Free Is The New Cash Flow

There is a great cover story in Wired magazine called Free! Why $0.00 Is the Future of Business. In short it serves up a reality check that in this world of the Internet, many businesses are not going to adequately support themselves from traditional revenue models. They will have to find ancillary ways to make money.

Sound familiar?

If you're in the records or radio business right now, you are no doubt consumed with trying to hang on to what you've got. Record labels want to prop up the CD even though increasingly its customers want digital music. But the online digital model pales by comparison. Radio stations want to invent some new format that is going to reclaim the next generation which was lost during consolidation. But the next generation doesn't want to listen to radio.

If it all seems like a losing battle, that's because it is.

What this inspires us to think about is how to make money in an era of free.

It got me to thinking that if I still owned Inside Radio today, how long could I expect to get $500 for a subscription if the same news was available for free on the Internet. Believe me, the folks running Inside Radio now do a great job dealing with these issues, but what would I have done if Clear Channel didn't send me on a four year teaching sabbatical?

What if I could no longer depend on advertising for revenue? What if all those neat jobs we published in the employment section dried up and appeared free online?

I'd have to invent some new ways to make money -- at least if you buy the premise of the Wired article. Maybe three conventions a year to make up for some of the shortfall. Maybe you become a broker for services and take a percentage of the business -- a middleman, if you will. Hell, if dealmakers get millions for just introducing a seller and a buyer (which in and of itself is absurd), then why not?

Applied to radio, imagine a station that has to rely less and less on spot revenue (don't hurt yourself imagining this now). How do you make up the difference? Well, radio wisdom says look to the Internet.

Oops.

So much for radio wisdom.

The Internet is the biggest free ride out there. It's no place to look for easy money unless you're in the porn business -- but let's not go there.

Radio stations automatically think that eventually they'll have to get in on the Google ad revolution. But within the past week, we've seen reports that Google's advertising is down and Google is sounding like radio now blaming the -- you guessed it -- recession.

I've said all along that Google is just another word for spot radio. Ineffective in the long run even with sophisticated search technology. Word of mouth is the best sales tool -- why do you think everyone has become obsessed with viral marketing? So, if Google is just the latest love interest of advertisers and agencies, can radio look to the Internet to substitute on-air spot advertising for an online presence. I say do it at your own peril.

Some folks are looking forward to Internet radio once a royalty deal is in place, is fair and equitable and provides some stability. But Internet radio is about democracy. Everyone can have a "radio' station not just the Mays boys. Don't think for one minute that on-air commercials will make Internet radio any better off than terrestrial radio. These Internet pioneers know that they will have to come up with new, innovative ways to make a profit.

If free is the new cash flow, radio stations would have to start relying on skills most of them don't have. They would have to get in the exposition business and all that entails. And, the solutions business -- my God, what a scary thought. Using the free airwaves to jockey for a piece of revenue that never winds up on the air.

Welcome to the business of the Internet.

When I discussed this with my USC classes last week, one of my students said, "professors should work for free". He'll be failing the course. I replied, "we already are". He and most everyone else had a look of glee in their eyes. I said, "alright now, how can professors work for free?" and I got suggestions like the school should publish your books and you keep all the profit. Corporations should sponsor various classes and courses and then students wouldn't have to pay. Free. Free. Free. That's all they care about.

Odd, isn't it?

Because they buy expensive laptops and iPods and college educations (sometimes with the help of mom and dad). They're not all rich but they seem to be able to spend on the things they like.

Like grossly overpriced live concerts.

Cell phones, ring tones and monthly text messaging plans

They've found a way around the Sheriff of Nottingham (aka the record labels) by playing Robin Hood and robbing the rich to help the poor -- themselves. They steal music at a record pace.

But many seem to pay for trips to Cancun at spring break.

The point: this generation expects free. Even the poor. Even the well-off. Free is the new everything.

So when we get caught up in arguments about saving radio or fixing the record labels or helping network television find relevancy again, keep that in mind. Like...

... If the iPod has a radio built in, radio would still be a dying business. That's when free doesn't matter. When the customer doesn't want it.

... If the labels could convince ISPs to charge its customers $5 a month to have access to all music ever made, they'd want it for free -- if they wanted it at all.

... If network television could get their viewers to subscribe to a $5 a month service where they get all shows past and present, this generation would hack into the system and get it for -- now you're getting it -- free. Then, the networks would probably come up with a stupid work-around like giving the TV shows away for free only after they play a short commercial they're getting paid to run. And the next generation would probably click on their email while that short commercial ran. What am I saying? This happens now!

Steve Jobs makes chump change on his iTunes music store even though it is now second only to Wal-Mart for selling music. That's because his ancillary way of making money is to sell new iPods to consumers every two years, iPhones that need new batteries changed only at Apple stores every two years, and new Mac computers every few years.

Sounds like a great business to me.

So, if the record labels lose money on music -- that's fine. They need to become the concert company Live Nation. They need to own a piece of the merchandising, touring. And they're doing that -- which is good. They call it 360 deals. But they don't have the skill sets to do it. That's bad. Another issue for another time.

If radio stations can't be a growth industry on spot radio, I wouldn't turn business away but I would look elsewhere for new free cash flow -- say, podcasting. Every local radio station produces a thousand podcasts a week tied into some local marketing link. See what I mean? Use your core content and marketing skills to make money in an ancillary way.

Now, back to professors for a minute.

I don't like this not getting paid idea. I've created a monster.

Maybe I should start a blog, sponsor some executive teaching conferences and consult media companies that want to truly be enlightened on generational marketing.

Oh, I get it, then I can teach for free.

Like it or not, we're looking in the wrong places for our solutions. The Internet has opened up our monopolies and has stolen our protected, traditional delivery systems.

Now we must all innovate in search of ancillary ways to generate cash flow.

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Radio Losing The Dashboard

Have you heard about what Ford Motor Company and Microsoft are partnering to do?

They’ve come up with a new factory installed fully-integrated, voice activated in-car communications and entertainment system for mobile phones and digital players. It’s called SYNC.

Users can access their mobile phones or digital music player including access to genres, album, artist, title, song all by voice commands. (SYNC is fluent in English, Spanish or French).

Names and phone numbers in mobile address books are wirelessly and automatically transferred to your car.

SYNC works with iPod, Zune (of course – it’s Microsoft), Play for Sure players and USB storage devices. The system can be updated for whatever becomes the rage next because all it requires is a software adjustment.

It’s hands-free thanks to Bluetooth. Contains a USB port for command and control and for charging digital music players. There’s audible text messaging from you mobile phone. Your contact list. Advanced calling features. It gets better and better.

While cars will still have radios and, increasingly, satellite radios, the traditional radio could become a relic of generations past.

I try to pass along trends that I see developing with my students at USC and I can assure you that nearly 100% of my students would like to drive a car with these features. You know they are not great radio fans. Many go through a laborious routine just to make their iPods work through their car radio. The SYNC system and future devices made in its image would be seamless.

Since radio is an automobile with four wheels, the radio may soon be headed for the junkyard with the next generation. If satellite radio is the upgrade older car owners want to have (and pay for), the SYNC system could be the option that Gen Y falls in love with (without a subscription)

This begs the question, how does radio sustain the latest attack – if this expected competition develops.

Buy Ford and throw out every device but a radio? Buy Microsoft and put the Vista software on a screen – that will drive just about anyone nuts enough to wish for an old fashioned radio. No, this won’t do.

But auto manufacturers are also looking to install hard drives in their cars so drivers can download their own CDs, digital tunes or whatever and that entertainment remains in the car.

Even exotic cars are adding distractions from radio. The new Maserati GranTurismo doesn’t have satellite radio. It doesn’t have Bluetooth. But it does have a hard drive for drivers to transfer their own content from CDs – those wild and crazy Italians!

I’m bringing the new radio distraction issue to your attention not so we can get into a defensive mode (“radio is still better") or an attack mode (“radio is dead anyway”) but to point out – well, new opportunities.

An automobile is fast becoming a hands-free, digital, connected entertainment center with four wheels.

The radio industry, still best equipped to produce content, must see this opportunity as a chance to adapt to the marriage of new technology and changing sociology.

