Let's Play Music Media Trick or Treat?

Let's put on our Larry Craig or Michael Vick costumes and play this year's version of Music Media Trick or Treat.

Trick.

Buy an HD radio and you get many new channels of music and radio programming. No. Buy an HD radio and get taken for a fool. The radio operators, however, won't be taken for fools. They're investing relatively nothing in the future of HD (wisely for them) and propping up the HD proponents with a meaningless HD initiative. (HD is the equivalent of trick or treating and returning home with an Apple that has a razor blade in it).

Treat.

Roku. This is the Internet radio that allows you to program thousands of Internet radio stations into it and listen (depending on the model) through you stereo system or speakers. Talk about a wide variety of programming. (The equivalent of getting a candy bag full of Reese's Peanut Butter Cups).

Trick.

RIAA settling out of court for about $4,000 per victim in their crusade against the natural phenomena of downloading and file sharing music you don't own. The $4,000 doesn't begin to pay for the cost of suing consumers nor the cost of litigation when it comes to that. But the real trick is on anyone who thinks suing customers will stop or slow down illegal piracy. (I'll report back and you decide when the new piracy numbers become public).

Treat.

The return of WCBS-FM, New York. This is a double treat. On one hand, listeners get a beloved radio station back that Joel Hollander's people didn't know how to value and update. On the other hand, it is a victory for everyone in radio who knows you can only program to the audience God gave you. That would be Gen X and baby boomers. Gen Yers are preoccupied with other things like iPods, social networks, digital downloading and mobile phones.

Trick.

That diary-based radio ratings are more accurate and reliable than the Portable People Meter. Are you kidding? I want to be WCBS-FM when the PPM kicks in and they get credit for all the listeners they've always had but were never recorded manually in the diary. (I guess I'm saying the diary argument is the equivalent of a burning bag of dog dirt that is thrown on the front porch of an old grumpy person's house and when you ring the doorbell they run out and stomp out the fire and the...well, you get the picture).

Treat.

The iPhone, Blackberry, Treo and other smart mobile devices that let us bring the world we have at home on the road. One of my great readers just sent me an adapter for my outstanding ear phones that wouldn't work on my new iPhone. Now, I'm in heaven again. My students at USC will never give up their cell phones. Well, you'll have to fight me for my iPhone. (And I'm from New Jersey).

Trick.

That satellite radio is different from terrestrial radio. Satellite radio is terrestrial radio. Satellite even brags about no commercials (like terrestrial brags about more music) and when you listen to some satellite news and programming channels, it's full of commercials. The really bad -- per inquiry type. Satellite missed its chance to make a good first impression as a real alternative to cluttered, hyped, boring commercial radio.

Treat.

The four satellite channels I pay $12.95 for just so I don't have to listen to consolidated commercial radio stations. It really hurts this ex-radio program director to hear what has become of a once vibrant medium. Even consolidation shouldn't make radio sound so uninspired.

Trick.

The sale of Clear Channel will mean the end of the Evil Empire. No! It means the beginning of the Dark Ages. What do Wall Street investors looking to buy and resell properties have to do with good radio? These folks -- the Bain and Lee people -- are so different (I'm being sarcastic here) that they actually said they like the way John Hogan is running Clear Channel. Now ask the managers and see what the predominant assessment is. Lee and Bain -- or as I call them -- Less is More.

Treat.

iTunes instead of CDs. Being in radio I, like you, have a lot of CDs and vinyl. What a pleasure to be able to pay 99 cents to download what I want on my iPod from the iTunes store. In fact, it's easier to just buy the tunes again (are you listening record labels?) than go find the CDs to download. And iTunes reminds me of when I added new music on my radio stations on Tuesdays -- they are more excited about it in their email than terrestrial radio stations are on the air.

Well, another Halloween edition of Music Media Trick or Treat comes to an end.

Time to take off the costumes and stop the childish pranks -- and I'm just talking about the media executives!

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Radio and Records: Would Your Audience Wait in Line for You?

I’d like to think I have more of a life than showing up an at Apple store at 6 pm Friday night to be among the first to get a copy of the new OS X operating system for Mac.

Well, think again.

I dragged my wife to Biltmore Fashion Square – home of my favorite place now that record stores have lost their magic – the Apple store.

I estimated at least 1,000 people waiting in a line that snaked around this retail village. To sooth my wife I said, I’m not a nerd – I’m doing this so I can write a post about it on my blog. Yeah.

Well, I am not a computer nerd. But I am addicted to Apple products and I thought you’d be interested in what happened to me as I queued up to spend $199 for the Apple operating system update.

Apple had it all figured out – as they always do.

The line moved fairly quickly – no one was complaining – only two people were too impatient to wait and I heard them say they would be back Saturday morning. Once in the store, Apple employees cheerfully (and they were cheerful) directed us into a separate line that went past other Apple products we could buy. Back to the Genius bar to pay for the CD which was rung up on a mobile device. The receipt was sent to my laptop. Another tree on the way to being saved.

On the way out of the store – and it wasn’t easy to get past all the people looking to buy other things – I thought “when was the last time a radio station or record label had the equivalent of fans lining up to get at their products?”

I know you’re going to say, “Jerry, how about concerts?” And I’m going to reply, can you say Live Nation and can you agree that many concert goers are pissed off before they even enter the venue (especially for what they must pay the ticket brokers).

KIIS-FM in LA does a wonderful star-studded concert event each year but that’s not what I’m saying.

The labels and the radio business (and this includes you, too, satellite radio) does not excite its fan base the way Apple does.

Money is no object. We’ll pay. We want to be early adopters even though we know early adopters must suffer through software glitches (and believe me, there are many with Leopard). Never have we seen so many happy people free to interact and empty their wallets since Woodstock (and of course, at Woodstock, we didn’t have wallets or clothes for that matter!).

Radio stations and record labels: would your audience do the equivalent of waiting in line for your product and/or service?

This, in my opinion, is worth thinking about. How to make radio, and music exciting again. Consolidated sounding radio stations haven’t done it. Less is more hasn’t done it – most listeners feel their getting more of less when it comes to exciting programming. Suing your customers – yeah, that really has a lot of potential to energize the labels’ fan base. Energize them to hate you and steal more from you.

It’s one thing to excite your audiences and customers (which traditional media absolutely is not doing) and quite another to satisfy them.

I say that because as much as I admire and appreciate Apple, I’m not wild about the new OS X operating system. It does some neat things differently but not necessarily better. I should have paid closer attention to The Wall Street Journal technology writer Walt Mossberg who said about the same thing in his review.

Still, I had to see for myself.

The power of focusing on not just doing your job well but exciting your customers and fan base.

I’m listening to the flight attendant on my USAirways flight to LA today (Sunday) and I’m being pitched (three minutes!) to sign up for their credit card. All consumers are bombarded with messages that don’t resonate.

If traditional media wants to make a difference now, focusing on ways to excite their audiences and customers and then delivering on those expectations can bear more fruit than all the HD radio alliances, NAB 2020 initiatives and cockamamie Internet promotions combined.

Apple usually gets it right. Radio and records usually gets it wrong.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

The Results: Two Days Without Cell Phones and iPods

About a week ago I mentioned that my students were going to give up their cell phones and iPods for two consecutive days. They didn’t really want to, but it was a class assignment. Since then many of my readers have asked for a follow-up of what happened when they went cold turkey.

At the heart of the assignment was to try and determine how this cell phone/iPod generation coped and what media they turned to.

Did they turn to radio?

More TV viewing?

Here’s what we learned:

1. My students could rather easily live without their iPods. To them iPods are today’s radio, but they do the programming. Their playlists are often very short (Steve Rivers, please feel vindicated) and they are often impatient with their favorite songs cutting them off and prematurely shuffling in mid-verse. Still, the iPod was universally deemed non-essential – at least for the purpose of this experiment.

2. They are addicted to their cell phones. This was the toughest part of the assignment which most of them put off starting until the last minute (nice to know nothing has changed from other generations). To a person, my students felt disconnected for two days. Their friends grew frustrated and some complained – adding to their anxiety. And anxiety is the word many used to describe two days off the smack. Some parents were concerned because they could not easily reach their kids on speed dial – and after all, these same parents have enabled this generation to be tethered to them as well as to their peers. One student said, “I had to stay near friends who had a cell phone”.

