Disney Shows The Labels How to Make Hits

The Disney Channel kids program "Hannah Montana" is a smash hit. And so is the music 14- year old Miley Cyrus sings as the fictional pop star Hannah Montana. She has sold over 1.6 million songs in about two months beating out the likes of Jay-Z, Sarah McLachlan, The Beatles Love album and a slew of others. It highlights the potential of the 8-14 year old market sometimes known as the "Tweens". These days the usual mojo from teens is not there in the record business. Teens and older Gen Y youths have found their way to music downloading. They're not such a hot record market anymore. But "Tweens", that's another story. Let's break it down.

Disney is looking to record clean, family music for its target age group. That leaves a lot of rappers out. Rap and Hip Hop may have been embraced by "older" young people, but the new record market could be kids -- really, kids -- looking for something the record labels could not know to offer them. That's because the major record labels have gotten into the habit of missing trends. They used to rely heavily on their gut. Now, gut has nothing to do with it. No doubt this "tween" market is not very hip -- and record labels try to be the epitome of hipness. But 1.6 million records -- an average of 100,000 a week since mid-autumn -- should serve as a wakeup call. Miley Cyrus who plays Miley Stewart on the "Hanna Montana" TV series is now getting ready to release an album under her own name. There's little doubt the kids know who she is. If they like her music, they will buy her songs.

I vividly remember putting on an Inside Radio Management Conference event on the campus of The University of Southern California before I sold the publication to Clear Channel and joined the USC faculty. My friend, Professor Ken Lopez, put together one of the hit panels with ordinary college students talking about what they liked and didn't like about terrestrial radio. Keep in mind that was five years ago and radio was actually sounding better to young people then than it does today. I will never forget the students talking about the things they liked in radio. No, these things didn't come from Clear Channel. Nor from CBS. Or any of the other big players. You see, the students waxed eloquent about Radio Disney. At first I actually thought they were putting us on. But their sincerity eventually won the day. These students liked the variety, the creativity, the production on Radio Disney even though they were clearly older than the Radio Disney target demographic. Most of the real world radio people attending heard this and promptly dismissed it. That would turn out to be a mistake. Just as it is a mistake for record labels to try to find the next teen idol when they are not willing to use their gut and gamble on something new. Britney Spears is so, well, 90's. Paris Hilton is so not going to be the one.

Former Disney CEO Michael Eisner has taken a lot of brickbats for his management style and his boardroom battles. But the very successful Eisner gave us all a hint even back then that he knew radio best. Eisner did not buy big radio stations when consolidation was approved by Congress. God knows Disney had the money to be a big player. I often wondered why and how they resisted buying even one major station once the floodgates opened. ABC Radio owned a lot of major market properties but not a lot of stations overall. When the consolidation buying spree ended ABC owned virtually the same number of stations. All of a sudden Clear Channel's 1,100 stations made ABC seem like a little fish and the little fish from San Antonio looked like the king fish. But Eisner methodically continued buying what some brokers called "shitty little properties" for a few million here and a few million there. He did it to have a place to air Radio Disney. You'll note ABC did a complicated deal (waiting completion) with Citadel to merge their stations. What you should also note is that current Disney CEO Bob Iger kept the "shitty" Radio Disney stations and did not sell them to Citadel or anyone else. Disney knew all along that as hip as we all are in radio and records that traditional radio's day was over, but kid's radio was a potential boom business. Along with theme parks and a cable channel, Disney is proving they were right.

This is all well and good but how does it bode for the future. I wouldn't be surprised to see more trouble ahead for the major labels as they chase their long tail in denial that the music changed. Or, has it? Maybe the labels changed. When radio stations full of hubris stopped programming to their local markets and went big time (as in big time media) perhaps the record labels did the same thing. They cut expenses, consolidated, overreacted to the online peer-to-peer downloading trend, started suing their customers and then declared themselves hip all over again in the digital age. Meanwhile they continue to under achieve.

The record buying public -- even the lost generation Y -- is tired of only rap and Hip Hop. Clean still sells especially with pre-teens. Pre-teens are putting on a record buying clinic for the labels as witnessed by Hannah Montana's success.

Is Disney the only company that listened to its gut? Was Eisner smarter than his unfavorable press led us to believe? Did he know something everyone else missed? I say yes -- and here it is -- when music media starts imitating itself it fails to innovate. Does that sound like an accurate description of both the radio industry and the record business right now?