Networks Losing Control Of Content

By Steve Meyer, Inside Music Media™ Contributor

The media is talking a lot these past few weeks about the death of TV as we know it. The Microsoft head guy Bill Gates comes out and echoes the same sentiments and says that in five years the Internet will completely alter the way we watch TV. (Gee, I thought it already had).

Whatever dialogue ensues about this topic from this point on, one thing is certain: the public is surfing through their galaxy of a hundred plus channels as fast as their remote control permits. The loyalty factor for their favorite shows is declining (with the exception of 'American Idol' which defies all traditional analysis at this point).

ABC's 'Desperate Housewives' (which was #1 two years ago) has declined from its 25 million weekly viewers to 17-18 million. 'Lost,' 'Survivor,' and other once guaranteed top-5 ratings champs are all down as well.

Why networks should be surprised at this, is beyond me. If they've been paying attention to what's going on all around them, they should have picked up by now that when you have a hit show, the last thing you should do is stick reruns on during the show's new season -- which is exactly what 'Desperate Housewives' has done this season and last. Forget the reasons why they say they do it (or need to do it), the fact is, the public has no tolerance for it, and they click to another channel to see something new or different.

And unlike in the past (when there weren't so many channels out there), once they do click and latch onto something, there's a decent chance they might lose interest in what they were watching previously. Instead of Attention Deficit Disorder, they get Viewing Deficit Disorder. And the shows they once were glued to, become faded memories faster than you see Larry King's hair turning gray.

This is the way it is now in media and entertainment. Hot today, cool tomorrow, ice cold in a matter of months. Disposability. It's that way now with the majority of music on the radio (which I refer to as "Chinese food for the ears" because it's good going down, but we hunger for something else in little time), most of the the movies being pumped into two to three thousand theaters a week (if you don't think they're disposable, try and name the dozens of films that came and went in a matter of weeks at the box office. Better yet, if you've got pay-for-view on your cable or satellite TV system, how many of them are you actually paying to see?), and yes, it's now that way with television.

YouTube didn't happen by accident. It was the next logical progression in delivering video entertainment on demand to an audience that embraced TiVo technology immediately. Except with YouTube, there's no need to program anything, buy a subscription service, and go through the efforts of hooking it all up. Nope. You push the button, power up your PC, and you're watching whatever you choose to online.

We'll still watch our big screen TVs. But the networks (like the major labels) are losing their grip on controlling the content the majority of the public will watch from this point on. One of the biggest mistakes network TV ever made was assuming for too long the public would actually tolerate summers filled with reruns and bad shows. That did more to drive people to cable and satellite faster than anything. Once there, the audience found out there was another universe of channels to entertain them.

Steve Meyer is one of the music industry's top professionals and publisher of the new media newsletter DISC & DAT.

How YouTube Could Become YouLose

There's good news and bad news for Google's YouTube and its many users.

First the good.

Google is jumping on board the video love train that will share ad revenues with contributors. Revver does that already. But the giant YouTube's entry into pay for play changes the face of the online video experience.

Now the bad news.

Google and YouTube are mulling the idea of adding commercial videos before the clip you're looking to view starts playing. They haven't made up their mind yet. Perhaps this research from a recent Harris poll will make them think twice about it:

• Nearly three-quarters of frequent YouTube users said they would visit the site less if it started including short video ads before every clip
• 42% of those said they would visit YouTube a little less often and 31% would visit significantly less often
• 42% of adults say they have watched videos online at YouTube and 14% are frequent visitors
• One in three frequent visitors to YouTube watch less TV
  

There is precedence for commercial rolls. Viewers who want to catch an episode of, say, Desperate Housewives that they may have missed are willing to watch the commercials online to do so. But the question is will YouTubers who are used to clicking and getting what they want fast and free tolerate the imposition of capitalism?

This is the dilemma traditional media companies have been saddled with up until now -- Generation Y resists commercialization. But now new age companies like Google has to deal with the quirks of the next generation. How do you share revenues to video providers and earn revenue to come up with the pay.

Google says it's looking at lots of options. A decision should be announced in a few months.

Keep in mind that even if YouTube remains commercial-free the dew could be off the lily in no time with this generation. My mantra is "Gen Y flirts with but does not marry it's technology". Perhaps the best way to keep YouTube alive with such a fickle generation is to keep innovating. Gen Y has a soft spot for something that is new -- and that matters to their lives.

What I fear is happening is that new innovators are hitting all the right buttons with the next generation in inventing new media concepts, but are falling back to traditional media's ways of monetizing their ideas. I could be wrong. Perhaps it is in the future for Gen Y to suck up the commercials as every preceding generation has done, but I wouldn't bet the franchise on it.

When Google announces its plans for YouTube monetization we will know what the most innovative company in new media has come up with for their solution.

How To Do An Intervention On Radio

We all know that the radio industry is in transition. It is coming off "The Dark Ages", a time span that began after consolidation in 1996 up to and including this year. I get the feeling radio executives are finally beginning to recognize (and the brave ones admit) that they have dropped the ball during consolidation.

It's time for an intervention for the sake of the radio monopolies allowed by Congress when it passed the enabling legislation -- The Telecommunications Act of 1996.

There was the Wall Street stuff -- getting used to running public companies, pandering to investors and analysts and for the most part having to predict performance three months hence.

Then there were the cutbacks -- economies of scale to squeeze more profit in order to make the numbers that radio CEOs were forced to predict three months in advance.

Don't forget the gloating -- buying your long time competitors and showing them you could run their stations better than they could. Priceless. Because for the most part you could not. The hubris that resulted in post consolidation caused many poor decisions and certainly a lack of vision.

The human element -- when you have your job downsized, outsourced, combined or replaced by virtual technology you no longer work in an industry conducive to new ideas. In effect you are no longer in a growth industry. Google is a growth company. Todays Clear Channel and CBS are not.

Failure to program to the next generation meant losing that generation (Gen Y) to the technology that young listeners have become addicted to (Internet, Wireless, iPods, iTunes, computers, Internet radio, cell phones, peer-to-peer file sharing, social networking to mention only a few).

But a worse failure was blaming technology for the loss of the kids. Technology didn't kill the radio star. Radio consolidation and the programming that resulted from it did.

Lack of a group leader doomed any chances consolidated radio might have to work. Clear Channel, CBS/Infinity -- whatever you want to call it -- were the big boys. They failed their shareholders (check what you would have lost if you bought their stock prior to 2000 and still held it today) and they failed their industry. Imagine for a moment what radio would have been like if one of these companies -- Susquehanna, Cox, Bonneville, Greater Media or Emmis -- had been the two biggest consolidators with the most stations in the biggest markets. Seriously. Do you really think radio would be in the mess it's in today if the market leaders were these smaller, better run groups?

The senseless litigation not only directed at individuals but against other companies created a bunker mentality that put off the kind of industry cooperation radio needed to usher in a new century and all the new technology that came with it.

The huge mistake of making satellite radio the enemy when satellite radio never got off the ground (sorry) and never, ever threatened terrestrial radio. Satellite radio has more problems than its terrestrial brothers and sisters but many of their problems are the same.

And last, but not least (as the old trite phrase goes) the folly of HD Radio. I say folly because HD radio as a savior for the medium is a joke. As an engineering enhancement it's not a bad upgrade, but it won't save radio from itself. One reason is because few people care about it. Terrestrial radio dragged its feet on this for years and now its too late. But don't be guilty. Today's consumers like convenience, fresh innovative programming -- not fidelity. Just watch Gen Y listen to the Internet on their puny computer speakers or enjoy their highly-compressed iPods with low tech ear buds.

There's more, but this will do for starters.

Is the radio industry ready to do its own 12 Step Intervention -- admit its mistakes, tendencies and addictions and start building people-friendly companies with creative, career professionals who understand that radio's problem isn't technology, it's stale programming. If they will recognize these frailties, they may be able to become relevant again. They may find a way to make the Internet work seamlessly not in the awkward way it does right now.

Demand more of your trade associations -- stop the pandering you do to each other. Demand more of your trade publications that like some politicians judge your loyalty to radio by how much you mindlessly wave its flag.

And then when you can do all this remember -- do it like any other 12 Step Program -- one day at a time, because the radio industry is an addict. Hooked on consolidation, bad management, stale programming, blaming others for their missteps, self pity about new technology that it neither understands nor has a plan for, arrogance that is so strong that the consolidators didn't think they needed to program to the next generation. They eventually lost them. Lost an entire generation!

