I love the colorful Mel Karmazin. He's a brash, confident -- alright, over-confident -- success story and right now the never-ending-salesman that he is is doing what you'd expect him to do -- whip up interest in his company's lagging holiday sales by talking up a merger with competitor XM (again!). I laugh every time he does this. And I hope I never have to eat my words when I predict that a merger of the two satellite services will never happen. Or should I say, a merger of the two satellite companies should never happen. Even in a country where we are all supposed to live the American dream until we consolidate our assets and then wind up with -- the American nightmare. Mel says he likes mergers because they create shareholder value. I don't know. I cringe whenever I hear a CEO mention shareholder value. It's become as painful to hear as looking forward to an appointment with the proctologist. XM and Sirius should never merge. This doesn't mean they shouldn't merge with other partners but not with each other. As a satellite radio subscriber with three paid subscriptions, all I need is to pay one consolidated satellite company for fewer choices. Isn't this sounding like less is more all over again? Perhaps the satellite operators ought to wake up and attack the real problem -- no young listeners (i.e., customers) in the pipeline. Nothing is more important than that. Not more content deals. Not more Howard Stern channels. Not more sports. Or promotion. Nothing. Satellite radio doesn't need a merger -- a merger will fail (except for the investment banks on Wall Street who make money from them). Satellite radio needs more young listeners and from what I see they can't get them until they understand the peculiarities of the next generation.
CBS -- Clear Channel "Lite"
In spite of the fact that Clear Channel owns so many more stations than CBS, you have to wonder how number two gets away with so much less blame for helping the radio industry into the dumpster. It's true that Clear Channel started off the consolidation era with great hubris and litigiousness, but CBS shouldn't get a free pass in my view. Imagine if these two companies decided to lead rather than bleed the radio sector through consolidation. Imagine if even one of these giant companies decided to run their stations as separate entities and take a pass on the cutting and running they both did. Imagine more choices for the listeners. More jobs for the content providers and marketers. Hey, what am I smoking, anyway? Of course it couldn't happen. Mel Karmazin was running CBS or whatever it was named along the way and Mel never met a penny he didn't mind pinching. And Clear Channel surprised everyone as they emerged as the number one consolidator when the dust settled. Remember when Clear Channel used to be called "Cheap Channel" prior to consolidation? How could these two outfits lead the radio business? But CBS seems to get a free pass. They've got great assets and outstanding people working for them. In the past they've had to put up with Mel Karmazin bullying them and setting unrealistic expectations. The current radio head, Joel Hollander, is a nice guy but he's saddled by Viacom and in my view CBS has made a lot of mistakes. They are Clear Channel "Lite". All of this is awful and part of the reason radio is showing signs of decline. In effect, our programming top talent is bound with duct tape and driven to distraction with shareholder value instead of listener satisfaction. You know, in the retail busiess you can hire as many models as you like, spend tons of money on promotion and advertising, do deals with the chic retail outlets and you've still got nothing if you don't have a good product to sell. (See where I am heading with this?). So it is with radio. If you have efficiencies in the name of shareholder value and one manager running three stations and one jock doing shows in multiple markets you have nothing if you don't have the best product. Clear Channel let the radio sector down and CBS did, too. No more free passes. Before the dust settles again the big companies or their replacements will eventually have to turn their stations over to people who know how to operate them -- the very content providers they've hamstrung and fired. The facts show that shareholder value went down and the Wall Street all public radio companies got into bed with is starting to reject them because radio is no longer a growth business.
Zune -- A Turkey
I knew it. My students knew it. How did Microsoft not know it. The new competitor to iPod from the folks at Microsoft -- Zune -- was a turkey even before Thanksgiving. The Wall Street Journal just reported that Zune sales are not meeting expectations ramping up to the holiday season. As we used to say back in South Philly, "who don't know that?" It's clunky, rather ugly, not better than an iPod, not cheaper and not...not...not an iPod. I always used to think when Proctor & Gamble launched a new product with all their market research, how could it not be a home run? They have many home runs, but not always. So the Zune will either become a lesson in humility or just chalk it up to bad "imagineering". Let us all take note: if you can't do something better than a competitor, why do it at all? And why not test it with the next generation. We do this type of thing at the USC Music Media Lab. Lab members wrap their arms around a project and then recommend various models that have a chance of succeeding. I can imagine how big companies do their innovating. I'm sure it's technically okay, but you have to get out from behind your corporate culture to develop new products and services. I know I've got iPods (again) on my Christmas list. I wouldn't give a Zune to anyone I liked. Nothing personal, but as one of my students said recently, if the Zune were better I'd try it. "Professor" Steven Jobs, the think different CEO, didn't even have to do anything to strengthen the sales of his iPod line. Microsoft did it for him.
We Don't Know Jack
When I first told my students about the "Jack" format as it first debuted in LA several years ago, their reactions are worth recalling even today. I say this because since I have been at USC I have come to closely value the rather direct reactions of this generation on things ranging from new mobile media devices to old approaches to radio formats. Nonetheless at the time they were troubled by the "Jack" format motto, "We Play What We Want". One young student told his fellow classmates, "yeah, we play what we want, too -- it's called an iPod". All this time has passed since CBS reinvented the wheel and the "Jack" format one assumes has become a staple for them. The buzz is over. You don't see a lot of radio stations jumping on the "Jack" bandwagon these days. You get the feeling the growth even in the target demo has been maximized. And, you don't see a lot of new youth formats either. Please, CBS -- no more formats like this. No more traditional formats pretending to be cutting edge. Young people are begging us to innovate. You can't blame CBS for trying. But there's lots to be learned going forward. In the world of iPod -- don't try to be one -- in mind or spirit. In this mobile age keep in mind that radio was the original mobile medium and even though it hasn't made it into the digital world the reason listeners turn to radio is for innovative programming. One of the wonders of the world to a lot of radio people is that we have well over 10,000 radio signals and a relatively small number of format permutations. Translation: the same formats on a lot of stations. And so few for the next generation. Can't we all get along? When our industry trades give up trying to categorize station formats next to the Arbitron ratings because it has become impossible, we'll know we're moving in the right direction. Still, we've learned so little about the important youth market. In effect, you could say, we still "don't know jack" about the the programming needs of this massive and necessary potential radio market.
How Radio Is Like Satellite Radio
What happens when you dominate a market, offer the majority of your programming to an audience you don't have and then fail to deliver young listeners? You have satellite radio! Wait. Increasingly, you also have terrestrial radio. It's a losing formula in a time of great change that is begging for a remedy. Satellite radio operators have hit the wall as witnessed by unusually slow sales at their traditional busy time of the year (Christmas). They've done an excellent job in finding their market -- the pay subscription market -- but there's not enough consumers willing to subscribe. Satellite programs some excellent channels for young people. In fact, most of their cutting edge music channels are for young people. Yet, their subscribers are older and they are offered less channel choice. They are relegated to talk and sports. Terrestrial radio is their close relative. Their DNA is the same. Lots of youth oriented stations on a medium that is seeing a steady decline in young listeners. Go figure. After selling Inside Radio four and a half years ago, I joined USC as a professor of music industry. I was shocked when I saw the utter disregard most young people had for the business I still love. But I've come to discover that it isn't radio that they dislike, it is what has happened to radio. Young people now are unusually aware of the big consolidators, don't care for the lack of music variety, feel the djs are not knowledgeable about the music and that the commercials and promos are insulting. This is not new to radio execs. The question is why haven't they done something about it. Many radio people when faced with this criticism say "we're doing those things". They are not. In the end, satellite radio will fall out of orbit if it can't find a sustained way to win over young listeners -- no small task for consumers who don't like paid subscriptions and in many cases can't afford them. And terrestrial radio towers will come crashing to the ground unless the owners go to school and take their bitter medicine on what will have to be done to bring 12-24 year olds back -- no small task for a demographic that has gone on without radio. Who would have thought -- kindred spirits -- radio and satellite radio.
Interactive Media Envy
Traditional media companies are falling all over themselves to do content deals with their new media rivals -- Internet and mobile companies. NBC Universal did a deal to allow AT&T to offer their owned stations a chance to be broadcast on AT&T phones -- welcome to some mighty lucrative markets. Google and Yahoo announce deals on an almost regular basis. And even without alliances, traditional media is rushing to find new ways to offer their content digitally. MTV is developing niche broadband channels. HBO is mulling putting their content on broadband. Newspapers ally themselves with Yahoo and hope that the lure of local content will help Yahoo help themselves. Fox News is using in-text keywords on their web site that allow a box to pop up with a small ad in it. I guess all this is good, but it looks like desperation. Traditional media so doesn't want to wind up like radio. TV companies especially are trying too hard to be YouTube. Working too hard to do deals with new age companies as a way of sort of covering their bets. The best use of time and money is to get serious about program development. There will always be new ways to deliver content to the public. But it seems like these TV companies want to be in the technology business more than the content business. Hopefully this urge will pass before their chance passes to adapt to a new digital world.
A Clear Channel Christmas
It's very easy during the lull in the Clear Channel sell-off to think everything is going to alright. But it's not alright for the employees of Clear Channel who are being let go or for the ones having to endure the holiday season wondering if they will be the next to be fired. If consolidation means anything, it means doing more for less. And now that Clear Channel's dynasty Mays family has decided to cash out for about $1 billion and take the radio division private there's still lots of housekeeping to do. Like tidying up the bottom line. This should be no problem to the radio industry leader that cut, combined and consolidated itself into a lousy share price for investors. So, the fine people at Clear Channel who have fought the good fight and held on for dear life are faced with becoming the next casualties. Separately, employees at the 400 plus radio stations that Clear Channel plans to sell are not exactly going to have job security until their fate is resolved. That may not be until the sale of those stations are approved and new owners take over operations. Happy Holidays again! We blog about the future, the potential of a new generation and the technology they bring with them, but I don't want to lose sight of the casualties of an unwinable war. Consolidation has proven beyond a doubt that you can't win by letting people go. Google hires. Yahoo hires. Apple hires. Clear Channel fires. It's little consolation to the families of these proud radio people who have endured so much in the name of free market consolidation and deregulation. And what's wrong -- very wrong -- is that while many radio employees are getting coal in their stockings this year (not bonuses), the three bears -- papa bear, sonny bear and baby bear -- get a bounty of presents under their tree. Drive shareholder value down, drive your personal buy out number up. And while all this is happening, radio's leading radio group is leading its industry into the dumpster.
