Labels' Subpar Subscription Plans

What does it take to pierce the brain of record label executives who keep insisting that subscription models will save the music business?

Last week, SonyBMG jumped aboard the Titanic for another try at offering an unlimited iPod-compatible library of its music for between $9-12 a month.

The plan is likely to sink in Europe before it arrives by lifeboat to this country.

Just what young people want -- one label's music library.

Even if the labels could agree to contribute all their music to a consortium and offer it for the same money, every indication I have is that it will fail.

Cut the price -- and it will still fail.

The next generation doesn't want more monthly expenses. They've got their most important monthly bill dedicated to their cell phones (with a text messaging subscription likely added on for an additional $20). They can't live without that.

Music -- well, it's free. Cell phone service -- not so easy. The cellular companies still control the delivery system. The record business does not.

And young people have to eat and pay bloated ticket prices to go to live concerts. They have other expenses, too. Even if you argue that many young folks get subsidized by their parents, I will argue that it's hard to beat free -- which is how so many of them get their music now.

I don't feel sorry for the record labels.

They have helped to devalue music. There are many strategic mistakes that have contributed to this situation including overcharging for CDs, killing off singles to force album sales, letting their "needle" stick on hip-hop with no new music genre in sight as a potential blockbuster.

The labels want to believe monthly subscriptions are the only way to make the digital revolution that they have botched so badly work for them. They believe it as much as Joan Rivers believes Botox will make her look young again.

The SonyBMG initiative is tantamount to -- damn the torpedoes and full speed ahead.

AOL Music failed.

Rhapsody's subscription model has never lit the world on fire.

No matter what the marketplace wants or doesn't want, the big four labels are going to give them subscription models anyway -- even if they are destined to fail (which they are).

To pay a monthly fee, you have to want a benefit real badly.

Apple users pay for Pro Care because they value it.

Young people pay for text messaging bundled into their cellular bill because they have learned how addicted they are to text messaging on an a la carte basis. It's hard to find a young person that hasn't run their cell bill up through text abuse. No wonder a $20 a month texting charge seems like such a bargain.

The labels haven't made their case to the public.

When you ask students if 99 cents is the price point for a song, many quickly remind you that you are 99 cents too high.

When DRM (digital rights management) was such a hot issue (as witnessed by the pissing match between Apple's Steve Jobs and the big four labels), Gen Y said, "what digital rights management". You see, they steal it or copy it from someone elses CD. Where there is a record label, there is way around them.

The labels are falsely encouraged by what's going on outside the U.S. right now.

France is imposing a settlement that will force ISPs to charge customers a monthly fee for all-access to music. In the U.K. legislators are threatening to take action if the ISPs and labels do not resolve the piracy problem. In Japan, where things are done a little differently, the sides are being asked to deal with the monthly fee concept.

Even if it works overseas (and I'm not sure it will), it won't work here.

My friend and record industry observer Steve Meyer (publisher of Disc & DAT) has summed it up so brilliantly with these five points that you get the feeling he knows the liabilities of the labels but they aren't aware of the pitfalls he outlines:

1. People want to own their own music and that's why iTunes has already sold
over four billion songs. Add up all the sales from other online stores
(amazon.com, et al) and the number of songs sold goes upward dramatically.

2. Given the choice between buying and owning their music versus renting it
(which in essence, is what you are doing if you choose a subscription
service), the consumers will buy it. If they wanted to "rent" their music,
the subscription services would be wildly successful. That isn't the case.

3. Once DRM-free music was made available from the labels (because the
consumers demanded it), allowing more flexibility in transfer and use,
online sales increased while subscription services saw no spikes and
floundered.

4. Every effort by the labels to try and navigate consumers to purchasing
something they really don't want, will result in more P2P file-sharing.
Translation: If you don't give them what they want, they'll get it for FREE
despite the useless lawsuits the RIAA files against people who download.

5. The anticipated increase in the future of advertising supported models
might let consumers have access to music for free. They will have to sit
through some online ads to get that access, but it won't cost them any money
to get their music. Of course, if the labels decide they won't release their
music libraries to any such models, this possibility never becomes a
reality.

I'm not sure the ad supported models will work, either.

Zero is the new 99 cents.

When zero is your price point, it's time for the record labels to start thinking of getting into another business.

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20/20 Radio Hindsight

There is a YouTube video making the rounds these days that is worth a look.

It's about CKLW's 20/20 News concept when The Big 8 was a dominant rocker in Detroit and Windsor, Ontario.

In my career I also had the opportunity to do this form of rock 'em sock 'em news which in many ways went beyond what news should be. But in retrospect, this video teaches us a lesson and gives us a glimpse into what might have been if radio kept inventing new ways to do things.

I hate to send you away to watch a video, but you must. Come back for some comments that I think you'll appreciate.

Click here.

Radio was forced to carry news in the 60's and 70's. But shrewd radio programmers (myself included) always found ways around it. Burying the news in the middle of the night with 15 minute newscasts -- all this to fulfill the station's commitment to the FCC. We had to deliver what we promised.

In a way the FCC was acting in loco parentis.

Today, the FCC always seems to be acting in the best interests of big business. Hey, this is not a political soapbox I'm speaking from. Democrat Bill Clinton's administration helped bring us radio consolidation and your NAB -- the group you think is acting on your behalf -- lobbied their butts off to get deregulation attached to the 1996 Telecommunications Act.

Many broadcasters didn't see it coming. Consolidation was a surprise to many.

Nonetheless, the old FCC was like the parent you feared if not respected. As a PD, I knew not to run afoul of FCC rules because a) I'd get fired and b) I'd get fired. You know about c) and d).

You earned a license renewal by reaching out into the community. You opened your public files. You explained. Made promises. And celebrated when you won the renewal.

I'm not saying the loss of a news commitment led to the demise of terrestrial radio.

I am saying that when the group acting in loco parentis became a pal of big business, it was the beginning of the end.

I don't think I have to make this case, but...

Radio wanted consolidation, it got it -- and failed.

Radio wanted to realize its financial potential by going public -- and failed its shareholders.

Radio wanted to guess what the public would tolerate instead of ascertain community needs and promise the FCC what little it eventually took to win a license renewal -- and it lost touch with the audience and the next generation. Radio stopped innovating.

Radio begged for breaks to automate broadcasting -- and failed its communities. The ones that didn't, remained the lifeblood of their cities of license.

Radio wanted to broadcast on a bigger, national platform -- and failed to provide the local content that made radio stations so valuable as a marketable asset.

This is not just about the past. It's still happening now.