I know lots of radio people who could start this intervention. Some of them are already working for you. Others have been driven to the sidelines.

If you believe anything believe this -- radio needs better content now. To get it, consolidators have to change their unfriendly corporate cultures into Google culture. Radio is too frugal. It's definitely not Google.

Go study. Change. Innovate. Get a mentor to help you navigate the next generation or continue business as usual and keep losing market share and revenue. The choice is yours. After all, you monopolize the radio industry. This one's on you.

What If Clear Channel's Sale Fails

Never have so many pulled so hard for so few.

The lines are drawn -- the many people in the radio industry who are hoping that Clear Channel will actually sell off part of its conglomerate and take a small group of radio stations private vs. the few owners and Wall Street money people who hope for a large pay day today and another one down the line if they decide to sell off more assets later.

But shareholders are funny people especially when some of them owned Clear Channel stock in the $90 range and are now holding the same issues in the mid-30's. The Wall Street Journal last week did a piece on the showdown between shareholders and the folks from San Antonio. It might not surprise you that Clear Channel is playing hardball again. Shareholders must approve the Clear Channel sale. That means they must vote "yes" for it. Texas law requires every "non" vote to count as a no vote so this is not that easy. The Journal surmised that Clear Channel would put the matter to the shareholders sometime in March. The hardball part? Clear Channel says if shareholders don't take their offer, they will take their offer off the table. That means Clear Channel will continue business as usual. Business as usual and Clear Channel scares some people.

There are many who are not fans of Clear Channel including some of their own employees who hope this doomsday scenario will never happen.

Wall Street is not unaccustomed to privatization going bad. It's been happening lately in other sectors and it happened to Emmis when a group of independent directors blew up their attempt to go private. Emmis stock has suffered significantly ever since -- off about 35%. The Journal says if the Clear Channel deal blows up, its share price could fall into the mid-20 dollar range. Whatever happened to the consolidator's mantra of "shareholder value"?

If you're pulling for Clear Channel to get its money and get out (with 800 or so stations as a consolidation "consolation" prize), you've got to pray harder. The largest holder of Clear Channel stock, Fidelity Management & Research right now is saying it will vote against the sale to Bain Capital, Thomas Lee Partners and some of the Mays family. At least three of the company's biggest investors are reportedly holding out. Clear Channel needs two-thirds approval to walk away rich and happy. Same can be said for radio people who suddenly find themselves hoping stockholders don't see the hidden benefits of Clear Channel as a public company.

I mean, if the investment group is willing to pay $18.7 billion to take it private, it must be worth something. That's a lot of money. Is it worth a lot of money because it can be sold off for even more money again or is it a free cash flow cow. That, too. In other words, maybe shareholders are thinking that Clear Channel's business isn't such a bad business to be in after all. Maybe it could be run better. More professionally. More vision to the future instead of packing up the marbles and changing the game. Less litigation. More music. Fewer commercials. I'm sorry, I sound like a "sweeper" on a radio station.

The shareholders are awake. Here's what that excellent Wall Street Journal article said:

"Indeed, Clear Channel's dissenting shareholders are advocating that the San Antonio company follow some steps from the buyout shops' own plan: take on a load of new debt while offering more shares of the company's outdoor-advertising unit, selling some international assets, and using a large tax credit gained during the spin off of Clear Channel's concert division at the end of 2005 to sell radio stations tax free."

So if the shareholders douse the deal and the industry's number one consolidator gets to keep running its public company with share prices in the mid-20 dollar range, it could get ugly. If you're working for Clear Channel, could there be even more cutbacks? There have been many cutbacks even though the radio trades have been soft-pedaling them. Could Clear Channel try once again to go private? Maybe, but other companies that have not succeeded have for now backed off.

Imagine what happens when you get San Antonio mad? No, not back then -- now -- if they don't get their way.

Consolidation -- The Monopoly Game That Kills

The situation at KDND, Sacramento is prophetic for more reasons than the obvious -- that a 28-year old listener died in a stupid, irresponsible on-air contest where she was encouraged to drink water without regard to her health. Now, the family of victim Jennifer Strange is suing the station and naming some 40 defendants in the case.

There's no doubt in my mind that the contest was irresponsible, but its up to a jury to determine whether there is legal culpability. And the FCC may determine whether the station gets to stay on the air. There's an uproar to strip KDND parent Entercom of the license. On that issue, I would not be so hasty. The station has served the community for many years prior to this unfortunate event and that should be factored in to any decision.

But these things are reactions to a bad contest -- not the real issues.

Entercom like a lot of other consolidated broadcast companies is a public company. These companies are pressured by quarterly performance that affects their share prices. Since consolidation legislation in 1996, there has been a lot of pressure -- real and implied -- to perform. For managers, that means numbers -- sales growth. For programmers it means numbers -- ratings. For on-air personalities looking to keep their gigs and avoid being replaced by virtual djs it means numbers -- high ratings and the outrageous things that often come while pursuing ratings at all costs. One could argue that radio has always been numbers oriented, but my response would be it has been far worse since consolidation -- the monopoly game that has killed companies, killed jobs and now is killing listeners.

If you're still not convinced that the consolidators couldn't make consolidation work even with a virtual legal monopoly on their sides, check the share prices of the major radio companies today compared to the early days of deregulation. Even in their own capitalist stronghold -- they couldn't produce shareholder value.

It's not lost on me and perhaps you that KDND is known as "The End" on-air. In more ways than one this station may represent the end of the innocence for radio operators who seem to want a free pass from the old days of radio while operating like a bench clearing brawl at a baseball game today.

Those of us who have been in this business during its better years know what went wrong -- consolidation. The hubris of companies suddenly able to acquire their long time competitors. The joy of becoming public and reaping those high share values in the early days. The new experience of cutting back because you could and you had to -- efficiencies of scale. Virtual programming. Remember Infinity loading up the airwaves with commercials and AM/FM and Clear Channel selling out its hours at nice prices? Life couldn't get any better for the few, the vain -- the consolidators.

But while they fiddled, the next generation got away. Lost -- not to the iPod, but to lack of programming aimed at their changing tastes. Don't you know that Apple's Steve Jobs would have put a radio feature in an iPod or his new iPhone if there was a marketing reason to include it. It has nothing to do with digital. Nothing to do with the Internet. Radio just dropped the ball while it pursued consolidation.

That's why the radio industry should enjoy itself now because each year will be harder and harder. Less is More wasn't a solution to anything. It was a PR ploy that was supposed to sit well with Wall Street. The jury is out on whether Less Is More (cutting commercial loads) has legs.

Now, after misidentifying satellite radio as its main competitor, the consolidators have discovered they have a lot in common with satellite radio, but sat radio has even more problems. Radio was watching the wrong enemy. They only needed to look in a mirror.

Now, after ten years of cost cuts, devaluing employees and failed strategies to put together lasting growth, the radio industry isn't kidding anyone anymore.

This bothers me because I came up through the ranks in this business with a lot of people who are still in it today and many -- not all -- have been constrained or terrorized to keep their jobs. They are good, wise, smart, innovative people. Interactive media companies -- the rage of the day -- should be so lucky to employ such excellent content providers.

It has come to this. Radio management is so misguided that programmers and talent can not recognize a contest that is not only fatal to their listeners but to themselves?

So KDND represents the end -- how apt.

Is there a station out there that would like to represent the beginning?

The start of a new day when the sniveling ends, the buck stops somewhere at the top and consolidation is "defanged" once and for all. Are you paying attention at the FCC? Congress, do you now know what you have to fix?

This Frog Is Dead In The Water

Spiral Frog's got problems.

Last year it previewed a music service that offered free music downloads in return for users spending about a minute and a half watching ads (even more ads for video). What were they thinking?

Who do they think is their audience? Its not the Generation Y I have come to know and love. No way are they going to watch all that advertising. Maybe 30 seconds of ads while the music is downloading -- once -- but not all this blatant capitalism for every song.

The labels knew a good thing when they saw it (I am being sarcastic here). Universal and BMI and a few indies jumped aboard the Spiral Frog Love Train. But now the CEO, Robin Kent, has been forced out and several other key people have left the Titanic because this ship won't float.

And there is growing pressure that will make Spiral Frog even more unnecessary.

Take Snocap. It's angling to sell music on MySpace. Take MySpace, it's becoming a big playing field for singers and bands.