Tough Times Ahead for TV
There's a new technology coming your way that deserves watching called Switched Broadcast. It's a technology that expands bandwidth and makes delivering hundreds of television channels to the home unnecessary. Technology enables only one channel at a time to be delivered to subscribers and this could change everything. Providers can then free up bandwidth for more content. Consumers could benefit from more on-demand services, faster delivery, more telephone services. This spells the end of television channels as we known them. Going forward under switched broadcast, channels become unnecessary. The question is will broadcasting thrive if and when switch broadcast becomes the new standard. Technology is changing everything but the generation that embraces this technology the most -- Gen Y -- enables the technology to take hold. I see turbulent times ahead for the television and video industries. They will experience the pain that radio experienced over the past ten years. A new generation hasn't just fooled with the Internet and come up with some alternative things to do with it. This generation has undone everything. What's ahead is numerous new delivery options. What won't change: the importance of content. Without desirable content, more efficient, targeted delivery systems mean nothing. If I'm college age and I want a career in the music related media, I'm getting into the content business -- the only bulletproof career for years to come.
It's a Retro-Christmas (Again)
In the past few days both The Wall Street Journal and The New York Times have had articles about the sorry state of the pop music business. The Times Sunday was talking about the baby boomers who shy away from AARP (American Association of Retired People) even though AARP is helping to sell records. How about this? Tony Bennett, the icon he is, has sold the most albums in his entire career for "Duets" (600,500 in the first seven weeks) and Bennett is doing AARP sponsored concerts. Rod Stewart, Elton, John, James Taylor and others are also selling music tied in to their senior status. This is all good unless you're concerned about the future of the music industry. And, you should be because its not in good shape right now. Hip Hop isn't going to do more than it has already done. You can blame the labels for this. They've been busy consolidating and suing its customers -- the next generation. There are wake up calls being placed all over the industry but few are paying attention. It's good to sell music to all generations. It's wonderful that Starbucks has found a way to sell CDs to the customers it knows best. Steve Jobs, for all his genius, can make the portable devices but the labels are going to have to make the music. From my viewpoint, the labels are killing off their own business by not paying attention to the product and there is no end to the proof.
The Best Way to Kill Texting
Cingular Wireless is trying to bridge the generation gap between parents who don't understand the language of texting and their children. Cingular, the largest cell phone company, will be holding interactive "texting bees" nationwide after the first of the year to teach parents how to send text messages to their children. It's all cloaked in the grand scheme of things to make the texting world a better place for mom, dad and their children. Of course, it's a marketing strategy to sell more cell phones. While the Cingular "texting bees" are not likely to have a major impact on anything, they do point out the fragile nature of today's runaway digital trends. You see, mom and dad might be able to invade the sacred space of their younger ones, but that's not the real danger. The real danger to the current texting craze is more likely to come from their brothers and sisters. There is already anecdotal evidence that the "next next" generation may not be as big a proponent of texting. To them, it's so -- well, so 2000. Not true of today's college-aged student. One student I know was outraged at her cell phone company for "overcharging" her for text phone messages --- that was, of course, until they proved to her that she indeed used every excessive minute on texting. She's now on a budget to pay down her mobile debt. All of this is quite interesting but that's not its main significance. For those of us in music related media, don't lose sight of the fact that trends are trends for reasons (because they go up and down) and these days the new rule of thumb is: the faster digital behavior becomes a craze, the faster it can crash and burn. That's worth thinking about (when you're not multitasking).
Traditional Radio's New Year's Revolutions
By Dave Van Dyke, Inside Music Media™ Contributor
More industry-changing has occurred in the granular level this year, I believe, than in any year in recent history. Based on what we're seeing through our media consumer research, radio of all colors has learned a great deal. It used to be that terrestrial radio was the cheapest, best-edited, most ubiquitous and most accessible music provider you could find. But today, radio on a schedule or by appointment is giving way to "on-demand". Radio is no longer the only best place to find new music. Radio now faces new challenges, the greatest is the fact that the last dominant domain of traditional radio (in-car) is now under siege!
In a recent study we conducted we asked the sample "Where do you listen to the radio?" While in-home listening was surprisingly strong - but not compared to 15 years ago - in-car listening, the final bastion of the original mobile media, is beginning to be worn down - across all demographics not just with our nation's youth. 46% listened in the living room, 45% in the kitchen, 32% in the bedroom. But in-car, by far, out-distanced all other locations with 76% of those responding. This figure is down from 89% just six years ago! In today's tech-enabled environment, radio's biggest challenge is listeners' choice; radio's biggest advantage? The paradox of choice! This is a keystone of truth as traditional radio faces an even more challenging new year. In a world of abundance, radio has new opportunities to help with the decision stress that comes with so much choice.
So, looking toward 2007, terrestrial radio's new year's revolutions should be:
- Cut through the clutter
- Provide context
- Improve content
- Ensure relevance
- Be Personal
- Be "people'
- Radio should continue to embrace podcasting to satisfy these key points.
What are some pieces of the puzzle of radio's future?
- Radio listening will increase with convergence as listening on cell phone devices begins to gain traction.
- Radio will need to become increasingly visual and interactive.
- Advertisers will try to engage listeners with visual content that stations will provide to digital radio screens, Internet radio players, etc.
- Time-shifted listening and downloaded content via DAB will greatly increase radio's functionality.
- New 'non-radio' brands will launch new radio services.
- Fresh ownership blood and increasing numbers of companies going private will energize the industry's creativity.
(Dave Van Dyke is President of Bridge Ratings)
iPodaphobia
There's a new article in the Baltimore Sun that reports campus newspapers are doing so well that advertisers are sitting up and taking notice. This fascinates me. We've seen the decline of general print newspapers for decades especially among younger readers and here we are in the age of the Internet, mobile phones and iPods and are we to believe that old fashioned printed newspapers are a hit with this same generation? You bet we are. I believe it. While general newspapers have been imitating themselves for decades, they've grown out of touch with the younger reader. Want proof? They say if they make their newspapers 1 and a half inches narrower more young readers will read them. So the New York Times and Wall Street Journal are getting the scissors out (never mind that they save millions on newsprint -- their real reason for going smaller). Does anyone believe that a narrower paper will gain young readers? The campus papers, as you would expect, also exploit their young editors' knowledge of the Internet so the online versions are attractive as well. Maybe this seems too obvious, but would you humor me here? Could it be that college students want news about their world and they are more than willing to read it in print or view it online? Could it be that the hidden lesson here (take note music media industry) is that when you build content they will come. Too much is made of the interactive Internet-mobile revolution. Perhaps traditional media is suffering from what I will term -- iPodaphobia -- an irrational fear of the iPod generation. Maybe Gen Y is less afraid of reading a printed newspaper that caters to their world than the publishers are of technology.
Van Dyke & Meyer Join Inside Music Media™
Radio veteran Dave Van Dyke, now president of Bridge Ratings and a keen observer of traditional and interactive media and Steve Meyer, a well-respected music industry veteran and publisher of DISC & DAT will both become regular contributers to Inside Music Media™. The mission of Inside Music Media™ is to present observations on the changing music-related entertainment business. I will also continue to post on a daily basis. Steve Meyer's first article begins (below) with today's issue.
When We Waited In Line for Something Else
By Steve Meyer, Inside Music Media™ ContributorWhat a week. Google's stock price hit $500 a share and Apple Computer was also at an all time high on Wall Street; the Universal Music group sued MySpace.com for copyright infringements; Fox Entertainment saved whatever face they had left and cancelled their planned O.J. Simpson special "If I Did It" due to public outcries; and Sony released their PlayStation 3 to retailers around the country. Well, actually they only partially released it, since most stores got 50 units or less and had lines around the block for days preceding the on-sale catastrophies. In several locations people were shot. In other locations there were incidents of robberies, and other violence. Must be a helluva tech-toy this PlayStation 3.
And then I thought back to a different time and I remembered vividly standing in line for hours to buy my copy of The Beatles 'Sgt.Pepper' album in Manhattan. My parents said I was crazy, but I hopped on my motorcycle at 7 a.m. with a friend, and headed down to be the first on my block to get the album and share it with friends. There were at least 200 people in line at the Capitol Records store in midtown, but we got in line, and waited. And when we got home hours later in the early evening and dropped the needle on the vinyl, we heard magic and didn't for one minute think the wait wasn't worth it all.