The Supreme Court has agreed to hear the fleeting profanity case that had until now been settled appropriately by lower courts in the interest of freedom of speech.

Oddly, many broadcasters are happy the highest court is taking up the issue because they are looking for some resolution so that they know what to do. How pragmatic of them?

The NAB swallowed its tongue on this issue dishing out the at-least-we'll-have-an-answer line of bull.

This is a dangerous issue.

The government belongs out of the censorship business.

Again, broadcasters used to know how to be responsible about what went on their air without censorship by knowing and considering their cities of license.

One of my readers emailed me yesterday with this fitting conclusion:

I heard the Chairman of the Senate Commerce Committee speak at a conference once. He said, “Radio is a great service to America. Time and time again you’ve come to the aid of your communities. Your industry has an amazing track record of taking on all challengers to your information and entertainment value. Nearly 99% of Americans listen to the radio every week. You’ve offset movies, television, color television, and I’m confident you will adapt in the information age.”

My writer added: How inspiring! Little did he know the only thing that could kill the radio industry, was the radio industry itself.

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One Radio Station Per Market

Every time I write about how better off the radio industry would have been without consolidation, I get a barrage of email telling me a) you’re living in the past; b) you’re out of your mind; c) how do you expect to compete with new media or d) you hate Clear Channel.

It has nothing to do with hating Clear Channel. As the old phrase goes, some of my best radio friends work for Clear Channel. But the people who run that company now have a proven record of not being ready for prime time.

How do you assemble over 1,000 radio stations and establish an initial value of over $90 a share and then drive the value all the way down to $26.92 (yesterday).

It’s more than that bad Internet, that bad economy, that bad iPod.

It’s about bad management at the top.

And it’s not just Clear Channel. They are the most vulnerable to criticism because they own the most stations. Most all of the consolidated radio companies are doing no better. In fact, some are doing worse.

Clear Channel is getting what it deserves no question about it – a monumental lawsuit that it and Lee and Bain have filed against the banks that are balking at the terms of their $29.5 billion buyout. Who can blame them? It’s not easy being an investment bank these days. That’s another group of financial geniuses, but don’t get me started.

It's awfully strange to me that Lee and Bain haven't tried to negotiate a better more realistic price for Clear Channel. My conspiracy theory is that Lee and Bain have a buyer waiting so they can flip some CC properties -- that buyer being Sam Zell.

And it is fitting that the Clear Channel that started its consolidated life in litigation is ending it by trying to sue the banks into marriage.

But Clear Channel employees deserve better.

These managers, program directors, sales managers, account execs, personalities and support personnel have been trying to run their company’s stations professionally and profitably during all the drama its owners and top management have supplied over the years.

That’s why I want to mention the virtues of owning one radio station per market.

I know. I know. It doesn’t work, right? You have to have critical mass to compete.

But the record shows that not one of the radio aggregators is running a successful, profitable, valuable or futuristic company. So much for conventional wisdom.

Radio is a dying business.

Don’t take it on my word.

Look at all the indicators. Listening continues to erode. The next generation shuns it. Radio advertising dollars continue to be diverted to the Internet. Shareholder value of public companies is pitiful. There is no workable plan to win the hearts and minds of the next generation on cell phones, mobile devices or the Internet and the consolidators have had the best part of ten years to think about it.

So work with me here.

I’m not saying that owners should be strictly prohibited from owning more than one station.

How about this: you can’t own a second station until you can prove you can operate one profitably, in the public interest, find an audience, return a profit (or at least break even) and have a plan to integrate your brand into new media.

I’m only half kidding.

There are success stories.

I often mention Jerry Lee who owns only WBEB-FM, Philadelphia and makes tons of money. He spends a fortune. Buys huge TV ads schedules (always has). Lee (my former boss a long time ago) once told me that he looks for ways to spend money on things that can help his station. How about that? Hear that one from a station owner lately?

But even Lee tried to expand once. He had the interest and money to buy the legendary WFIL-AM in Philadelphia long after its prime and he failed with it. But Lee was smart enough to get out and concentrate on his cash cow 101.1 FM.

Lee is not perfect. I can prove it. He advocates HD radio and that is the black hole of broadcasting.

But his station shows what happens when you do something well year after year. He defies the economy. Defies the wisdom of consolidation (“more is more”), makes ungodly profits for its owner. Has significant money to invest in staff, research and promotion.

I’m on this kick because Bonneville, another radio company I respect, just purchased KRBV (V-100) , Los Angeles from Radio One. That would make Bonneville a one station owner in the second largest market in the nation. It purchased the single property after having left LA as an owner years ago. Inside Radio quotes an unidentified longtime appraiser as saying the acquisition was at a 40% discount.

I’m sure a lot of naysayers think Bonneville’s Bruce Reese is nuts. I’m not one of them.

In fact, Emmis owns a great property in LA – Power 106. They also own a not so great property -- an FM station that used to be country and now is called “Movin’”. Wouldn’t it be better investing its time and effort into keeping its moneymaking brand number one?

Some may argue that what I’m in effect saying is that radio people can’t walk and chew gum at the same time.

Well?

Radio people have to get over a few things before they even have a chance to participate in the future of new media.

You don’t need critical mass to be a powerhouse. Ask Jerry Lee.

One radio brand is enough if …

If you own fifty or 100 lifestyle podcasts (all sponsored).

If you run some different Internet streams that are relevant and marketable to your terrestrial radio brand.

If you have a mobile strategy.

And if your brand has earned a place in the hearts and minds of your audience.

As long as the radio industry believes “less is more” on the air and “more is more” when adding up the number of radio stations it owns, it cannot compete in today’s media market.

No need to own all those stations when you can't operate all of them profitably and effectively.

Own one brand.

Then profit from hundreds of new age ways to create and market content for that brand.

The alternative is to continue to watch audience and advertising share shrink while another, better more economically manageable strategy eludes an industry hijacked by a handful of
Gordon Gekkos.

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Tell Clear Channel to Go to Zell

When The Wall Street Journal reported yesterday that Clear Channel's privatization deal was near collapse it sent shock waves throughout the radio industry.

This ill-conceived way for the Mays family to have one more payday has been teetering on the brink for well over a year.

I say teetering because the economy and the radio industry has been declining since the ink dried on the agreement.

The $19.5 billion price was wrong from the start. You'll remember Clear Channel tried to do the deal at a lesser price than $39 a share, but was forced to up it.