Radio companies can continue to run transmitters and towers, but now they must become content providers for new media – even entertainment systems in tomorrow’s cars. If not, radio becomes a relic tied to the day when the only entertainment in the car was -- a radio.

In fact, the latest trend is just the tip of the iceberg. You’ve seen me write about the opportunities in Internet radio, mobile content and podcasting. If I am a radio company right now and I want to turn things around, I’d consider this plan:

1. Bring proven, top-notch programmers back to produce the best radio you can using the formatics that get ratings and the talent that still resonates with the available radio audience. Cut the commercial load to eight units – ten in morning drive. Let the client buy up to 60 seconds of commercial time or as little as ten – but the station still only carries eight to ten units. Price accordingly. Raise the rates. My programming friends will attest to the fact that this can be done easily and listeners will like it. Ratings will go up.

2. Re-value radio. Radio has been devalued for decades by owners and managers without the courage to cut the spotload and raise the rates. Now, it’s time. And while you’re at it, lose the Google commodity deals for selling radio and double your sales staff. Increase commissions. Don’t take away earned accounts. Billing will go up.

3. Take action to build a plan to produce content for auto entertainment centers, Internet streams, mobile phones and podcasts. This is a big deal. It requires an investment in time and money. It requires an education that even the boss must be willing to get. Corporate can develop content, but local stations and their talented people can also develop content based on localities, the expertise and interests of the local programming staff and technology and marketing opportunities. You will create a new income stream.

Many of you ask is the future for radio hopeless? Is there anything positive?

It’s really time to stop with the excuses. Stop hanging on to the horse-drawn carriage when the consumer wants an auto. Step into the future.

I can promise you that even more distractions for commercial radio are coming. Radio is losing the battle for the dashboard, but it doesn't have to mean the end of the road.

In one of my courses I teach generational entertainment – that is, how to understand your target market(s) the way Apple's Steve Jobs does by instinct. In the future the entertainment business cannot get by with research studies, gut instincts, new age technology deals unless and until it understands what each generation wants and needs.

Start your engines and ignite your ability to become masters of generational marketing).

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What If Radio Taxes the Music Industry?

Next week I am appearing on a panel in Santa Monica (The Copyright Office Comes to California) devoted to repealing the performance tax exemption from radio. The NAB will have Suzanne Head, a representative, on the panel. I guarantee you we'll both be in agreement that any attempt to tax radio for helping the music industry make money for free is wrongheaded.

But, as we say in New Jersey, "who don't know that?"

You know why the labels are desperate to raise money. They are losing control. Their arch enemy, Apple CEO Steve Jobs, has trumped them again. Apple's online iTunes music store is now the number-two music retailer in the U.S. behind Wal-Mart by unit volume according to NPD Group.

CD sales continue to tank. Online sales still cannot make up the difference. It makes sense to them to turn to their old friend -- the radio industry -- and make up the difference.

Their argument is that radio gets free music from the labels (in spite of the ASCAP, BMI fees stations have always paid). Interesting that the labels didn't move to repeal the radio tax exemption until recently. Before that I guess radio was not getting a free ride or perhaps the labels were not as desperate.

Unable to make their businesses grow and left to their own devices, the labels have to look elsewhere. This week the NAB and RIAA have rival forces descending on the Capitol to lobby lawmakers to see it their way.

But I've been thinking.

We're looking at the issue of lifting the radio tax exemption the wrong way.

Radio should be considering taxing the music industry for playing their music.

I know the labels say radio can't live without the record business, but as Inside Radio reported recently:

(Nashville) Mayor Karl Dean has inadvertently given radio some ammunition in its fight against the move to end radio's royalty exemption by proclaiming next week "Country Radio Week" in Music City. The proclamation says "Country radio is the primary medium for exposure of country music, an endeavor that employs many Nashvillians as artists, writers and producers."

So let's fight fire with fire. Here's the plan to tax the record business for radio airplay.

1. If your music gets any airplay at all on a radio station, a charge is to be levied for taking up valuable time from, let's say, Rush Limbaugh, news or any other type of programming.

2. If your music gets played on any station, radio gets a percentage of the sales from that station's city of license market area and a blanket percentage (perhaps one or two points) for online purchases.

3. If your music makes any station's top ten, make it four points of profit.

4. If radio stations are forced to play a stiff or do a favor for a local promotion person who needs your help saving their job -- you pay the low, low price of only 5% of the sales of your highest ranked record on my playlist.

5. If you need my station to help break a new artist, an automatic "finders fee" of ten percent of the national gross sales will be distributed to every station playing the record. Hey, we never considered the risk factor to us until you made us think about it with your move to repeal our performance tax exemption. Thank you, labels.

6. If any of my employees take payola, you owe us nothing because making the acknowledgement that radio is so important that you have to bribe me to play your music is -- priceless.

7. If the artist my station played goes on tour, add an extra 5 points of profit to the nations stations that made the group popular enough to fill all these venues. You can forget giving me the usual free tickets, backstage pass, introducing me to groupies in lingerie or CDs to give away on the air.

8. If station airplay led to your artist winning a Grammy, I get an extra 1 point just for the hell of it. After all, try doing that without radio airplay.

So you see, we're looking at this thing too defensively. We have the NAB fighting the good fight but playing defense.

Maybe it's time to go on the offensive and let the labels that have enjoyed free exposure and lots of repetition to sell their products feel our pain.

The record labels are telling the radio industry the free ride is over.

I'm telling the record industry to be careful what you wish for because your royalty tax exemption could be radio's new Disloyalty Tax.

Before the cock crows twice, one of you will betray us -- and radio should devise some ways to rise from the dead and fairly tax the music industry that is truly benefiting from free radio airplay.

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New Rules For Radio PDs

An ex-program director is like an ex-Marine.

There are no such things.

Like the Marine, once a PD always a PD. We have worked in the trenches. We performed well before consolidation and we know what is working about today's radio content.

I'm one. Many of my friends are one -- some still have jobs in radio. There is a reason why three people make or break the management of a radio station -- the general manager, sales manager and program director.

During the Dark Ages -- 1996-present AD (After Deregulation) managers holding these critical positions were lured, then forced, then threatened with taking on responsibility for more stations than they could handle. Of course this was done to save money. Why? Because the consolidators who led the smaller more independent owners set the pace for Wall Street.

Profits.

Quarterly reports promising more profits.

And year end results promising even more ... well, you get it.

In the process one critical position -- that of the program director was bastardized. So, I'd like to offer my thoughts on an easy-to-implement way to restore the power of the PD to help build audiences and create ratings so that their employers can go brag about them to investors.

Here are my New Rules For Radio PDs (addressed to consolidators or other serial abusers):

1. One PD per station. It used to be that a successful program director lived, breathed and experienced his or her one radio station 24 hours a day 7 days a week. This was an acknowledgment that the program director of a successful radio station is a specialist not a generalist. Consolidators anxious to get the most bang for the buck have spread otherwise qualified PDs beyond their core competency. If you want great radio stations that can program to the available market (which does not include the next generation), then suck it up and pay for one quarterback per station. Stop with the shortcuts and you'll see a better return on your investment. And don't tell me about the handful of PDs who are programming more than one station for you -- imagine what they could do with one?

2. No airshift. (Does anyone know CPR for our consolidator friends?). The PD is responsible for talent, commercials, promotions, music or content, audience and community relations. Need I go on. If yours is a small market, an exception is allowed. Bigger markets -- no exceptions. You don't need your brain surgeons cleaning up the operating room at the end of the day. I know you don't like this one but look at the results you are not getting by repurposing your PD. If you accept the suggestions so far, read on.

3. Outline goals and expectations on one page. How do you expect your content quarterback to do that which you ask him or her to do if you don't articulate your goals and expectations on a piece of paper? I know. I know. Legal told you not to so when you fire an otherwise good PD who has achieved their goals you won't have to lose the ensuing lawsuit. But really, put the items on a list. Make the program director sign off. Then, proceed to step four.