You see, unlike those Play Station 3s, MUSIC isn't generic product, it's something wrapped in our deepest emotions, psyche, and at its best, like great literature, can be either a mirror that shows us ourselves, or a lamp that sheds light on current and future conditions. So let's be blunt, those in the industry who don't realize this are part of the reason that so many people are now waiting in line for video game consoles instead of waiting in line to buy new albums by their favorite artists. (Steve Meyer is one of the music industry's top professionals and publisher of the new media newsletter DISC & DAT)
Apple Is Up To Something
Their stock is skyrocketing. They somehow seem bigger than Microsoft (even though Microsoft way out distances them in computer software). Analysts say another big holiday season -- another -- of selling iPods is underway. But some experts say that Apple is getting ready to launch an iPhone. CEO Steve Jobs has been mum as usual and anything is possible -- including no iPhone. But think about it. Every time Apple burps consumers get excited. The only thing close to it is the gaming market where a lot of burping is going on right now. Yet few get excited over clunky HD radios that don't have content much different than what you can get on a regular radio. Nothing a record label has done has caused such a stir except maybe suing its customers. Nothing. The labels have all the rock stars but Apple's Steve Jobs is the biggest rock star of all. Year after year he teaches those of us who work in music media how we need to change to be successful. Make it beautiful. Make it colorful. Make it simple. Make it matter to the target consumer. Then we go nuts. We pay higher prices. We let Jobs hijack the record industry and set de facto standardized prices for legal music. What is it that we don't understand? Why are we trying to reinvent the CD -- I mean, the wheel? Can those awful looking HD radios get any uglier? And they don't do anything really different or desirable. Have we gone nuts or has Jobs? If Apple does announce an iPhone soon what I know is that it won't be ugly, won't be like other phones, it will be colorful, will allow us to do something we want to do (that we can't easily do now) and we'll support it. Jobs is so transparent but for some reason we're not paying attention.
Be Very UNafraid of YouTube
Traditional media seems to fear the next generation and its Internet, mobile devices and social networks. I don't know why. In our fierce competition for audiences and dollars we often forget that media creates more media. There's some recent evidence to make my point, but it won't be the last corroboration. CBS of late has been diving into YouTube content like a true convert. "CSI". Lettterman. "Survivor" to name a few of their shows. MediaPost reports CBS has placed more than 300 clips on YouTube. You'd expect the views to be high, but some never expected ratings to go up. Letterman's audience is up 5%. Even "The Late Late Show with Craig Ferguson" on late, late is up 7%. Translation: YouTube is helping traditional TV gain audience not lose it. When YouTubers see TV they like, they turn it on and watch. What's wrong with media executives? How can so many smart people be so stupid? Record labels, get your video on YouTube and stop with the rights management stuff. You'll sell more records. Universal, take MySpace's last offer and improve your business. You're never going to get rich on these rights deals but selling music will make you money. The New York Times gives away its news online and is still one of the better newspaper franchises. Cross pollination -- new media with traditional and back and forth makes sense to consumers. It only doesn't make sense to media barons. If content is king (which it is), make people crave what you're selling and they will buy. Thanks to so many new ways to reach customers the record labels, TV networks, newspapers, and radio operators ought to be very unafraid indeed.
Where's The Music?
When compilation albums are routinely number one, do you have to be a genius to know you're business model is in trouble. Here's your Billboard Top 20 (week ending 11/25/06)
DEBUT AT 1* - NOW THAT'S WHAT I CALL MUSIC-VOL.23 (Get that! There were 22 others)
DEBUT AT 2* - JOSH GROBAN, Awake
DEBUT AT 3* - KEITH URBAN, Love, Pain, And The Whole Crazy Thing
DEBUT AT 4* - SUGARLAND, Enjoy The Ride
5 - SOUNDTRACK, Hannah Montana
DEBUT AT 6* - JIM JONES, Hustler's P.O.M.E.
7 - BIRDMAN & LIL' WAYNE, Like Father, Like Son
8 - CARRIE UNDERWOOD, Some Hearts
9 - JUSTIN TIMBERLAKE, FutureSex/LoveSounds
DEBUT AT 10* - DAVE MATTHEWS, The Best Of What's Around, Vol.1
DEBUT AT 11* - ANDREA BOCELLI, Under The Desert Sky
12 - HINDER, Extreme Behavior
13 - BARRY MANILOW, The Sixties Greatest Love Songs
14 - JOHN LEGEND, Once Again
15 - EVANESCENCE, The Open Door
16 - BEYONCE, B'Day
17 - FERGIE, The Dutchess
18 - RASCAL FLATTS, Me And My Gang
19 - MY CHEMICAL ROMANCE, The Black Parade
20 - NICKELBACK, All the Right Reasons
Just to set the record straight early and often, I am not putting these artists down. I repeat. Some are major. I'm asking: is this a snapshot of a vibrant pop music business right now? I'm thinking no. Of course, it's no. So before we throw away that wishbone from our Thanksgiving turkeys, let's use it to wish for a Great Awakening -- for the record labels. These poor souls have been hanging around lawyers too long. They've been in denial too long. It's not the iPod that is their problem. It's not variable pricing that will be the solution. It's not the decline of the CD that's killing them. It's not new repackaging schemes that will save them. Ever get the feeling these labels should get back to their roots, get out more from their desks, rise above their distrust of the Internet generation and spend some money on -- dare I say it -- content. Heck, they've got the Internet, viral social networks, a desperate radio industry -- everything they need. How about back to business -- the business of finding, trendsetting and eventually profiting from discovering the next big thing in music. Stop blaming the kids for ruining their record business. Look in the mirror.
DEBUT AT 1* - NOW THAT'S WHAT I CALL MUSIC-VOL.23 (Get that! There were 22 others)
DEBUT AT 2* - JOSH GROBAN, Awake
DEBUT AT 3* - KEITH URBAN, Love, Pain, And The Whole Crazy Thing
DEBUT AT 4* - SUGARLAND, Enjoy The Ride
5 - SOUNDTRACK, Hannah Montana
DEBUT AT 6* - JIM JONES, Hustler's P.O.M.E.
7 - BIRDMAN & LIL' WAYNE, Like Father, Like Son
8 - CARRIE UNDERWOOD, Some Hearts
9 - JUSTIN TIMBERLAKE, FutureSex/LoveSounds
DEBUT AT 10* - DAVE MATTHEWS, The Best Of What's Around, Vol.1
DEBUT AT 11* - ANDREA BOCELLI, Under The Desert Sky
12 - HINDER, Extreme Behavior
13 - BARRY MANILOW, The Sixties Greatest Love Songs
14 - JOHN LEGEND, Once Again
15 - EVANESCENCE, The Open Door
16 - BEYONCE, B'Day
17 - FERGIE, The Dutchess
18 - RASCAL FLATTS, Me And My Gang
19 - MY CHEMICAL ROMANCE, The Black Parade
20 - NICKELBACK, All the Right Reasons
Just to set the record straight early and often, I am not putting these artists down. I repeat. Some are major. I'm asking: is this a snapshot of a vibrant pop music business right now? I'm thinking no. Of course, it's no. So before we throw away that wishbone from our Thanksgiving turkeys, let's use it to wish for a Great Awakening -- for the record labels. These poor souls have been hanging around lawyers too long. They've been in denial too long. It's not the iPod that is their problem. It's not variable pricing that will be the solution. It's not the decline of the CD that's killing them. It's not new repackaging schemes that will save them. Ever get the feeling these labels should get back to their roots, get out more from their desks, rise above their distrust of the Internet generation and spend some money on -- dare I say it -- content. Heck, they've got the Internet, viral social networks, a desperate radio industry -- everything they need. How about back to business -- the business of finding, trendsetting and eventually profiting from discovering the next big thing in music. Stop blaming the kids for ruining their record business. Look in the mirror.
Radio Group That Proved More Is More
I've been mulling an odd thought lately that today's consolidators could never have pioneered the radio industry. It takes me back to the 1960's when a company called Westinghouse that made electrical appliances, light bulbs and other manufactured goods owned radio and television stations. That was allowed then, but they couldn't own too many. Hold that thought. The folks at Westinghouse came up with a zany idea for a format that did all-news 24-hours a day. I was a young guy in Philly at the time where they owned a very poor signal that they wound up calling KYW Newsradio 1060. It was awful. And I just don't say that because I worked for some of their competitors as I was trying to start my career, it was bad. The other more established adult stations in Philly made fun of it mercilessly -- news teletype ticker in the background and all. Somewhere I think I still have a bootleg send up of KYW done by some Philly radio people then. It was merciless. But this noble experiment droned on and on without ratings, audience or really a reason for being. Oh, and did I mention it wasn't cheap. Doing news took reporters, anchors and there were unions and engineers. But it droned on and on. The stubborn people at Westinghouse thought they had a new format idea and they weren't going to let a lot of money and a lack of quick whiz bang success make them act otherwise.
Eventually, Westinghouse prevailed and built the money machine now known as the all-news franchise that is pumping tons of free cash flow into the hands of CBS -- the consolidator that inherited Westinghouse Broadcasting. Here's a concept Clear Channel wouldn't get: a costly news format that makes a lot of money. I guess you could say -- "More is more". And that was one of the reasons radio was attractive enough to lure the hungry investors of Wall Street who pillaged our stations and raped our...well, you get the point. Small groups of stations, independent of mind, that had to answer to a lot higher FCC standards than broadcasters do today -- and the industry flourished. I think it's fascinating that CBS, a no-risk company that pulled the plug on Howard Stern's ill-suited replacement after less than a year owns one of radio's historically most patient formats -- all news. I could do tit for tat on how things were better then than now, but that's not really the point. What matters -- and what the next generation of broadcasters should note -- is that radio is best when it is not a business. It's best as an art form -- not a science with everything researched and standardized (is any of that helping radio today?). If consolidators ran the show then, radio wouldn't have all-news. Todd Storz and Gordon McLendon wouldn't have invented the top 40 format and Bill Drake would never have developed the format that cleaned up clutter like no other format did. No. You'd have bean counter radio. No soul. No rock 'n roll. Many of my radio friends remember what it was like to work for these mom and pop operators. (Check Lee Abrams' blog, he'll tell you). Station owners had to have other businesses -- so radio could lose money. Westinghouse had an advertising slogan back in the day that went like this -- "You Can Be Sure If It's Westinghouse" and it surely applied to radio.