All during the tough times, Clear Channel tried to keep Thomas H. Lee and Bain Capital Partners engaged in the buyout. I wondered aloud why Lee and Bain weren't renegotiating the terms of the deal when the spread between the buyout price and real price got to be as much as $10 -- even with arbitragers considered.

I've said it many times -- Lee and Bain don't need a radio company in a world where radio is in a decline. That the value of buying Clear Channel might be in selling as much of it as they can.

Isn't that the game plan for these buyout artists anyway?

Randy Michaels and Sam Zell came to mind because they are putting together the best radio team in the industry that runs only newspapers and TV stations.

Hello?

Zell is a buyer.

But Zell's M.O. is to buy at a discount and $39 is not much of a discount.

Zell is a buyer.

If the Mays want to sell upon the collapse of the Lee and Bain deal, they'd best not expect anyone else to line up and take the stations off their hands except for -- Zell.

At his price.

The Mays family would also have to swallow its pride in selling to a company that is run by the guy they removed from running Clear Channel. Show me the money. Forget the past. Suddenly everything is okay.

It would be so much easier if the deal went through and Lee and Bain can sell to Zell -- something I have speculated on for months. Why else were they not aggressive in trying to renegotiate the sale price.

Randy Michaels put the Clear Channel clusters together. He would no doubt enjoy the irony of stealing the Clear Channel stations for less than what they could have been worth -- perhaps if he had remained at the helm.

Nothing may happen for a while once the sale finally blows. What's next isn't pretty.

Unless you are a lawyer.

The Journal reports that neither side seems to want to get this deal done -- although anything can happen. The Journal believes both sides are building a legal record for the inevitable litigation that is likely to follow.

What? Clear Channel? Litigation?

The New York Times reports that Lee and Bain and Clear Channel may take this battle to court to force the banks that are balking to complete the original deal.

For the poor folks who have to keep running these excellent outlets under tenuous circumstances, they can expect cutbacks and economies of scale to operate the infrastructure in an industry that is ice cold and headed into the freezer. Tough times for Clear Channel employees. More shortcuts and layoffs.

The Journal reported "The sponsors do not want to do this deal," said one person involved, referring to the private equity firms. "No one wants to do this deal except for the seller."

Ya think?

Randy has waited a long time in Siberia. His boss has money and arguably access to money to buy some or most of the stations for which Clear Channel cannot find a buyer.

It's a strange comeuppance.

These two wacky guys may be the only option for Clear Channel to get out of the industry that they helped to ruin.

That's why many of their employees are secretly putting this curse on Clear Channel --

Go to Zell.

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Let's Play Satellite Radio Monopoly

Yesterday the DOJ fired the shot heard 'round the entertainment industry. It paved the way for the long-anticipated merger of Sirius Satellite Radio with XM.

Now the only thing standing in the way is FCC approval which will come -- maybe in a month or so.

But the question is: how will the FCC screw up this merger by mandating add-ons that have little or nothing to do with the merits of the merger?

Let us count the ways.

Don't get me wrong.

Once Sirius merges with XM it will be a monopoly -- the kind of thing the DOJ is supposed to protect us from. But they gave up on that mission a long time ago.

Now, it's all about what kind of monopoly satellite radio will be.

A group of self-serving organizations is pressuring the FCC to restrict their approval of the satellite radio merger. The suspects include Public Knowledge, Media Access Project, New America Foundation, U.S. Electronics, National Association of Telecommunications Officers and Advisors, iBiquity and HD Radio Alliance.

They are up to no good.

Under the banner of Open Access (sounds as good as The Patriot Act, doesn't it?) this group is out to get the FCC to make the satellite radio operators wish they never thought of the merger option in the first place.

They say they want consumers to have the choice of receiving both satellite networks on the same radio.

That's funny.

That's exactly what the two satellite radio licensees were mandated to do when they got their approvals to launch. Somewhere along the way they were allowed to bypass the rule.

Anything iBiquity or HD Radio Alliance wants is also suspect.

They are sore losers. The public voted, re-voted and the radio equivalent of the Supreme Court has ruled and HD radio didn't win. That's not stopping them. They want HD channels mandated on new satellite radios. You know, the consumer pays for satellite service every month then gets what they clearly don't want -- HD Radio -- for the same price.

That's like going to Ralph's and buying a roasted chicken and being forced to take home raw chicken livers at no extra cost.

Yuk.

Terrestrial radio is also acting like a sore loser.

The granddaddy of self-preservation -- Clear Channel -- has petitioned the Commission to give terrestrial radio access to 50% of their satellite capacity. Think about how ridiculous that is? Imagine Clear Channel giving anything up to a competing medium. But you know the routine by now -- the argument is more diversity in programming.

Stop me if I'm wrong here -- aren't satellite customers paying their monthly subscription fees to get diversity in radio programming? Aren't they consenting adults who knowingly have entered an adult relationship with a satellite radio operator?

Oh, I get it -- it's about a declining radio industry wanting in on a business other than terrestrial transmission.

This whole thing has been a farce.

Sirius CEO Mel Karmazin -- with a straight face, yet -- argued that the merger was not a monopoly because satellite radio now has to compete with the Internet and mobile devices. I wanted to bust out laughing.

One more time -- from two into one equals a monopoly. Period.

But that's okay with me if everyone else including the DOJ doesn't mind.

I'm just getting this awful feeling that the geniuses at your FCC are about ready to screw up a business that was already screwed up before the first satellite was launched.

1. Would they have ever considered mandating building terrestrial radios that were also satellite receivers if the shoe were on the other foot?

2. Would they have considered requiring satellite radio on HD receivers -- God forbid -- had the situation been reversed?

3. Would the FCC have considered a demand by, say, one of the satellite radio applicants in the early 90's to force terrestrial operators to give up 50% of their capacity to the emerging new satellite business?

Fat chance.

The terrestrial radio business would have pitched a fit so loud they would have embarrassed even themselves -- not easy to do.

So my advice to the FCC is hold your nose, approve the Sirius/XM monopoly as is and don't play kingmaker with a bunch of sore losers.

I've got an even better idea.

Once approved, do like Mister Rogers and ask Sirius and XM "won't you be my neighbor"?

Because when all is said and done, the only way radio and satellite radio can coexist is if they are under the same tent. And while we're at it, let's add interactive and mobile media.

Divided we fail. United, well -- we become a new growth business.

Either that or keep fighting these parochial battles even though the consumer has moved on.

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March Media Madness

With the NCAA's March Madness annual collegiate basketball frenzy underway, I see too many parallels to the music media business to not mention them.

Imagine if the key components of the music media industry were basketball teams -- with real nicknames, coaches and game plans.

