The record industry is broken beyond repair.
The radio industry exists only for an older available generation.
We see poor decisions by executives in these two industries based on their inability to see what the next generation wants.
For example, in their day radio and record CEOs saw how well the simple process of finding new acts, pressing records and promoting them on radio worked. It was a beneficial relationship for both sides no matter what their rhetoric may be today.
But now, record execs cannot grasp that free downloading is their friend and that they need -- no will absolutely benefit -- from reinventing their business model.
One of my readers, Kurt David Englehardt, told me of a very relevant interview that the singer Richard Marx had with Lou Brutus on XM channel two. In it, Marx very correctly learning from his own children, observed that, indeed, things have changed.
Back in his day, consumers were likely to discover music on radio and have a finite number of favorite singers and bands. And, he observed, they seemed to show more loyalty toward those musicians.
Today, young consumers have access to so many different genres of music and sheer numbers of musicians. And they seem to tire of them faster than in days gone by. This does not necessarily reflect on how good they are, but on how many choices young folks have today when it comes to music.
If you buy any of this -- and I do -- you can reasonably conclude that any fix of the record industry or radio for that matter must take into account the almost insatiable appetite by members of Gen Y for music variety.
Radio stations have a hard time owning up to their limitations. Even before the Internet, Napster, filesharing or Limewire radio programmers were lying to their listeners. They promised fewer commercials, more music and the best variety (make up your own one liners on this empty promise, they did). But the audience had no choice but to listen.
The reality of a generation that has bested radio owners out of their expensive towers and transmitters and relegated record labels to petty sore losers who have traded smart marketing for retribution is too much for these executives to comprehend.
The genie is out of the bottle.
No young person in this -- the most massive generation in terms of population -- will ever have to let radio djs be the trendsetters again. And, if you've listened to local radio, there are few of these tastemakers around anyway. They were expendable -- couldn't survive the non-stop budget cuts.
The big four record labels are smoking something very strong these days -- not that they didn't inhale back in the 60's either -- but now they actually think they are going to rein in these kids and make them pay a monthly fee for access to everything ever recorded. You don't see it working, do you? And you're not likely to.
Look at it like this: the kids control the CEOs. They can workaround radio's limited channel of picking the hits and repeating the same tested music over and over again.
Of course, as a program director I know that repetition works and playing the right music will get you better ratings. Once I started working with the next generation I realized that things have really changed. Now -- as incredible as it may seem -- they actually like no repetition. This is not to say they aren't tougher than our old friend Steve Rivers who knew how to chop a playlist down with the best of them and win. After all, their iPods are their own radio stations -- and yes, they repeat what they like -- but they don't always listen to songs all the way through.
So, times have changed. They defy the best knowledge of radio and record executives.
As smart as they are, the solutions being offered to give radio and future by attracting a new generation and giving labels a new meaning in today's filesharing music world are not likely to work.
Want to see what I mean?
Here are the counter intuitive strategies that deserve a shot because they do have a chance of working.
MUSIC INDUSTRY
1. Charge five cents (ten at the most) for all music downloads. That price is too cheap -- on a par with text messaging expenses -- to force consumers to steal music. Sell volume and yes, I understand five cents won't make them rich. So there will have to be more.
2. Become the radio station of the future and cut out the middleman (terrestrial radio - which is on a suicide mission anyway). Learn about the next generation and deliver music programs and content to them directly through podcasts, mobile content and the Internet.
3. Fire all your lawyers. Stop propping up the RIAA which is hurting you more than helping.
4. 360 deals as you define them don't work -- lots of luck.
5. Develop a new business model that encompasses owning the marketing rights of artists you promote and go back to school to learn advanced merchandising -- a panacea for the future. The label of the future will replace the agent, the merchandiser and even the live venue. You may say, " I thought you said 360 deals won't work?" They won't because labels demanding a cut of an artist's future without the skills to advance it is fraud not commerce.
RADIO
1. Fire upper management including regional people.
2. Close the corporate office.
3. The CEO works out of home.
4. All individual station executives have autonomy to run their own formats, marketing programs and digital initiatives. Fire them only if they fail to meet written mutually agreed upon goals.
5. Mandate 85% of all radio broadcasts local in origin.
6. Triple your sales staff. Send them for quarterly sales training. Pay their health care if you want to attract the good ones. Draw for three months. Generous commission after that. Never steal a client and appropriate it to another sales rep. Let them sell digital as a integral part of terrestrial radio.
7. Budget 20% of the corporate budget to digital initiatives.
8. Define digital revenue stream as that derived from non-repurposed material (such as streaming your already existing radio station online).
9. Make it a goal to produce 300 local, five days a week, by the end of the first 12 months and take it from there. Sell a new form of advertising (not spots) once you aggregate the listeners from the various podcasts broken down by interest not demographics.
Hell, I could go on and on.
But why?
Radio and record executives aren't listening. They don't even agree.
Not to worry, then. If they don't see the path to a digital future and return to a growth business, the next generation will be doing it by the time they are 30.
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