The campus ad-based music service Ruckus (not very popular on USC's campus, but nevertheless...) has opened its service up to anyone with an edu after their email name. In other words the music is free until they graduate and get to pay off their college loans and then, I guess, these brain trusts figured this group of underemployed graduates would be anxious to continue with the service for a fee. Wrong.

I admit I don't have all the answers nor do my students -- the next generation leading this rebellion and revolution. But some principles are self-evident that all online music services are not created equal. Music is readily available online these days. A subscription service would be nice, but not necessary. Pandora is attractive but with ads maybe not as attractive.

Also, things happen more at lightening speed. Ever watch how Apple's Steve Jobs announces products? He keeps the secret. Goes to MacWorld. Does his really big show and often the product is available quickly -- the iPhone and Apple TV being exceptions. This generation is fickle. You've got to act quickly. The idea has to resonate. It has to offer them something they actually want to get them invested and keep in mind what I have said before: this generation flirts with but does not marry its technology.

So Spiral Frog, we hardly knew thee.

Good luck tying to deliver a concept that didn't look like it would work then let alone now. This frog is dead in the water.

In memoriam let's just say that you can't learn enough about the many facets of the next generation and do it soon because right behind them is another generation -- that may have never purchased a CD or fallen in love with a radio station -- and you'll be dealing with them next.

"My Box In A Box" -- Record Label Prototype

The most viralist video on the Internet right now is a simple clip recorded by two Philly girls doing a parody of SNL's "Dick In A Box" digital short. The girls call their version "My Box In A Box". This whole thing may just sound like another YouTube "can you top this moment" but I think it is more than that -- it's a glimpse into the future of the music business.

One girl (Leah Kauffman) sings the song and her friend, Bunny, lip syncs the video -- and does a damn good job of it (Ashlee Simpson, take note). Then a friend recorded the video -- not on an expensive sound stage, not with Madonna's producer -- but in the Cheese Steak capital of the world, Philadelphia (I spent a lot of my life and career in and around Philadelphia before I moved west so I can't say I am not rooting for them). Lesson number one for the labels: your gut is busted. The market will now lead you. If you choose to listen, when the market speaks, swoop down and sign these girls. And sign them just as they are -- a singer and a lip syncer. Don't make them into something you want them to be. Let them be as they are.

So they get a blog up and running (we know how easy that is, right?). Their blog is called "My Box In A Box" -- what else. No big time label-icious web sites with Java all over the place. And these two girls -- please sit -- give their video away. They do have a "tip jar" where you can voluntarily donate $2 to the author, as they put it. And yes, it's either $2 or nothing. You won't nickel and dime these girls. More lessons for the labels: Imagine pleasing your customers so much that you ask them to donate to you -- and you set the minimum donation amount. I know this takes the control away from you, but imagine the frenzy when happy consumers volunteer to reward you with m-o-n-e-y. Makes suing your customer seem so 90's.

Oh, did I mention -- no digital rights management. You can steal it, refer it, use it as much as you like.

These two young entrepreneurs could also teach the labels about marketing, too. Their web site has related, unpretentious writing about the parody and what they plan to do in the future for an encore. They know a thing or two about marketing. They auctioned off their "box", the one wrapped in a red ribbon and appearing in the video, on eBay for $1,525. They now plan to donate it to a Philly-area charity (Yo Yo Yo). They've got links to Keith Olbermann's MSNBC "Countdown" show where the hard hitting Olbermann was as taken by these girls as I was when he featured them Friday night.

And, Leah Kaufman can sing! But, I digress.

Back to the real world. The girls report about 20 radio stations say that they are playing "My Box In A Box". Find those 20 stations. Hire away their program directors. They get it. You want them working for you if your in the tired, predictable radio business.

The labels? Who knows where they are on all of this. Maybe trying to show how many of their ideas they can come up with to stay competitive in the music media business. Let me tell you. I'd offer these two a contract. I'd bring them west -- wine them and dine (if they're legal) -- and get them to sign on the dotted line for seven years. No, not as singers -- as the future CEO of your label.

It's things like this that begin to reveal only the tip of the iceberg of the new music media industry. It's exciting. Unpredictable. And if those in power fail to take note and respond, they do so at their own peril.

Labels Fighting DRM There So They Don't Have To Fight It Here

Like President Bush, who is surging ahead with his plan to send more troops to Iraq instead of withdraw as much of the country seems to want, record labels can identify. Labels know they are going to have to eat their words on digital rights management (DRM), but they don't want to do it too soon. Maybe they want to fight the downloaders there so they don't have to fight them here because in China where most of the music is pirated EMI has done a deal with their leading website Baidu.com to offer free music. And the two are going to work together on music services supported by advertising.

But maybe the record labels think that in this case "stay the course" means hold out for as long as they can because eating their words is going to taste awful this time around.

Revenue from digital music sales is declining. Much has been made about iTunes sales leveling off and we all know iTunes music is protected by Fairplay, its DRM system. Apple may be selling tons of iPods but the marketplace is once again speaking and it is saying the unthinkable -- we want music for free (to try it and enjoy it). We may buy some later. And we definitely don't want DRM if we're going to be paying you.

It appears the death of DRM is near. It is on life support, but the labels may want to keep DRM alive artificially for a few more years rather than admit a mistake. Some people think this sounds like President Bush on Iraq -- even some leaders in his own party.

Once again the indies are saying "let's have a plan for withdrawal". By their actions they are making music available in MP3 so it can be downloaded, shared, copied to the enjoyment of the listener. Indies think differently. They think this new age replacement for "radio airplay" will actually lead to album sales.

They may be right. Radio's influence over music sales is strong, but declining. MTV is so yesterday. Even iTunes growth has been declining. The revolution is underway. No DRM.

So, Labels need to get an exit plan. It would be great if one of them could step forward and say -- we're listening to the next generation and they don't want DRM. We are betting that more music being played and shared will lead to more music being sold.

And it will.

Because filesharing is simply the new radio. Remember, record companies complained in the early days of radio about stations playing their music for free way back in the day. They were wrong then. And they are wrong about DRM now. Radio was their money machine. Filesharing is their new money machine.

So, labels beware. Make the world safer for more record sales. Let your viral audience promote your artists for you. Have confidence that they will support the music and want to own it. (A poll in my USC MUIN 495 class "Music, Broadcasting & The Mobile Future" showed that almost all of the 52 students purchased at least one CD in the last 30 days -- and the CD is an old music format).

Bring our DRM home and retire it. Don't send in more troops (RIAA). Listen to the generals (indie labels and Internet moguls). Do it sooner rather than later and your revenue will start rebounding.

Video Ad Model No Threat

Traditional media finally has something not to worry about.

A study from Forrester reveals that 82% of the consumers they surveyed thought video ads were annoying. A full 75% said they just ignore the video ads and only ten percent said they interacted with these ads occasionally. If I'm selling traditional media, I'm going to like selling against these statistics.

Of course, you don't have to go to a research company to know how ineffective the new age of Internet advertising really is, you just have to be a Gen Y'er or the parent of a Gen Y'er or a nosy person watching someone blow off Internet advertising. I know I am oversimplifying this and there are Internet advertisers with stories they consider success stories, but really, how threatening is Internet advertising?

Gen Y hates advertising. They openly state they'd like everything for free. Of course we all want everything for free, but these people mean it. While that is not going to happen, let's keep a few things in perspective.

I don't believe Google will ever see its $1.6 billion investment returned on YouTube. This is not to say that it wasn't a good move for Google to buy YouTube, but there are no guarantees. News Corp is trying hard to see its $600+ million acquisition cost turned into wild profits but even that's not a slam dunk. Watch the Gen Y consumer. The more you monetize, the more you threaten to lose their eyes and ears.

Let's face it. All consumers would probably like to watch TV without advertising. Radio without commercials. Newspapers without ads. Movies without those annoying pre-feature advertisements. This is never going to happen. I don't like to say never and you'll note I nonetheless said never. It's isn't going to happen. Wouldn't be prudent.

Gen Y consumers also don't like to pay subscription fees -- a problem for music services, online radio stations, some podcasters and traditional publications looking to monetize their online presence. Internet TV is coming some day. Will it have commercials? Will the consumer be asked to pay for it like cable?

Is anyone thinking about this?

They should be. Because the irony of our modern media world is that we all hate commercials yet the Super Bowl is as much a "commercial bowl" as the ultimate football game. Traditional advertising has been laying an egg for many, many decades and yet it has funded radio, TV, print, outdoor and just about anything else you can think of.