Let's see if anyone other than Jim Cramer would bet money on them.

The Wireless Mavericks

Remember when many of the major cities in the U.S. were going to make municipal WiFi available to their citizens?

Forget it.

Philadelphia, the leader in round one, is now being forced to abandon its plans because of second thoughts on the part of Earthlink, their partner. Not profitable enough for Earthlink.

This is like basketball shorts not showing up in time for the game and the players had to hide in the locker room.

San Francisco, Houston and Chicago are among the cities and small towns that got early traction for a plan that some hoped would also be a way to help poor networks get online.

In Tempe, AZ and Portland, OR users are suddenly without service as providers are walking away from their deals or refusing to help the municipalities expand further.

Philadelphia vows to keep its service up and running but when City Council held a meeting in December to question Earthlink on how they were going to live up to their contract, they failed to show.

WiFi could have been a contender. It could have been somebody -- to quote Brando.

But after a fast start, the Wireless Mavericks petered out.

The Ruining Rebels of Radio

Radio is competing for the national championship based on the fact that it has been to the big dance before -- many times. But fewer people each day care about radio. And nobody wants their freshman player -- HD Radio. HD was supposed to save the team, but came up short. Very short. Kinda like if a player with questionable talent was hyped as being the next superstar.

This is a lackluster group of consolidators with more hubris than ability to compete with the bigger, faster teams.

Just before the tournament, head coach Farid Suleman decided to cut a lot of his players. His other radio competitors at CBS and Clear Channel also cleared their benches of talented players. Assistant coach John Hogan of Clear Channel reassured them not to worry because less is more.

Radio expects to win the listening championship with a lean mean machine (with the emphasis on mean). Of course, in college basketball this would be ludicrous. But in the world of March Media Madness it's a possibility, however remote.

Internet Radio Raiders

Internet Radio is on a tear. It may be virtually unstoppable and if people could listen via WiFi anywhere -- any time, it would be unstoppable.

Internet Radio is not just the next transmitter for terrestrial radio stations as radio people would have you think. The real value of Internet radio is access for all types of programmers to make their content available. But what is really happening? Licensing fees for music are oppressive and there is no real rate security for developers of this new medium.

This is like a highly competitive college basketball team on a season long winning streak running into -- the flu -- just before game time. The only way a team like that could lose would be if its players were not able to make it to the arena and compete.

Same is true of Internet Radio.

The only way it isn't the favorite to win it all is if the record industry ties their hands by taxing them more than established media companies.

Cellular Wildcats

Mobile phones are so far advanced in Asia. What are we -- a third world nation? Federal regulators and U.S. cellular companies have dropped the ball here at a time when technology and innovation need to be nurtured.

Cell phones rise beyond the ability of consumers to afford them. Almost everyone has a cell phone regardless of their economic status and most have monthly plans that, yes -- include text messaging.

Imagine if a cell phone became a mini-computer?

Well, Apple did and they are likely to up the ante on cellular communication in the year ahead even if they have to do it on yesterday's technology (say, the kind AT&T peddles to its customers).

Using the March Madness analogy, the Cellular Wildcats are lucky to make it to the championship series.

In sports terms, not this year. Maybe next year or the year after. Meanwhile in the off-season, the Cellular Wildcats need more practice and some new plays.

Record Label Titans

This team hasn't made it to the final four in eight years -- and in their league -- they are the final four!

They are working so hard to try and keep the Apple Aggie's out of their league that they are forgetting how to compete.

What's really embarrassing is that Nine Inch Nails and Radiohead are starting to put teams together on their own to play in their league. Their play book calls for new ways to compete and make money -- by giving away music in the hope that consumers will still buy CDs, special albums, merchandise -- something -- from them.

They lost a big player who cannot be easily replaced when The Live Nation Bruins stole Madonna away from Warner.

That's not the worst of it.

No matter how hard they practice, they aren't likely to win another national media championship because the majors and the fighting artists have not solved any of their problems.

The free model doesn't work for developing bands and artists and without developing bands, there is no music industry.

The TV Tigers

The national TV networks were once the envy of media competition. They had a strong bench in entertainment programming, news and sports. Today, their team has been reduced to a few members of the Reality Squad who produce programs on the cheap. This doesn't make for very compelling television.

Even HBO is having trouble putting together a new team to equal the Sopranos.

It's hard to bet on a team that is moving in the direction of YouTube without all the YouTube fun.

Their coaching staff has bitched about TiVo and being forced to make their programs available online in return for viewing a 30-second pre-roll, but in the last few minutes the TV Tigers just don't have the talent, creativity or endurance of previous seasons.

They are helping to turn your TV -- into a computer -- whether they mean to or not.

The Satellite Spartans

This is a very unusual competitor. They got permission to play in the big leagues back in the early 90's by promising to be the future of media and while they were ramping up, the Internet came along and beat them to the punch. Oh, and radio died along the way.

Coach Mel Karmazin has a unique game plan. He's merging his players to cut costs and maybe raise ticket prices later -- for now though, he's telling the "commissioner" that if he approves the team merger he will offer "a la carte" options. Maybe that means you can watch only the first period and not stay around for the ending but you get to pay less!

The Satellite Spartans have an uphill battle. They've never won a national championship and never won the hearts and minds of the Media Madness fans, but they have a plan to turn it around.

Less choice for less money -- what a concept. Their game plan has some problems because you already have a competitor doing that -- terrestrial radio.

Still, if the Satellite Spartans make it to the final four, you can count on coach Karmazin to march right up to the commissioner's office and demand that they merge the final four teams into the final two.

Oh, well ...

The rest of the nation only gets March Madness one month a year.

In the media business, we see madness every day.

In an age when there is so much exciting technology that unlocks so much creativity and inspires so much innovation, the problem seems to be so few people in charge of the game that are not oh-so-ordinary.

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The 7 Words You Can't Say On Radio

The U.S. Supreme Court has agreed to hear a case concerning vulgarity on the airwaves -- you know, Bono using the F-word in an unscripted broadcast, etc.

The FCC wants the power to punish carriers that are responsible for such slips -- like the ones Cher and Nicole Richie made at a Billboard Awards show.

I guess the Supreme Court has nothing better to do -- the next presidential election doesn't need to be decided until November. What's remarkable about this issue is that one of the chief proponents for stronger FCC power is the Parents Television Council -- a group some consider right wing wackos.

In fact, as The New York Times reports, "Of the 234 complaints the commission received after the 2003 Golden Globes broadcast, all but 17 were generated by the Parents Television Council".