Clear Channel hasn't invented one format the stature of all-news with everything going for it. CBS kills formats like its legendary oldies station WCBS-FM and calls new formats like "Jack" great innovation. Not that "Jack" is bad, but it's not all that new. Any doubt as to why the radio business won't really turn around until it gets into the hands of people who believe "more is more", "losing money makes money eventually" and "radio is a public trust not something you buy for your trust fund".
Eventually, Westinghouse prevailed and built the money machine now known as the all-news franchise that is pumping tons of free cash flow into the hands of CBS -- the consolidator that inherited Westinghouse Broadcasting. Here's a concept Clear Channel wouldn't get: a costly news format that makes a lot of money. I guess you could say -- "More is more". And that was one of the reasons radio was attractive enough to lure the hungry investors of Wall Street who pillaged our stations and raped our...well, you get the point. Small groups of stations, independent of mind, that had to answer to a lot higher FCC standards than broadcasters do today -- and the industry flourished. I think it's fascinating that CBS, a no-risk company that pulled the plug on Howard Stern's ill-suited replacement after less than a year owns one of radio's historically most patient formats -- all news. I could do tit for tat on how things were better then than now, but that's not really the point. What matters -- and what the next generation of broadcasters should note -- is that radio is best when it is not a business. It's best as an art form -- not a science with everything researched and standardized (is any of that helping radio today?). If consolidators ran the show then, radio wouldn't have all-news. Todd Storz and Gordon McLendon wouldn't have invented the top 40 format and Bill Drake would never have developed the format that cleaned up clutter like no other format did. No. You'd have bean counter radio. No soul. No rock 'n roll. Many of my radio friends remember what it was like to work for these mom and pop operators. (Check Lee Abrams' blog, he'll tell you). Station owners had to have other businesses -- so radio could lose money. Westinghouse had an advertising slogan back in the day that went like this -- "You Can Be Sure If It's Westinghouse" and it surely applied to radio.
Clear Channel hasn't invented one format the stature of all-news with everything going for it. CBS kills formats like its legendary oldies station WCBS-FM and calls new formats like "Jack" great innovation. Not that "Jack" is bad, but it's not all that new. Any doubt as to why the radio business won't really turn around until it gets into the hands of people who believe "more is more", "losing money makes money eventually" and "radio is a public trust not something you buy for your trust fund".
Beyond Clear Channel
We'll be hearing plenty about the breakup of radio's friendly giant -- I kid -- but I'm now looking to begin focusing a long conversation on the great beyond. Let's not kid ourselves. The 448 smaller markets Clear Channel is selling could go to one or two mini-consolidators -- maybe public companies -- and then I'm not so optimistic. They could and should sell some to minorities, but they should also subsidize these minority owners not just let them die on the vine. If the "lower 448" wind up in the hands of mom and pop operators, entrepreneurs, my graduates at USC, you'll see a rebirth of local, personality-oriented, music and news on the radio. But Clear Channel for the next five years or so is likely to remain in the hands of the Mays' -- the people who had every advantage but couldn't lead the industry it dominated. But they'll be weakened. I think the end game is hold it and sell it -- profit again. We'll see. Meanwhile they will likely, in my opinion, put themselves at a competitive disadvantage by cutting costs further. They still dominate the top 100 markets so they matter. I'm hoping some other public companies go private. That's a tricky deal with shareholder get rich quick schemes that often result, but the consolidators got in bed with them so they deserve their litigious selves. Returning to long term planning, avoiding the quarterly freak show that Wall Street now requires and going to school on the next generation to right radio's wrongs are now at least on paper and in theory possible. It will take that and more for radio to re-invent itself and to do what radio had better start doing now -- no questions asked -- get into new content businesses. Remember the fate of the railroad barons in the early 20th century? They thought they were in the railroad business not the transportation business. And that's why we don't fly B&O Airlines today. And why the railroads are a relic. We'll talk more about the great beyond especially from the perspective that the key to tomorrow is becoming relevant again with today's youth. But for now: Clear Channel is not going to be as big. They may neuter themselves over the next five years. And there is a new-found glimmer of hope for a medium gone mad for money.
Black Friday Special
Inside Radio reports that Radio Shack has a three-day only $99 special on this HD radio usually low, low priced at $199.99 ($174.99 with rebate). Why do I get the feeling this is not PlayStation 3 (okay, that wasn't fair). Why do I get the feeling this is not an iPod (ooh!). Okay, it's not a Walkman! Listen to the selling points the manufacturer, Accurian, lists. (I'll react in parentheses like an average consumer): Receive HD radio signals that increases the clarity of your FM radio stations to CD-quality sound. (The better to hear Less is More -- that's not average -- the better to hear too many commercials). HD offers expanded programming options, data services, traffic, weather and sports. (So does my Blackberry, a smart phone and the Internet and its smaller and better looking). Display provides valuable information like station and song name, band, frequency and more. (They're kidding, aren't they? So does my satellite radio and it does sound better). Discover HD2 substations hidden between your regular stations that only HD radio can deliver (and wait for the hidden commercials to be next). You have to laugh or you'll cry if you love radio. Where did the consolidators (and they're the ones steering our ship) get the idea that listeners wanted technology over content? Didn't they see consumers listening to music on their puny computer speakers or cheap iPod ear buds? The reason our consolidated "Loss Leaders" called this one wrong is because HD technology costs the consumer money. One-time fixed expenses at the station, and then each and every consumers pays out of pocket if they buy HD radio with the current programming fare. Content, on the other hand, costs the consolidators money. Consolidators cut costs to impress their real audience -- Wall Street. Thus, they are ramming HD down the throats of listeners who have to be splitting their sides when they read an ad like this. Content costs money. Content builds audience. Radio still possesses the greatest talent to produce content of any industry -- Internet included -- bar none.Universal Lawsuits
Have you noticed what Universal is up to these days. They've been getting "sue happy" over the lofty and worthwhile issue of copyright infringement. They targeted YouTube first, but then took a stake in the company ending that threat. Now, Universal is beating up on MySpace. They are apparently looking to test the "safe harbor" provision under existing law pertaining to Internet companies. Or are they? Many people -- and I'm certainly one of them -- believe no matter what your argument is on the copyright infringement issue, no one can stop the present generation from having their way with music. Don't shoot me! Young people see the Internet as sacred -- it belongs to them. They see both sides of the issue (stealing vs. free distribution). But this Universal tactic in the end might not be as principled as it seems. Their lawsuit against MySpace might just be to get their attention. You see, Universal and MySpace have reportedly been in negotiations. Apparently, Universal didn't like the numbers. Certainly Universal has a right to seek legal recourse on this issue just as MySpace has its defense. But anyone seeing Universal's move as a high-grounded, principled strategy might just want to take another look at the circumstances. Even the labels must know that they are spitting in the wind on this issue. All the more reason to suspect their motives in cases like this.
PS3 And Music
When was the last time you remember hearing about riots breaking out to buy a consumer product? How about a music-media related consumer item? PlayStation 3's significance is far more important than a bunch of geeks having to wait on long lines for the privilege of having price gouging performed on them. (And, I am taking into account those "entrepreneurs" or opportunists looking to buy one and then turn around and gouge somebody else). Gaming is the next frontier for the music business. You're not going to see anyone riot over radio ("have to get an HD radio or I'll break the door down"). Maybe it was the high price, but I don't remember such a passionate demand for flat screen, HD televisions. Demand yes. Wild passion. Not really. The gaming industry is an important player in the future of popular music. The audience is there. And the audience is older than a lot of people think -- thus opening up a potential new market as well. As the technology gets better the sound quality improves. I know some people in academia who believe that the ability to write or edit your own music on gaming devices presents even more possibilities. Video games have already popularized music. There is no reason to believe that it won't continue. The gaming business is huge -- bigger than the record business. While we're hearing and seeing all these stories about the rush to get a PS3, I'm thinking about the future applications.
Clear Channel's Cut And Run
After having its way with the radio industry thanks to consolidation, the Mays family (Lowry, Mark and Randall) will be laughing all the way to the bank as Clear Channel decides to be purchased by Lee Partners and Bain Capital for $18.7 billion. Shareholders will get about $37 a share. The Mays family gets about $1 billion and continued employment as the remnant of the company sometimes referred to in the press as "The Evil Empire" goes private. The Mays reinvest some of their profits in the new entity and if you're cynical enough (or Wall Street savvy), they will be around the next time the company sells (and they'll likely profit again). The Mays' couldn't resist the current buyout trend (Readers Digest, Univision and Tribune to name a few). Consolidation has been good for Clear Channel. Not necessarily so for investors (see separate companion post). If you don't like the deal, it could still fall apart. But if it does, it's likely to be replaced by a better offer. Of course, the principals would make more as they head to the bank. Clear Channel's non-top 100 market stations will be sold. I'm sure they'd like to find one or two groups to buy 448 small market stations and another to buy all of its 42 TV stations. No matter, the sum of its parts is worth more than Clear Channel whole. So was this the end game all along? It often is when companies go public. You buy 'em to sell 'em. The biggest radio/media company of all time cut, hacked, laid-off whatever it could and even with the most dominant position of any broadcasting company ever couldn't make it work -- for it's shareholders, that is. For the masterminds, it's another day in paradise. If you'll allow another phrase from last week's election frenzy, if Clear Channel stayed the course would it be worse? It all sounds like a flip-flop to me.