4. Give full authority to the PD to do his/her job. No meddling. No backseat programming. Leave your PD to either do what they promise or risk being replaced at the end of the year. Oh, no changing the rules in mid-stream. No using "corporate is making us cutback" as an excuse to stay involved. Warren Buffett, the billionaire who knows a little bit more than the Mays family about making money gives the people who run the companies he acquires full autonomy to do their jobs. Unlike the geniuses in radio, the Oracle from Omaha butts out. In fact, legend has it he only meets in person once a year for about two hours for an accounting of goals.

5. Fully fund the programming budget. Too many PDs have no real budget or the budget they have looks like Swiss cheese. If you suspect that corporate is going to ask for further givebacks during the year, under budget programming by the percentage of cutback you anticipate. You can't expect a PD to do their job without knowing how much money they have to spend. In fact, put the amount on the goal sheet(#3 above) and make him or her sign off on it. Channel your inner Warren Buffett.

There's more, but that's a starter list.

Now, I know some of you consolidators are going to say I'm nuts and unrealistic to propose these five first steps to unscrewing-up your station's programming, but I'm not really. A little crazy after all these years but not nuts.

You're the ones with devalued penny stocks. You're the ones who have lost audience, advertisers and the next generation.

Call me a Pollyanna, but this plan has been proven to work. Your plan has been failing for the past 12 years.

More of the same or time for a change?

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The Mourning Radio Show

Lost in all the cutbacks, firings and cost adjustments that consolidators have been making the last few months is the demise of the morning radio show.

The morning slot is responsible for up to 50% of a radio station's total revenue yet that apparently means nothing to consolidators desperate to make their latest poor quarter look a little better.

Clear Channel is the leader in dismantling morning shows but CBS is not far behind. They are the biggest, but they're not alone. Other operators are no better -- the morning show is no longer sacred.

We've seen morning teams divided in half -- one half left to create all the magic.

Able and consistent personalities let go because -- well, they make too much money. No, they don't make too much money. They don't make enough as the consolidators will find out when they shoot themselves in the foot one more time.

But this time, there will be no hiding. Radio has been neutered during the course of consolidation to please Wall Street money people -- you know, the bottom line. These operators are either insane or have a death wish for their stations by cutting into the morning shows that bring them the lion's share of billing.

Radio is becoming a commodity not a profit center because the execs making the decisions are making decisions that cut profitability -- as their stockholders have discovered. In the alternative, why not just become a commodity?

What's fascinating about this latest move is that it is a real indicator of how clueless radio executives have become.

You don't grow a business by cutting back. Look at any growth business. Cutbacks just make losses look better.

You don't fire your quarterback because you can pay a cheaper one to do the same thing. Any team that has ever tried it, got what was to be expected -- nothing.

Radio is in need of morning shows and personalities -- something to distinguish them from iPods or jukeboxes. Recently when I wrote that my USC students suggested more personalities in all dayparts to win them back, some readers shot that down with comments about how personalities like Rick Dees in LA have a one-share. So much for personalities, they intimated.

But radio has some excellent personalities still on the air and, increasingly, some of whom who are unemployed. What it doesn't have is owners who are of the same caliber. Promotion is anemic. TV advertising non-existent. Promotional money -- sparse if it exists at all. Producers and content providers a vanishing breed. When guys like Bill Gardner are out of work -- due to his firing by CBS at KOOL-FM in Phoenix -- something is seriously wrong. The man does a clean family show, is consistently entertaining and oh yes, gets ratings.

Gardner is not alone. Unfortunately there are too many talented radio people under or unemployed who could add some personality back to radio.

But never mind, who needs ratings? We need cutbacks, right? Short-term diversions to cover up inept leadership by all consolidators and by many smaller operators who are tantamount to lemmings.

Radio should be developing personalities not dismissing them. Hell, there isn't even a minor league for big market personalities any more.

The next generation, by the way, has it right if the sentiment expressed by my students is representative of the greater demographic. Listen to them. You need personalities in the morning, midday, afternoons, evening and all-night. Yes, all-night. Radio was once famous for all-night personalities. Need I name them all?

And since the industry is hell bent to get rid of the proven ones, don't get the idea that cranking out controversial "morning zoos", Howard Stern imitations or Don Imus clones is what I'm talking about.

That train has left the station.

Most young people don't know who Imus is and would never think his nappy headed ho comment was funny. They already know talking about breasts and sex on the air is very 70's -- remember how the FCC looked the other way while Stern titillated the audience. No more. Stern is radio's version of "pay per view" and Imus is an accident waiting to happen again.

And being famous doesn't impress them. Entertainment does. Being an authority on something or being funny or being real -- things we in radio have either forgotten or have lost sight of while we're cutting off our ratings and profit lifeline.

It appears the radio big boys -- who with every misguided new move are dismantling what used to be a pretty good business -- have decided their necks are more important than the industry's well being.

There is no excuse for such a tactical mistake.

In its glory days radio stations knew that without a morning show, they were a mid-chart also-ran.

As the consolidators will find out, today is no different.

The once mighty morning show is dying and radio's available listeners will mourn its demise and a generation that never got to hear talent developed for its tastes will be cheated.

No wonder they think radio sucks.

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Ad Blocking

It doesn't take long to figure out that the next generation doesn't like advertising.

Its curious because their world -- the Internet -- is cluttered with ads, search results, links, videos, pop-ups and the like from companies desperate to get through to them.

TV isn't getting the job done.

Radio? Forget about it. Any medium that thinks six commercials in a cluster will be heard is mistaken. It is a miracle that radio got away with it so long.

The Clear Channel of their world is Google -- the search giant you can't ignore. Google seems to be on a mission to be everywhere with its search-based advertising and in a lot of ways search advertising is really new age spot radio.

The same fate awaits it.

Gen Y doesn't use Google to see advertising. They use it to find the information they want. However, just as radio has convinced advertisers that spot radio is worth buying, Google has the world convinced that search is the way to target exactly the customer advertisers are seeking.

It's not.

Now, things just got worse for Internet advertisers.

There's a new, easy-to-install program called Adblock Plus that could become what the modern day "clicker" is to TV and the seek buttons are to drivers looking to change radio stations seamlessly.

Here's how it is described in Forbes:

"Adblock Plus takes a minute to install and instantly replaces annoying banner ads and intrusive videos with pleasant white space. It is one of the most popular free downloads for Firefox, the rival browser to Microsoft's Internet Explorer. Firefox is used by one out of six Web surfers worldwide. Three million people are already using Adblock Plus, and every three months another million join them".

Microsoft may want to consider this before trying to buy Yahoo, the down-on-its-luck search giant that is second to Google. Adblock Plus will likely continue to grow exponentially and before long even the illusion that Internet ads work will be -- well, an illusion.

Don't blame the next generation.

They are no different than their fathers and mothers. We hate advertising 364 days a year -- Super Bowl Sunday being the exception.

But this generation tires of things quickly. They have more control over their media than any previous generation. What other generation could steal music? It couldn't be done from a record store unless you wanted to risk arrest. It's possible today because the Internet allows users to control the delivery system.

What previous generation could have custom "radio stations" in their pockets? This generation can program their iPods without daffy djs and commercials.

Radio is starting to fear the big bad wolf of media -- the Internet. The radio industry is panicked as it watches traditional ad dollars cross over to the dark side of cyberspace. The TV business would actually like to control the delivery system for its programs again -- a throwback to the days when it owned key affiliates and paid obscene compensation dollars to TV outlets to carry network programs. TV networks force viewers to watch pre-roll commercials -- or as Gen Y calls it one last chance to check your email before the show starts.

I know Google stock still sells for $500 a share -- radio should be so lucky.

But they are both on the road to nowhere.

The best ad investment is one that delivers results. Results come after a message is received. Banner ads, search results and even spot radio do nothing for advertisers.

What does is relationship selling -- the kind that might (I said might) evolve from social networking sites that are cropping up all over the place. People telling other people what they like and what they buy -- the next logical extension of product ratings. Facebook is trying to delicately get into social network selling.

Google's mindset is to treat advertising as a commodity. Radio loved that idea because they fantasized about how they could cut their sales staffs, reduce pay and benefits and let Google do all the work.

Funny about that.

Google has failed so far to help radio undo whatever relationships it worked long and hard to establish with advertisers and agencies. Back to the drawing board?