One reason for this is that advertisers, agencies, program suppliers and the like rarely focus on effective advertising. They never did then and they aren't doing it now. So advertising doesn't appear to have to be effective to be the vehicle of choice for companies with goods and services to sell. If this is true then welcome Internet! Why hold it to a higher standard than traditional media.

Technology has changed. Generations have changed. Expectations for advertisers' return on their investments -- priceless.

iPhone & The Digital Future

By Stephen Meyer, Inside Music Media™ Contributor

There's no doubt the entertainment industry is undergoing a massive transformation as it attempts to evolve and succeed in the digital revolution that's changing almost everything around us.

The segment of the entertainment industry most impacted thus far by digital doings, is the music industry. Music industry leaders ignored the oncoming warnings of an online tsunami for too long, and when it hit, it washed away the shores of protected intellectual property as millions around the world started downloading music for free from a myriad of websites that offered them libraries of music.

While the music industry saw the Internet as a threat, others like Wilco's Jeff Tweedy, saw it as an opportunity.

(From an Associated Press Interview w/Tweedy)

AP: You've said that you don't see music file sharing as a threat, mainly because of quality issues?

Tweedy: That's just part of it. I don't think that the quality is the same. But I don't see it as a threat because I don't feel that it's a threat to have people more interested in music. I think what's happening with file sharing is that you have a lot more people hearing a lot more music, and I think more than anything else it has engendered an enthusiasm for music. It's a no-brainer that it should be embraced, that's kind of the whole point of making music, to be heard. The only thing that stands in the way of making sense to most people is greed. ... File sharing sites don't just have new material, they have archival material, they have spoken word, they tons of material that I never had access to growing up. At their fingertips, people have all this amazing stuff, and I'd like to see what's going to come out of that in the future. If you shut that down, it's like closing a library.

AP: So the record industry's approach is driven by fear?

Tweedy: Do you remember home taping as killing music? It's the same thing. The sky is falling. Ultimately, I think it's an excuse for incompetence.

Whether or not any industry executives agree with Mr. Tweedy, is irrelevant. His point of view is as valid as those of the opposition.

Another individual who saw the Internet as an opportunity, was Apple's CEO Steve Jobs. He launched iTunes, had Apple develop the iPod and now it's an iPod world we live in (most recent sales figures estimating near 90 million iPods sold). Every iPod sold means another consumer who is less likely to purchase CDs in the future.

The iPod success story is evidence that people don't care how they listen to their music or how they store it. iPods have become the consumers' music libraries replacing those bulky plastic CD boxes and discs which are no longer needed.

At MacWorld recently, Steve Jobs introduced Apple's iPhone. If you haven't yet heard or read the news about the iPhone -- Apple's latest new toy -- and it's a "game-changing" touch- screen-controlled cell phone device that among other things, plays music, surfs the Web (with a great screen) and delivers voice mail and e-mail.

About the ONLY thing the iPhone won't do is "beam you up" like those hand-help communicators we saw on 'Star Trek', but at this point, I'd be inclined to believe that Steve Jobs and his Apple team are working on that technology as I write this.

The iPhone will no doubt further expand the mobile market as the demand for distribution and delivery of entertainment content increases in the consumer market, and it will also raise the bar for all handheld devices from this point on. One thing is certain: more iPhone type devices will follow to compete with Apple, and each one will provide consumers with more and more entertainment option abilities.

Steve Jobs said during his MacWorld keynote: " We are selling over 5 million songs a day now. (On iTunes) That's 58 songs every second... the last time we talked we were the fifth largest music retailer in the US. We have now passed Amazon; we sell more music than Amazon and we are now #4."

I would expect that because of the iPhone, iTunes and other online stores to continue to increase their sales as more and more people choose to listen to music away from the home and/or use these devices as their storage devices to play back music at home when they want as well.

Steve Meyer is one of the music industry's top professionals and publisher of the new media newsletter DISC & DAT.

Killer Radio Contests Don't Work

KDND, Sacramento is in hot water because its morning team did a ridiculous contest egging on a listener in a water drinking contest. Water is harmless, right? Not in excess. The victim, a contestant, drank more water than she should have. Entercom, the owner, dutifully fired ten people including the morning team, as a reaction to the death of the 28-year old Jennifer Strange. Criminal charges are possible. One of the morning crew apparently questioned on the air whether they were doing the right thing. If no charges are pressed at least a prosecutor will get a chance to make some headlines for a while.

All in all the contest was inappropriate for many reasons including the obvious -- it was irresponsible and someone died as a result of it.

It's not the first radio contest to cross over the line nor the first radio event. I remember the controversy when Bubba The Love Sponge castrated a pig and then killed it on air. He got the local animal rights group PETA mad and they launched a boycott that the Clear Channel station felt in lost advertising. Lousy radio contests have been around a long time. I'm sorry to hear of anyone losing their life because of something that was supposed to be fun and I know those involved feel the same way. Things got out of control.

But how did it get to this?

That brings me to the real issue. Things are out of control in radio. Management is not held accountable for the mistakes they make -- and I'm not talking about the death of a listener alone -- but the life and death of a radio station. They too often get a free pass from consolidators more focused on Wall Street than their local markets. Entercom wasted no time firing a slew of people, but they should also hold top management responsible -- the people who hired the "talent" and managed them. They should look in the mirror. Pushing the envelope may be a Wall Street staple, but people can get hurt like that.

Another issue is: hasn't anyone told radio stations that contests don't work. They haven't worked for years. Radio wore out contesting when stations gave away everything conceivable. Do you want to employ program directors who are running contests when the audience -- and the future audience (the one radio isn't going to get) doesn't respond to them? So, contesting is bad business, bad strategy and sometimes bad programming. Programmers think contests add something special to their formats. Perhaps. But not drink-until-you-die contests. And most stations have long since stopped giving away big cash prizes on the air, too. Why? They don't work either.

That still doesn't stop radio stations because too many of them live in the past. Too many still wish it were as simple as running a contest to boost their audience.

Radio has been self-destructing for almost ten years. You can blame the consolidators and the people the consolidators chose to run their "investments". When a listener dies in a meaningless station promotion, it not only shows poor judgment but poor management.

Radio has been blaming satellite radio, iPods, the Internet, the decline of CDs, the laughable lack of HD audio and you name it for its demise.

But it's time they look to themselves. They are the real problem. Radio doesn't get it and until it does there will be more unfortunate embarrassments ahead and more erosion of its future potential. There are still too many talented people around who know how to do good radio. They've been spending ten years since consolidation started trying to keep their jobs. Now is the time to let them get back to doing what radio does best -- a management decision that takes more courage than, say, firing ten people after they get your station in trouble.

Killer contests used to be ratings-getters. Now, they just don't pack much influence. Today, killer contests where people actually could die show the desperation of some radio stations that have seriously lost their way.

How Apple Does It

Apple is reporting a fiscal first quarter profit up 78% from a year ago. A 24.5% increase in revenue from the prior year's quarter. Shareholder value is up 65 cents a share over a year ago. You may also remember that news accounts had iTunes slipping in the second half of 2006. The vultures were circling Cupertino. Luckily Apple CEO Steve Jobs bought none of it. Jobs knows that he is in the iPod business and that iTunes exists for the iPod. Apple sold 22 million iPods for the period ending December 30th -- a 50% increase from a year ago. Steve Jobs once again had his eyes on the right prize.

If you were in an Apple store prior to Christmas, you knew they were going to blow the numbers out. Microsoft introduced its iPod competitor -- Zune -- around Thanksgiving and it is firmly in second place already -- actually, a dubious distinction in light of Apple's continued and sustained strength in the segment. The problem is second place is so far behind first place that in reality it doesn't matter at this point.

How does Apple do it?

What's obvious is that Steve Jobs is so tuned in to his youth-oriented market that this baby boomer is making pundits question why they think only Gen Y can develop products Gen Y will buy. The ironic part is that arguably the biggest media device of all time, the iPod, was developed, re-developed and expanded by a baby boomer. Either Jobs has their number or he is just lucky. Or both. This bodes well for all the older managers and owners of music media companies should they be of the mind to take a lesson. In other words, Jobs makes his living from knowing his market better than his competitors. It's not about being hip or cool. It's about being shrewd.

Lesson Number One: get to know your market better. Live with it. Understand their quirks and preferences. Too frequently traditional media executives think knowing the market means doing a research project, hiring some young brains or attending a seminar or two. No. No. No.