CCU: $94 a share to $37
The holy grail on Wall Street is "shareholder value". How many times has Mel Karmazin said it? How many times has Clear Channel said it. Here's a quote from Clear Channel's own "Investor Q&A" for shareholders issued when yesterday's sale was announced: "The board of directors has continually evaluated ways to maximize value for shareholders. After conducting a thorough and careful review of strategic alternatives, the board concluded that this transaction is fair and in the best interests of its shareholders". Hello? Does anyone think the same stock that was worth $94.94 on January 10, 2000 was worth holding until today when a deal is made to liquidate for $37.60 -- ten percent more that it closed Wednesday but a heck of a lot lower than $94. Maybe they're thinking $37.60 is in the shareholders' best interests because the stock price may decline even more in another six or 12 months -- that's one way to look at it. The way I see it, the Clear Channel principals (the three Mays') and their buyers are the only ones who absolutely come out smelling sweet as a rose. Shareholders? Well, you do the math. The employees? What employees? They've laid off people constantly and the ones that remain often have enhanced jobs. More for less -- so to speak. The listeners? How have economies of scale helped them over the past ten years. How does virtual voice tracking make radio local? And we all know that radio is better when it is local. There must be someone else who benefited from the past ten years. How about lawyers? Okay, okay. But that doesn't count. What about the industry -- radio most certainly should be better off, better able to compete with new technologies and continue growing -- after all, the government gave radio consolidators a big advantage when they allowed them to buy up an unprecedented number of stations. No, the industry doesn't seem to be better off. Even the other, smaller consolidators aren't better off. Some want to go private. Some are doing clutch and grab mergers. Some are just holding on and praying that things get better. In the end the way I see it, the company that tried to sell you "less is more" when it comes to cutting commercials on-air has the perfect slogan right there for selling this deal to its shareholders -- less is more. Unless, of course, your last name is Mays. And then you can drop a few words and your new slogan comes down to "More".
An Appreciation of Radio People
I never liked media consolidation and I said so over and over again when I published Inside Radio. I remember doing an Inside Radio convention in Scottsdale one year and the usually fun-loving and social event had a pall over it. After all, consolidators were at the time forcing managers, programmers and sales managers to take on more jobs, more responsibility, more stations without a lot more money. I paid the price personally by taking on the evil of consolidation but it all worked out for me in the end. I see everything coming full circle now as the biggest consolidator of all, Clear Channel, is on the eve of selling off its empire for a lot less than the aggregate was worth during the good years. Yet the people who run these consolidated stations are my heroes. They love this business. I know it for sure because they stayed. They could have gotten out, but most didn't. They watched a handful of arrogant consolidators cut, slice, bully and neglect their future. They had families. Kids, college, but they stayed. If they owned stock and held it during this time, they likely took it on the chin financially. My dear friend, the legitimate legend, John Rook, whom I admire very much, was pillaged and tortured by the industry he helped build and although worse off financially today, he is still kicking. Still caring for his brothers and sisters who love this medium. And maybe that's why it makes me so mad when I see what is happening now in the end -- we are a brotherhood, a sisterhood -- we love this business and stand together. My long time friend John Parikhal who is more accurate than a heat seeking missile when he predicts the future, called the shots all along and never missed a beat. John predicted the ending share price of a major consolidator and I printed it in Inside Radio. It wasn't good news for them. Then John paid the price by losing this consolidator's business. John isn't selling assets. He is the asset. It's the consolidators who are starting to sell. They are leaving radio like the U.S. left Vietnam. In this case, the last helicopter -- so to speak -- is coming to rescue the fat cats from the embassy roof. Only now there are billions of dollars waiting to reward them for -- well, let's say it -- incompetence. If driving down the share price and leaving the industry worse off than they found it are indicators, consolidation failed. I am always proud of the people who cared enough about radio to stay with it in spite of all the odds against them. If some of Clear Channel's stations (the one's the Mays family doesn't keep) don't all wind up in the hands of other large consolidators, the smaller regional groups could lead a radio renaissance. Consolidators: you blew it. Radio people: job well done under awful conditions.
When Media Marries Technology
The decline of traditional media so far as been concentrated in radio (due to consolidation), the record business (due to unwillingness to accept new paradigms) and newspapers (inability to picture a newspaper on something other than newsprint). Television is next. It's happening right now. Their clumsy entry into short-clip video via YouTube and their own sites speaks volumes. You know its bad when an episode of Desperate Housewives ends and an announcer asks you if you want more, then directs you to their web site. TV affiliates can't be happy. Compensation is on its way out. The web is a growing alternative competitor. TiVo DVRs are giving advertisers a reason to question the rates they pay. Now TiVo is expanding to Internet-based content later this year so their customers can download videos from the Internet and watch them on their TV sets. All of this without consolidation! In fact, the big media companies want cross ownership and the ability to own larger platforms. It's not likely any of this will help the TV business although it might line the pockets of a few principals and Wall Street types. The next generation likes TV but is not likely to be the same type of rabid viewer as seen in preceding generations. Gen Y has the Internet and that has changed everything. So as I witness the decline of Clear Channel and a radio industry left worse off than consolidation found it, I wonder what will be televisions excuse for giving up its dominant position in media -- a move that is sure to come in my opinion. It's the same old answer that applies to the other struggling media. Failure to understand that TV broadcasters are really content providers not really broadcasters in the sense of the technical. And these TV executives are married to their transmitters, towers and areas of dominant influence. They fail to see themselves as video content suppliers. The first TV company to cross over in their mission to embrace their content producing role will be reborn again -- on the Internet. Fail to do so? Look no further than radio to see what happens when a medium marries its technology and is relegated to the past as sad as it is.
Apple Air
On the same day that Microsoft launches its iPod competitor, Zune, Apple announces a deal with six large airlines that will let passengers play video clips, movies and music from their iPods through in flight back seat displays. Apple is also looking to get car manufacturers to offer built-in ports in their vehicles. In the air, over land and no doubt by sea iPod is becoming the standard. Apple did what Microsoft couldn't do and this announcement yesterday rubbed it in. No matter what the fate of the Zune is, it is not likely to catch up to the 70 million (and growing) iPods now in use -- in the near future or perhaps ever. This device is bigger than Walkman ever was. My USC students called the Apple move a long time ago without having any privileged knowledge of Steve Jobs' intentions. You see, a lot of people doubt that small screen devices are as big a growth market as say MP3 music devices. But these doubters don't think like Gen Y. My students knew that the little screen on the iPod is just a convenience -- that the greater appeal is to use them to plug in to or wirelessly beam their contents onto a network of TVs placed everywhere in our world. Elevator and gas station screens (with ad content) are already here. What these students know that a lot of people don't get is that the beauty of the iPod is that it is a magnificent storage device for still pictures, audio files and video. The screen? Just a feature. Not the feature. So, as a result the iPod is becoming a sort of digital wallet in which to store everything precious to the next generation. It is another reminder of the iPods pervasiveness and the genius of Steve Jobs. Or put another way, an unfortunate reminder that big media companies and manufacturers have gone down for the count and that unlike Apple, they have little clue as to what makes this young generation click.
"Cell Me", I Mean "SELL Me"
Google CEO Eric Schmidt has been talking publicly a lot lately, but no comment he has made is more significant than Schmidt's prediction that our mobile phones should be free. And he has a plan. Sell advertising -- which happens to be a Google speciality. Schmidt told a group at Stanford recently that mobile phones may never be entirely free even with advertising subsidies citing that newspapers still charge readers and they carry advertising. Nonetheless, the wall-to-wall world of advertising now has another potential frontier. This makes me question why very little is said about the effectiveness of advertising rather than the mere volume of it. This is the weak spot of the ongoing Internet advertising boom. Where is the concern for effectiveness? Generation Y is a tough market for all the many reasons we have mentioned time and again. Yes, they reside on the Internet. Yes, they may spend as much as as 10 hours a day talking, texting and using the web on mobile devices but that doesn't mean that anyone is going to master the art of online selling to them. I'm seeing a runaway obsession with finding new ways to put advertisements in front of a generation that doesn't want to spend money (unless they want something). And too little emphasis is placed on making them want something. True, they're young and haven't realized their full financial potential, but they are the richest young generation of all time. This Internet boom will be a bust if shortsighted marketers don't wake up to the complexities of monetizing the Internet. Just being there is impressive, but making the next generation buy -- priceless.
Dead Technology Walking
Deader than Microsoft's new iPod competitor Zune this holiday gift buying season will be HD radio. Expensive. It has no rhyme nor reason to anyone who doesn't own or operate a radio station. It's remarkable to me that any sane radio executive can believe that HD radio will give the industry the rebirth it needs to satisfy its prime audience -- Wall Street investors -- I mean, listeners. Now, if someone would invent a radio with pictures that would start a revolution. Wait, someone did. The inventors of cell phones and MP3 devices. So how can radio be so sure HD spells relief? From my perspective its wishful thinking. The reality is consumers want better programming. You don't hear them clamoring for better audio. They rarely mention it. They want fewer commercials (please, not less is more). Less insulting commercials -- meaning stations would have to stand up to advertisers and agencies that want to continue cramming 45 seconds of meaningless copy into 30 seconds of time. Jocks that know the music -- and not sound like they're playing music in between personal phone calls. More variety -- not sweepers that try to con listeners into believing their radio station is playing more variety. Local stuff -- radio since consolidation seems to want to be bigger than local. Listeners like community -- they like local. The Internet is big but it is about community -- local. Hint. Hint. Even my Gen Y students tell me at USC that they want stations to be more locally oriented. If you find any of this hard to believe let me remind you that the next generation reveres public radio's KCRW in Los Angeles (i.e., "Morning Becomes Eclectic" etc). And KCRW is on it when it comes to utilizing the Internet in an effective way. In fact, KCRW is Los Angeles and nothing but Los Angeles yet it has a growing -- forgive me -- national market for people who want to hear "Los Angeles" radio. I'm sure you get the distinction. You owe it to yourself this holiday season to give the gift that keeps on giving -- no, not expensive, meaningless HD radios -- a trip to Southern California for a radio exec on your list to sit in a hotel room for a few days and go back to school on tomorrow's radio. KCRW is showing that radio does not have to be anything more than old technology with tons of new ideas.