3. Many students don’t wear watches and claim to use their cell phones as a watch (miraculously, none were late to their presentations). Others said they missed having something to do – to fiddle with their phones, check text messaging and feel connected.

4. Only one person reported increased radio listening but didn’t seem all that happy about it. TV viewing didn’t increase. Students found themselves using their laptops and PCs to watch YouTube. Or listening to iTunes, watch TV shows on their computers and rely more on Facebook, the social website, to feel like they were still connected.

So students could easily live without their iPods, but were near nervous breakdowns to get their cell phones powered up again. In other words, for them it was a long two days.

Radio didn’t do well even when cell phones and iPods were cruelly taken from these Gen Yers.

Being connected is the key issue.

The next generation is not out protesting the war or fighting for civil rights as baby boomers – the ones who still market to them – once did. But it is important for this future money demo to feel connected with others. Some blame it on their ADD, and others on their parents (baby boomers) who had no small part in making them the way they are.

This could be a bitter lesson for traditional media.

As obsessed as they are with new technology and as much as they blame the iPod for their plight, traditional media doesn't seem to fully understand what makes the next generation tick.

Some thoughts to ponder (no doubt you will add more):

Traditional media has to find a home on the receivers of choice for the next generation – this would be the cell phone.

Steve Jobs already knows this which is why he morphed the iPod into the iPhone – a shrewd and timely move if you believe the results of my USC class study.

Record labels mired in their own self-pity over online music piracy need to get out of court and on the phone – the cell phone.

The cell phone is fast becoming the aggregator of media content.

Radio stations can’t expect to simply stream their stations on the phone. They need to reduce their programming to small segments that can be consumed on the fly. Gen Yers like it short and sweet. They like options. Possibilities. The boomers who program to them like content always on in one continuous loop.

Record labels can’t expect to continue their war against Steve Jobs. He won. They lost. That's apparent again from this experiment.

Nothing would scare traditional media executives more than to listen to the oral reports of my bright and engaged USC students.

But it should be the other way around.

Nothing gets me pumped more than to see the many opportunities that are coming soon to create content for people who are waiting to be addicted.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

NAB Is Selling Radio Out (Again)

I don't take any pleasure having to say this, but the National Association of Broadcasters is selling radio out -- again.

I want to start by saying that there are a lot of great and good people at the NAB who care about radio and many broadcasters who serve on its board who do so for all the right reasons.

But somehow, our trade organization as powerful a lobby group as it is, is siding with big money, big broadcasters and those interested in further consolidation.

Consolidation has been a spectacular success and has made the radio industry more vital, more relevant, more vibrant and better able to compete with new media such as interactive and mobile. Wait...wait...

That's what consolidation should have been. Here's what it is:

Consolidation is a spectacular failure and has made the radio industry myopic -- losing sight of the vital next generation while enabling greedy broadcasters to have a virtual monopoly over what once was a pretty successful local medium. It has fired or laid off hundreds if not thousands of dedicated and talented radio people and likely will have to trim even more jobs as the consolidators can't seem to make their monopoly work.

The only answer?

More monopoly.

And the NAB, which was there for the big money people before, is at-the-ready again.

FCC Chairman Kevin Martin is hell bent to loosen media ownership rules before the end of the year angering politicians on both sides of the political spectrum. Martin, who wouldn't be the first FCC Commissioner to cross over to the side that he now oversees when he retires, is putting the interests of a few over the best interests of the industry.

What disgusts me is that the NAB -- your trade association that you support with your membership, dues and attendance at profitable conventions is selling you out.

This would be the second time.

The first time under former NAB Chairman Eddie Fritts (now in private practice as a lobbyist), helped sneak radio consolidation legislation into the 1996 Telecommunications Act at the last minute. Many broadcasters were blindsided. Once passed, the consolidation land grab was on and you've seen the price the radio industry has paid as a result.

Imagine if radio was still run with a maximum of 14 AMs, 14 FMs and 14 TV stations. Then imagine that the Internet came along, the next generation started turning to their computers and the radio industry had to answer the challenge. I'll bet these owners would have. There would have been a lot more individual companies taking a whack at the problem. You wouldn't have been looking to the likes of John Hogan or Joel Hollander to lead you through a remarkable new age.

I'm not saying ownership limits couldn't have been relaxed -- but how about this -- set the limit at a number companies could actually operate in the public interest as well as their own interest. How about 50 stations of whatever kind? Alright, 75 if you can run them. But not a handful of monopolies run by a handful of not-ready-for-prime-time CEOs.

You see where they and their clones got you.

A dying business.

No Internet strategy other than websites.

No mobile strategy.

No blueprint to follow their audience where they now live -- online and on their phones.

And by the way -- I don't know about you but I am tired of hearing the principals of large radio companies crying the blues about their bad financial performance. Can anyone remember when owners who held radio stations actually lost money? It went with the territory to holding a public fiduciary. You didn't always make a profit.

That's right.

They lost money holding the public trust.

Those characters from the hey day of radio were OK with owning a stinker or two. Okay if some of their stations got ratings and didn't have a good enough sales team to take advantage of them. Just fine being the owner -- an honor, by the way -- of a public conduit to education, information and entertainment.

I'm not shedding tears for the money losing radio owners who have failed to use their monopolies to build shareholder value -- the holy grail of greedy corporations.

By every standard -- audience, revenue, shareholder value -- the consolidators have failed. We read about it nearly every day in the trade press.

It's all insane.

Let me get this right.

Consolidation failed.

Radio is losing revenue and audience (especially the next generation).

Careers of talented people have been ended and lives destroyed in the process.

Wall Street analysts don't even want to cover the radio sector anymore.

All this and what do we do?

Seek more consolidation.

It's not personal. It's business. I'm just going to say it.

Your NAB is leading the fight against you.

What are you going to do about it this time?

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Panic in the Music Industry

Perhaps you’ve noticed how Radiohead has shaken the four major record labels to the core by offering value pricing for digital downloads.

Now Oasis and Jamiroquai – two major acts that don’t have a record label contract – are considering following in Radiohead’s footsteps. A group called the Charlatans is also offering its next album free if fans visit the site of British radio station XFM. (Hint to U.S. broadcasters and labels, listen up).

And more artists could be on the way.

Radiohead is letting consumers determine if and what they want to pay for their new album In Rainbows online.

They expect to make their money from concert ticket sales and merchandise. And, CD sales for those who want to own the hard copy.

Prince gave away his new CD in the Daily Mail tabloid newspaper and sold out his 21 concert dates in the U.K.

It’s too early to tell if this creative marketing move will be successful, but it's one more new idea than we’ve seen from the big four record labels.

HitWise shows the Radiohead site has moved up from #43 to number one for music sites in the U.K.

When all is said and done, the Radiohead experiment may not endure. But it may be significant because it marks a tipping point.

The artists are revolting and taking control of their music from record labels that have been dead on arrival for the last seven years – at least. When a label comes up with a revolutionary idea, they call a lawyer and sue. When a label embraces the Internet it means hiring interns to try to manipulate social networking groups as Columbia has admitted publicly to doing in that New York Times Sunday Magazine piece on co-top exec Rick Rubin.

With CD sales dropping, the artists are taking matters into their own hands – as long as they are not under contract. Madonna negotiated with her label, Warner, and Live Nation before signing a huge ten year contract with Live Nation. The significance is that Madonna was betting she wouldn't need a record label and went with the sure thing -- the touring that Live Nation could bring. This may not be a good deal for Live Nation. They are paying through the nose. But time will tell.

For now, all the pioneering is done by big name artists and groups with fan bases and track records. As I said earlier, the Radiohead experiment may not endure but the idea of embracing rather than fighting the digital future has officially arrived this Fall.

Artists want to insure touring profits. They want to grow merchandise sales. If they go down with the CD, they are out of business.

So, they are trying things.

It probably is not in the DNA of the four major record labels unless they were to form an independent (and I mean hands-off independent) skunk works to do some outrageous things.

If not, the artists are beginning to show that they will.

What’s unsettling about all this is that if the four labels had listened to their arch enemy Steve Jobs and lowered download prices instead of fighting for variable pricing, they would be headed in the direction of future growth.