This is also the group that brought in over 90% of the complaints about seeing Janet Jackson's boob during the Super Bowl.

Now, the issue is out of our hands -- the one about vulgarity on the radio, that is.

However it harkens us back to the day that George Carlin caused a big stink by having the audacity to utter the 7 Words You Can't Say on TV. That begs the question (and you'll soon see where I'm going with this) -- what are the 7 Words You Can't Say on Radio?

1. Variety -- Listeners know that when stations claim "more variety" what they really mean is the same 30 songs over and over again. In fact, there is even less variety in the liners and sweepers that tout "more variety". Ask any listener under the age of 25 what "variety" means on a terrestrial radio station and they will tell you it's an empty promise.

2. New -- like in "new music". Again, long before consolidation drove the spike into the heart of terrestrial radio the lack of new music on-the-air was choking it. The reason is that programmers have been drinking the Kool-Aid of research companies they've been hiring for years in which results show -- play the hits over and over. It's always worked before. Only one problem. The next generation doesn't care as much about hits. This social networking generation is more interested in whether a friend likes a tune than if a station plays it to death. So much for research.

3 and 4. Fewer Commercials -- Hey, if they're not believing "more variety" and "new music" why do you think they are going to believe "fewer commercials"? One good reason is that ostensibly (and with all due respect to our forefathers who gave us "less is more") it still sounds like the same high number of commercials on terrestrial radio. Oh, and yes, most of these commercials are awful. Clients doing their own spots who should never be on the air. Spots that have more copy crammed into them than even a genius can comprehend. Fast talk. Crummy music. Copy written by account execs. Stop me! I can go on forever. Fewer commercials, indeed!

5. Talent -- That's because radio has been methodically exterminating on-air talent the way Terminix eradicates household pests. Radio used to have afternoon personalities because somehow they got the idea that listeners returning home from work wanted to hear the same kind of personalities they enjoyed on their way to work. Bad consolidators! Remember how hit music stations used to even have night-time jocks that were personalities and trendsetters for the youth audience. Aaah, who needs them? Throw on some voice tracking and no one will ever know. Or listen.

6. News -- Somewhere along the way these past 30 years, radio stations have conducted a holy war to reduce and then finally remove news from the radio. Makes sense, doesn't it. Why not take away another local element that distinguishes them from -- say, an iPod. Think of the savings! Anyway, there are lots of ways to get your news these days, but radio isn't one of them. Maybe it wasn't such a good idea after all to dump local news.

7. HD -- (I know, HD is not a word, but it's also not High Definition). The reason you can't say HD on the air is because your audience may drop their cell phones out of their hands, cause an accident -- all this because they can't stop laughing. Remember, people listened to AM music stations for years not because they sounded as good as a recording but because of what was between the music. When you say you're broadcasting in HD, it's like saying you're breathing air -- what is so remarkable. HD is a figment of radio's misguided imagination but it is meaningless to the audience.

I don't envy the Supreme Court for having to rule that the FCC has the lawful right to punish broadcasters for fleeting and unplanned vulgarity over the air. I think there's a good chance that will be their judgment. I don't agree, but that's my personal viewpoint. Some radio people don't really care, they just want to know what the guidelines are going to be so they can avoid the fines.

I do wish we were all more concerned with preserving the right to free speech than we seem to be when 217 lunatic fringers get a bee in their bonnet.

But if radio stations are seriously looking for a way to do something positive for their declining audiences, scroll back up to the 7 Words You Can't Say On The Radio and fix them.

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Inside Apple's iPod Subscription Plan

No doubt those of you who follow the music media business have heard that Steve Jobs is supposedly working on a program with the major labels to sell fully-loaded, "all you can eat" iPods with virtually everything ever recorded.

Well, if you have you may not be getting the real story.

My contacts at the record labels confirm that discussions have been going on for sometime -- for Europe.

No deal can happen in the U.S. very easily because of publishing issues.

Nokia apparently has set the bar for what it would take to get the labels to offer their libraries as a benefit for buying a fully-loaded MP3 player -- that's $80 per unit.

Jobs is reportedly offering $20 to be divided by market share as he is playing the labels for a sucker -- something he is very good at.

There's no deal here in the U.S. but the press is all abuzz over the thought that Steve Jobs may actually switch over to a rental model for music on iPod and iPhone devices.

But Jobs has a plan.

There are some who think he must have been involved in leaking the story. Apple is air tight when it comes to which of their secrets get out so the Jobs theory is plausible.

Some at the labels think that Jobs' motivation is to -- duh, sell more iPods and iPhones. The year ahead is not a slam-dunk in an uncertain economy and there is some evidence that the dew is off the lily for iPods.

Because the new "all you can eat" version of iTunes won't work on old iPods or iPhones that means we'll all have to simply buy new ones -- that is, if we want the fully-loaded music feature.

What do you get?

No one knows for sure but some scenarios out there indicate that consumers would buy new iPods or iPhones and then get the entire universe of recorded music for the price of the device.

That is, music included for a certain period of time that has not yet been established.

And at the end of the term, it is possible that the consumers who bought these new fully-loaded iPods and iPhones would get to keep a set number of songs permanently. That number has not been determined but it would likely be more songs than the difference paid for unlimited music and what the same songs would have cost purchased separately on the iTunes store.

The labels might be better off sticking to the 99 cent model.

There's another issue.

In the years I've been working with the next generation I see little evidence that renting music is appealing to them. Witness the demise of AOL music or the lackluster performance of subscription services like Rhapsody.

The MP3 player and mobile device is fast becoming the new frontier in music sales.

iTunes' top downloads are purchased by older, white consumers.

Cell phone users are heavily into hip-hop -- almost exclusively. This is so big it is one-half of the labels' digital sales. The cell phone customer is younger and they are willing to pay more for less when it comes to cell phone music.

The record labels are certainly motivated to sell more music, but they've been had by Steve Jobs before.

After all, its the record labels that made it possible for Jobs to start the iTunes store and launch his iPod device because he argued successfully that it was the anti-Napster. Because labels were being robbed blind by free downloading at the time, they saw iTunes as no big risk and it might even help sell music.

They would have been better off to buy Napster and take them out instead of suing them. Instead, the labels enabled Steve Jobs and Apple to succeed with iTunes and become a major player in their business.

Now Jobs is back for another bite of the -- dare I say, Apple.

This time he is peddling a way for the labels to get their way -- revenue from monthly subscription service while at the same time paying them a small premium per phone.

It's like the Trojan Horse.