Small is Big
Okay, if Clear Channel can coin the term "Less is More" -- a ridiculous term at that -- I thought I could try this ridiculous one out -- "Small is Big". I'm not talking about commercials here (just cut them to 8-10 units hourly, raise the prices when able -- we knew that all along, didn't we?). I'm talking about a current trend to gather critical mass -- the exponential building of huge audiences for Internet hotties such as MySpace and YouTube. MySpace is far and away the leader in social networks and marketers are licking their chops at the benefits of viral marketing. Big. Really big. YouTube does about 100 million video clip downloads a day! That's bigger. Facebook, the student social network, has opened its site to everyone -- that's big of them, as well. So I'm thinking -- everything big is a hit with this generation. Well, now I'm not so sure. I'm seeing early signs to the contrary that might interest you. There's a backlash coming with this fickle, connected generation. You see, they love the reach of the Internet and the convenience of mobility but they also love community. That's how social networking got started -- not with the goal to be big at anything -- just a way to help people find other people of like interest online. What's more, now that mega-media conglomerates are on a spending spree to dominate their world -- the world of Gen Y -- Gen Y may have another surprise for these moguls. I'm seeing the seeds of change. Discontent with the bigness of MySpace (and fear of what News Corp may do to monetize it at their expense). They love YouTube but don't like how difficult it is to deal with so much random content daily. They like Internet radio but settle on a handful of niche stations not available to them elsewhere. So for what it's worth I'm watching this generation in the early stages of technological rebellion. I'll go out on a limb and say if media America gets bigger, this big youth market will get smaller. I'm coming to appreciate how sacred community is to this fine young generation and anyone wanting to succeed in interacting with them will have to do more to learn what community really means to them before they can become important to big media and its advertisers. Therefore, small is big. It may be the new paradigm for the interactive, fickle and commuity-minded generation.
Beware of Geeks Bearing Gifts
There's a great article in the Sunday New York Times about whether Google is a friend or foe of media companies. The issue is Google's desire to sell advertising online for radio, newspapers and soon, television. Sounds like easy money and traditional media companies could use some of that these days. Google insists its a friend. I'm not so sure. Traditional media companies have set themselves up for Google's latest play. Newspapers have been dying off for years. Don't blame that one on Gen Y or the Internet. Papers have been trying to commit suicide by not adapting to new technologies and the needs of younger consumers. Radio has set itself up to be nothing more than a commodity traded and priced online by anyone simply because it selfishly pursued and won consolidation -- now it's Achilles' heel. Television, cable and satellite are at the early stages of being taken to the cleaners by short video (certainly Internet-delivered programming) because a few kids screwing around in a garage invented YouTube. Google knows what it's doing. Microsoft CEO Steve Balmer told BusinessWeek "The truth is, what Google is doing now is transferring the wealth out of the hands of rights holders into Google." Radio can expect an assault. The Times article refers to Google Chief Executive Eric Schmidt's plans to have up to 1,000 engineers and sales representatives working on the radio industry. By contrast the constantly downsizing radio industry hardly ever has a day without news of more layoffs. I'll bet radio hasn't collectively gained 1,000 new employees since consolidation began in 1996! You can't blame Google. They see opportunity. But you can hold radio, print and television accountable for helping to make their businesses the commodities that Google covets. To play on the old adage -- Beware of Geeks bearing gifts.
Apple 2 Microsoft 0
To quote a Sesame Street song -- one of these things is not like the other one. It's not like Microsoft didn't have plenty of time to come at Apple's iPod with a vengeance. And the new Zune is their second attempt. The comments have been very polite so far in expectation that this time Microsoft has outdone Apple CEO Steve Jobs. But the early reviews on the Zune by respected tech writers are anything but gushing. The New York Times David Pogue gave the impression he felt Zune was more revenge of Microsoft than anything else. The Wall Street Journal's Walt Mossberg was fair but not impressed. What was Microsoft thinking? To buy songs for this rather ugly, clunky device a consumer will have to purchase points from Microsoft. And here's something Steve Jobs would never do -- you have to buy a 5 point minimum to buy one tune. That is, the consumer gets to give one of the world's biggest companies four extra dollars until they spend it all on downloads. You just can't buy one song for a dollar. Another thing Apple wouldn't do is make a big deal out of sharing music from device to device and then give the consumer three chances to preview a shared song and only three days to make up their mind to buy it or else it goes away forever. And if you play only part of the song -- it still counts as one of your three free plays. Also, Jobs wouldn't make a clunky device. You'd never see Apple pick that brown (pictured here) as one of its three inaugural colors. He wouldn't start with a woefully insufficient music library if he had four years to get it right. Battery life on the Zune is reported to be not that good. But less than sufficient battery life is something Apple would do and has done, but their customers would forgive them for getting everything else right. The Zune has barely launched and it may prove to be a turkey even before Thanksgving. It's a good bet that the number one software company will still be number two to the number one music device and music store -- iPod and iTunes.Microsoft, Universal May Be Playing Into Steve Jobs' Hands
So Universal finally has the deal it wants in exchange for digital distribution rights. Microsoft has agreed to a deal that will give them a piece of the action on every Zune portable music device it sells. And Microsoft is, according to the New York Times, ready to extend that offer to the other major record labels. Universal has been tough on the DRM issue. As Jeff Leeds points out in his article, "The move also reflects Universal’s recognition that, for all the runaway success of gadgets like the iPod, consumers are still not buying enough digital music to make up for declining sales of music on compact disk. Universal said it was only fair to receive payment on devices that may be repositories for stolen music". The labels make a good point when they point out the flaws in Apple's iPod/iTunes system where a study shows Apple sells only about 20 songs per iPod. Maybe Universal's way -- becoming partners with the hardware supplier -- can generate the revenue they have been longing for.But, let's not get too far ahead on this one. It was Steve Jobs who pulled a fast one on the record labels when he brought his iPod/iTunes idea to them originally. They didn't see it as much of a threat then and were willing to accept pennies on the dollar in return for help in solving one of their other problems -- music piracy. We all know what happened next and whether they meant to or not the labels helped create the monster -- so to speak that they can't control -- Steve Jobs, record executive.
So, now along comes Microsoft with its second bite of the Apple in an attempt to claim the digital music device market Apple stole away. You see, the deal Microsoft made with Universal -- the one the labels hope will change the terms of digital music licensing in the future -- is for the Zune. The Zune! Microsoft's entry into the iPod market. My experience with the next generation at least on the college level is that these happy iPod owners and users will need a lot of convincing to switch. They are initially underwhelmed from early buzz. The Zune doesn't do enough things to be better than an iPod and worth the cost and inconvenience of switching. The Zune could lay an egg. That would be unfortunate for Microsoft but even more unfortunate for their hungry partners -- the record labels.
That means Universal got the deal it and the other labels wished they made with Apple in the first place, but the Zune is not the iPod and the Zune could be a flop or at best, an also-ran. If it gave iPod a run for its money it would be not only the device of the year but of the decade. Holding your breath is a death wish on this one.
In the end, it may have been the right deal for the labels, but with the wrong company, at the wrong time. Somehow I don't think Steve Jobs is worried. Unlike Microsoft, he knows the youth market for portable players, owns the market and possession is still nine-tenths of the law. In fact, as Jobs no doubt knows, if one more competitor has a failure, Apple won't even see another attempt to beat them for a long time to come. I'm betting the sly-fox, baby boomer from Cupertino knows the next generation better than Microsoft. Microsoft's move plays right into Jobs' hands if it eventually fails because it allows Jobs to tighten the noose on fixed pricing -- and he continues to fix the pricing. The fixed rate -- 99 cent model that labels don't like and can't do anything about. The labels will then lose the sweet deal with Microsoft along with all those CDs it's not selling. Inevitably, it will be time to substantively re-invent the record industry unless it's already too late.
Revenge can be sweet, but it can also backfire.
Time Out For The Record Business
I've noted with great interest the record labels' entry into the digital space recently with special interest in having it their way. They want to be in on the tsunami known as social networking (YouTube, MySpace, et al) as well as preserving their digital copyrights. Well, they're both late to the party and fighting a battle they cannot win. The record business is broken because of their deep desire to hold onto the past (Say CD). They see themselves as manufacturers (Hear them say "product", "units"). Their long-time partner in hit-making ain't what they used to be (radio -- growing less influential as a source for new music for young people). They see themselves as gatekeepers of copyright protection (RIAA lawsuits can't stop piracy). Even the present generation admits that a lot of the music the labels are hawking is long in the tooth (Hip-Hop, for example -- what's next?). The future of the music business is in social networking (they are more obstructionist than constructionist). It's time for a time out. Labels are in desperate need of a play date with young entrepreneurs (turn them loose, send your lawyers on vacation). Labels need to lead not follow (music drives social networking, build social networks). They need to bust into the mobile space (mobile is the future and music will be a big part of it). If the labels find themselves saying "we're doing these things already", they're cooked. Just ask any Internet-savvy, mobile connected, multitasking representative of the next generation.ClearGoogle -- Death of A Salesman
Google could be the next Clear Channel.
It is planning a massive assault on what is presently known as radio sales. If Google succeeds, it could become the next evil empire -- the term some journalist have used to describe some consolidators. Google not only wants to make it possible for anyone to buy radio ads online, it wants to go after radio's big advertisers thus the hiring away of top radio salespeople that is going on right now. Radio groups might be willing to let this mega-giant -- shall we call it ClearGoogle -- sell off unused inventory, but will they let Google turn their stations into a click and bid system open to anybody and everybody? Of course they will. While some radio groups are swearing up and down that they will have no part of ruining the personal selling relationship between station and client, their history shows otherwise. And while Google needs Clear Channel (now looking to split up) and CBS to succeed at this power play, neither has signed on -- yet! This Google Audio Ad Service is right down a consolidator's alley. You can smell the cutbacks, layoffs and reliance on a system that would make radio sales a mere commodity.
