them. Therefore the features, formats and personalities that are aimed at your audience should be many, short and sweet. More interruptions is against our grain because we radio people still think forty-minutes of commercial-free music is most appealing. It may have been one day but now it all runs together. See the next item.

5. Frequent commercial breaks. Bill Drake had it right even before short attention spans became popular. Song, commercial, song, commercial & programming element, song, commercial and then a few songs in a row without interruption. Today, stopping and starting is desirable. But radio people have it in our DNA to do the opposite and stretch those music sweeps out.

6. More variety. The reasons my students told me they rarely listen to an iTunes song on their iPod all the way through is because they’ve heard it so many times and are tired of it. Hint. Clue. Music discovery helps keep their attention.

Ironically, an industry that made a virtue of winning as many quarter hours of listening as possible in the diary days of ratings may have to challenge itself to think about doing the things that cooperate with how today’s listeners now listen.

And, if you think there is safety in programming to older listeners, you may want to think again. Their attention spans have been compromised – ours have – which is why we, too, bury our heads in mobile devices, connect to social networking and can’t live without TiVo.

The revelation that radio has so many 2-minute listeners is not as worrisome as the fact that radio stations almost always program content to a vanishing listener who no longer drives to work with only the radio on (think, phone calls, email and texting).

It forgets that traffic and weather is not a monopoly of radio and that winning the attention of listeners going forward will take some new thinking that isn’t backwards.

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Paid Streaming Poses Radio Threat

2010-07-15T00:02:00.001-07:00

New research has emerged that shows a very favorable outlook should Apple enter the streaming music business.

This option, while not technically being radio broadcasting, could have a significant impact on radio especially if broadcasters can find no equally attractive alternative.

A market research company called NPD Group polled iTunes users – some 50 million strong in the United States – about both free and unlimited streaming of their iTunes libraries as a paid subscription possibility.

The research predicts between seven and eight million people reported strong interest in the paid version.

Free streaming would appeal to between 13-15 million iTunes subscribers.

You’ve heard me talk about the paid option with regard to podcasting, Internet, streaming and music so what I feel is even more significant is that NPD estimates between 7-8 million iTunes users in the U.S. could pay a monthly fee.

That fee?

A minimum of $10 per month.

That’s about two-thirds of the revenue now being brought in by pay-per-tune models or about $1 billion in year one alone. Subsequent years could show increases.

The sample, according to NPD, is based on 3,862 completed surveys from qualified respondents (age 13 and older). Each respondent reported using iTunes at least once in the past three months. Confidence level: 95%.

Two things.

One, it is curious that existing legal music downloading sites are popular but not booming and certainly not in as much demand as free filesharing.

Then there is the fact that companies like Rhapsody that are in a tailspin over decreased support from consumers wanting all you can eat subscription music plans appear to contradict the findings.

But Apple is Apple and one of its benefits may be the 100 million credit cards the iTunes store currently has on file. In other words, selling streaming music to the converted who used cool Apple devices may be what overcomes the apparent objection to paid streaming sites.

One thing is certain.

Apple didn’t buy Lala and shut it down for nothing. It was after Lala's cloud technology that will allow Apple to launch a cloud-based streaming service if record labels allow.

And they may not give their permission. You know the record industry – it would rather spend money to sue filesharers than have Apple pay them for increased sales. Apple may just launch cloud streaming anyway without additional permission citing the already existing contract between them and the labels.

What is worth watching is radio’s response to this.

Radio CEOs have trouble seeing past traditional radio. They don’t understand how young consumers are changing even traditional media users. So, while accessing your music library from iTunes over a cloud for free or a fee is not radio, it can continue to erode time spent listening to music stations.

I am a proponent of the paid model – not as a replacement for the free Internet we know and love – but as an additional option for the Internet that we would like to monetize. If NPD has discovered this active market for paid cloud-based streaming, you can bet Apple already knew it.

So, what are the options for music radio.

iPad Radio.

I am going to devote an entire piece on my concept of iPad Radio because it is not really radio and it is not really an iPad.

The delivery system for all entertainment in the coming years appears to be the iPad – that is, watch video, hear audio, read text, connect to each other and play. If I am right about this call – and I am personally betting on it as you’ll see – then radio’s answer to cloud-based streaming will likely have to reside on the iPad, iPod and iPhone.

What should become apparent, but I fear is not, is that listeners are consuming media differently than traditional media companies would want. That is, even network television is losing young audience because on-demand consumers want to access their video content on their portable devices.

Therefore, more radio formats featuring music and the traditional hot clock will not answer the bell.

Personalities and music experts (note that term) will be an advantage for radio companies if they haven’t already fired them all. But group owners will have to find new ways to put these personalities in the lives of consumers who have already changed the way they listen and watch.