What we can conclude is disturbing to the labels but exciting to consumers and artists.

The 99-cent legal music download standard is probably over – soon, at least.

The “album” that the major labels romantically refer to as a collaboration of creativity is also over. The next generation cherry picks what it wants. There is little magic left in the concept of a record album.

Today's technology allows artists to produce new music quickly and distribute it upon completion in real time. They can feed their public – one song at a time or in clusters. They now have the power.

In time, lesser known groups will harness the advances that we’re starting to see now.

Then it will be lights out for the major record labels who were actually in the dark themselves during the digital revolution that is gaining attention today.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Satellite Radio Is Radio

Yesterday, I wrote a piece called "NPR Is Not Radio". You can see it by scrolling down or, if you receive my blog via email, log on.

Basically, the gist was that my young students don't consider NPR radio. Radio to them is what consolidators do. They don't much like it.

Someone sent me a copy of the Arbitron National Satellite Report for Spring of 2007 and I've got to tell you that based on the results, satellite radio is radio. Terrestrial radio. And I'm not sure that is a compliment.

The satellite Arbitrons (based on diary entries) tell me a few things:

1. Hit music formats get the best ratings (any program director could have told you that, but still...).

2. Howard Stern is satellite radio with the highest ratings (about 1.2 million cume) of any satellite channel. Hell, his second channel "Howard 1o1" does half a million. Stern is the Sirius franchise so lay off of Mel on this one. He was right to open the vault and give the big money to Stern.

3. Satellite operators should pray for the People Meter because they can only do better if satellite listening is automatically picked up. Can you imagine how under reported satellite radio listening is in a diary system?

4. Satellite operators need to subscribe to Arbitron. They are going it alone now because ratings matter less to satellite stations that don't run commercials (duh!). But satellite will carry commercials eventually. I promise. And when they have an audience to sell, they'll have to use ratings to sell them. (It's like promising no new taxes and all of a sudden, you get what? -- a tax hike. Same will be true of commercials on satellite music channels).

5. Niche formats -- the ones you'd think attract subscribers who'd be happy to pay for satellite channels -- do poorly. Sometimes very poorly. Sirius Underground Garage has about 45,000 cume listeners. XM's Fungus has 44,000. It might be better to turn the electricity off and save some money. But...the long tail theory applies to satellite radio as it does to popular music. All those little "low rated" channels make up what's called the satellite radio audience.

If you're a satellite radio subscriber as I am (three cars with satellite radio), then you finally get an idea of whether you are one of many or left out there in left field. My wife, for example, loves Sirius Hair Nation (337,700) and I favor Sirius Totally 70's (301,00) -- sorry XM, my cars only come with Sirius. I didn't make it that way -- you did! Especially because I like a lot of XM channels as well. I just can't get them in my cars. Damn -- for me. Sorry -- for satellite radio.

Satellite radio is terrestrial radio in so many ways.

It's run by ex or current terrestrial radio people. Some satellite jocks also have gigs on terrestrial channels. You get the point.

It sounds like terrestrial radio -- too many loopy jocks and too much radio production. Even top of the hour station breaks that the FCC doesn't warrant. Channel hype. Bored djs. The whole thing.

Satellite radio hypes non-stop music commercial free. Sounds to me like -- you guessed it, terrestrial radio.

Jingles! Yes.

So what am I saying?

If NPR is not radio -- at least according to representatives of the next generation known as my USC students -- satellite radio is an alien mother ship in outer space (I like that). But if the next generation would listen -- and so far, they won't -- they'd get hit music with no commercials and Howard Stern with commercials. True, they'd get many niche formats they can't get on terrestrial radio, but then again they can get them for free on the Internet.

The next generation holds NPR in higher esteem than commercial radio. That's why my students wouldn't insult NPR by calling it radio.

But somehow satellite radio has become terrestrial radio on a subscription -- a paid subscription.

Satellite is a world where the hits keep on coming. Big radio stars like Stern dominate. And their many innovative channels still appeal to small groups of devotees.

The choices are shaping up like this:

Terrestrial radio -- free mass communications.

NPR -- not as bad as terrestrial radio.

Satellite -- the same as terrestrial radio.

Can you see why radio is on the decline, NPR is defying the delivery system it is on and satellite radio can't seem to get revved up.

Internet radio?

Priceless.

Free.

Free to be all the little things its diverse audience wants it to be.

And coming soon to a WiFi, WiMax or cell phone enabled device near you.

If I'm terrestrial or satellite radio right now, I'm going to cut the crap and get down to the business of programming content to a generation that doesn't care about fidelity, craves diversity and choice, rejects radio formatics and will pay next to nothing.

Or, turn off all those channels you're aiming at the next generation because they're not going to hear them. Program to the available audience -- Gen X and baby boomers who do want the satellite or terrestrial signal.

Forget HD, bickering between terrestrial radio and satellite radio, Wall Street investors and the like (Am I alright? Did I really say forget Wall Street?).

It's time for a timeout.

Rethink who the market is and how you're going to make them addicted to your content.

They decide.

You report -- to them.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

NPR Is Not Radio

There was an excellent piece by Sarah McBride in The Wall Street Journal yesterday featuring an interview with National Public Radio CEO Ken Stern.

The article highlights the success of NPR including its widely heard morning show, Morning Edition, which is the most listened to show on non-commercial or commercial radio next to Rush Limbaugh. NPR is a tastemaker in the music world. It has an outstanding reputation for broadcast news (Edward R. Murrow would approve, in my opinion). NPR has been skillful in using the Internet and podcasting as a way to extend its very special brand.

Nonetheless, NPR is not radio.

How do I know?

Well, my students told me. Here's how it happened.

One day in class I did one of my periodic checks to see how traditional media was ranking with these young folks. So, I asked the question, "by a show of hands, how many of you listen to radio?" Only three hands went up (out of 52).

I was taken aback.

And no -- these students are not all media students -- half are from other disciplines.

I said, "That's impossible. I know you're listening to radio less but only three of you will admit to any listening at all."

After a brief discussion, it became apparent that when I said radio, the students thought I meant Clear Channel/consolidator-type radio. Upon further discussion, they told me that they listen to NPR.

I said, "NPR is radio, isn't it?"

No, NPR is not radio -- I was told. Young people hold NPR in high esteem. Many listen and love it. In Los Angeles, "Morning Becomes Eclectic" on KCRW is revered.

So, I polled the class again.

"If you count NPR as radio, how many listen to radio?"

About 75% of the students raised their hands.

I've said it before -- the next generation is not listening to what terrestrial radio is offering. One main reason is because free radio doesn't speak to them. But it is interesting that when the content is there this group will work harder and seek it out even if they have to do it on an analog device.

NPR has the same problems as commercial radio.

As the Journal article points out, time spent listening is down and most importantly, NPR's audience is getting -- well, shall I say it -- older.

Ken Stern thinks the answer is better content and he's got a supporter here. If I've learned anything from my years of working with Gen Y, they are not responding to the best efforts of consolidated radio stations.

In addition to better content and better delivery systems, radio programmers are going to have to deliver their shows where the next generation lives -- and that's not near a terrestrial radio.

It's not near an HD radio.

HD means nothing to them. It is a black hole without content. A poor reason to waste money on a new, ugly radio. Very uncool.

It seems simple, yet it is not obvious to traditional media companies. They need to go back to hiring the wild programmers who willed their way onto terrestrial signals during the glory days of modern radio. Consolidation has all but ended these creative, hard-to-manage, geniuses. There is an entire old generation of qualified PDs out there and a whole new one waiting for their chance.

So, what is radio?

HD is not radio -- it's an excuse by manufacturers and some operators to get access to more sub-channels while the consumer is asked to pay the freight. It's not even better audio. HD even causes interference on the AM band.

Consolidated radio is not radio -- it's programming on the cheap. Wall Street Radio. More commercials and less entertainment. Programming in the black. Safe. And audiences are rejecting it quarter by quarter (as investors would say) just as I have warned since 1996.

The iPod is not radio -- it's a record player. And a damn good one for most people who can program their own "stations" without obnoxious jocks and in total control of the music they hear. Yet, it's only a record player.

The Internet is not radio -- it's a delivery system for what will come in the future once fair royalty rates are applied to the new generation of radio.