To the eye, it looks like the music rental service the labels are clamoring for. But when you look inside, Jobs' plan is really a way to purchase music at a price lower than 99 cents a song after the initial grace period is up.

My advice to the labels this time around -- beware of geeks bearing gifts.

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In Music, the Customer is Always Wrong

It never surprises me that the music industry is in the mess that it's in.

Consumers want one thing and the record labels want another. In any other industry, this type of thinking would put companies out of business. But in the music industry, it's standard operating procedure.

Examine the evidence.

1. Starbucks sells CDs when customers obviously want coffee. According to a recent New York Times article the average company-owned Starbucks sells only two CDs a day. Starbucks disputes the figure, but refuses to supply Times reporter Jeff Leeds with a better one. Starbucks has lost its way in the coffee end of the business, too and recently coaxed its former CEO back to rescue the company. One of the first things he did was close the stores for a few hours to offer in-service training to teach employees how to make it right for the customer or give them their money back. Same should apply to music. Customers don't want CDs. They want downloads. Starbucks had a plan to install machines at their stores that would allow customers to fill up on coffee and also fill their MP3 players up with music. Where are they?

2. Record labels want to make up for the loss of CD sales revenue with monthly subscription fees that offer consumers more music than they could ever imagine. The problem is that most young people don't want more music than they can imagine. They want what they want and they want to own it (or steal it). The customer and the labels are at odds. And the labels don't get it. They flick off the failure of AOL Music. They discount the less than impressive example of Rhapsody's subscription model. No, damn it -- the customer is going to get their music by paying the labels a monthly fee! But customers are vowing, no, damn it -- I'll get what I want for free. Smart strategy on the part of the labels, eh?

3. Fans love live music. In fact, live music is one of the few bright spots for the music industry. Young people and students overwhelmed with evil professors who force them to work too hard during a semester will find the time and money to pay outrageous ticket prices to attend live concerts. And it's not like when they get to the venue that things get cheaper. Everything costs a fortune. So, let's see if we have this right -- music loving young people will beg, borrow and steal to go to a concert and the concert companies will rob them blind. Sounds like a match to me. Even Steve Jobs knew when he overpriced the first generation iPhone and swiftly cut the price. Only in music can you expect the entertainment providers to spit in the face of an adoring and willing public.

4. The next generation lives on the Internet. They work, play and enjoy entertainment on their laptops. Music lovers consume music like no generation before them thanks to Internet streaming and digital downloading through peer-to-peer groups. So, how does a music industry down on its luck respond? They discourage Internet streamers who will give their music wide exposure by seeking unreasonable royalty rates against them. This is ludicrous because Internet streaming is in its infancy and imposing burdensome rates on a burgeoning industry is an insult to the the consumer and tantamount to the labels stunting the growth of a new age business that can help them sell music.

5. Rabid music consumers want to mash up their own albums. They no longer want 12 tunes from the same artist. Consumers sent that message to the labels five years ago when they started to buy individual songs from iTunes instead of purchasing entire albums. Yet the labels give lip service to the current mash-up trend. They reiterate that they want to sell albums. After all, albums are the holy grail. I don't know about you, but I have only a small number of albums that are best enjoyed when they are played from front to back. Could it be that the labels' desire to promote what they want -- selling albums -- and killing off the sale of singles was their real strategic mistake? Never underestimate the desire of the next generation to get actively involved in their music.

For the record labels, it seems the customer is always wrong.

But for Apple, the customer is always right.

This is not to say that we all haven't had a issue or two with them but on the whole, Apple gets it.

No pressure selling at the Apple store. (I'm on my new MacBook Pro for the first time today and they helped me agonize between Apple Air and MacBook Pro and then said order it online if I want). They even take back laptops with glossy screens when consumers realize they made a mistake and would prefer the matte finish. It has to be done within a few days, but they do it. The Apple customer can't lose.

My daughter lost all her iTunes songs on her iPod -- you can imagine the crisis. We explained, Apple reactivated them. Done. Now, I have heard of others not being as fortunate, but I have also heard many more customer-centric stories like mine.

Apple, as imperfect as it is, tries.

They try to satisfy customers by giving them products and services that they like.

And guess what?

We pay for it -- dearly.

Could there be a connection between the customer being right and the ability of a company to earn record revenues?

This is not brain surgery to you or me, but to the music industry it is one of the great mysteries of life.

The future looks like this:

Downloads not CDs.

Own not rent music.

An insatiable appetite for live music.

The Internet as the music industry's new "radio".

The new album is whatever the consumer mashes up and says it is.

The record industry is on the wrong side of all these significant and current issues.

Is it any wonder that the company that defies you to use their product is the one that is always wrong.

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THE INTERNET, MOBILE MEDIA, AND YOUTH ARE NOT TO BLAME

Traditional media industries and companies are overwhelmed with an atmosphere of consternation and fear today.

Trade publications and industry association meetings are filled with news of diminished budgets, reorganizations, consolidations, and layoffs. People say traditonal media are declining and will soon disappear. Potential employees are wondering if there is a future for them in the industries and senior employees are hoping their jobs will last until they reach retirement. Everyone is pointing the finger,but most of the blame for killing traditional media is laid on the Internet, mobile media, and young people.

There is just one problem with their scenario. IT’S NOT TRUE. We have deluded ourselves into thinking that well established media are dying and that young people are uninterested in traditional text and audiovisual media.

Although new distributors of information and entertainment abound and video on demand and consumer-created content are increasing daily, consumers’ greatest time allocation and advertisers’ greatest expenditures remain with traditional media. Although young people have adopted newer media technologies more rapidly than other population groups, most of their media use still involves film, television, magazines, and non-traditional newspapers.

If the death knell for traditional media is not ringing, why do industry personnel keep hearing bells in their ears?

The reason is that significant changes are underway and most people don’t understand them. We have reached a era when the collective weight of expanded offerings of traditional media and the appearance of new types of media are ending the relatively undemanding operating conditions that existed due to lack of media choice and are removing the effortless profits that traditional commercial media enjoyed for a half century.

Suddenly there is competition. Suddenly there are financial losses. Suddenly there are company failures. Suddenly audiences are no longer satisfied with the “take content on our terms when we want to deliver it” approach that traditional media have offered. Only it wasn’t really sudden. Those factors have been growing incrementally for at least three decades. The problems were certainly compounded by the arrival of Internet and mobile content distribution, but they were not caused by them.