One of my readers wrote a note expressing his frustration that radio companies dabbling in new media are still trying to make it all sound like radio – the radio they want to broadcast.

I hope I have whetted your appetite for a fuller discussion about iPad Radio in which I will outline logical and attractive options for broadcast companies (and entrepreneurs) looking to wrap social networking, streaming, podcasting, video and text in one “clubhouse” for existing and potential fans.

In the meantime, be careful not to discount the Apple cloud coming to iPods and iPads soon.

Now is the time to study the options and look for new opportunities – of which I predict there will be many.

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The "F" Word Debacle

2010-07-14T00:02:00.001-07:00

I got the job that helped me get to the big time in Philadelphia radio on the misfortune of a station disc jockey who had a slip of the tongue.

Seems this newsman/part-time dj was working the Sunday morning shift where this particular top 40 giant was forced to schedule religious programming to fulfill its FCC license requirements.

Suddenly, a taped religious program dropped out, dead air ensued and the announcer ran into the studio in a panic.

I must explain that at this time that station had engineers who controlled levels, tapes and microphones and the jock cued the music, commercials and jingles. It was an awful system.

There this poor soul, hearing dreaded dead air, runs in to studio A and shouts to the engineer controlling the taped show, “what the f@#k happened”.

Unfortunately, the engineer threw his mike open when he saw the announcer enter the studio assuming that he was going to fill the dead air – but not like that!

Horrors!

You can’t make this stuff up.

The engineer recovered, fixed whatever was wrong with the taped program – I still can’t believe all this happened in the middle of the station’s religious block or that the call letters of the former religious-then-top 40 station were W-I-B-G (like in “I Believe In God” the inspiration for the original call letters).

WIBG’s one Sunday morning listener protested, contacted the management and the announcer was rightfully called in to explain.

He confidently said, “let’s go to the tape” and when there was no “F” word there he thought he dodged a bullet that could have been fatal to his career.

But the listener insisted he heard an inappropriate word during his favorite Sunday morning religious show and finally management thought –let’s go to the other tape.

You see, miraculously the “F” word was expunged from the station’s Soundscriber – that is, the Soundscriber for WIBG-AM. Somehow, no one was thinking of the simulcast FM Soundscriber that morning. Who knew this stuff was on both the AM and FM station.

The announcer was fired.

The station, apparently hard up, finally hired me after years of pounding their door down.

All ended well for the announcer.

He went on to Hollywood, wrote a movie.

I went to New Jersey. Let’s not talk about it.

I was thinking about this when I heard about Tuesday’s three-judge panel ruling against the FCC’s current policy on indecent language, the stage has been set for a Supreme Court battle.

All the elements are there.

The Second Circuit Court of Appeals saying, the FCC policy is “unconstitutionally vague” and leads to “a chilling effect that goes far beyond the fleeting expletives at issue here.”

Proponents of decency and restraint arguing to uphold the pre-Obama policy that makes even “fleeting indecency” such as the kind Nicole Richie, Cher and other personalities sometimes utter in public at awards show and the like. And that such offenses should be fined.

One thing I’ve learned about politics from my mother who was a dyed-in-the-wool local Democratic party worker is that you’ll never change someone’s politics. But if we look beyond politics, perhaps we can all agree that the indecency issue and, for that matter, issues of free speech could be dealt with much more effectively at the local level.

If we had the kind of local management WIBG had when it was owned by Storer Broadcasting Company, an excellent operator who also dabbled in TV and then cable. They set the right tone as local operators.

No pressure to make money.

Just to serve the community. Owners got into radio for different reasons then as incredible as it seems today.

I, and others working at fine companies like Storer, were more afraid of the general manager than we were of the FCC.

And rightfully so, because there was always a consequence for violating that special relationship between the station and its audience.

You know, it was kind of like a social network (without the Internet and mobile devices). Our listeners counted on the station for programming and the management counted on its employees for good judgment.

If someone slipped the “F” word, he was gone.

Consequence.

Nicole Richie, you slip up and you don’t get a live mike again.

Consequence.

Janet Jackson – if your top falls off and there is at least a little suspicion it may have been planned and/or some viewers were offended at that thing that was hanging off your breast, you’re done.

Consequence.

In the end, the FCC is scrambling to make indecency a federal case and now they’ve got it. But that is no substitute for good local judgment.

A fine is of little consequence.

The problem is today most stations are operated by people who don’t know how to run radio and TV stations because they’ve never worked in the industry. That’s like hiring you or me to run a hospital when we have no experience even as an orderly.

In the age of corporate responsibility, fair speech was not a problem, either.

On-air talent was expected to get both sides of the story. I worked for Paul Rust, the toughest news director I ever met. I am convinced he toughened me up (sorry Farid, Lew and John). No need for equal time rules, it was expected or else there were consequences.

