A New Beginning for Radio

Fortune did an interesting piece on the brash, young head of programming at NBC Universal, Ben Silverman, in its November 10th issue.

He's got a lot of faults -- doesn't show up for meetings, iffy business dealings, party animal behavior but he also has some qualities that are worth examining.

2008 was a bad year for radio and records.

Radio stocks dropped to below a dollar. Audiences continued to erode. Advertiser cutbacks -- partially from the bad economy but also due to many other new media choices. Top executives had the look of a deer in the headlights.

Cutbacks will continue through the holidays and into the new year.

Now we can't say that Farid and his pals don't show up for meetings and we're not saying they have iffy business dealings. As far as the party animal behavior? Nah!

Silverman is different because he sees things from a 360 degree perspective -- content, marketing, technology -- all of it, not just cost cutting. It's also fair to see that after two years he has had some success -- although not overwhelming. NBC Universal is going to double down and re-sign him to a new contract.

Meanwhile the record business is dying from paralysis. I mean, it would even be refreshing to see them sue everyone who owns a computer -- not that it is right and just -- so that it would show they're still alive (I kid).

Beyond that which we cannot control, I'd like to focus on the 360 radio and records executive -- someone who understands the big picture. If you are interested in being that person you might find this helpful.

Content Creation

You're not in the terrestrial radio business starting in 2009 -- even though you may be working in terrestrial radio. You'll be a content creator.

You won't be a record exec -- you'll be a music discoverer and marketer.

If we're learning anything from the misfortunes of radio and records, it is that the old model of broadcasting to radios or selling CDs with music on them to consumers is no longer enough of a business to provide sustained growth.

Going forward, content will be created for terrestrial signals, but new and different content will be created for Internet streams (and by the way, can you see why I always say radio folks have the greatest motivation to fight for fair Internet royalties -- they're going to be affected by them if I am correct). Currently radio operators cut costs, cut quality, cut local focus and then turn around and stream it on the Internet.

Not going to work. It may help attract a little more audience -- so if that's what you call success, I stand corrected. But my definition is to create a growth business. Do you see the distinction?

So, at least two different kinds of content on-air and online (more is preferred).

Then, 100 podcasts -- not of your morning show highlights -- but of topics aggregated around a target consumer group. Not mere demographics -- that is so 90's -- but a group of consumers (i.e., working women). These podcasts should not sound like radio. I am working with clients right now who are radio personalities learning the new realities of podcasting. I could go on and on about podcasting but for the purpose of this piece let me simply say -- short and sweet. Not like radio.

Then, mobile content that perhaps takes advantage of a brand that radio is defending and a strategy to channel new programming to cell phones. New content.

I'm just getting warmed up.

You get the idea. For record labels it would mean increasing the content not decreasing it as the majors are doing currently to save money. The labels should become radio stations -- not in the sense that they have djs and irritants -- but that they can refocus on becoming the distribution source of tons of content and cut out the middleman (radio).

Anyway, the labels are going to help kill radio off even more if they win repeal of the performance tax exemption.

Still, the number one purpose of a record label should be music discovery. You see, they've drifted away from this during all of the eight years where CD sales declined. These two consequences are not incidental. There is no reason to have record labels if their business is not about music discovery.

The labels will whine about how to make money, but there are ways. They just don't like them or understand them.

So, if you're with me on this -- those of us who want a future in the growth business of radio and records (that even sounds funny, doesn't it?), then we will have to be 360 executives who cover many more aspects of growth potential than traditional media.

Beyond Spot Radio

Radio shouldn't worry about the decline of spot radio, it should encourage it. (Oh boy, am I'm going to hear it now from all those folks who are working at stations telling me I'm out of touch. I'm out of touch, alright -- with the old way).

Radio got away with murder for over 50 years. Short radio commercials with meaningless production and written by the sales manager of the car dealership in your town is not sales. Not getting results -- just running spots -- is not a business when you have competition. There have been great commercials done in radio's history but far too few. After all, at $15 a spot which station is motivated to hire great talent to produce great spots?

Here's the change.

Get off of spot radio or die with it.

There I've said it and I'm not taking it back.

Hell, we're down to one radio rep firm and even that one can't drive a growth business nationally using spot radio.

So, what am I proposing?




This takes work and investment capital so count out the consolidators.

But let's move beyond their shortsightedness and look to the other side of possibility.

I'm running a station in a medium market. I isolate the ten biggest advertisers in radio, TV, print and online for that market. Notice how I am looking to local advertisers? Get ready for the pitch of a life time.

If it's Main Street Bank (assuming they survived the recent banking crisis), I go in and pitch them on a ten-year deal for naming rights to my station "Main Street's Classic Rock". That's what the station is called -- call letters are used just for legal purposes. If priced right, this one strategy should come close to covering a lot of expenses and maybe even making a profit.

Of course, if you just give them naming rights and nothing else but spots -- they should kick you out on your ass. But if your proposal has naming rights, sponsorships (not just of concerts, and dj events but seminars for young consumers on investing, etc) you're starting to get it.

Then, add in podcasts that in ten years will turn out to be a bargain -- targeted, short, sweet, good and using your terrestrial brand to access consumers. Later, add video podcasts.

Next, mobile initiatives.

You see where I'm going. And this is just the start. You're going to relieve them of a huge amount of money for the next ten years and they are going to be glad they bought in now.

Not just a dying medium -- terrestrial radio.

Not just spots -- get them off the air.

Not the cheapest air talent to be their spokesperson.

Of course, you'll also sell other sponsorships and allow different companies and organizations to underwrite your new business -- which is not radio, remember? It's content creation.

You're getting out of radio -- getting rid of the radio mindset (we'll save that for our fun reunions). But we're not going down with it.

I'll bet you that a radio station can generate more non-cluttered, guaranteed revenue by getting rid of spots and adding new media and then -- voila -- the birth of a growth business.

I hope I've helped stimulate some ideas here. Believe me this is just the beginning. If you'd like to bring your best thinkers to Scottsdale where it's 75 and sunny and have me brainstorm with them, I'd be glad to.

In any case the topics to work on:

1. Content creation (vs. merely radio).

2. Harnessing generational media (as Steve Jobs does).

3. Beyond spot radio (for a replacement of all spots within 5-7 years).

4. Podcasting

5. Mobile content

6. Selling naming rights, sponsorships and underwriters (and how to make an orderly transition from spot radio to investment-driven content).

If not, my purpose is to help as many people in this proud business of ours begin to think about how to take a declining asset and turn it into a growth bonanza.

I've got a separate proposal for my friends in the record business that'll need more space so I'll get to it next week.

The record industry can be turned into a growth business by blowing it up (the majors are doing a good job of that on their own) and then rebuilding as a source of discovery in a delivery system they control.

They are pretty negative people -- they're miserable just hearing this -- so I'll need the weekend to get my courage up to confront their foolish stewardship over what could be a different but great business.

What an appropriate time for a new beginning -- not just an old accounting or the institutionalization of the status quo.

We can do this -- we really can.

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