Your mobile phone is not radio -- it's a convenience that potentially will deliver content as Apple's iPhone is starting to show us. But the content is not likely to exist in 24/7 streams. And the Apple folks don't have the talent to provide radio-style content for their new application.

And, of course, NPR is not radio.

NPR is a brand that innovates, entertains, informs and experiments with new delivery systems.

With all this in mind, I've come to realize that my students have paid NPR the greatest compliment of all.

It's not radio.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Two Days Without Cell Phones and iPods

You’d think my USC students would really think I’m an SOB for giving them an assignment (worth one-third of their semester grade) to stop using their cell phones and iPods for two days. They pick the days. But that’s of little consolation.

This is a generation that lives on their cell phones and is never far from from their iPods.

At first, the majority of my students were less than thrilled, but today and Wednesday they will stand up before their classmates and report back what happened when they went cold turkey. Hell, USC is in LA. We detox well in this town. Why not a 12-step program for cell phones and iPods if necessary?

Unfortunately, I’m not kidding.

And my students have since warmed up to the idea (especially when I offered to substitute another term paper instead).

Seriously, these brave students are intrigued with the idea of what their lives would be like without the two things that seem to define their music media lives the most.

Two weeks ago there were only four holdouts. And there was one doubter a week ago – a student from New Jersey. Wouldn’t you know? But now she's on board and ready to bite the bullet.

Perhaps you can see why I love these young students. They are so full of life and so open to ideas that they would actually be disappointed if I pulled the assignment. And they are also smart – very smart. One student said, “Professor Del Colliano, are you going to give up your cell phone and iPod, too”.

Hell no, I thought. I’m the professor! But after thinking about it, how could I not take the challenge as well. (I have already served my two days of abstinence but I'm holding my comments until I hear from them).

Just what am I trying to get to?

If, as I believe, the future of the music-related media is on the Internet and delivered through mobile devices, we need to test whether this digitally-stressed generation can take more stimulation. Are they suffering from digital stress (I say yes, and I’m with them a lot). Just look at Blackberry users (forgive me if you are one but I’m going to insult you) – do you want to really live like that? Well, my students are just like you when it comes to being addicted to their mobile phones and music devices.

If we’re going to send more video to their iPods and digital devices, can the market take it? Are their young lives on overload because they’re always listening to music, online, texting and interacting through online social networks?

The Wall Street Journal made me more legitimate Thursday, October 11 when it reported companies like Deloitte & Touche and Intel were imposing a ban on email on Fridays. The article describes the uprising that ensued. The limits were imposed to force more face-to-face interaction. The results as documented in the Journal article were positive.

You can’t look at just technology today. You’ve got to study the sociological implications of technology. Just as television changed a generation, the computer has changed another generation and what’s ahead is more changes with mobile and online availability.

Now, video, audio, text and social networking is all converging around devices smaller than the channel knob on those first television sets.

I am expecting some insightful reports from my students and if enough of you want to hear about the results, I will write about it in a future piece.

We’re now at the corner of technology and sociology. Which way do we proceed?

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Media Deregulation: More Is Less

FCC Chairman Kevin Martin is on a fast track to rushing through approval of an ambitious plan to almost singlehandedly relax media ownership rules – some of which have been in place for decades.

If it survives the court challenges that are likely, companies could own newspaper, radio and/or television stations in the same market. Consolidators would also be free to get their greedy little hands on even more stations and grow the size of their radio monopolies – sorry, I guess I should say, clusters, in the same city.

But Senators Byron Dorgan (D-ND) and Trent Lott (R-MS) are saying not so fast. Martin wants to push the ruling through by the end of this year. Inside Radio was reporting late yesterday that, “In a letter to Martin they argue "The FCC should not rush forward and repeat mistakes of the past."

Ya think?

Dorgan and Lott want the FCC to do a localism proceeding first. Elected officials have a lot on the line. Their constituents don’t like consolidation. They like their broadcasting local.

But what’s the use. I say let Martin and his buddies deregulate again.

Any company that wants to own a newspaper (with or without radio or television stations in the same market) is nuts and must have another motive, don’t you think? Like a way to generate fees for investment banks and big profits for the lead consolidators.

Someone is going to make money from all this and guess who it isn’t going to be?

The shareholders.

No one who knows what’s happening vis-à-vis the next generation and the growth of new media would want to own a newspaper.

Hell, or more radio stations for that matter.

Ditto for television, an industry that is in the early stages of corporate dementia – forgetting that content is what made the house that the Paleys and Sarnoffs built. Not delivery systems like YouTube and its clones.

Pinch yourself and then look at the stock market. See radio consolidators deeply in the toilet doing a poor job running the monopolies they already have. I know, but radio is a great free cash flow business. Great for whom?

But I guess a few media analysts could prop up the prospect of more deregulation. Get ready for the word “synergy” to get bandied about. Someone will say these deals are “accretive”. Hey, it’s back to the future.

Suckers wanted – no phone calls, just buy stock.

This is all so ludicrous that I can’t imagine any sane person would call for more deregulation. Then again, I wouldn't call the FCC sane. In fact, I hope my readers send this post to their congressmen and give them the following alternative:

“End consolidation as we know it. Limit the number of total properties a group could own. Make license renewal based on serving the public interest, convenience and necessity (that again!) and winning the support of local community groups. No automatic renewals. This would not only be good for broadcasting but it would make the owners have to face their real bosses – the listeners and viewers – not the investors. No more than 50 stations total or one in fifty different local markets. They don't need newspapers or TV stations to compete in a market. They need the goodwill of their audiences, support from the local community and an Internet/mobile strategy for the future."

Asking for more deregulation is like calling for more chemotherapy after the patient has died.

Consolidation didn’t work – by any measure.

Not by shareholder value – radio stocks are worth next to nothing.

Not by synergy.

Not by more choices for listeners.

Not by a better deal for advertisers.

So, based on that, let’s have more of the same.

The only person who would want more of this -- is the one who profits from the transactions. The broker. The investment bank. The deal maker. The principle of the acquiring company, and the federal regulators who will go work in their industry when they leave government "service".

While these folks are out lining their pockets, the Internet grows, society becomes more mobile and the next generation continues to abandon traditional media.

That’s why I say don’t fight Kevin Martin.

Let him have his way.

Radio is already dying and if he somehow thinks the best medicine is more of the same -- he's the doctor! Once Martin paves the way for consolidators to have an even bigger monopoly than they do now, then they will come to realize that more is actually less.

Unless…

Shareholders first figure out that more will make them less. Nah, they'll never do that.

I've got a wild idea. Call the whole deal off, get smaller and actually start acting like local broadcasters.

Remember them?

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Satellite Radio is Not the Enemy

The National Association of Broadcasters spent a whopping $4.3 million dollars -- more than five times as much as XM and Sirius according to Frank Saxe at Inside Radio -- to lobby against the proposed satellite merger of the two.

XM spent only $580,000 and Sirius $230,000 (and I'll bet Mel Karmazin choked on that).

Saxe points out that even the powerful Motion Picture Association had a budget of only $220,000 for its interests.

And these figures are only for the first six months of this year!

To be fair, some of the NAB's expenditures were on behalf of the fight against copyright royalties and pushing off any return of the Fairness doctrine.

I like what the NAB is doing to help Internet streamers these days. Keep in mind that the NAB does not represent the interests of this disorganized group of entrepreneurs, but the interests of terrestrial radio stations.

And fighting the CRB's unfair and burdensome royalty rates for streamers is definitely in the interest of terrestrial broadcasters who most certainly will always be vulnerable to a dying music industry's last gasp.

NAB needs to stop fighting satellite radio.

Radio people need to understand that satellite radio is not their enemy. They are the enemy for allowing the next generation to get away so easily. And for not redeploying its talented people to take a major stake in the online streaming and mobile future.

Radio execs just can't be rational about satellite radio.

The two satellite operators -- XM and Sirius together have only 15 million paid subscribers.

There are still lots of listeners who don't like to subscribe to that which they can get for free. Radio is competing with a business that has tied its own hands behind its back by eliminating commercials in music programming.

The world has changed since the first radio satellites were launched. The promise of satellite radio -- over 100 channels mostly without commercials -- is a non-starter with the next generation and it appears to have even plateaued with its base -- older listeners.