I'm not Google. My stock is not worth $500. But if I were radio and television right now, I'd let Google knock themselves out trying to become the replacement for spot radio.

The future is in relationship selling.

That is when the medium has a personal relationship with the advertiser.

And the medium has a personal one-on-one relationship with the listener or viewer.

Audiences don't hate commercials. They hate the advertising with which many companies choose to bombard them. But one day a year -- everyone loves commercials.

And it's not just about making commercials better. It's about making them different. Redefining what a commercial is.

The bad news is radio is no better than the Internet advertising monster it fears.

The good news is that the Internet advertising monster it fears is no better than radio.

Radio has had de facto ad blocking for decades. It's called changing the station.

Now the Internet has what could become an unstoppable menace -- ad blocking which might prompt radio executives to say welcome to our world.

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Saving Radio

One of my readers asked if I had any ideas on how the radio industry could redirect its efforts in light of all its mounting problems.

He said, “It is one thing to pick apart the problems and the challenges. It is another to identify the solutions. If you could do anything you wanted to a radio station – or group – what would you do? What would your strategy be?”

Great question and timely beyond belief.

Just yesterday we learned that January’s radio billing was down over 6% from the previous year and Wall Street analysts are now re-computing radio’s expected performance for the year ahead. The latest thinking is that annual revenues will be off slightly, but that could change. It could get worse.

We know that radio is losing advertisers to the Internet and young listeners to digital devices, online and mobile phones. Arbitron's latest "American Radio Listening Trends" report which includes Fall 2007 data, shows a 3% decline in U.S. per capita radio listening over the past year - off 16% over the last nine years.

Radio may still have many decent years left but it is fast becoming a mere shadow of its former self. It is no longer a growth business by anyone's standard including Wall Street.

So the question is what can be done to save radio.

1. Start by seeing radio under a larger umbrella – Internet streaming of terrestrial stations, new Internet stations, mobile content, podcasting, social networking – even the record business (more on that later). Radio as a transmitter and tower business alone has no future. Its finest days are behind it as sad as that is to say.

2. Get into the local content business. I’d start a website with music, social networks, artist interviews and other embellishments for every college and high school in your terrestrial listening area. Radio folks would do it the other way – one website for all local colleges. Radio works best when it is local. The Internet is your friend. It enables you to reach out to markets that may not ever listen to your terrestrial stations. After that expand by interest or social group. Impossible? Costly? It’s being done all the time in the Internet world by young entrepreneurs on what even today's radio would consider chump change.

3. Stop the firing. No business can be a growth business when it is cutting back. If you want to increase revenues hire more sales people and train them better and make more content that is available to consumers who are abandoning your terrestrial signals. It’s okay to be in other entertainment and information-related businesses while owning towers and transmitters. These businesses don’t have to be linked. Radio people are the greatest providers of content on the earth – branch out beyond terrestrial radio. Take a loan. Invest don't divest when you badly need to grow.

4. Start your own Internet-based record labels. That’s right. I’d do this in a Hoboken heartbeat. The big four labels are coming after radio in an effort to repeal the performance tax exemption. If I told you that the young people I meet on campus would rather listen to independent artists in many genres, would you believe me? They want less repetition. They want more discovery. This could be easily done on Internet streams. And you don’t have to – and shouldn’t even want to – link the names to your radio stations. There is no magic in making everything you touch B-93 or whatever your brand is. And the label? You take music submitted by artists who will waive their rights fees and make it available in a stream and purchasable by download. Split the profits. Drive those greedy record labels nuts.

5. Turn to your terrestrial format now. CBS President Dan Mason is setting an example I like. Returning radio stations to the music, format and personality that available radio listeners will appreciate. I’d hire one of many seasoned and proven programmers and give them a mission statement. If they accept, I’d give them a time line. If they succeeded, I’d reward them financially and otherwise. If they failed, replace them. But I’d also have to fund their efforts and give them support unlike what the consolidators are doing today. Radio's true believers are getting the shaft. They love radio but they are not getting the personalities, the production, the excitement, the local involvement or the connection they used to get. This must be remedied.

6. Internet streaming of terrestrial radio is okay for stations that are big on in-office listening. Start new streams and make them different than what’s on the terrestrial signal. Internet radio is going to be big – real big. Once the copyright issues are resolved it will enjoy a greater period of sustained growth. I’d want to be in on that from a marketing perspective not just as a brand extension of my terrestrial signal.

7. Unplug your HD equipment and make a door stop out of it. Move your emotional and financial efforts to something that has a chance to work with the next generation. Sub-channels on a band where you have no chance of attracting the next generation makes no sense.

8. This is my favorite – and I’m thinking of getting into it with partners – develop the podcasting business. Podcasting is the new radio. It allows a generation that wants control of its content to start, stop, advance and enjoy content on demand – a prerequisite. No, I’d start 100 podcasts in a single genre that I could monetize (example: podcasts that appeal to 18-34 year old males, etc). Again, the consumers would not necessarily know I also own radio stations because starting now, I’m in the content business not the tower and transmitter business. The marketing of these podcasts to the next generation will also take some innovative thinking. Perhaps we can get into that in the future.

9. Develop personalities for all your products. Just yesterday, when I asked some of my young students to tell me one thing radio could do to win them back many said – are you sitting down? – put more personalities on-the-air like they do in the morning except have them on all day long. That’s what they said so criticize them if you must but maybe they know what they’re talking about. Radio sure doesn’t. Consolidators are firing morning talent at a record pace. Bet my students are right and the consolidators are wrong. Time will tell.

10. This one is for consolidators – you don’t need seven stations in a market to make money. Just one WLW or one WBEB or one WLTE. Just as in real life, it isn’t how big you are, it’s how long you can dominate a market. Doing one thing well instead of seven things on a shoestring is clearly better in our post-consolidation world. More cost-effective. More potential profit. (Consolidation really was a bad idea).

I could go on and on but let me spare you. Some will pick apart these ideas but I know many will hitchhike on them. That's the discussion we need to have.

Let me leave you with this sobering reason to go back up to #1 and reread these thought starters that resulted from a reader hungry for possible solutions.

One young student shared with his group yesterday this insightful comment about the radio and record business. He said it’s like they keep trying to find a new way to repackage a horse in a day when we prefer cars.

I fear that is exactly what radio has reduced itself to – trying to repackage the one thing it knows how to do in the hopes that the next generation of listeners will give up their preference for time-delayed content, new non-radio Internet streams, social networks, iPods, digital downloading, cell phones, YouTube, Pandora and on and on – and return to radio.

But they've got it backwards.

Radio must go on to the future – and with the talent in our business – it could be a new beginning just in the nick of time.

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The XM+Sirius+HD Radio

Inside Radio is reporting that at least one analyst (Blair Levin of Stifel Nicolaus) thinks the FCC may mandate radios that include HD plus satellite stations as a condition of winning approval for the XM-Sirius merger.

The HD Radio Alliance and iBiquity (the folks who brought you radio’s version of digital radio) have been lobbying for it.

Consumers have consistently voted down HD radio but radio’s self-appointed "super delegates" are pushing to influence the outcome in spite of what the marketplace is telling them.

HD by every standard has been a dismal failure. Consumers won’t buy HD radios at any price and broadcasters refuse to load HD stations up with new and appealing content. In some markets where big box stores like Best Buy sells HD radios there is virtually nothing to listen to once the consumer takes the radio out of the box.

Imagine buying an iPod and not having iTunes to derive content.

Radio is treading on dangerous ground again in its desperation to force the HD issue. The industry is drinking iBiquity’s Kool-Aid, but if they, along with public interest groups like Media Access Project, get their way and force the merged satellite companies to include HD on future satellite radios they are opening the door to something more devastating.

Wouldn’t it then be fair and in the public interest for satellite operators to be granted permission to use their repeaters as local radio stations?

That’s what I would argue if the HD proponents ultimately win the day on combination receivers. Satellite radio is sitting on top of hundreds of transmitters called repeaters. The NAB claims the satellite operators haven’t constructed them where they are supposed to be and allege some are operating at excessive power.

Satellite interests have supposedly outspent the NAB by ten times in lobbying, advertising and hiring lawyers according to Inside Radio’s article -- all over the merger issue.