So as you observe the wasted time, legal fees, judicial wrangling in the years ahead over an issue that could easily be resolved by responsible local management, remember how I got my big break in radio.

An “F” bomb with consequences.

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NPR Divorces Itself From “Radio”

2010-07-13T00:02:00.001-07:00

I don’t know about this Vivian Schiller.

The NPR CEO is starting to scare me.

Last week National Public Radio announced with great flourish and fanfare that it would no longer be known as National Public Radio.

You can call them Ray.

Or you can call them Jay.

But “you doesn’t has to call” them NPR – to borrow a phrase from the comedian Raymond J. Johnson Jr.

After all, CNN is no longer Cable News Network. It’s all grown up and much more than cable so I guess it naturally leads you to three letters – CNN.

At least to Vivian Schiller.

National Public Radio – excuse me, NPR – has over 900 affiliated stations that pipe pretty damn good programs into localities across the country. NPR audiences are growing with the advent of the The People Meter.

So Schiller thinks because NPR has added podcasting, webcasting, streaming, blogs and a wide variety of other content that it is time to divorce itself from the sole concept of radio. You know, this reflects the transition from good old fashioned radio to new media.

Obviously, Schiller is not one of the 10,000 or so people who read this space every day.

In fact, Schiller is sounding more like a well-educated John Hogan (no, that wouldn’t be Lew Dickey – keep your mind on the subject here).

Schiller is the perfect Wall Street mistress of NPR – the CEO who is going to do for radio what it hasn’t been able to do for itself during the onset of the digital revolution these past ten years – dump the word “radio”.

But alas!

Most of that time NPR was run by – and important decisions made by – dare I say it, radio people not Wall Street Schills. That is, them that brung NPR to its powerful position in the mind of listeners were radio people.

Radio people -- the kind who knew before their terrestrial brothers and sisters that the word “radio” would have to be expanded from terrestrial broadcasting to digital, Internet and mobile content.

Expanded not expunged.

These same old radio people are the ones who must now suffer fools lightly by watching their CEO miss the entire point.

It’s not that radio was so bad – it was that radio needed to be updated, reinvented, refreshed, reinvigorated and relaunched. National Public Radio did all of that and some of their affiliates took their cue and embraced the mobile future.

I don’t know what has happened to the media business.

A longtime friend of mine who knows all about these things said that consolidation would never work in radio because it is a local business run best when it is kept small and diverse.

Hello?

Isn’t that so?

Clear Channel -- $18 billion of debt that it can’t repay coming due in a few short years and it has had a virtual monopoly for over ten years. Those poor souls can’t make radio work as a business so they are now in the process of making radio work as a takeover play where fees are the rewards even when the venture fails. Virtually no footprint in new media which I don’t have to tell you is everything these days.

Citadel – His Ultimate Ego Fagreed Suleman crashed and burns his radio company, fires the talent and signs a long-term contract to keep Citadel crashing and burning. Wall Street hates change. No digital plan like NPR for sure.

Cumulus – Happy the Clown Lew Dickey brags and brags about acquiring assets while his own asset is in serious trouble. No mobile Internet strategy as NPR has.

So you get the point.

Radio folks made all the NPR decisions before Vivian Schiller came along and she is now showing she doesn’t get it at all – just like the three sorry examples I mentioned above.

Schiller came over to National Public Radio from The New York Times and CNN. How are those two alma maters working out? The Times slipping. CNN already slipped.

Oops.

Let me tell you who has it right.

Tim Westergren, the founder of Pandora and a reader of this space.

Westergren embraces the concept of radio. In fact, Pandora is called Pandora radio. Yes, it may be customizable radio but it is radio nonetheless and Westergren is proud of it.

As I’ve mentioned previously, Westergen defended the use of the term “radio” to my USC college students on more than one occasion. These students thought Pandora was above radio. Westergren stubbornly disagreed. Pandora was a new kind of radio – customizable to the music genome Pandora uses to entertain listeners.

I’m writing about this because consolidators may have brought shame on themselves and the radio companies they inherited but they cannot shame the radio industry without our permission and I, for one, will not let them.

Secondly, it was radio people who did all the good Internet, mobile, social networky things that made NPR a leader as tomorrow’s content provider. Terrestrial radio was part of their genius – but they added the critical difference.

Radio people.

And finally, we would all be wise to proceed cautiously when trashing radio as opposed to those who ruined it. In fact, take a page from Tim Westergren as he looks to localize customizable Pandora Radio.

NPR – or whatever you call yourself – get to work and help your local affiliates be local affiliates not just repeater radio for the network feed.

Did I say that NPR’s Schiller is beginning to remind me of John Hogan?

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