The Internet is the elephant in the media room.

Once unleashed -- with WiFi or WiMax -- and fair royalty deals, it promises to be the new radio that satellite had hoped to be. Smart satellite operators will become Internet companies, but that's not likely in my view because they seemed obsessed with being the next "terrestrial" radio.

Satellite won't sink radio's ship.

The threat of performance taxes on top of existing ASCAP and BMI fees will.

Time for NAB lobbying efforts to employ waste management.

Spend what could easily be $10 million for the full year on the real enemy -- record labels.
And fight for fair royalty rates for everyone -- terrestrial, satellite and Internet streamers -- because when one medium gets saddled with high rates eventually all will.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Did I Buy an iPhone or a Blackberry?

As many of you know I, like many of you, have obsessed over what kind of smart phone might enhance my business and personal life. About two months ago, I finally made a decision – this after almost a year of investigating Blackberry and dealing with rumors about the availability of an iPhone.

The entire process was agonizing and I thought I would share with you what I learned because I am convinced that mobile smart devices will be a major delivery system for content in the music-related media going forward.

I was concerned when my friend Bill Tanner, the brilliant program consultant, gave up his Blackberry (of six months) for an iPhone. Bill had a lot of coverage problems living in the Hollywood Hills, but the early-adopter in him couldn’t resist trying the iPhone.

It was cool enough, but a letdown as far as the email component of the iPhone. I had just about made my mind up that I would go for the iPhone until I heard from Bill.

Still, he didn’t get rid of his iPhone. He just couldn’t use it. So much for coolness, I thought.

Then, all those lunches and dinners I had with other Blackberry owners who found it important enough to whip out their phones and put them right next to their water glasses concerned me. I didn’t want to turn into one of them – an obsessive, compulsive user of email even while people are talking face-to-face. So much for the Blackberry, I thought.

I owned a Motorola V-series phone with no bells and whistles on it. All it did was fit into my car and allow me to talk on the phone hands-free through the stereo system. I rarely used it. And when I did, I left it in the car and had to hunt it down when I realized I was without my phone.

I fly between Phoenix and Los Angeles every week -- can’t use my Motorola on the plane, but if I had an iPhone, I could make it my iPod – two in one. Less to carry, I thought.

My calendar is on my Mac laptop. That has worked well for me. I use Entourage. I always have a to-do list, but I’ve never found a digital one that easily allows me to rank my tasks on the A-B-C system I have used all my life. Neither does Blackberry or iPhone so it’s a wash, I thought.

Then, there’s the issue of coverage area. I was a Verizon customer and while it was better than other cellular companies I had tried, I loathed their service.

But the mother of all issues was AT&T. AT&T’s Edge system is as slow as radio stations adopting an Internet strategy. The word Edge strikes fear into my heart. What if I buy an iPhone and it takes considerably longer to do the basic things I bought the phone for. I am not a patient man, I shamefully thought.

Blackberry has push technology. The iPhone does not. That settles it. It’s a Blackberry.

But the Blackberry’s keys seemed too small and it didn’t feel cool enough. Hey, why should that concern me. It should concern my students, right? I’m cool, I thought – after all these years.

It's an iPhone.

Then I went to the AT&T store to look at the iPhone but I was horrified to find out how badly they wanted to sell me a ...

Blackberry!

I thought that the AT&T people were supposed to be as cool as the kids who work in the Apple store. They’re not cool, I thought.

So I went to the Apple store and they knew nothing – and didn’t want to know anything – about how to get service on an iPhone. Just take it home and register online. My Hoboken background made me suspicious. We’re all suspicious up there.

I waffled back and forth between the two phones and then I decided to go with the iPhone. I went to AT&T because I have a vanity phone number from South Jersey that ends in four-sevens like my friend Rick Sklar’s phone number did (God rest his soul). Anyway, the AT&T staff told me they had to seal the bag with my new phone in it before I walked out of the store -- Apple policy directly from Steve Jobs. How cool, I thought. I have a sealed bag from Steve Jobs. Forget what’s in it.

I had trouble the moment I got the iPhone, but I had two weeks in which to take it back. (If you haven’t scrolled to the end, this is either gripping drama or you’ve got nothing else to do).

Maybe I'll trade the iPhone in for that Blackberry.

Believe it or not The Wall Street Journal technology guru Walt Mossberg was nice enough to walk me through the early stages. He gave me a great hint – after all, he got rid of a Palm Treo for an iPhone. I felt more confident now. Mossberg has an iPhone. Oh, what Walt told me was, if I had an Earthlink email account, use Earthlink’s outgoing server instead of the Cingular server AT&T provided. And thank God Walt gave me that advice because it was taking one to two minutes to send a single email on the iPhone. At that rate, I’d have no choice but to get the Blackberry.

Prior to getting the Earthlink outgoing service I took the iPhone to USC with me and had more problems. This phone is going back, I thought. All the while I’m hearing the voice of future past in Bill Tanner who is too smart a guy to ignore. Maybe Bill was right.

Finally, the last straw!

Steve Jobs cut the price of iPhones by $200 and offered a $100 credit at Apple stores. But, I only owned the iPhone for four days – I had two weeks for a full refund. I charged into the AT&T store ready to fight, but they asked for my credit card and gave me the $200 difference without a moment’s hesitation.

I’ve got a week and a half left at this point to test my decision and if all else fails, opt for the Blackberry. I wouldn’t even have to tell Tanner!

The iPhone is not a Blackberry so while I could do email, I didn’t become a rude, offensive, obsessive-compulsive “crackberry” addict. I didn’t put my iPhone next to the water glass at lunch or dinner. Mission accomplished, I thought. Then, I remembered who is famous for saying “mission accomplished” and I thought again.

Okay, iPhone's email was acceptable, but I realized that if I purchased a Blackberry I would have a hard time giving it up for the iPhone. The iPhone is not a Blackberry. It’s a cool device, but it's not a Blackberry.

I liked the iPod feature on the iPhone better than the iPod on my iPod. But I don’t get to listen to music as much as my students do and those expensive earphones my son got me didn’t work in the iPhone because the plug didn’t fit. The iPhone buds were horrible. No wonder iPod users have to turn them up to hear the music.

Maybe that's a case for the Blackberry. Not too late.

Hey, I started liking seeing my calendar and a rudimentary task list (not the kind I like on a legal pad) on the iPhone. I have a picture of my beautiful wife as my screen saver. Family pictures of my son and daughter on iPhoto. Syncing was seamless. Apple does software updates that made me feel that I would be on the cutting edge of the future and, of course, how cool could I be if I kept it?

Did I use the phone more? Not really.

Did I email more? Just a few more urgent ones while waiting at LAX.

I liked the Safari browser with that crisp, clear iPhone screen, but I still do my browsing at home on the laptop.

But if I kept this iPhone I felt that I would be keeping a part of the future.

Radio is dying. Satellite radio never really took off. HD radio? Don’t get me started. The next generation that I do know a little something about lives online and on-the-go with their mobile devices. When I passed my iPhone around the classrooms, all my students wanted one of them from mom or dad this holiday season.

A "crackberry" or a “cool” baby boomer intrigued by how primitive the iPhone really is but how representative of our mobile future.

Time’s up.

Take it back for a full refund or buy the Blackberry.

For all the above reasons, I am now the proud owner of an iPhone.

Very cool and very much the future.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Radio's Late Adopters

Did you ever think about how long it took the radio business to fully utilize the FM band?

Some AM radios had FM back in the day, but nobody listened. There was nothing to listen to.

That is until these events occurred: automakers started including FM as an option for new car buyers and then as standard equipment.

And content was created.

Oh yes, and there was the overload of commercials and clutter on the AM dial making FM worth a listen. Previously, you’d never find a top 40 station on the FM band – maybe classical (in stereo) or elevator music (we called it beautiful music when I worked for Phil Stout and Marlin Taylor at Jerry Lee’s WDVR – now WBEB – Philadelphia).

FM programming moved to AM when radios were mass manufactured and when there was a programming reason for listeners to own one.