From all indications, the merger will likely win DOJ approval. Hell, the DOJ approves just about everything. It will just throw a few conditions in and say they are acting in the public interest. This oddball and ill-conceived maneuver by HD proponents to mandate HD-satellite radios could be one of them.

Satellite radio customers don’t want – and I argue don’t need – a radio that receives HD sub channels. After all, they are consenting consumers knowingly opening their wallets for the expressed purpose of paying for content. They want satellite radio not HD. If they wanted HD, they'd buy HD radios -- which they are not doing.

In a few more years it all won’t matter.

As the next generation continues to come of age – the very young people radio folks make fun of and don’t understand will be showing the radio industry what happens when you fixate on technology instead of content.

Radio broadcasters are lost in what they think is the transmitter and tower business. That’s why these properties are often valued at hundreds of millions of dollars. To them, that's what radio is.

Satellite broadcasters sell hardware and offer programming that is less irritating (no commercials) and slightly more interesting than their terrestrial radio counterparts. They're in the consumer electronics business, but their value isn't in individual towers and transmitters.

Again and again traditional media comes up with technological “solutions” that are outdated and out of favor.

So when XM and Sirius finally win approval to merge (which they should) and HD proponents win the mandate to get access to satellite radio (which they may), don’t be surprised if satellite operators come back and lobby for use of their repeaters as local radio stations.

After all, what’s fair is fair.

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NPR Outsmarts Commercial Radio

My old friend and radio executive Bill Figenshu wrote to me over the weekend with some thoughts on the recent New York Times article about why National Public Radio is thriving and PBS television is hurting.

Fig says, "..they (NPR) have grown, have none of the negative commercial radio issues, and did it without taking the 8th caller, TV or any marketing budget, slamming PPM, HD, or "less is more." In many cases, the public radio signals are not exactly "blowtorches." They did it
with good programming, a long view of content, and a robust on line
platform".

From my vantage point with the next generation, Fig has hit the nail on the head. Long before consolidators got their minds messed up with visions of Wall Street sugar daddies dancing in their heads, radio was blowing it.

Bluntly put, radio -- once proud, innovative and well-liked -- got into imitating itself. Today, it has become a caricature.

The same old unbelievable liners, positioners and brand names.

Back when radio ran contests, it's amazing that stations could rarely come up with a new one -- or a good one, or one that was actually fun to listen to.

Long before even the first Gen Y baby was born, listeners were telling radio researchers that the music was too repetitious -- not enough variety -- too many commercials. What was radio's answer while it was still the only act in town? Slogans like "More music, fewer commercials, the best variety" -- while continuing to play the same 30 or fewer hits over and over again. In other words, commercial radio didn't listen and tried to act like it did.

Radio has spent tons of money fighting a figment of their imagination -- satellite radio.

Wasted resources that could have gone elsewhere to that turkey called HD radio.

Even fought its one and only credible ratings company, Arbitron, on the value of the Portable People Meter even after the same complainers actually signed long-term contracts for their stations to use People Meter ratings.

NPR on the other hand is boring.

Not to its listeners, but compared to the bombast of terrestrial radio executives hooting and howling about a form of radio that listeners have been complaining about for at least 20 years.

Even thought it is far from perfect, NPR listens.

While terrestrial radio geniuses couldn't wait to cut out newscasts, NPR stations kept doing them. No bells, no whistles, no laser sound effects -- actually, just news.

NPR is green. That increasingly matters if radio people are truly listening.

NPR affiliates are truly local. Public affairs is a proud program element not news of an office scandal.

While terrestrial radio was insulting their intelligence, smarter listeners discovered the talent of NPR and their local affiliated stations to be just what they wanted. At least they liked being talked to with respect and intelligently -- something many commercial stations still haven't learned to this day.

While public stations were not included in radio ratings for years, their stations were cleaning the clocks of the morning zoos and outrageous shock jocks in terrestrial radio. I guess by not seeing the local public station ratings in the "book" radio people convinced themselves that they didn't exist.

And if they did, they were for the elite.

I have shared this with you before but it deserves reiterating, the next generation doesn't consider NPR and local public stations radio. That would be an insult as far as some of them are concerned.

And even while the next generation moves to iPods, Internet, cell phone content and social networking they seem to find a way back to the analog radio dial to get something they cannot get elsewhere -- NPR and affiliated programming.

The lessons are painful which may explain why terrestrial apologists prefer to belittle and attack their non-commercial brothers and sisters.

1. Listening to listeners pays dividends when you actually do something to respond.

2. Listeners don't want an imitation of radio 20 or 30 years ago, they want today's radio.

3. Listeners like news -- presented intelligently and reliably. News can also be local. Local is good. Radio is best when it is local.

4. Listeners like more variety in their music. Today's young people have very eclectic tastes. Commercial stations never did get this and probably never will.

5. Listeners like to at least "feel" that their personalities are picking the music. They outed "Jack" for playing what he wants because "Jack" was playing what his owner's wanted. Affiliated NPR stations like KCRW in Los Angeles actually -- God forbid -- let their jocks pick their own music and this is not lost on the next generation.

6. Listeners want a web presence that allows for discovery, delayed listening and enhancing the station's experience. NPR stations are way ahead on this.

There are some things even NPR can't do -- like save HD radio. There is no reason for more channels when there are too many radio channels now. Add in what you'll be able to get through Internet and cell phone delivery and try to say with a straight face that consumers need more radio stations.

No, they need better radio stations.

Ones that listen to their listeners and stay in the present not the past.

Like it or not NPR has quietly proven that even analog radio can't deter their listeners from loving them.

So while consolidators continue to look for ways to fire talent, reduce resources and water down local radio, they would be wise to see what NPR has done to put themselves in a great position with the next generation.

And it must really piss them off to know that NPR did it without spending a lot of money. However, the money they spend is on content.

Commercial radio can do it.

But they have to start listening to people other than investment bankers.

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Radio's Grudge Helps Satellite Radio

There are few things that aggravate radio executives more than satellite radio.

For years they were so blinded by the prospect of competition from satellite radio that terrestrial operators actually thought they were competing with satellite. Some still think so.

This in spite of the fact that together XM and Sirius only have about 15 million paying subscribers.

They run many music channels with no commercials -- and some channels have few listeners. They are money losing machines that have posed no threat to traditional radio -- not even for a minute.

Meanwhile, the NAB is helping to mislead the industry into thinking that satellite radio is worth the millions and millions of dollars it spends every year on fighting the XM-Sirius merger. This is just playing to the lunatic fringe of radio people who fear a technology that is as outdated as -- well, terrestrial radio.

Ironically, radio's battle against satellite may actually be helping XM and Sirius.

Sirius just signed a long extension with automaker Chrysler to install Sirius radios in their cars right through 2015. The satellite operators may have failed at a lot of things, but they have succeeded at getting automakers to factory install satellite radios into their new cars -- thus giving XM-Sirius a certain degree of parity with free radio. That's more than terrestrial operators have been able to do for HD receivers. And there is a major reason why satellite operators have succeeded where HD proponents have not -- satellite companies are paying the automakers to install their radios.

In theory, at least, satellite radio will have a chance to have some parity with free terrestrial radio in the most important place a radio can be -- in the car. And, unlike terrestrial operators, XM and Sirius don't need every car buyer to subscribe -- just gain more subscribers than they are getting now.

Also favoring XM-Sirius is that terrestrial radio has a proven track record of cutting back on programming. Once the merger goes through, the joint satellite company will save hundreds and hundreds of millions of dollars -- if not more -- by eliminating costly duplicated technology expenses. Sirius CEO Mel Karmazin was never one to spend money on programming when he ran Infinity/CBS, but if he chose to invest in making satellite channels rich in content, he could do it more cost effectively than, say, a consolidator with a lot of local stations. After all, when Mel likes something he opens his wallet (i.e., Howard Stern).

Fighting satellite radio is a zero sum game anyway.

Terrestrial radio and the NAB should be merging with satellite radio in the sense that radio has to become a bigger, more technologically and sociologically advanced tent for it to have a future.

Terrestrial radio alone is dying and will never again be a growth industry if it has to rely on towers and transmitters.