Lesson Number Two: Apple took almost three years to develop the just announced sensation -- iPhone (all while Jobs was denying interest in manufacturing such a phone). They studied everything. Worked in secret groups. The Apple way is said to be so secret that differing team members don't know what other team members are working on. When was the last time a radio company got to know its audience (outside of a research project or hiring a hot program director or consultant)? And when was the last time they spent almost three years building anything? Westinghouse spent more than that building the all-news format and lucky for us they did or there would be no all-news format for AM radio.

Record labels want to fight the battle of Bull Run over the CD. They will lose and expend lots of energy and wear out lots of troops. Labels simply declare themselves cool -- now they understand interactive and everything is alright. Except revenue. Except sales. Except interactive profits. Oh, and they continue to fund their lobby group -- the RIAA -- so it can continue suing potential customers.

Has anyone thought of spending the next few years on developing a record industry without the CD. Without digital rights management (DRM) -- a most certain casualty in the years to come.

Traditional media wants it on demand, the way they want it. Isn't that the same description of their Gen Y growth market? You can't have it your way until you understand how to let the market get its way. It takes time, effort and focus.

Interestingly, Apple's iPhone is still almost six months away from making its first call. It has been reviewed by all the biggies in tech. Fully 25% of my Music Industry class at USC had seen the Steve Jobs video clips within 24 hours of his announcement at Mac World. How effective is Steve Jobs, the salesman! There has been enough time to pick apart the iPhone and very few writers and reviewers have been able to. Perhaps more scrutiny will come when it is introduced to the marketplace this summer.

That means Apple did it's homework. Mission accomplished (sorry, about that term). It performed due diligence and succeeded in finding its market.

Radio, records, television, newspapers, movies will not benefit from the next generation if all they do is make adjustments and ride trends. Example: TV networks are going nowhere fast when you see them become YouTube's best buddy. TV networks are panicking not innovating.

It takes time.

It takes commitment.

It takes focus.

Apple knows this and time and again it pleases its market. The lesson is not that complex. Doing it -- now that's the trick.

By the way, Steve Jobs has become such an icon that Saturday Night Live has had him for dinner. When you get a ribbing like this vignette, you have arrived.

Turmoil Ahead For The Record Industry

By Steve Meyer, Inside Music Media™ Contributor

This past week also saw the shake up in the highest executive ranks at EMI. EMI announced the dismissal of top executives Alain Levy and David Munns. Levy had been Chairman and Chief Executive Officer since 2001, Munns was Vice Chairman. While part of the reason given for the senior management changes is an expected £110 million per year savings, observers wonder whether EMI is restructuring itself for a sale, or just cutting costs to adapt to the new realities of the marketplace.

No one should really be surprised by the EMI announcement. Just last year, Sony/BMG let Don Ienner (Chairman of Sony Music) and Michele Anthony (Executive VP Sony Music) go as well.

These changes at the very top of the executive food chain can be blamed on a variety of reasons. But the simple fact is that as profits shrink in the music industry, BIG salaries and BIG bonuses cannot be justified as they once were when labels made millions and millions in profit year after year in the mid 1980's into the 1990's.

Though the profits generated by CDs were extraordinary in the 80's and 90's, in fact, they distorted the true growth of sales, because if catalog sales were taken out of the equation, the profits would not have been near as healthy and close examination would've revealed that though they were mega-selling multi-platinum artists/projects during this time, the number of REAL artists established with long-term potential, diminished as the focus was shifted to "product" to fill the distribution/retail pipeline and keep profits fat.

And then of course, there was "the damn Internet" and downloading. The labels tried to blame the Internet and file-sharing for most of its problems once real sales declines set in, and their industry association, the RIAA, took up the cause by identifying, then suing, several hundred people a month who had allegedly (some people who were sued did not own computers) downloaded music illegally. The RIAA continues this practice today, though it's had no real effect on stopping people from file-sharing. If anything, it's made people more tech-savvy so they won't get caught in the future. Now there are "darknets" (intranets known only to their users) all over the Internet that fly below detectable RIAA radar.

So, what does this all mean? How does the industry survive?

I envision the major labels as nothing more than digital warehouses and intellectual property owners with huge catalogs and acting as distributors online in the future. There really is no reason for any established artists to be beholden to any label once they reach platinum plus sales levels (we'll see more artists take control of their music like Garth Brooks, Jimmy Buffet, et al) and new artists can break now online via social networking, YouTube, etc.

The real power of major labels will be leveled by ongoing technological developments. They will exist, and the depth of their titles in catalog will allow them to create new revenues. But, the next generations will continue to break music online without major label help...and artists will make the bulk of their money not from sales of music, but touring and merchandising. (It's almost like that now)

Labels should heed the words of Charles Darwin who said, "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."

Those who respond to the ongoing changes will exist in the future, albeit in different manner.

But don't be surprised to see more executive shake ups, more industry personnel laid off, and more changes in the industry until the new models for the future are designed and they start creating new revenues.

Steve Meyer is one of the music industry's top professionals and publisher of the new media newsletter DISC & DAT.

Getting Real About HD Radio

It's time to take our medicine. HD Radio as a concept, as a savior, as the enabler of more channels is never going to happen. I am sorry to say this because so many of my radio friends are betting their futures on it. Its time to deal with the failure of HD and move on rather than to continue to fool ourselves. HD will not make any difference whatsoever to the future of radio.

If not HD, then what?

I'm not opposed to installing HD capability on radio signals if that is going to improve the sound quality. It should always be our goal to improve the quality of the radio signal. But at the same time it would be helpful to keep in mind that the next generation listens to music on their computers (and I'm not talking about add-on speakers for everyone). They listen on low-quality iPod buds. Fidelity was never a big attraction for broadcasting. Mobility, yes. Fidelity, no. That's why AM stereo didn't help. AM stations garner big ratings when they offer programming FM stations will not -- like news, sports, and talk. It has nothing to do with stereo.

So, improve the audio, but don't tell anyone. Does that make sense? Of course not, but it's true. HD Radio has turned out not to be a public relations lure. Just because station owners invest their money in it is no reason to publicize it, because frankly, the public is showing it doesn't care. And I can tell you the next generation really doesn't care. HD is a stupid name. It means something for television -- it's a high definition screen. Clearer view. Better picture. It means nothing to the radio listener. What does it mean? A little clearer sound. More sub-channels from stations you're not wild about now. So, I would say install HD to make your signal better (if you think it does) and don't tell anyone. They don't care.

Stop with the selling of more expensive HD radios. You're not going to get HD
radios into the general population ever unless HD becomes standard on new replacement radios at the same analog price. It's time to deal with the facts which are that listeners will not spend money to upgrade their radios to HD. We often can't be objective about this. They can. Many listeners have a lot of complaints about terrestrial radio and even the ones who don't can't find a compelling need to upgrade their sets. HD is in less than 20% of the TV households and in television HD is something special. If you want to help radio at a time of great change, know this and give up the marketing campaign to get listeners into HD.

So, what's left?

Reinvent radio. Yes, cut the commercial loads -- cut them in half. And raise the standards for radio commercials. You can't have a Smooth Jazz station and create mood from the beginning of a music sweep to the end and then have an advertiser screaming you'll like their mattresses or the mattress is FREE! Radio pioneer Jim Schulke who developed the beautiful music format knew this. He limited commercials to four an hour (most hours) on his many successful syndicated stations and they had to pass the mood test to make it on the air. He told me one time when we sat together on a beautiful New Jersey beach that eventually the radio powers (and this was before consolidation) will not be able to resist the urge to run more than four spots because of all the success they were having. He was right. They did. And look what you've got now. Too many commercials. Same old formats. Irritating DJs. No wonder listening on a computer sounds so alluring to the next generation.

Radio in the future will need help selling -- selling fewer avails, better commercials, installing standards to make commercials fit the format. Even my students, Gen Y'ers, wonder why radio commercials have to be so awful. They know that the radio commercials too often don't fit the station.

And throw away the hot clock. It no longer matters. Life does not begin for most of us at the top and bottom of the hour as it once did. In an on-demand generation, the clock starts when we listen and ends when we stop whenever that is. And with the People Meter coming on line, stations won't even have to identify themselves ad nauseum. The People Meter will know who is listening.

Send your djs to smart school. Teach them how to talk normally -- they can entertain but do they all have to do a poor imitation of "Cousin Brucie"? Lee Abrams has always been an outstanding programmer who understands how to feed and nurture radio talent. Go to him. And there are others. Go to them.