FM had stereophonic sound, but improved fidelity alone was not enough to give traction to the band. Many industry people thought fidelity was the potential of FM but not so. Listeners wanted to listen to AM because it had top 40 stations and all the popular formats. I can recall program directors who would rather have programmed an AM than an FM station because all the listeners -- including young listeners -- were on the AM dial.

That didn’t stop me from doing it at WIFI (that’s right WiFi 92) in Philadelphia with the likes of Mike Anderson, Bill Figenshu, Joe Benson and others. Still, it wasn’t a straight top 40 sound – it was more like play-the-music and back sell the records.

All that changed and top 40 moved to FM with all the hype, screaming jocks, jingles and what not that AM listeners wanted to escape.

In a few short years, few listeners could tell the difference between formats previously heard on AM radio.

Then AM went out and got stereo because its brain trust thought listeners defected to FM for better fidelity. AM became the news/talk/sports band until...

Until FM stations started carrying these staples as well.

Lesson: it didn’t matter. No one listens to AM for stereo. Soon no one will listen to AM for anything unless it is broadcast in heaven. AM has old listeners and the ones who moved to FM are not exactly spring chickens, either.

Remember, it wasn't but a few years ago that Joel Hollander blew up WCBS-FM because he thought the format appealed to an older demographic. After all CBS-FM was making less profit every year. It couldn't have been due to incompetence, could it?

Today, in its first real ratings since the switch back, WCBS-FM went from the 20th listened to station in New York to the eighth. And old listeners? Dan Mason and his crew gently (and I mean gently) added some younger oldies (I'm speaking about the playlist, not the audience although by doing one he has accomplished the other).

You program to the audience you have, not the audience you want. The next generation is listening to Internet streams, downloading music, sharing music and walking around with portable listening devices that in past generations were called radios.

Some news stations have long ago moved their formats from AM to FM. And what's with all the heat Emmis took for moving WIBC, Indianapolis to FM after 69 years on AM. What else could they do? Program to no one. That would be the definition of HD radio, wouldn’t it.

And speaking of HD radio, proponents could argue that I’ve just made the case for HD being the next thing. First AM. Then FM. (Then XM – that’s for you Lee Abrams). And now HD. Right?

Wrong.

HD has none of the requirements for westward expansion. No programming needs because owners can barely program their terrestrial signals. Not technology: fidelity belongs in marriage not in radios. Most listeners don’t care. Widespread manufacturing of a device that would bring all this good stuff to listeners --- priceless. Unfortunately, it isn’t priceless. It costs consumers a lot to buy even the cheapest (and poorest sounding) HD radio.

HD was just a ploy for radio owners to create more channels they eventually did not want to pay to program.

CBS’ KYW-AM is now also available on one of WYSP-FM’s digital sub-channels. What’s that about? Arguably the greatest all-news radio station in a hell hole like WYSP’s sub-channel. Put it on FM for now and come up with a strategy to understand and take advantage of the future of Internet and mobile delivery.

Inside Radio reported consultant Walt Sabo as saying there are “very bad” stations on both bands. He would be correct. He adds, “if the station is good, it will do better on the FM band because about 80% of all radio listeners spend all of their time (there)”. (Sabo consults WXKW, Trenton, NJ that bills a reported $30 million through a 900,000 cume).

Soon the money demos will be spending their time on portable digital devices. Dismiss the next generation all you want -- at your own peril. They are growing each year into your next money demo and you don't have their attention.

And the radio industry has no plan – no understanding – and no desire to start learning what is real and what will be a waste of their money to win younger demos.

For example, 24/7 streaming is going to be a disappointment online because the next generation is used to clicking on and off and shuffling through their options. Broadcasters delude themselves by thinking that streaming their terrestrial signals online will be the future just because they are getting some listening online today.

This would be a mistake.

Terrestrial radio's brand listeners are finding them where they are listening – in the cubicle, working at home online – wherever. The next generation will not be so easy to win over to online streaming because you didn’t have them at hello. You never had them, really. Young people listen (in decreasing numbers), but they prefer just about everything else but radio.

Future listening will be online in shorter programs and on digital devices and from the way it looks today the radio industry is not going to go where tomorrow's listeners live.

It’s almost as if consolidation, age, ignorance and time has caught up with radio.

You can almost hear some of the most talented people in audio entertainment say,
“I just want to hold on for a few more years until I put my kids through college (or retire)”.

Pity. What a waste of talent.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.

Universal Thinks Consumers Are iDiots

Have you heard about Universal Music’s new Apple-killing idea to make consumers pay a monthly fee for free music (pay and free don’t go in the same sentence real well)?

According to Business Week: “…insiders say [Universal head Doug] Morris & Co. have an intriguing business model: get hardware makers or cell carriers to absorb the cost of a roughly $5-per-month subscription fee so consumers get a device with all-you-can-eat music that's essentially free. Music companies would collect the subscription fee, while hardware makers theoretically would move many more players”.

So let me get this right? The hardware makers or cell phone manufacturers bury the cost of what basically is a subscription service and all these young kids who have taken down the record labels run out and buy these un-cool devices – and presumably forsake their iPods.

(I can hear you saying, how can Jerry know that these devices will be un-cool, they haven’t even made them yet).

Let’s start with the proposed name of the service – Total Music.

That’s about as bad as Microsoft naming its iPod a Zune or more recently naming the Zune social network – Zune Social. C’mmon. All you have to do is have kids to know this is as un-cool as Barry Manilow.

Now don’t hyperventilate when you read this description of Total Music courtesy of my friend Vytas Safroncikas of Born Again Radio:

“With the Total Music service, Morris and his allies are trying to hit reset on how digital music is consumed. In essence, Morris & Co. are telling consumers that music is a utility to which they are entitled, like water or gas. Buy one of the Total Music devices, and you've got it all. Ironically, the plan takes (Steve) Jobs' basic strategy-- getting people to pay a few hundred bucks for a music player but a measly 99 cents for the music that gives it value--and pushes it to its extreme. After all, the Total Music subscriber pays only for the device--and never shells out a penny for the music. "You know that it's there, and it costs something," says one tech company executive who has seen Morris' presentation. "But you never write a check for it."

Total Music could then become a streaming radio station or allow individual songs to be downloaded like Yahoo Music.

This could be so good. The killer app! Giving Steve Jobs his comeuppance. A whole new beginning for record labels.

Then, I woke up.

Universal must be kidding.

Jobs gets the next generation (and their parents, baby boomers like him) to shell out substantial cash for his products because they are not designed to fool consumers into thinking it is one thing while they are paying for another.

Doesn’t anyone get it yet?

The iPod is a portable record player – okay, you forced me to use the words. Record player. Except, an iPod is even better. And you don’t always have to buy music for it.

While I am on the topic of buying music, the next generation never worries about this because they can find almost anything for free online. (Please re-read that last sentence).

When they buy from Apple’s iTunes store it is because it is convenient, seamless and they want to. But they don’t have to.

Universal alert: consumers don’t have to buy music to own it. Therefore, they don’t have to buy one of your “record players” disguised as a mild-mannered reproducer of music for which you really want them to pay.

As they would say in the British Parliament, “I refer you back to the right honorable gentleman from Hoboken, New Jersey” – that’s me!

Record labels don’t have to connive, mislead, threaten or bully their customers.

Just lower the price of legally downloaded music. As I have written before in this space – make a song the price of a text-message and you will do a land office business.

Still don’t believe me?

How would you like to add the cell phone carriers’ profit for something as simple as text messaging to your bottom line.

Back to the drawing board.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends
and for linking to my blog.

Radio and Records – What Went Wrong

I think it’s fair to say that most wide-eyed industry types know that the music industry and the radio business are in deep trouble. This happens to coincide with being in deep denial.

We may differ on the exact reasons, but it’s hard to argue that either radio or records is a growth business today.

The question is – what went wrong?

One thread that runs through both of these declining businesses is their executives inability to understand that a teenager or young adult today is not the teenager or young adult we know – or think we know. And certainly, young people today don’t resemble Baby Boomers.

It’s not helpful to use your children as a barometer for anything because we, as parents, have an influence on them – even if we sometimes think we don’t. They are, indeed, representative of their generation, but they live under our influence.

Let’s look further.