Satellite radio never got started and can only thrive because terrestrial radio is taking its eye off the ball -- content.

The next generation wants none of it -- they are likely to be big Internet radio users, mobile content customers and podcasting fanatics in the next ten years. And there's a lot of them coming of age even now.

So, while the NAB panders to its base and wastes millions on fighting a competitor that can't even beat them in one of their major markets, they are unwittingly giving new life to satellite radio.

What they should be doing is using their resources and influence to get all radio under the roof of "new radio" -- the only way to survive and perhaps some day thrive -- together.

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iPod, I Quit

It's hard to fathom that a consumer electronic device that is both so cool and so hot may have finally peaked.

In my work with college students I have discovered one thing if I have learned anything at all -- you can hardly find a student on campus without an MP3 device (usually an iPod).

That is, until now.

Several months ago a class project revealed that most students who were asked to give up their iPods and cell phones for two days could easily sacrifice the iPod, but not so much with the cell phone. The cell phone is essential equipment.

This past week I discovered that half of one of my larger classes, students didn't even have an iPod on them. That would not have been true a year or two ago. And just about all students own one.

But why?

Many of the iPod generation are concerned about issues that may not have yet made it on all the experts' radar screens.

Take socializing.

Many are concerned that the iPod is stunting their social growth -- interfering with personal relationships. They want to be available for these encounters -- the first time I've heard more than one person articulate this desire.

My sample group seems concerned about their hearing.

Many have taken action already. Some said they wanted to listen to their iPods less because hearing is compromised by not only loud play but length of time listening -- even at acceptable levels. These students are right on with that. Some have invested in ear buds or even ear phones that will cancel noise and allow for lower levels of playback.

About a year ago I shared my observation that iPod fatigue had settled in. In fact the term is theirs (my students) not mine. They weren't saying they'd give up their iPods -- just that some were bored with them. Even students with tens of thousands of songs on them (most obtained illegally) wanted something new.

These observations might provide some context to the slumping sales of the Apple iPod. There may be many other reasons like the economy, the advent of the iPhone or just a tired line of devices. Still, there seems to be anecdotal evidence that the iPod phenomenon is cooling.

The radio industry has often blamed iPod use for some of its problems. Of course, they would be wrong. When I suggested to these same young people that they might be willing to return to radio for music, the laughter was loud and sustained. They meant no insult. It's just that the idea of radio being useful in their lives is -- well, laughable. My experience is that they don't like commercial radio.

The record business has cried in its corporate beer for a long time because of Steve Jobs and the iPod, but record labels don't stand to benefit from any decline in the use of iPods in the lives of the next generation.

Don't misunderstand me. Young people are not ready to let their iPod batteries die out. They still want portable music that they can control. But, there is growing evidence I have observed that they are beginning to disconnect from their portable music devices in a way that was unthinkable a few years ago.

What they are not willing to do is separate from their laptops and computers.

I can see why Steve Jobs and Apple are selling more laptops than ever before. The laptop may soon be the center of Gen Y's new universe.

One thing they really like and are addicted to is iTunes -- the ability to create playlists, shuffle songs and control their entertainment. I'm almost thinking that iTunes is more magical than the actual portable device. iTunes is the record store. It can replace the radio station as a source of new music. It is an archive.

I've also previously noted that students want to have more say in their entertainment. They want to choose music, edit it -- send it along to others. I am confident they will not be denied in spite of the RIAA's threats or the labels inability to cooperate with the inevitable and make money out of it.

Radio appears to be left out of the future.

Some day, when I'm not the only one in the room with a WiFi radio, the Internet will become a vast resource for the next generation. It will be their radio. Portable streaming devices are becoming available but not on a massive scale.

Terrestrial radio -- caught in cutbacks, consolidation failures and no vision of how to engage the next generation -- is cooked.

It doesn't have to be that way.

Radio operators could go to school on this generation and deliver things that they would like where they live -- which is not near a radio.

1. Intelligent people picking their own music (and maybe even talking about it).

2. Programs that can be time-delayed -- shifted forward, reversed and paused.

3. A way to get their hands on it -- mash it up -- and send it along to others.

4, No commercials, no pre-rolls (that they don't watch anyway), but links to discovery that they may eventually pay for.

The iPod is the most successful portable entertainment device since the Walkman. It has taught a new generation how to avoid the things they loath about traditional media.

But it hasn't taught traditional media even one lesson that it could use going forward -- mainly because radio and records executives do not want to hear about radical change.

The iPod will be around for a long time, but to consider the emerging preferences of the iPod generation -- before it's too late -- can be the ticket of admission into the digital life of the next generation.

Opportunity is again knocking. Will anyone answer this time?

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Clear Channel Gets EZPass

Five years ago when I moved out west from New Jersey I had to give up my EZPass, an electronic toll collection system based in New Jersey and used extensively throughout the Northeast. We have freeways out here.

I slapped the device on my windshield out of the way under the rear view mirror and I could cruise through toll plazas on the Jersey Turnpike, Garden State Parkway, Lincoln Tunnel and the bridges leading into Manhattan and Philadelphia.

It was seamless. Just put your travel on your tab (credit card) and cruise right through to your destination. No stopping to pay the toll.

Kind of reminds me of Clear Channel.

Clear Channel has been using its own type of consolidator's EZPass for the last 12 years. But no situation was more egregious than what happened yesterday.

The Department of Justice proposed a settlement to make it possible for Lee and Bain investment capital groups to bail out Clear Channel. All that has to be done is to sell some stations in Cincinnati, Houston, Las Vegas and San Francisco and the world can rest assured that we won't have one bit of monopoly in the radio business.

If you want a good laugh read the DOJ explanation or try to make it through this paragraph without getting sick:

"The Department said that the transaction, as originally proposed, likely would have resulted in higher prices to purchasers of radio advertising in Cincinnati, Houston, Las Vegas and San Francisco because Bain and THL already have substantial ownership interests in two firms that compete with Clear Channel in those cities. Bain and THL have ownership interests in Cumulus Media Partners LLC (Cumulus), a large nationwide operator of radio stations, and THL also has an ownership interest in Univision Communications Inc. (Univision), a large nationwide operator of radio stations that broadcast primarily in Spanish".

In other words, Clear Channel uses EZPass again and this deal from hell continues to race toward closing by the end of the first quarter.

EZPass comes in handy -- even in radio -- as witnessed by these events:

1. Clear Channel stock is $29.49 -- about ten dollars less than what Lee and Bain have agreed to overpay and yet no one is suing anyone. The arbitragers are out in full force but in many other cases when the buyout price far exceeds the actual price the buyer(s) usually demand to renegotiate the sale price downward. Not here because Clear Channel has EZPass.

2. No one wants to renegotiate. EZPass.

3. CCU stock has been steadily declining over the years from its post-consolidation high point in the $90 range and yet shareholders are unusually passive and accepting. Maybe they like to lose money -- lots of money. Another benefit of Clear Channel's EZPass.

4. According to the DOJ "Bain and THL raise pools of capital from private investors, controlling and managing that capital through private equity funds and co-investment vehicles that invest in discrete opportunities, such as venture capital, public equity, and leveraged debt assets. Bain and THL, either directly or indirectly through management teams, typically manage and operate the assets in which they invest". They bought assets that will likely be worth less than they paid for them in an industry that analysts say will have flat to modest revenue growth at best. And Lee and Bain don't bail on the deal. Another benefit of EZPass.

5. About 400 odd stations will have to be sold to complete the acquisition that will leave Lee and Bain with some 700 properties. Money is tougher to raise right now and deals are harder to close. But it doesn't bother these fat cats. EZPass to the rescue.

6. Now that the buyer will be forced to divest itself of stations in four markets to win DOJ approval, Clear Channel is not likely to get a premium for them. Hell, they're not likely to even get a fair price. I mean, the DOJ is saying sell them or else -- what kind of pricing power does that leave Clear Channel with potential buyers who know they are under the gun. Mark Mays said in Inside Radio that "he is pleased they won approval, and says the merger continues on track for a first-quarter close". Everything is beautiful in its own way. Ray Stevens, the singer, was right. No problem. EZPass does it all.