The point is that HD radio is not going to happen. It's not going to save radio. Listeners are not ever going to care.

Oh, and one more thing.

The lure of several side channels, I know, is so strong with radio people that they can't think straight. And they must. Adding more channels waters down the franchises you already own unless they are something special. HD side channels, if they are anything, are nothing special. This may be the hardest thing to give up. Just because HD allows radio operators to split the channels, doesn't mean that you have to do it. Smart broadcasters will run one radio station per signal unless or until they can get those stations to be a growth industry again. The addition of multiple side channels will do nothing to help.

High Definition is a misnomer. High Expectation would be more suitable. HD will not get radio out of the doldrums. Will not be the magic wand that gets the next generation to come back. It's a lot less digital than that. Taking stock of the realities of HD and using some of the abundant talent that radio stations still possess, the answer will likely be more analog -- like creating a new generation of radio programming.

Clear Channel Being Clear Channel

The Arbitron diary system is history in Philadelphia, the first People Meter market. Philly has long been a test market for Arbitron in the development of The People Meter, a technology that should have been implemented years ago. There is no reason under the sun except for perhaps pricing that any broadcaster would choose a paper diary over this advancement. And doing ratings on the cheap was never a good investment for the industry.

You'd have to give Arbitron an A for persistence and you'd have to give Clear Channel an F for putting the radio industry's interests ahead of its own.

Clear Channel certainly has the right to reject Arbitron's new ratings system. No one can make it buy something it doesn't want to buy. But Clear Channel's refusal to allow encoding of its stations' signals in the Philadelphia market makes no sense because it hurts the other stations and the advertisers who will be looking to the results of the first People Meter ratings.

Clear Channel is also hurting itself. It won't appear in the ratings by its own actions.

An 1,100 station group certainly packs a lot of influence, but this "winner take all" attitude is in my opinion just poor sportsmanship. Better put, it's mean-spirited and unnecessary. Clear Channel is not hurt by allowing its signal to be encoded. Other companies not yet ready to sign contracts with Arbitron have allowed encoding of their stations. In other words, they may be taking a wait and see attitude about The People Meter but they are not impeding its progress.

In the end, Clear Channel, the huge consolidator that had everything going for it, is just being Clear Channel.

Never mind that it is admitting that it can't run its big radio group in the present business climate by liquidating many of its stations and taking the radio group private. Radio needed a leader when consolidation came along. Not a leader in employee firings. Not a leader in lawsuits. Not a company that plays by its own rules. That's one of the reasons radio is in the mess it is in right now. Operating with efficiencies that only Wall Street could like, it is not a growth industry in an era when many new age businesses are. It could have been. But it isn't.

If the young men who built YouTube in a garage in about two years and sold it for $1.6 million to Google had shareholders it could honestly say it was building shareholder value. A company like Clear Channel that allowed its share price to drop from the $90 range to the $20 range failed at offering shareholder value. You think they'd change their ways.

Clear Channel is unlikely to change. The fact that it is escaping from consolidation through the back door is of little solace to those careers that were lost, the audiences that eroded and the leadership the entire industry never got from its leader. Many would just like to see them go away, but they won't. The private Clear Channel will still be a large company -- still run by the people that "brung them there".

This People Meter problem is an opportunity for the radio industry to step up and do what is right without Clear Channel.

The day will come when Clear Channel will likely sneak through the back door (this is getting to be a habit with them) and sign an Arbitron People Meter contract. All the news releases will go out. Arbitron and Clear Channel will make nice.

But if the People Meter helps propel the radio industry into future -- if it helps radio at a time when it sorely needs it -- it will be no thanks to the 1,100 station gorilla some people have nicknamed "Cheap Channel".

Will Gen Y Love The iPhone?

Apple has excited its base once more with the long-awaited announcement of the new iPhone/iPod that will be available in June. The online edition of The Wall Street Journal did a "hot or not" poll Monday wondering if iPhone will be another iPod or a Newton, Apple's pioneering PDA that failed. The results were overwhelming on the positive side. David Pogue's initial reaction in The New York Times was glowing.

Of course, I have come to trust the instincts of the next generation on all things music and media -- and that includes whether it comes to judging traditional media or cell phones. Some people seem to have a problem with this, but I don't. I got my rude awakening when I joined the faculty at USC and witnessed first hand how this generation feels about its media. They are a hot barometer of future success.

I got an email from one of my former students after Apple CEO Steven Jobs made his San Francisco presentation and he said, "we called it" and call it his music industry class did back in 2005. About fifty percent of the class then said they wanted a dual device that could be a phone and an iPod. They even mocked one up as a class.

I took a follow-up poll today among 50 students and the sentiment is the same. Half of this generation seems to want an all-purpose music/phone device and the other half wants to keep it separate. Apple knows this. That's why iPhone fits nicely into the iPod family. Nothing is clunky. It's not a Motorola phone with tunes packed in -- it's an iPod phone.

And, Jobs is pricing it like an iPod. This phone won't cannibalize the iPod. It will co-exist with it. For $499 or $599 depending on storage capacity a consumer will dig a little deeper into their pockets for a lot more.

But, there are concerns.

One of them is Cingular. Cingular is not Verizon and some of my students did not like the fact that Apple did an exclusive deal with one carrier. They had expected better from Apple. And this could be a bit of a problem as some who are inclined to want an iPhone are disinclined to want to switch to Cingular. We'll see.

Battery life is a concern. Can a heavy user -- a heavy user of an iPod -- also be a heavy user of an iPhone and have enough juice left to exercise that killer app called making phone calls? The word will get out after the early adapters line up for their iPhone this summer, but it's still a concern. Five hours of mixed use sounds like a lot compared to current options.

Some were concerned about Apple's reputation for -- how should I say this -- questionable quality. Many have had problems with Apple products -- the screens, the batteries, even the computers. But others expressed confidence in their Apple products sayings they have never failed them.

There is also an apparent resignation to the planned obsolescence of Apple products and for that matter mobile phones. They aren't built to last. They are built to be replaced by something cooler with more features. These representatives of Gen Y don't necessarily like it, but they understand how the game is played.

Making the Apple operating system available on the iPhone is a clear winner with Mac users. Another stroke of genius. The design and operation is pure Apple and Steven Jobs continues to play to his base when he unveils new products. An Apple is expected to be hip, sleek and intuitive and they are.

So unlike Microsoft's recent debut of the Zune music player, Apple's soon to be released iPhone has taken the market by storm. It's everything and more to its target market -- not less than expected.

But this is only one small step.

Gen Y'ers concerned with too little storage capacity probably will see larger models by next Christmas and they won't be cheap. As some of my students point out, each subsequent edition of the iPod got better and they expect the same to happen with the iPhone.

From where I sit, Apple has a winner with the next generation.

By the way, some of my radio friends were disappointed that the Apple iPhone does not contain a radio feature. How could it? Steve Jobs only deals with what's hip and radio is not hip right now. He didn't fail his audience even if radio is failing its audience.

If Steve Jobs Reinvented Radio

Steven Jobs did it again. The Apple CEO brought another product to market that promises to be a big revenue producer for him and a revolutionary device for consumers. The iPhone will arrive in June and will work on the Cingular mobile system. Chances are you already know a lot about the iPhone. No need to go into it here. That's only part of the genius of Jobs. He thinks them up. Builds them. Makes a big deal out of them. And sells them.

So, I've been thinking -- what if Steve Jobs took over a radio group with, say, 1,100 or so stations. What would he do? What could he do? Is analog radio off limits to the master? Or, could Steve Jobs teach us something that traditional media executives have forgotten.

Let's think (differently, that is).

He'd show up the first day on the job in jeans and a pullover black turtleneck. That's the easy part. And, oh yes, he'd get rid of those PCs, but you knew that.

I'd like to think that Jobs knows what radio executives have forgotten. Since they have been going uptown to Wall Street, they've forgotten Main Street. Radio has become like toothpaste. Listeners use it and put it away. It's not hip. It's not exciting. That stops once Jobs arrives on the job.

Shall I dream on?

Steve Jobs would concentrate on making radio hip again. The first clue would be not to use the word "hip" unless he's talking to baby boomers, but you get the idea. He'd close down some of those fancy radio studios and rent some garages. The skunk works is coming to radio. Jobs would likely go through his people to see which ones still get it and which ones don't. Then he'd outline some long term goals. Jobs would use his gut. This is going to upset the radio industry that still buys research only to ignore it anyway. It's an industry that doesn't trust its gut any more than it trusts its research. As Kal Rudman, the colorful tip sheet icon used to say, he'd create a Tasmanian Go-rilla.