The record industry thinks that teenagers and young adults (the record buying core to their business) will buy CDs – will buy albums. That’s why they keep trying to sell these things to that generation. And, of course, they have it all wrong. And they’ve had it wrong from the beginning. CD sales are on a long, steady decline and the album has lost its magic.

Baby Boomers who run record companies are nothing like the Gen Yers who are confounding them. We think, as Boomers, that we understand revolution. We do when it comes to government and society, but this generation isn’t all about that. Visit a college campus and see how the Iraq war is not their war. They don’t seem to care.

But they do care about social interaction and the Internet.

To be connected is to Gen Y what protesting society’s evils was to Baby Boomers.

Look at the labels.

They think they can stop file-sharing, but file-sharing – illegal or not – is networking to the next generation and we already know that networking is everything to them. But labels see the issue as sheer piracy – which it is – and they can’t get past that and onto understanding a generation that can hack its way through the industry’s latest and greatest DRM protection.

The labels want to sell albums because the Baby Boomers who run the labels have both a romantic and financial tie to the album. We see it as a statement of art and music. Even the old vinyl album covers were in essence an art form. But the next generation isn’t as nostalgic or restricted. They see choice as more valuable – the ability to cherry pick the tracks – and listen to the ones they want when they want to listen.

Boomer record execs set prices. Gen Y likes free. Sometimes there is a compromise in between as Apple CEO Steve Jobs has discovered. That compromise is the 99-cent price point for a legally downloaded, digitally protected song. And what do record execs fight for? Variable pricing, a non-started with the Gen Y consumer they don’t really know.

Jobs is a Baby Boomer, but he is unlike his brethren who don’t understand that a teen and young adult today is not what we think they are. Jobs has their number. He knows what is important to them and he doesn’t judge his market by what he thinks a teen or young adult should be.

Radio executives have made similar mistakes misreading the next generation.

First, they didn’t even bother to program to Gen Y because they were too busy consolidating very valuable radio properties. Radio people assumed that teens would always listen to radio. They always had. But radio stations lost valuable years and when it occurred to some (and I mean some) that they missed their chance to be part of Gen Y’s entertainment regimen, radio’s future was already lost.

No one could foresee that the next generation wouldn’t be as they imagined. But that’s the problem – and now both the record business and radio industry have no future with this indispensable group of consumers.

All is not lost.

Music isn’t dead. The music business is dead.

Radio isn’t dead. Terrestrial radio is dead. Internet streaming and podcasting is alive.

The next generation didn’t kill radio and records. Radio and record execs assumed they knew the next generation of consumers and they were wrong.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends

and for linking to my blog.

Madonna at 60

In ten years when Madonna’s new $120 million deal with Live Nation expires, she will have overcome her dependency on toxic substances like the materials used to manufacturer CDs.

Of course, CDs themselves are not toxic, but they are fast becoming toxic to record labels that have been asking for the beating they are beginning to take.

No. Not at the hands of young music pirates.

By the artists they represent.

After 25 years with Warner Records, Madonna went for the sure thing or you can say she took the money and ran. She still has to deliver one more album for Warner. And Warner gets to keep her catalog, but what Warner wanted was what Live Nation could do better – promote her concerts and sell her image and merchandise.

Industry accounts reveal that Warner tried to get TicketMaster’s parent company to go in with them on a Madonna deal. Madonna’s representatives were negotiating with both sides.

She will be choosing to do a deal with the people who promote concerts and not the company that sold all her albums and CDs.

The Wall Street Journal reports Madonna will get a $17.5 million general advance and advance payments for three albums of between $50-60 million. Plus, $50 million in cash and stock for Live Nation’s right to promote her concert tours. Oh, and did I mention that as with most superstars, she gets to keep 90% of the gross when she tours and when Live Nation does licensing deals in Madonna’s image, they split the proceeds.

Not bad.

Warner was over its head because the music industry has passed it – and the other major labels – by.

It’s a risky deal for Live Nation even with Madonna on board. She is a major concert arena attraction and is one of a vanishing breed of music superstars, but…

She will be 60 when her Live Nation contract expires. It doesn’t mean she’ll die of old age. Mick Jagger didn’t (although he and Keith Richards look like it). But it is a risk nonetheless.

Live Nation isn’t a record label so Madonna could need a label to market her three studio albums.

Or…

She might not need a label.

A lot can happen between now and her first Live Nation album and we’re all watching the Radiohead experiment in the meantime. We’ve seen Prince stuff his new CD into a tabloid newspaper that his fans probably don’t even read and sell out his 21 U.K. concert dates.

The “album” – whatever that morphs into – could also become a loss leader for stars who are shifting their strategies faster than the record labels.

So what have we learned?

Is Madonna’s deal the end of the record labels?

Probably not.

But artists who are big enough are taking note. They don’t need a label anymore than consumers need to buy CDs from record companies.

Is Prince a marketing genius?

Probably not.

But he did sell out his concert dates and gave away a record label’s most precious asset – the CD – for free.

Is Radiohead setting the trend for big artists to offer real variable pricing for online downloads that include the option of paying nothing?

Probably not.

But at least it’s an idea. One more than most record labels come up with.

Are record labels dead?

Probably.

But not for five or ten more years. They currently don’t have the skill sets to seize new opportunities that are being created by this upside down digital music revolution. After all, labels manufacturers in designer jeans.

To get in on the new action record labels would have to become what they are probably not.

At 60 Madonna may outlast some or all of the big labels and laugh all the way to the bank.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends
and for linking to my blog.

Imus' Stock Is Higher Than Citadels

Looks like Don Imus is coming back in a few short weeks.

In August, Tom Taylor, who first broke the story in his excellent Taylor On Radio-Info, quoted Citadel CEO Farid Suleman on the possible return of Don Imus: “There will be a little publicity for a couple of days, but after that, all that will matter is if I made money for the shareholders.”

You wish.

Not the part about the bad publicity going away.

The part about making money for the shareholders.

Even when Clear Channel's Lowry Mays lowered the bar to "We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers products” the consolidators still failed.

CBS (owner of WFAN, Imus' former home) canned Don Imus for his offensive portrayal of the women's basketball team at Rutgers. Imus was deader than K-Fed's career.

Imus apologized. Even arch-enemy Al Sharpton is now open to his return. Sharpton said he has no problem with Imus getting another chance but that the reverend vows he's going to keep an ear on him. Talk about completing rehab!

I don't have a horse in this race. If someone wants to hire Don Imus -- fine. The market will vote and he will probably continue to rake in money for whatever station he is on.

But the National Association of Black Journalists is screaming "Say it ain't so, Farid" and they are fighting for him to break off negotiations with Imus.

The problem I have with Farid I also have with other smarties who spout off things that try to make you believe that their Holy Grail is building shareholder value for their investors.

Well, if that's true -- why don't they actually make some money for their investors instead of talk about it?

Take Citadel.

Its stock closed at $4.38 a share yesterday.

It was in the $10 range a year ago.

$14 two years ago.

$24 five years ago.

Has anyone noticed that the "shareholder value" Citadel and other consolidators wear as a badge of honor is going in the wrong direction?

Even Citadel's ABC acquisition couldn't run the stock price higher than the $10 range for very long.

Ironically, Imus' stock personally seems to be trending back up after just six months. But Citadel's stock -- well, as you can see, not so good. It almost can't get too much lower.

So, my friends, if what Imus said on the air made you sick, meet his potential employer, Farid Suleman, who will do the same if you buy his stock based on the promise of shareholder value.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends
and for linking to my blog.

A USC Student Consults a Troubled Radio Industry

Some of you tell me you like for me to share my experiences, insights, outrages and epiphanies that I gain from teaching the next generation at USC.

Interestingly, most of my students did their mid-term papers on the problems of the music industry or the potential of interactive media. One addresses the decline of the radio industry. My experience has been that the next generation takes very little glee in witnessing the beginning of the end for terrestrial radio. She is remarkably candid, however, about what can be done.

I thought you’d like to know what one student, Agatha Karmelita, said in addressing the radio industry. Let’s say she’s a consultant and the price is right.

1. It’s great that radio is free but the next generation wants to control what they hear. She quotes Mark Sovel, Music Director of Indie 103 in Los Angeles: “The popularity of the iPod is directly related to the crappiness of radio”.