7. Clear Channel guts its stations, devalues and dismisses its employees -- careers are ruined, jobs are eliminated and not one politician (you know, the ones who are saying we need to create jobs to get our economy rolling again) speaks up or acts. The consolidator has its way and everyone looks the other way. EZPass again.

8. Advertisers were told that what radio needed was fewer commercials -- you remember, less is more. Clear Channel implements a slight cutback in its hourly commercial inventory and forces clients into shorter spots that fit its game plan. Not to mention the black eye Clear Channel gave the radio industry when it screamed to advertisers from the rooftop that radio is loaded with commercial clutter. Yet, advertisers kept buying and some lemming operators followed suit. How did they get away with this, you ask? EZPass.

It's a seemingly unending litany of circumstances where others might have paid a price and yet Clear Channel continues to exact a price.

Clear Channel is Teflon.

It's as if the legislative and judicial branch of our government know they created this monster and now they want to help it go away.

It's as if investment banks that made Clear Channel consolidation possible have no shame -- what's wrong with one more deal. The Mays' get rich all over again and Lee and Bain somehow turn this lemon into lemonade.

Everyone seems to want this deal to go through.

Forget that the sale is not worth the $19 billion acquisition price. Forget monopoly -- oh, we already forgot that one. Forget that advertisers, listeners and loyal employees are getting screwed. Forget that money is hard to come by.

Just do the deal.

I think Sam Zell is waiting in the wings to buy some or all of the Lee and Bain acquisition. And do you think Randy Michaels wouldn't want to get his hands on the Cincinnati spinoffs?

Clear Channel was given an EZPass to lead the way into consolidation and now it is getting an EZPass to lead the way out.

EZPass might work for a toll road, but the real toll is being paid by the employees of Clear Channel who, I'm afraid, are in for one final screwing.

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CHALLENGES OF TROUBLESOME AUDIENCES

Media companies have historically been relatively unconcerned about and even disdainful of individuals in their audiences.

Publishers produced newspaper in ways and at times that was convenient for themselves. Television channels offered programs on a take-it-when-offered basis—Too bad if you visited your mother and didn’t see it. Journalists and public service broadcasters conceived the public as an unkempt mass that need to be educated and led to think correctly and do the right things.

Audiences were things to aggregated and sold as commodities, so media executives pretended audiences were a unified, stable group in sales pitches and that advertisers were purchasing the same group of people hour after hour, day after day, week after week.

The reality is that audiences have always been individuals that changed constantly, but media companies needed to pretend otherwise in order to aggregate them and portray them as a unified group for sales pitches. A TV channel would tout itself as best at reaching women between 25 and 54 years of age, a magazine would promote that it offered more business decision makers than any other magazine, and a newspaper would tell advertisers its readers ate at restaurant an average of 125 nights a year. Never mind the others who watched the channel, read the magazine, or stayed home at night.

The façade put up by media companies is eroding rapidly and is one reason why there is so much unease and shifting in media advertising markets today. Advertisers have discovered the big lie that audiences had specific characteristics and were stable.

The ascendancy of customer relationship managements and personal marketing, and the personal identification of audience members in interactive media have moved businesses to view them as individuals and to recognize that approaching them on an individual rather than mass basis increases return on marketing and advertising investments.

Media companies are waking up to the nightmare that many advertisers find the idea of mass audiences less appealing. At the same time, media firms are shifting their own offerings to try to make content—news and information, TV programs and films, and magazine content—available to individuals any time, any where, and across any platform.

Unfortunately most media companies are finding they know everything and nothing about their audiences. They know their average characteristics, habits, and purchases, but they no little about them individually, their individual lifestyles, and how they individually consume media and other products.

Media companies have a great deal of catching up to do in order to understand individual consumer behavior and its implications for their business models. Doing so will be difficult because media companies tend to know less about their customers than other types of companies. In the past media CRM programs have been absent and audience research has been relatively unsophisticated and had limited applicability.

One of the first lessons media executives are learning is that human beings are troublesome. They tend to do what they want, when they want, and how they want. They resist being constrained and controlled. They are prone to changing their minds and interests. They want flexibility in their lives. They make it different to predict their preferences because their tastes and needs change over time. They are fickle consumers who have the audacity behave as individuals rather than an aggregated group.

Some consumers want music while they are walking to the office; some want news about stock prices at 10 a.m.; others want short video entertainment when they have a coffee break at 2:30 p.m.; some want to view a prime time TV program at 5:30 p.m. when they are taking the commuter train home; still others want a recipe from a cooking magazine at 6 p.m. when they get home or a video of their choice at 8 p.m.

These demands are highly problematic because media technologies and industry structures have traditionally allowed them to tell consumers what they would get to consume and when they would get to consume it. Few companies have the competence or infrastructures to handle the new demand-driven world of media.

Media companies need to make understanding audiences and the individuals that join audiences center point of their management attention. They need to find ways to develop better relationships with them if they are to prosper in the changing environment. It is a strategic challenge that must addressed if companies are to remain vital in the media choices of their customers.

Dr. Kevorkian, Meet Radio and Records

At the Grammy's the other night, Recording Academy President Neil Portnow stepped up on his nationwide soapbox and promised to "fight to pass legislation to once and for all ensure that, just like in every other developed country in the world, all music creators are compensated for their performances when played on traditional radio".

Fortunately, no one heard him.

The Grammy's pulled in the third worst TV audience ratings of all time.

Apparently, Alicia Keys was not listening either when she thanked "every radio guy" in her acceptance speech -- a real time acknowledgment that she couldn't have won without the free airplay she got from radio.

Portnow's lap dogs, Judiciary Chairman Patrick Leahy and Internet and Property Subcommittee Chairman Howard Berman of California (who is pandering to his Hollywood constituents) have issued identical bills to "close the loophole".

It's apparent that it is now time to dial Dr. Kevorkian, "Doctor of Death" who gained his notoriety by assisting terminally ill patients commit suicide.

Well, the radio industry and the record industry are terminally ill.

They keep trying to kill themselves off, but they're just hurting themselves and those around them.

The radio industry is committing suicide by strangulation -- cutting, slicing, dicing its product and reducing the surviving employees to the last men and women walking. CBS chopped some more assets off in St. Louis the other day. Clear Channel, well -- you know firing has been a big part of their business plan since they have gone public. Firing and reorganizing -- if that's what you insist on calling downsizing.

The music industry, equally clueless and hopeless, is hell bent to get the performance tax exemption removed from the one source that drives traditional CD sales -- radio. And it makes a lot of sense. Why not burden a dying radio industry even more by charging radio stations to help you sell product. Well, it makes sense the way these two industries do business.

The real reason radio companies are cutting back is to mask their under performance in the profit column -- Wall Street's gold standard.

The real reason the record labels want more revenue from radio is to hide their inability to be a viable business in a digital world. Not one viable idea since the digital revolution was launched.

But now this has all gone too far.

I hate to see the poor radio consolidators and greedy record labels suffer so much. There is nothing we can give them to reduce the pain while we wait for them to die. It's time to dial 1-800-DRDEATH.

Who will be the "Dr. Kevorkian" who will finally put the record labels and the radio consolidators out of their misery. Once proud, once booming -- these two traditional media platforms are a mere shadow of their former selves.

And we won't have to deal with ethical issues of assisted suicide because neither the record business nor radio consolidators have let ethics get in their way lately.

So, who is it going to be? Who can put an end to the pain and suffering of these two formerly great businesses once and for all.

How about the RIAA for the record labels?

They've done just about everything else possible to hurt the music industry. Give the lawyers more power so that they self-destruct five or ten years earlier.

And, how about Wall Street's investment banks for radio?

Maybe they could escalate the pillaging of the radio industry by making funds available to continue the trafficking of radio stations for their profit. After all, was there ever anyone else?

The sad state of radio and records is attributable directly to their own lack of leadership and poor vision. Selfish interests have led to losing sight of the real prize -- the digital and mobile future.

Since no one can protect the radio and records business from itself, it is time to let them deliver a lethal dose of -- ultimate bad management. The very thing that ruined two viable businesses and accounts for strategic blunders like the record labels wanting to tax the radio industry.

But it's worse than that. And we can't save them from themselves.

They're not dead yet but they are burying themselves alive.