I say that because the past ten years has proven that that's the way radio thinks and acts -- like a commodity. Not a hot commodity just a commodity. And that's why radio is stuck at the $20 billion mark. Am I predicting some form of online ad purchasing for radio in the future? You bet. It's coming. The radio industry has single-handedly shot itself in the foot since consolidation by devaluing employees. Not all the radio groups -- just the big, public ones -- the ones who have led radio to its present predicament. The breakdown of the sales relationship between station and buyer in spite of all the angry denials you'll likely hear is inevitable because consolidation is all about efficiencies of scale. It's all involved with one person doing two or three jobs and if it could figure out a way -- no person doing two or three jobs. That's why online buying and bidding for audio ads is made for consolidated radio. It's about efficiency of scale. And why Google could become a new-age ClearGoogle -- at least to the radio industry. This idea can't lose and at the same time radio can't win. It made its bed and now Google has come to lie in it. Sarah McBride did an outstanding piece in Wednesday's Wall Street Journal on Google's plans if you haven't already seen it.
As many of you know, I took a lot of brick bats for predicting radio's demise at the hands of consolidation as editor of Inside Radio ten years ago. Sadly, I put even the casual use of online bidding and buying in the same category today. If radio heads really want to grow their businesses, start hiring. Hire young people. Turn them loose (put them in a garage to work like the kids who are turning out all the billion businesses these days). Then bring back the talent you've discarded as consolidation's collateral damage and value the pros you still employee. These pros never turned on you. Wall Street did. And listeners are now. Put bluntly, radio is a growth business only when it starts to grow its staff, grow beyond the false efficiencies of consolidation and grow into the next generation. It not only hasn't measured up, it is very vulnerable to ideas like this one.
Ironically, radio -- the same giant that gobbled up mom and pop radio stations as the booty of consolidation may be defenseless in the end to a bigger giant like Google gobbling them up into their click and serve world. Radio, meet Google. Google, meet Clear Channel's 1,150 stations. ClearGoogle.
It is planning a massive assault on what is presently known as radio sales. If Google succeeds, it could become the next evil empire -- the term some journalist have used to describe some consolidators. Google not only wants to make it possible for anyone to buy radio ads online, it wants to go after radio's big advertisers thus the hiring away of top radio salespeople that is going on right now. Radio groups might be willing to let this mega-giant -- shall we call it ClearGoogle -- sell off unused inventory, but will they let Google turn their stations into a click and bid system open to anybody and everybody? Of course they will. While some radio groups are swearing up and down that they will have no part of ruining the personal selling relationship between station and client, their history shows otherwise. And while Google needs Clear Channel (now looking to split up) and CBS to succeed at this power play, neither has signed on -- yet! This Google Audio Ad Service is right down a consolidator's alley. You can smell the cutbacks, layoffs and reliance on a system that would make radio sales a mere commodity.
I say that because the past ten years has proven that that's the way radio thinks and acts -- like a commodity. Not a hot commodity just a commodity. And that's why radio is stuck at the $20 billion mark. Am I predicting some form of online ad purchasing for radio in the future? You bet. It's coming. The radio industry has single-handedly shot itself in the foot since consolidation by devaluing employees. Not all the radio groups -- just the big, public ones -- the ones who have led radio to its present predicament. The breakdown of the sales relationship between station and buyer in spite of all the angry denials you'll likely hear is inevitable because consolidation is all about efficiencies of scale. It's all involved with one person doing two or three jobs and if it could figure out a way -- no person doing two or three jobs. That's why online buying and bidding for audio ads is made for consolidated radio. It's about efficiency of scale. And why Google could become a new-age ClearGoogle -- at least to the radio industry. This idea can't lose and at the same time radio can't win. It made its bed and now Google has come to lie in it. Sarah McBride did an outstanding piece in Wednesday's Wall Street Journal on Google's plans if you haven't already seen it.
As many of you know, I took a lot of brick bats for predicting radio's demise at the hands of consolidation as editor of Inside Radio ten years ago. Sadly, I put even the casual use of online bidding and buying in the same category today. If radio heads really want to grow their businesses, start hiring. Hire young people. Turn them loose (put them in a garage to work like the kids who are turning out all the billion businesses these days). Then bring back the talent you've discarded as consolidation's collateral damage and value the pros you still employee. These pros never turned on you. Wall Street did. And listeners are now. Put bluntly, radio is a growth business only when it starts to grow its staff, grow beyond the false efficiencies of consolidation and grow into the next generation. It not only hasn't measured up, it is very vulnerable to ideas like this one.
Ironically, radio -- the same giant that gobbled up mom and pop radio stations as the booty of consolidation may be defenseless in the end to a bigger giant like Google gobbling them up into their click and serve world. Radio, meet Google. Google, meet Clear Channel's 1,150 stations. ClearGoogle.
Top 10 Ways to Make Music Radio Better
Inspired by David Letterman not written by him. Advice to the big radio conglomerates:#10...Cut the commercial load in half but don't tell anybody (the listeners will notice).
#9 ... Hire djs who are knowledgeable about the music
#8 ... Let your newly-hired "smart jocks" play some of their own music not just the corporate playlist
#7 ... Stop trying to be interactive -- you can't. Entertain in an analog sort of way
#6 ... Take all the stations you own in each city and run them separately. You keep the cash they will surely generate by being truly competitive with each other. The listener gets real choice.
#7 ... Location/location/location -- the more local you make your station the more listeners will crave it
#6 ... Mix new with familiar music. Make the familiar really familiar and the new really new
#5 ... We're onto your tactic of clustering commercials -- too bad advertisers aren't. Run one commercial between each song -- don't cluster them to create music sweeps. The longer the commercial sets the longer you lose us.
#4 ... (And while you're at it), go back to lots of "live read" commercials. Young listeners will listen to knowledgable personalities they respect even on products and services
#3 ... Don't brand yourself -- no "Kiss", no "Jack", no "Power" -- no meaningless names. Go back to call letters and frequency. Think KCRW.
#2 ... Stop with the repetition, already! Play the hottest tunes once per daypart at most and listen to your audience. In the past they said they didn't want so much repetition but you knew your ratings would go up if you tightened the playlist. Now, no means no. Your listeners can turn to the Internet to avoid the needless repetition they detest on your stations.
And, the #1 Way to Make Music Radio Better ...
Don't wait for HD. HD doesn't matter to listeners like it apparently matters to you. You'll see. You can't be what you're not -- interactive like the Internet. Be cool with being less interactive. Make these changes and to quote Mister Rogers, "we'll like you just the way you are".
News Corp Couldn't Have Invented MySpace
And Google didn't invent YouTube which is why it paid $1.6 billion for that oversight. There is a reason why big, viral music media-related ideas come from people with nothing to lose. That's because they act like they have nothing to lose. I must say I had an engaging conversation at the USC Faculty Club today with a young, talented woman who helped launch MySpace and she's the one who made the observation that News Corp which paid about $600 million to buy it couldn't have invented it. I haven't been able to get all of this out of my mind. Steve Jobs needed a garage to collaborate on building the first Apple computer. He had nothing to lose. Meanwhile Microsoft has nothing but money and they are about to take it on the chin with their newest iPod challenge -- the Zune. Microsoft -- as many traditional media companies do -- live in their own world. New ideas could never make it out of committee or past the lawyers or worse yet past their own establishment. So which companies really want to innovate? Well, come up with the paltry funds YouTube's founders had to get by on but give them carte blanche to do what they want. (Could you imagine YouTube's young founders getting their idea past any media company's lawyers? Fortunately they didn't have to. Now Google's lawyers can do the legal work). My thought at this moment is -- we need to foster ideas, encourage the unthinkable. Too much emphasis on why ideas can't work. No media corporation that I know can presently do this. Maybe it's time to start. What do you think?
The Video Clip Factor
As a guy who has spent considerable career time in radio I am very interested in the boom presently underway in video clips. YouTube does 100 million short videos a day. CNN's various short news clip services stream about 5o million a month. There are cell phones everywhere with screens that are getting ready for more video. The iPod has already been updated to include it. How important will short videos be? And if you're in the print business, is it a deal breaker going forward? What about radio or audio streams -- a thing of the past? I sense the answer is yes and no. One thing I can tell you about the next generation is that they want text when they want text -- audio when they want to hear something and video when they want to see it. This is a reality and any one medium may be at a great disadvantage if all three experiences are not offered. Of course this isn't the end of the world. It's just an indicator that we need to think differently. More texting events for radio. Easily available video for online print publications. Audio is always in demand by consumers but not necessarily alone. If I programmed a radio station today I'd have a text event and video event for every element in the format even if all I could broadcast is audio. After all, a mobile device is always near today's consumer. All of this is exciting to me. We have a chance to re-invent traditional media with some of the tools of the interactive era and all that is necessary is companies that encourage out-of-the-box thinking and big ideas.