Let’s look at the case of the newspaper industry in the U.S. Readership problems have been evident for half a century. Although actual circulation rose continually throughout the twentieth century, reaching a height of 62.6 million in 1993, penetration has declined steadily at 1 to 2 percent each year since 1950. The pace has been steady despite the appearance of additional types of media. The expansion of network television didn’t increase the loss, the arrival of cable channels didn’t amplify the decline, and the arrival of the Internet didn’t boost the pace.

Today, the Internet is having an affect on advertising, but even that is not disastrous despite the wailing and gnashing of teeth. Total U.S. newspaper advertising was $46.6 billion in 1999 and $49.3 billion in 2006. In financial terms newspaper advertising is rising, but when accounting for inflation it has basically plateaued so one can not say the Internet is killing papers. If we look at classified where the biggest substitution exists, classified advertising in newspapers reached a height of $19.6 billion in 1999 and it was $16.9 billion in 2006. Clearly a decline occurred but it was offset by the fact that newspaper online advertising produced $2.6 billion in 2006. Overall, the business has stopped growing and investors are unhappy, but the industry isn't dying.

Certainly, the Internet is having many effects on established media. Research shows that print media business models have been least disrupted, unlike audiovisual media, but that print media work processes are changing most among media. However, Internet, mobile and other new form of distribution are providing all types of traditional media new opportunities.

Similar things have happened in the television business. The change from a limited number of television channels to hundreds of television, cable and satellite channels spread the audience, reduced the viewers of dominant stations, and made advertisers unwilling to continue paying previous prices. The big 3 networks could count on ratings in the 20s to 30s in the 1970s, but today they achieve ratings in the teens and are fighting to stay among the big 3. Nevertheless, viewers want network programming--on TV, as DVD, as syndicated programming, as downloads. There is no sign that demand for interesting programs is diminishing even if the basic television ratings are falling and new ways of monetizing the content are being developed.

We all need to recognize that changes in traditional operations are painful for industries, companies, and their personnel and that the contemporary changes are placing a lot of stress on management and employees. Everyone would prefer to continue doing things in the old ways they know well, but because of the new conditions those business models, processes, and market techniques aren't working as effectively as in the past.

The biggest challenges facing people in traditional media today are pessimism and lack of vision. Morale in publications and stations continues to drop, and doom and gloom are everywhere. That negativism makes things worse internally, reduces confidence of advertisers and investors, and makes it difficult to think about trying new things or even trying old things in new ways. The first step out of this condition is to stop lamenting the passing of the past. Things will never be the way they were. So get over it. Move on. Discover and embrace new ways of operating and new opportunities to prosper and grow.

The Evil Empire Vs. Satellite Radio

Clear Channel, sometimes referred to as The Evil Empire in the consumer press, has finally let the FCC know the merger conditions it is requesting should the Commission approve the merger of XM and Sirius. That is, after the DOJ decides.

Clear Channel is a minority owner in XM and has been for a long time. And, they provide some terrestrial programming for XM.

It must have been a good fit way back then because from the looks of their merger conditions, satellite radio is the evil empire -- not Clear Channel.

Here's what Clear Channel wants (in bold) -- with my comments:

1. No less than 50% of broadcast capacity be made available for lease to create "a viable competitive alternative" to the merged company.

Let me get this right. Clear Channel wants XM and Sirius to give terrestrial broadcasters half of its channels so that woefully inadequate terrestrial radio can wind up on their competitor -- satellite radio. That's as ridiculous as XM and Sirius demanding (at license renewal time) 50% of Clear Channel's towers and transmitters to air their programming. You know, as a viable alternative. This is laughable in many ways not the least of which is how it has disregarded what the satellite customer wants. Remember the customer? They choose to pay monthly fees for an alternative to terrestrial radio. If they want terrestrial broadcasters to provide them with content, they can simply hit a button in their car that says "radio" -- for free.

2. No less than 5% of capacity be set aside for public interest programming, modeled after the 4-7% requirement for DBS services.

A group called Public Knowledge made the same stipulation -- coincidence? You decide. This is simply pandering to the FCC on diversity and minority issues. I'll bet 5% of any terrestrial consolidators programming is not designated "public interest". These guys are proposing this stuff with a straight face, I assume. I don't know about you, but I'm laughing at them.

3. That Sirius-XM be subject to indecency regulations. Because, "one of the primary potential dangers to free, over-the-air radio posed by this merger is siphoning popular, including 'edgy' content, with consequent loss of advertising revenue."

Sours grapes. All things are not equal. Satellite broadcasters charge subscribers for their programming and these customers can opt out of edgy stuff. This is simply a way for an industry that lost Howard Stern -- and one that has to defend Don Imus -- to cry foul -- officially, that is.

4. Sirius-XM be prohibited from broadcasting local content.

I'll bet they'd like XM and Sirius to stay national. But those legal satellite repeaters that some argue are not necessary -- some as powerful as 50,000 watts -- stand ready to offer local competition to terrestrial radio. Wouldn't it be ironic if the cry babies at Clear Channel actually helped level the playing field for XM and Sirius with a what's fair is fair policy. Let's say radio gets its way on #1 (above) and XM and Sirius must cough up some of their channels to terrestrial broadcasters. Then, it's only fair that XM and Sirius can compete with local radio using their repeaters. Public Knowledge, by the way, is in favor of this.

5. Following #4, Sirius-XM be prohibited from receiving local advertising revenue.
And I guess what's fair is that if the FCC grants Clear Channel the right to lease 50% of their satellite channels, they, too would be prohibited from receiving local revenue. Right?

6. The FCC require that HD Radio capabilities be built in to all satellite radio receivers.

This is par for the course for a desperate radio industry that hasn't been able to get consumers interested in buying HD radios. It is a proven fact that consumers will buy satellite radios and then pay monthly subscription fees so why not reward terrestrial radio for failing by giving them another free ride on satellite receivers -- you know, the ones people are actually buying. The iBiquity people are on board with this one as if I had to tell you that.

So, there you have it.

Another example of why terrestrial radio consolidators are a joke. They fail their way to desperation. Want to hitchhike their fading fortunes to an industry that never made it. Satellite radio is a medium that has so many of its own problems that it is seeking this merger as a remedy in the first place.

Luckily no one will ever grant the Clear Channel wish list. No one is seriously listening to them.

In fact, increasingly fewer people are actually listening to their terrestrial radio stations. Or buying commercials. Both benchmarks continue to decline.

Oh, and if you fail to see the humor in The Evil Empire's latest Darth Vader strategy, you probably won't be laughing when you come to realize that WiFi radio is more important than satellite or terrestrial radio because it carries what all generations really want --Internet streams.