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The Advantages of Being Fired From Radio

I’ve previously written about a Temple University college professor of mine – the legendary Lew Klein (ABC in Philly, American Bandstand) – who told my freshman class in communications that if you are not fired from your jobs several times, then you’re not in broadcasting.

Professor Klein would be proud of me – and my fellow classmates who went on to careers in broadcasting. We didn’t let him down.

We’ve all got stories. That’s why I love the people in our industry. I’ve thoroughly enjoyed working with such a resilient lot in a system that has always been rigged against us. It’s always been that good.

Now, it’s that bad.

Before consolidation if you were fired by a station, there were always many other places to work in radio -- plenty of stations owned by other companies – across the street. Hell, you could fulfill Professor Klein’s prediction of getting fired several times in just one city.

Today, that’s not possible.

If one consolidator discards you, you’ve only got a few other choices in the same city or region. Blacklisted? Did I say that? You’re screwed. So if you’re fired from a group that owns 300 stations, lots of luck even if you're willing to move your family 2,000 miles away to work for them elsewhere at your own expense.

I've quit and I've been fired. Quitting was more fun. But without a lot of other options for employment we would have had -- well, what we have today -- slavery.

I had the dubious honor of walking out on that radio wild man John Tenaglia when he wouldn’t give me a $25 a week raise. It was wrong. I shouldn’t have done it. I know that now. I was just a kid. I'm sorry. My jocks also walked. I did not ask them to – great people like Bill Figenshu and Mike Anderson. They came to their senses and returned to Johnny T for a while anyway. Actually, looking back -- I’m glad I quit.

I got a better job across the street. I should have been blackballed for that stunt. Maybe I was, but it didn't matter. Options -- that's what radio people always had -- lots of options.

Today, though, forget it. You’re persona non grata for a lot less. Like, say, doing your job every day at a low pay with constant budget cuts.

Having seen an unemployment line in Camden, New Jersey, I can easily identify with the inequity that today’s radio people face at the hands of proven incompetent "leadership". I know a lot of folks who have lost their jobs have health care issues, educational responsibilities for their children, retirement to hope for some day and just plain pride.

But there are some benefits to being fired by radio consolidators that will become evident. Among them:

1. The radio industry is dying by every measure. But the Internet and the mobile space is a potential employer that needs talented marketing people, managers, talent and content providers. It's a great place for entrepreneurs. Internet streaming is stunted by the lack of a fair royalty agreement so it may not look like the future to some, but it is.

2. Podcasting is going to be big. Disagree if you like, but the next generation doesn’t need only 24/7 broadcasting. They want programs they can control – stop, start, rewind and listen to in a time-delayed fashion. Broadcasting will be so – 70’s. Those of us who are moving on will be preparing and marketing content that the next generation can load onto a mobile device and use wherever -- whenever.

3. Centralized programming is on the way out. Mashups are in. The next generation wants a say in what they consume and then, if possible, a way to add to it. Look at the popularity of YouTube. Remember a piece I wrote recently about how cell phone users like to shoot photos on their phones and pass them along to friends to add music, edit or otherwise revise. Radio will resist the mashup concept because radio owners think they control the programming. They used to. Not anymore.

4. If you’ve been fired, stop trying to stay in the business. There is no future. Even the good guys – the companies that are not necessarily public and still very decent – can’t turn this baby around. Even they are cutting back – perhaps more humanely but nonetheless we must never forget we are playing in the house consolidation built.

5. An industry dependent on morning shows for the majority of its revenue is suicidal to cutback talent and resources as they are now doing. Cutback on corporate aircraft not morning air staff. One makes you money. One spends your money. Know the difference.

I have come to appreciate that out of bad comes good. For me, it has been very good and none of it would have been possible without the radio manager who got so drunk each night he called to tell me how lousy my act was only to compliment me the next day. Or the group exec who likes to kick desks over while you’re sitting at them.

The disadvantage of being a consolidator is that they are going down with the ship.

The advantage of being the talented people they are firing is that for you there is life after radio and today it is more exciting than ever.

Welcome to the “new” radio – Internet, podcasting, mobile content, social networking, terrestrial streams, satellite radio and the online music industry.

This month's budget victims will soon discover the advantages of disadvantages.

Their employers -- the consolidators -- won't be able to say the same thing.

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Wall Street "Pimped Out" Consolidators

MSNBC’s David Shuster was taken to the woodshed last week because he made an unflattering comment about Hillary Clinton’s daughter, Chelsea, whom he said was being pimped out in an odd sort of way to win the favor of increasingly critical super delegates.

Shuster was no doubt pushing the boundaries. MSNBC suspended him and Hillary Clinton, a mother no less, is out for blood.

But it got me thinking about the sad state of radio consolidators. I often write about the tragedy of needless cutbacks at a time when radio needs to invest in content, marketing and, God knows, management.

Instead, super managers with impressive track records are being let go. Program directors are doubling up not only in their markets but in other cities. It’s folly. Sales people are being fired – how can that be at a time like this. On-air talent is being let go because their salaries are too high and thus, present a greater opportunity for financial belt-tightening.

It’s insanity.

Important morning show personalities are being fired. Morning teams are becoming solo acts -- lest I remind the consolidators that they are messing with 40-60% of their total stations income. Believe me, they know it.

So, let’s try to put ourselves into their shoes. I’m not pretending to be objective here, but let’s try.

Many of these consolidators – not all – were great operators. After all, they had major roles in building up the assets that Wall Street investors saw as so attractive when consolidation whetted their appetites for a great free cash flow growth industry. Hard to believe today that it was radio that they saw as a comer.

So with the exception of the Mays’ – who really had little experience doing anything but running a small company – some of our consolidators were the pioneers of radio’s growth.

Where did they go wrong?

Most had little experience dealing with Wall Street. They were small time operators who worked for companies that were able to take losses. Hell, I worked for several companies like that. Radio was the business they wanted to be in for whatever reason. Many of the best operators took loses. Or, they didn’t care because radio was not the essential part of their businesses.

Remember when a tire company – RKO General – owned radio stations because they could -- not because their stock price depended on it?

When Congressman Cecil Heftel of Chicago owned a group of stations because he wanted to?

When Rick Buckley took over a group because his father had passed away and he has kept the company privately held to this day?

Not now.

It’s kind of like in those mafia movies. The moment you take the money, they own you. Don’t pay them back and you’ve got a beating coming. You lose your independence. You do things the way you’re told.

Even when it spins out of control and a consolidator knows it, they are helpless to fix things because the rules of the game are stacked against the operator.

Emmis CEO Jeff Smulyan knew that he had to take Emmis private. He tried several times. But the rules of the game make no sense. Shareholders armed with lawyers and threats beat him down. Going private was the solution – at least better than being beholden to a Wall Street that no longer thinks radio is a growth business.

Clear Channel wanted to go private because the principals finally had to acknowledge that they were in over their heads. If they wanted one more pay-day, they had to sell. Thus, the long national nightmare called the Lee and Bain bailout. I don’t call it a privatization move. It is a bailout from the owners’ own incompetency.

The people who radio consolidators looked to for money – very similar to loan sharks where I come from – are moving on to other industries.

Even that nut case Jim Cramer on CNBC’s “Mad Money” socked it to radio the other day saying radio is dead. That it is no longer attractive as a free cash flow business because there is less free cash flow. That when the Clear Channel sale goes through, the trouble is just starting. And the ultimate insult – that every car will have a factory installed satellite radio in it. When a cheerleader for Wall Street so blatantly dumps on an industry, you know it’s all over. Get the lights on the way out.

There is a future. But it’s not for consolidators.

It’s for the people who built the radio industry on their backs – their work ethic, their loyalty and dedication and it’s in the Internet and mobile space. Radio as an industry is over due to mismanagement and a marriage that failed between able radio operators and Wall Street money people.

It’s interesting that the first three letters of consolidation form the word – con.

Radio presidents and CEOs let themselves be conned. Lured by the game Wall Street always plays with its victims. Then, Wall Street pimped them out.

And along the way, radio’s consolidators – some of whom I previously respected – the ones who are firing their brethren now to save their bottoms lines, well –

They’ve sold their souls.

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