One thing we know for sure. Jobs would work in secret. The 1,100 radio stations in his group would operate on their own while he pointed all his efforts to the future. There would be no distractions. The stations could continue to decline, he'd still not take his eye off the future. If it took two years or more, as the iPhone did, Jobs would take his time. And if he had to mislead the press about what he was working on, he'd do it -- all the more cover for his innovators.

So, relying heavily on his instincts (which still work by the way for radio people if they want to use them), Jobs would rip apart the 1950's and 60's brand of radio that the industry has been repackaging for years. You might think that he'd aim his efforts at young people, but you would be wrong. Jobs would aim at any market that had money -- and that includes the baby boomers. And he sure wouldn't ignore the next generation as radio has managed to do.

Wondering if Jobs would tie radio in to the Internet? Probably, but not the mundane way most radio stations do it. Would he have a mobile strategy? You bet, but it would fit squarely into his plan to do programming that is his benchmark --- intuitive.

He might consider a deal with a manufacturer to design and sell new age radios that look good and add features. I'd like to think he's not a big enough fool to get caught up in the HD radio concept that means and will probably continue to mean absolutely nothing to listeners. It's not hip. It's not that great audio. And using sidebands are off in the future until after Jobs figures out how to use the bands God gave them in the first place -- the ones listeners are unfortunately listening to less.

Jobs would be advertiser savvy. He might work deals with the big advertisers to, say, buy naming rights for his various stations. Maybe there would be a "Coke 105". Or a "Miller Lite 93.7". He'd bring the advertisers in to the process to find out what it would take to get them to part with more of their money -- and then? And then, he'd design a hip interface -- programming -- that would make people want to listen.

He wouldn't give away any prizes. Jobs wouldn't buy listeners. He'd make his listeners pay him -- and they would -- to become part of the communities that he could develop around his radio properties.

He'd quit the NAB and RAB because he's not a joining type guy. He'd go it alone. And he doesn't go to conventions, conventions are built around him.

He'd do the People Meter in a second and maybe bug Arbitron with ways to make the meter sleeker and more useable. I think Arbitron would listen. He'd spend what it would take to get new age audience ratings designed to reflect the new formats and concepts he is taking years to develop.

He'd subscribe to Inside Radio. (Had to put that plug in, sorry).

And when Jobs finally had all his people developing something new, he'd teach radio a lesson right off the bat. You don't develop the future by calling in a consultant who is rubber stamping formats market by market. He may use one to work with his skunks, but that's different. In other words, radio develops the Jack format and it's the greatest thing since sliced bread and it's all done in months. Different sweepers, a different playlist -- the same old radio. Developing the future takes time, money, effort and vision. Any wonder why radio companies don't do it?

On the day of his big announcement -- which would be in Scottsdale, Arizona while an NAB convention is going on in Las Vegas -- Jobs wouldn't just announce one new format. He'd have one for every target group. He'd have hardware. He'd have software. He'd have well-rehearsed programming. There would be an Internet strategy and mobile content. His salespeople would be ready to go even if they didn't know what they were selling until he told the world. After all, lest we forget, Jobs is very secretive.

And tell the world he would. A big media event. Radio would become larger than life. It would be more than the imitation of itself that it has become. People would talk about it like they do when he announces new Apple products twice a year. None of this HD stuff or more people listen to radio than anything else patter.

He'd woo Wall Street, but not like current radio group heads do. Jobs would lead. Investors would follow.

If you're getting excited right now waiting to hear what Jobs has come up with then let me know.

This is the first time I've been excited about the future of radio and it took a fantasy to do it. But the reality is until the radio business becomes more like the quirky, self-confident and tuned-in Steve Jobs and less like the button-down interlopers who are letting investors lead them into the future, radio has no future.

I like the way Jobs would do it. We can do that.

Clear Channel -- The Purple People Meter Eater

What Clear Channel, the largest radio broadcaster, is doing to delay or disrupt implementation of Arbitron's much needed People Meter ratings methodology reminds me of the Sheb Wooley hit in 1958 where he sang about the one-eyed, one-horned flying purple people eater. To me, Clear Channel is acting like the Arbitron People Meter Eater. Refusing to even allow all-important encoding of their stations' signals to permit these personal devices carried by a sample of listeners to record Clear Channel station listening. Surprise! Clear Channel is taking a hard-nose policy on pricing and other issues that clearly haven't helped radio into even the present. Forget about the future. Right now with diarykeepers recording their listening from memory in old-fashioned weekly, written diaries, radio comes in dead last again in the "I Want To Be A Competitive Medium In The Digital Age" department.

Clear Channel, the People Meter Eater, is showing again why radio is in the post-consolidation mess that it is in. A real leader leads. They jump out ahead on difficult issues. They work through problems. They compromise. They put their industry as a whole ahead of their own company interests. This has not happened with Clear Channel. And it's no surprise that in my opinion they've run down the industry by acting in what they consider their best interests not radio's. In the end, they drove themselves out of business into the liquidation that is currently underway because radio has been weakened by their actions and policies and by other consolidators also acting selfishly. It makes you wonder what consolidation would have been like if occasionally the consolidators actually made some sacrifices for radio as a whole.

What's worse is that as Clear Channel sells off stations, takes the remaining remnants private and gets ready for life without the outdoor division, what's stopping them from getting behind something the radio industry has needed for years? Haggling for greater cost savings? A show of muscle or resolve? An honest dislike for the technology? Or is it just Clear Channel being Clear Channel? Nothing has changed. Whether they are to be remembered as the most hated or most admired consolidator is in the hands of their contemporaries. Back when they didn't care for my Inside Radio stories about their operations, many radio people swallowed their tongues. I can almost understand that then -- they were hoping not to anger the Purple People Meter Eater. But now? These brave souls are still hiding while their industry is in decline.

Perhaps its time to speak up.

During the past difficult ten years, radio people -- for their own protection or whatever reason -- have ignored the consolidators when they have fired good and loyal employees for the sake of Wall Street, cut research and resources in the name of shareholder value, looked the other way when consolidators litigated instead of advocated and as their industry took a beating -- had the nerve to blame iPods and the Internet -- but spared it's consolidated leaders. Radio execs in denial also had a holy jihad against satellite radio, a business that has still not gotten off the ground and represents very little threat to them.

Radio One at least agreed to encode its stations to enable People Meter technology but not to subscribe. This showed they were unselfish if not willing to help lead its industry into the future. In all fairness it must be pointed out that stations will have to pay an estimated 65% more for electronic ratings. Sorry, it's not free. Stations pay more for everything else, but ratings make them money. If electronic ratings turn out to be better for radio than diarykeepers reconstructing a week's worth of listening as they often do, radio stations will recoup some or all of that increase.

Another doomsday possibility for a hurting medium: Clear Channel may be responsible for a possible showdown between advertisers and their many large radio stations. Will the agencies fail to buy ads on stations not reported by Arbitron's People Meter as some threaten? If so, you'd have to conclude that these agencies have guts. But I wouldn't hold my breath.

The worst case scenario is that agencies shrink from the People Meter standard, buy ads on unencoded stations and allow radio's "leaders" to continue to do an outstanding job of leading their industry -- leading it into the past.

Stupid Music Media Tricks

You've heard of David Letterman's Stupid Pet Tricks. Somehow all the smart executives in music media manage to do things that are, well, not very productive for them. With that in mind, try these Stupid Media Tricks on for size:

• Throwing radio listeners a bone by saying that HD radio will bring digital audio to terrestrial radio stations when what the industry really wanted was more channels. Unfortunately listeners don't.
• Radio owners dragging their feet on implementing the People Meter seemingly never running out of excuses for sticking with a paper diary system in a digital world. At this moment Clear Channel, the largest radio group, should be leading the charge. Instead it is acting as the biggest impediment. Who needs enemies when the radio industry has Clear Channel and other groups not only shooting themselves in the foot but setting their entire industry back.
• Suing your customers -- as in RIAA -- with the full blessing of the major record labels. Has anyone noted that their legal strategy isn't working? Illegal downloading of music (and video, by the way) is still rampant. But legal downloads are up and could be even higher if digital rights management can be relaxed or eliminated.
• Playing the same formats over and over again. It used to be that radio stations played the same music constantly while insulting their audiences with slogans like "fewer commercials, more music, and the best variety". Now, the radio industry is doing the same thing by not inventing new formats. They are doing the same tried and true formats market after market. Fewer formats, a lot of commercials and less variety. Don't make that a slogan! Consolidation is killing the radio star.
• Utilities such as mobile phone companies getting into the content business. This is like Public Service Gas & Electric producing content for your cell phone. The mobile companies see money -- like in added monthly fees -- for content so they want to be in that business, too. Perhaps they should bring the level of cell phone service and coverage up to the higher standards that are already available in Asia. Radio companies should be in the mobile content business.
  