2. She unearthed that God-awful Lowry Mays quote that “We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers products”. She adds that radio needs advertising to make money but if no one is listening, how does that help sell advertising? For music radio stations, she suggests that the future is being compromised by the record labels’ inability to produce hits and radio’s unwillingness to add variety beyond the same short playlists.

3. “When consolidation robbed the listeners of its music discovering device, radio lost its personality and its listeners lost interest. That’s when the Internet showed up to save the day, for listeners anyway. Contrary to what many may think, a radio personality is just as important to a radio station as the variety of music being played.” This is consistent with what other young people have told me that personalities knowledgeable in music are what stations should opt for – not daffy djs talking gobbledygook.

4. “Perhaps if radio stations became radio stations again, the situation would be different. Radio stations should be individually-owned by members of the respective community in which the station is located as a station is such a local and personal part of the community. Frank Bell, Vice President Programming for Keymarket Communications states, 'One of the first lessons I learned in radio is be local, be loved. That’s the best way to reach an audience'.” She wants stations to make listeners feel like they are part of a big plan.

Her conclusion is realistic yet pragmatic:

“Yes digital music will eventually kill terrestrial radio, but right now technology is nowhere near good enough to completely rule out the use of terrestrial radio. Station owners should make the most of the time they have left. Surely radio stations aren’t going to start suing their listeners so why not let radio fade away on a good note. All I am really trying to say is: we want the airwaves back, while we can still get them”.

Agree or disagree you see one member of the next generation lament the self-destruction radio has brought to itself – my opinion. That’s why we need to follow the successful implementation of leaders like CBS President Dan Mason who is methodically facing the music and trying to rebuild the trust with its listeners (CBS-FM and the other CBS radio turnarounds).

For those of you who think I, as their professor, overly influenced this student and others to think as I do, you obviously have not spent a lot of time around the next generation –- other than the children you influence in your family.

However, I am proud that I have accomplished one thing – that they can speak up so eloquently.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends
and for linking to my blog.

The HD Radio Lunatic Fringe

In the formative days of radio, preachers used to tell their flocks to put their hands on the radio before they asked them to put their hands in their wallets for donations.

In radio, nothing changes.

Now the forces that bring you “yesterday’s technology today” – HD Radio – are doing the same thing.

The new HD evangelists – who preach hell, fire and brimstone about the necessity of switching terrestrial radio stations from analog to digital are now apparently targeting the religious broadcasters who might be able to multicast to many audiences using HD’s ability to form subchannels.

The presumption here is that the religious leaders can get their flocks to buy HD radios. (As one of my readers said, “why do you think they call them flocks?”)

One operator quoted on Ibiquity's website as recently as yesterday says:

"HD multicasting is a pretty good deal because we can put up a second channel that a lot of our listeners have wanted, but we just couldn't justify until now because of the expense," comments Clair Miller, Vice President and General Manager of WFCJ 93.7 FM, a nonprofit station owned and operated by Miami Valley Christian Broadcasting Association in Dayton, Ohio.

There’s only one problem.

Okay, there are lots of problems, but here’s a big one.

Your listeners don’t have and probably won’t buy HD capable radios. Anyway, while they are shelling out the money for new radios, it’s presumably coming out of your donations.

I suspect radio’s eyes have always been bigger than its stomach.

One can only imagine how operators slobbered over the thought of splitting digital signals into several channels. In effect, something for nothing. But they eventually wound up snookering consumers into getting nothing for something.

What comes first the HD radio or the programming.

While the major radio operators are disco dancing their way through conference calls on Wall Street …

While they are blinded by the light coming through their rose colored glasses that things are actually getting better…

The HD lunatic fringe is out there trying to sell HD radio like a bottle of Doctor Good at Brother Love’s Traveling Salvation Show (apologies to Cher and Neil Diamond).

This isn’t funny any more.

The radio industry, deeply in denial, is deeply in trouble.

The proponents of HD radio have more of a chance of selling HD technology to a dying radio business than religious radio stations have of trying to get their listeners to buy HD radios.

No one buys HD radios – not even to gain admittance to heaven.

We hear about the lunatic fringe in politics – the religious right or the folks from MoveOn.org.

You don’t have to go that far to get political. Just look at the time, money and effort wasted to solve a radio problem that doesn’t need solving.

By next year at this time the radio industry will not only have lost the next generation (it started doing that ten years ago), but missed an opportunity to super serve the only listeners who are available – ethnic, Gen X and baby boomers.

So, it’s high time that radio got religion.

Put your hands on my blog, on your laptop or Blackberry and feel the presence of the Grim Reaper.

If you continue to sin (worship Wall Street instead of Main Street) and continue to worship false gods (HD radio proponents), you will lose your faithful (listeners) to Job – I mean – Jobs, Steve Jobs. Adam and Eve couldn’t resist an apple and neither will your listeners of future generations.

There is now an 11th Commandment – Thou Shalt Not Confuse HD Radio with Programming Content.

Programming content is radio’s only hope of gaining access to People Meter heaven.

HD audio and sub-channels alone are radio’s damnation.

One more thing.

Although radio may not get it yet, take comfort in the fact that consumers do. You don’t see them buying HD radios.

Do the math and then give your program directors a raise.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends

and for linking to my blog.

RIAA Loses First Copyright Trial

Yesterday, a jury convicted a Minneapolis woman, Jammie Thomas, of downloading music illegally and awarded the record labels $220,000 -- $9,250 for each of 24 songs of which the companies sought damages.

Still, the RIAA and the labels lost.

Hope they enjoy the money – if they collect it. The cost of “winning” these highly publicized trials is excessive in terms of finances and as far as bad PR, you can’t scare RIAA with bad PR – they actually think suing clients, settling out of court or winning at trial, will actually stop music piracy.

Still, the RIAA and the labels lost.

Piracy is at an all time high. You can buy music from Russia for pennies on the dollar. DRM-free music is beginning to catch on with musicians with nothing to lose. Big acts like Radiohead are in essence giving their music away for a tip jar – an honor system, if you will. Fans love the possibilities if not the reality of Radiohead's project. But never mind. The RIAA won its first court case.

Still, the RIAA and the labels lost.

The Minneapolis debacle reminds us all about the great American jury system that lawyers seem to love. You know, the one that let O.J. off the first time and the same system that couldn’t decide if a serial handgun abuser like Phil Spector actually killed his girlfriend. In America, winning a trial by jury means nothing – and the same can be said for losing. It’s the American way of keeping college law schools in business. Therefore, the RIAA should have the upper hand in scaring young music pirates to death. They have plenty of lawyers so bring the pirates on!

Still, the RIAA and the labels lost.

A Sony executive testifying at the trial admitted that the four-year RIAA holy war against its youthful customers is costing the music industry millions of dollars and is losing money for the labels – something they are getting very good at, by the way. If you like trials – and apparently lots of people do – you got to hear Sony BMG’s head of litigation, Jennifer Pariser, admit in sworn testimony that the labels have no idea of the actual damages it suffers from file-sharing. The RIAA had sued an estimated 20,000 people – some actually living, some innocent – and settled with most of them for between $3-4,000. They take the rest to court.

So, let’s see what the RIAA and labels have accomplished with their anti-piracy war:

1. They’re losing money hand-over-fist by their own admission and piracy is increasing exponentially.

2. Downloaders are proving they are not afraid of the big bad wolf and illegal downloading is not likely to subside even after the Minnesota “victory”. I guess it’s a draw – the labels win, and illegal downloading increases. Nice job.

3. The labels continue to see drastic drops in CD sales without corresponding increases in legal digital sales while they are suing their customers.

4. Apple is eating their lunch while the labels are picking on victims smaller than they are. Steve Jobs is unstoppable right now and even the bullies at the record labels are afraid of him. But there’s always radio to pick on.

5. Radio is now alienated at the labels for trying to extort performance taxes from them – the very stations that used promote all their records for free. A court victory like the one in Minneapolis should raise the labels' hubris level even higher for the next battle: music industry v. radio. Go ahead, how lucky do you feel?

So, enjoy your $220,000 if you ever collect. A label exec told me recently legal fees are nothing for a label.

So, how about a toast?

To your victory in Minneapolis and to your outstanding management and legal strategy that brilliantly enabled you to win the battle and lose the war.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.