Radio's YouTube Has Arrived
It's called BlogTalkRadio.com and it may soon do for amateur talkers what YouTube is doing for the homemade video clip. It's all very simple. Want to be a talk show host? Log in. And lots of people have been doing just that since August when it launched. Even MySpace bloggers are getting into the act. The service is free to talk show bloggers who share equally in whatever revenue BlogTalkRadio.com brings in from advertising. Listeners can subscribe via RSS feeds and the feeds can be archived. Each host gets a switchboard page and they can do links from their blogs to their talk show. Listeners listen on their computers to hear the stream but they can call in. Hosts can call in on a regular telephone to record. Listeners must listen to an ad to get the stream and they can't fast forward through them because the broadcasts are live. This is all kind of consistent with the present generations' desire for democracy. Remember their mantra: they want it their way when they want it. If this catches on it won't mean the end of radio talk shows, but it will distract listeners from seeking radio and right now Gen Y lives well without radio as it is. Again, I get the sense that radio's complacency to air only couple of genres of talk shows and syndicate them among 12,000 potential stations is part of the problem. Now radio has online competition from the folks who had eyes for YouTube and now a voice of their own thanks to BlogTalkRadio.com
Google's Ad Empire Expands To Newspapers
Tests will get underway in the next month. Some 50 major newspapers are on board including The New York Times, Gannett papers, The Washington Post and Hearst. Google is simultaneous taking on radio ad sales and is hiring high profile sales people away from terrestrial radio for its new service there. Earlier this year Google started selling ads in several dozen magazines such as Motor Trend and PC World with mixed results so far. Google takes its usual 20% of the ad revenue and traditional media, treading water to show break even growth, is apparently up for it. Television is also in Google's plans. It's hard to know what the eventual impact will be on traditional media but Google could be the darling of old media if it can inject some of new media's innovations into efficient selling. The question of what becomes of relationship selling is a good one and not easily answered. The Internet has changed everything. Agencies are very comfortable doing their buys online. Face to face contact is becoming a distraction. Show me the numbers. Get me the best price. Book it. While our tendency is to talk about all the content changes that are building exponentially these days I am personally keeping an eye on Google's great sales experiment. If it succeeds, the master of online advertising may be helping to save traditional media's bacon with a wider range of prospects and lower sales costs.
I Give YouTube 2 Years UNLESS...
Whereas the Internet was a big factor in the last presidential election, YouTube is an even bigger factor in the mid-term election Tuesday. YouTube -- the homemade video clip phenomenon -- has become the repository for every politican's slip up, attack ad, Jon Stewart ha ha and more this political season. But I'm thinking that this election happened to collide with the growing popularity of YouTube. What about in the future? YouTube or future clones will always find a place for politics. It's a dream come true -- wide distribution video -- for no money. The real question is how long will the amatuer video market drive the growth of YouTube? It's my belief that the generation that made YouTube a household name in less than a year can also make it a has-been in short order. I'm saying if YouTube doesn't become the next cable or satellite TV then I give it two years of growth at best. If somehow traditional media giants could grasp the importance of producing short video for this new outlet then the boom can and probably will continue. To keep the revolution rolling on there is a need for a multitude of speciality channels beyond what is currently offered with an easy to use interface for knowing what's on. YouTube is so massive it needs better navigation and search. A big hurdle in the way is their present concept that all TV programs have to be a half-hour or an hour (minus commercials). In the new world -- with multitasking, ADD and endless media distractions -- the major studios and networks are going to have to get into the short video business. George Lucas has already warned the motion picture industry about major generational changes ahead for it. And they thought working out rights deals was going to be the back breaker. That, too! Not to worry. YouTube is just the beginning. The transition from always watching professionally produced programs to having the choice of viewing interesting short episodes or reality clips whenever is underway. We're not going back.
Glimmer of Hope For Radio's Future
The NAB is sponsoring a Teen Initiative. Projects and research will be done to determine how to win teens and young adults back to radio. Some of the smaller, well-run groups are probably going to lead the way. The big consolidators need to sign on, too. Radio for decades has coveted its money demo -- 25-54. It's made a cottage industry out of 18-34. It loves women over men but knows how to monetize male listeners once they attract them. But teens -- most radio operators submitting to a lie detector test couldn't attest to their interest or concern for this demo. So, while radio was out consolidating and licking their chops about seven station platforms and monopolizing markets, teens and young adults found other alternatives. The Internet, the iPod, social networks, peer-to-peer downloading, the mobile phone and even Internet radio. And I'm just getting warmed up. Radio got away with this neglect for generations, but this time taking their eyes off their teens is having catastrophic consequences. They inadvertently put their stations' futures at risk for money demos and the promise of lots of stations. This project is one of the most encouraging things NAB has done for radio lately seeing as how NAB was so instrumental in getting consolidation legislation passed in 1996. Can radio attract teens? Right now it's a long shot. Not that teens don't appreciate good programming, but by and large they're they are not getting it on radio. Young people are turning to other sources. They have become individual program directors. Their iPods are their oldies stations even if they are only 19! To win back this demo its going to take a major, honest and complete dialogue with teens. I see young adults at USC -- they are way ahead of my dear friends who are programming radio stations. They want radio delivered in new ways -- not just emanating from an over-the-air signal. Can radio accept this? The youth market wants more knowledgeable djs -- do I have to really say more on this? They want real variety in music (not slogans) and they want radio to be local. They hate consolidation. They don't believe less is more and almost everyone young knows who Clear Channel is. Think Clear Channel is responsible for mediocre radio -- the poster child -- fair or unfair. What about CBS? They're rarely mentioned yet CBS has made as many bad moves as Clear Channel of late. It all resonates. If radio is going to spend the next year to modify existing formats only to make them teen-friendly then young adults are going to do what they're doing now -- bail out in droves. They want change. There is no future for radio without young listeners. Can the radio industry, really get to know this YouTube, Facebook, MySpace, iPod/iTunes, Pandora, post-Napster generation? The Teen Initiative is ten years late. Better late than never.
Trick or Treat for Radio
I thought Halloween was over. Not for radio. November 10th is supposedly the date Clear Channel should receive the first bids in its breakup attempt. News accounts indicate that Kohlberg Kravis Roberts (KKR) may have had a head start on all of this several months ago. Some later bidders may be at a disadvantage because -- short of a deadline extension -- they will only have a few weeks to get their bids together. At the heart of Clear Channel's move is how a buyout group would deal with (or deal away) radio properties here and abroad, TV stations and outdoor businesses in and out of the U.S. So what could be in the bag of goodies? Treats -- lots of media will be in play if this goes through.. That's how investment companies make their money. Properties will sell. Money will be made. Bankers will smile. Trick -- the professionals who operate Clear Channel stations will have their careers thrown into uncertainty once again. They may wind up working for a better operator, may remain in limbo or may have to start looking for work. Treat -- is there any doubt the Mays family will come away whole -- maybe even better than whole? Trick -- the radio industry's leader, the one who sets the trends from "less is more" to sell the company for more is signaling the end of consolidation and the start of a period of great uncertainty and turmoil. Hopefully we will find no razor blades hidden in apples (to continue our Halloween analogy). Of course, razor blades in apples would in this case mean hedge funds. They're sketchy and Congress could be ready to restrict them if the Democrats win Tuesday's election. The overriding point is: radio's long suffering is not over yet, it has only just begun. But at least ten years of failed consolidation is coming to an end.
Facebook -- A Bad Investment
One of the many benefits I have teaching at USC is to pick up on trends among the next generation even as they begin to coalesce. I mentoned recently the decline in stature of the student social network Facebook. As hot as it was with college students, it's cooling off now. So much so that founder Mark Zuckerberg (22) who dropped out of school to work it full time may regret not taking an offer in excess of the $1 billion range. Zuckerberg reportedly wanted $2 billion. (Consult Mark Cuban about when to sell). Viacom and Yahoo! were reportedly interested at the right price. A new BusinessWeek article reports "declining Facebook traffic numbers may have potential buyers waiting for a discount." Facebook has made many missteps lately. It is locked in a disagreement with rating services that measure web traffic and usage. It backed off of a unilateral attempt to expose users to automatic notification of friends every time, say, Megan broke up with Josh and so on. Zuckerberg kind of backed off and gave users an opt-in voice. Still, that stung with students at the start of the current semester. Then there was Facebooks' decision to open up the network to everyone even while preserving protected areas such as colleges and high schools. This Zuckerberg may yet have a future working for Viacom. That sounds like something Viacom would do. Facebook remains a powerful platform. In a way college students are locked into it -- hooked, invested with their pictures, groups and friends, but that doesn't mean they like it as much as they did last year and it definitely doesn't mean that it is still as cool. MySpace never really made it to cool. Students had preferred Facebook. Can Facebook be MySpace? Can MySpace be Fox and News Corp. My guess is that as popular as social networking is, it could be a bad investment for traditional media companies unless they go to school on their target audience.
Googleberry And The Mobile Future
Google has found a way to make mobile phones more like a Blackberry so customers can receive email on their cell phones and up to five times faster. YouTube is expected to have a mobile service within the next year. Cingular is joining the mobile companies that make it possible to download music on the fly and there are those who think Apple will indeed turn an iPod into an iPhone sooner or later. Boston University is partnering with Amp'd Mobile to create a class where students produce episodic (short) videos which Amp'd (backed by Qualcomm and Viacom) then distribute. The videos are shot only with cell phone cameras in spite of the sound and video quality problems. Amp'd charges its subscribers 45 cents per download or $20 for unlimited access. And that brings up an excellent point. Will consumers 18-35 really pay for mobile video? Will they respond to mobile ads instead? Early research is not real encouraging. M:Metrics shows the response rate in the U.S. at only 7% compared to 29% overseas. We're back to the same dilemma. The next generation doesn't do paid subscriptions real well and if this research is any indication their response to mobile ads is only slightly better than only perform slightly better than Internet ads. Delivering mail, music and video is a no-brainer, but the challenge is to find a way to make it profitable. One clue might be to study Gen Y. They want what they want even if they won't pay for it. I'm less optimistic about the future of mobile advertising than I am about the future of text and pay. The mobile industry may have all they can get right now -- charging users for texting and for service plans with added benefits. But competition is forcing some carriers to make texting free and being on a college campus I am always aware of how fickle this generation can be. Technology is great. Now, go make it a business.
Subscribe to:
Posts (Atom)