• TV networks for betting the ranch on YouTube and short video clips. Yes, it's a good promotional tool this minute, but the jury is way out as to whether the Internet is the next cable or satellite delivery system. TV networks, produce better programs! That's where you can make more money.
  
• MySpace for entertaining the idea that the next generation will sit idly by and support its blatant attempt to monetize the social network it bought for upwards of $600 million. The next generation loves networking and hates commercialization. I'm not trying to spoil the party but there's trouble ahead.
• Cutting the size of The Wall Street Journal and next year The New York Times down in size to save money on newsprint. Folly for The Journal which estimates its annual savings at $16 million. The reason many papers cite for slicing their newspapers down is that young readers want to read a smaller paper easier to hold. Repeat after me, "younger readers don't want to read your newspapers because they get their news and information online". Spend your money there.
  

Radio Dying From Self-Inflicted Wounds

Excuse me, but am I dreaming or having a nightmare about Arbitron's People Meter. Yes, I know implementing this new portable technology will cost significantly more and that radio will have to share listening with other media, but -- I have a major question to pose. Why is the radio industry in this age of technology still culling their audience ratings from a paper diary system? Why is Clear Channel still nickel and diming the People Meter when the radio industry not only needs it -- it needed it years ago?

Radio is an industry that is dying from self-inflicted wounds.

Take HD Radio. I have a problem with the name -- HD (high definition) radio. Sounds like a copycat of HD TV (a name that is more accurate). More importantly, HD radio was never the savior radio executives hoped it would be -- not even in their fantasy. The fact is fidelity is nice, but not necessary for most radio listeners. Can you say AM stereo? Most people listen to radio in the worst acoustically sound spot ever -- the car. Portable radio fidelity is even worse. How could so many smart people think that improving audio would be "the thing". It's nice. It should have been done a long time ago just to keep up with technology, but it became another self-inflicted wound. TV didn't do it. Technology didn't steal listeners away. Indecision and bad decisions did it.

Consolidation -- a self-inflicted wound.

The adage "be careful what you wish for for you may get it" applies directly to radio executives who lusted after consolidation. But consolation proved to be a failure for the radio industry, a short ride for investors and a disappointment for listeners. Do you think Clear Channel would be liquidating right now if things were growing -- booming? Consolidation was like a diabetic in a candy store. Radio groups ate up as many stations as they could but made themselves sicker eventually.

The Internet -- a self-inflicted wound.

The same radio execs who brought you indecision on The People Meter, poor decisions on HD radio and selfish decisions on consolidation also misread the Internet and continue to mis-read it in my view. The Internet turned out to be more than a distraction to young kids. It became a source of information and entertainment that would ultimately compete with traditional media. Radio could have worked with the record industry to become "iTunes" if they had taken this threat seriously enough, but instead the number two computer company, Apple, became a media baron. To this day I am convinced most radio groups don't know what to do with the Internet and under estimate the importance of moving new content there -- not just terrestrial radio streams.

The next generation -- a needless, self-inflected wound.

Is it possible that the radio industry was so distracted during consolidation that it let the next generation find more intriguing alternatives? What were we thinking? There are few formats that can attract Generation Y to the radio and to their credit some researchers and programmers are beginning to admit that they blew it. Unfortunately, there is no Plan B. It's harder to reel in this Internet generation because they grew up not craving radio. Many don't even like radio even if they do use it. No project is more important to radio than rethinking it's youth initiative. First, they need to get a youth initiative. And there's lots to learn. Radio isn't going to like the answers because if they want to program to the next generation, they are going to have to deliver their programming to mobile devices other than traditional radio sets.

HD radio, The People Meter, The Internet, The Lost Generation -- some of the mistakes that radio executives made that did more damage to the future of radio than any one technology. This is not to point a finger at all radio people -- just to learn that to make things better it is time to start admitting mistakes.

In the days and months ahead we'll focus on some positive ways traditional media can compete for the next generation and a more robust growth pattern. But for now, don't underestimate the negative effects of taking one's eye off the prize.

Inside The New Future Of Music Coaltion Study

By Peter DiCola, Inside Music Media™ Contributor

Future of Music Coalition has released a new study about the radio industry: False Premises, False Promises (available at http://www.futureofmusic.org/research/radiostudy06.cfm). We asked first whether allowing greater ownership consolidation in the Telecommunications Act of 1996 worked as a policy. Going by the FCC’s three policy goals of competition, localism, and diversity:

Competition: We found that 281 out of 297 local markets had experienced extreme concentration, that is, to a point beyond the “danger zone” for antitrust concerns (see p. 69).

Localism: We created a Local Ownership Index to measure of the geographic local-ness of station ownership—the index decline 28 percent between 1995 and 2005 (see p. 78).

Diversity: We learned that large station groups exceeding the local caps offer a narrow range of about eight formats: Country, Classic Rock, Talk, Sports, News, Oldies, CHR, and AC alone account for over half their programming (see p. 94).

These trends have not improved radio for the public. The pre-existing decline in radio listenership has accelerated since the Telecom Act (see p. 44). But has consolidation has worked as a business model, at least? Our findings—in both our 2002 report and our new report—have suggested that hypothetical “economies of scale” have not materialized (see pp. 45-48).

In the report we make some concrete, realistic suggestions for fixing radio (see pp. 114-116). But the bottom line is that radio policy has to reverse course and promote the efforts of small, local, independent, and minority-owned station groups.

Peter DiCola is the research director for the Future of Music Coalition

Labels About To Eat DRM

Digital Rights Management (DRM) has been a dismal failure. My music industry students at USC knew it before anyone because they are part of the generation that helped neuter it. We know why labels like DRM. It protects their rights and in their fantasy helps sell more music.

Now the labels are getting ready to swallow the bitter pill and give up on trying to manage DRM. It is in their best interest to do it now, but they will probably drag it out. Revenue from digital downloads and mobile content is down. Even iTunes sales are down and if the Christmas spike materializes once the figures are in, the trend is still off. Apple has problems with iTunes. They are being sued in federal court over allegations that iTunes DRM is a monopoly. The judge in the case refused to throw it out. Apple is now planning to defend itself. Apple in turmoil doesn't help the record industry.

It's no secret that the labels want iTunes to have a major competitor. That competitor was supposed to be Microsoft and its new Zune hand held device. But the Zune hasn't been a hit since it was introduced in late Fall and Microsoft's version of DRM will suffer along with Zune sales.

There are lots of challenges on the horizon not the least of which is a move by MySpace along with SnoCap to start a music download service that would allow artists to sell music right from their profiles in the MP3 format. No major labels are on board yet, but indie artists and unsigned acts will be the focus of the experiment.

The labels have tried everything to maintain their DRM position, but they are losing the battle. The same generation that blew up the business plans of established labels will end up dictating that they will not accept DRM. How could this be? How could the marketplace be more influential that the labels? The Internet has brought democracy to the music business. The labels don't get to choose whether DRM is a keeper. Consumers do.

What young people seem to want is the ability to use the music they want. They want to be able to transfer it to the various devices they own without respect to digital rights management roadblocks. In fact, they might be more willing to buy music if they could use it on the devices of their choice. If this no protection approach survives it could be a boon to digital music sales. But labels have been hard-nosed in their opposition, but that is changing.

Some record company people are even advancing the idea that they should be selling music from digital downloads as MP3 files without DRM. It will happen sooner or later, but the labels need to choose sooner. Why fight them there (at DRM) so they don't have to fight them here (on mobile music).

Look for the labels to get religion in the year ahead. They've got lots of serious problems including the end of the growth cycle for ring tones -- a big way they makeup losses from CD revenue. There is not too much on the horizon that bodes well for traditional labels which is precisely why they need to act now, disable DRM policies and concentrate on the business of finding and recording artists. If they don't act it could be too late. The marketplace has spoken and the question is not whether labels have heard their voices. It's when they will admit to the mistake and embrace scrapping DRM.