I'm sure in light of that which we have covered here, then, you won't be surprised that Clear Channel recently removed all its terrestrial streams from WiFi radio.

Can you see why these people have run their own business and the radio industry into the ground?

It's not just greed -- although it is that, too.

It's about incompetency.

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Mad Radio

CNBC's Jim Cramer has been out to get terrestrial radio of late. The circus-like Mad Money show is hard to watch and even harder to tolerate if you work in radio.

Cramer's advice to investors owning radio stock is "sell, sell, sell" which is easy to say because he doesn't own Citadel at $1.32.

I don't know whether to advise you to listen to his most recent and scary rant, but we're all adults so here's the link. Promise me you'll return because there are some important points to be made.

1. Cramer worked in radio. Cramer no longer has his show. That makes it easier for him to pimp satellite radio. I can't imagine him attacking the industry in this way if he still had his show.

2. What is he on -- no, I mean, seriously not because his show is a circus but because he actually thinks satellite radio is a growth business. I haven't seen anything to indicate that satellite radio will fare much better than terrestrial radio. Does he have a horse in this race?

3. Unfortunately, Cramer is right about the demise of terrestrial radio, but he's got the reasons wrong. Terrestrial radio died because of people like him -- Wall Street folks who pumped lots of money into radio consolidation and stood by as worried shareholders withdrew their investments at a loss. Cramer and his buddies are the reason he can rant and rave. If I'm satellite radio right now I'd be worried, too, because even after the merger goes through, technology is outdated. Since the first and only two satellite radio companies asked for federal approval to launch their satellites, the Internet has come along.

4. I didn't hear Cramer mention how important Internet streaming through WiFi or WiMax is to the future. That's because Wall Street can only see the future one quarter at a time. They don't know what Main Street wants or what the next generation demands. If they did, they'd realize any business that allows consumers to listen to the Internet on the go is a growth business.

5. I guess Cramer fancies himself as a populist trying to incite his viewers that they -- whoever they are -- don't want you to have what you want -- presumably satellite radio (if he is to be believed).

6. Cramer refers to the deal Mel Karmazin promised regulators in return for approving the merger -- tiered pricing -- that Cramer thinks is good. Wait until the consumer sees what they don't get with bargain basement pricing. Kind of defeats the purpose of satellite radio. Who needs the equivalent of basic cable in the car?

What I'm saying is that Jim Cramer is right about radio for the wrong reasons. It isn't worthless. It still has huge -- albeit it older -- audiences. And in spite of the recession and recent signs of economic vulnerability radio still generates lots of cash flow.

I don't like to mince words about radio's problems. It's a proud industry that has seen its better day. The next generation got away and the present generation of radio CEOs have a lousy track record and an even worse understanding of what radio will have to be ten years from today to still be a viable revenue source.

As for Jim Cramer, I am sorry to have to knock a fellow Philadelphian. But from my years of living there perhaps Philly folks can use their patented response to his self-serving and misguided radio rant.

Boo.

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New Radio

By Jerry Del Colliano

At left with the program consultant Todd Wallace (center) and former KOOL-FM, Phoenix morning personality Bill Gardner.

We had a great lunch in Scottsdale Wednesday that could accurately be described as "good times, great oldies". I've known Todd Wallace from the very, very early days of Inside Radio and Bill Gardner and I worked under Paul Drew when he was doing Drake at WIBG in Philadelphia.

It's always good to be with old friends. Todd still consults. Bill was one of the many victims of the recent CBS cutbacks. He was a highly rated morning personality so his departure is either gutsy or stupid depending on where you're sitting. You know what I think. The ratings will tell the story soon. Bill is so big in this town that when now presidential candidate John McCain made a recent visit to Bill's show, McCain was pleased to be on his favorite radio station. Give a listen. (Advance to the end to hear the possible next president of the United States be a KOOL-FM jock).

That day, I shared with my friends the view that radio cannot survive as it is right now. I'd like to pick up where I left off.

Apple is getting ready to start making its iPhone the killer app many of us thought it would always be.

Upon introduction it was sure cool enough which is why consumers bought it even if they had to get saddled with AT&T service.

Now, within the coming months, CEO Steve Jobs is going to offer iPhone users push technology through Microsoft Exchange so businesses can opt for instant email communication. While big companies are not likely to dump Blackberry immediately, the iPhone will become a future option in corporate smart phone communication.

But that's not all.

Jobs is also going to offer third party software through the iTunes store and accessible over an iPhone with just a click to access many neat applications.

Here's how David Pogue described it on his New York Times blog:

"The release of iPhone 2.0 is over three months away, but I’ll stick my neck out and make a prediction: it will be a gigantic success, spreading the iPhone’s popularity both upward, into the corporate market, and downward, into the hands of the masses. iPhone 2.0 will turn this phone into an engineering tool, a game console, a free-calls Skype phone, a business tool, a dating service, an e-book reader, a chat room, a database, an Etch-a-Sketch…and that’s on Day One".

So what does this have to do with the future of radio?

For most people in radio it probably means nothing, but they should take a closer look at the implications.

Radio is fast losing the next generation to their cellphones, texting, social networks, iPods and even their laptops. Radio's programming is unremarkable to them. Putting programming aside, there is nothing more uncool than a radio -- except maybe a Microsoft Zune digital music player.

For those who are willing to cross over to the other side for a few moments, let me share some thoughts on new radio based on my experience with the next generation and the developing technology that appears to be enabling the changes you will soon see:

1. Radio is no longer just audio. If you want to limit yourself to that definition, you lose because the next generation is over it. They want to see, hear and read whatever they want whenever they want it. Try to imagine that someday a new age radio company (I can dream, can't I?) says, we can do this. No longer just audio. We're in the picture business. We can deliver text. Video.

2. Terrestrial transmitters are antiques. Sorry about that if your company happened to spend hundreds of millions of dollars in each market during consolidation. Monopoly failed. Do not pass go. Do not collect $200 million in return for your poor investments. Towers and transmitters can only do so much today. They can't do what I described in item one above. Start letting go. (Are you uncomfortable, yet? -- good, you're stretching yourself).

3. 24/7 programming is so yesterday. If you really want a view of one aspect of new radio, keep in mind that the next generation has a short attention span. They are not like us. They won't carry a transistor radio or Walkman around and plug into live radio programming. They are used to listening in shorter segments and they're now accustomed to more variety -- which brings me to the next disconcerting reality of the new age.

4. New radio will be TiVo. This generation -- the one we've driven off, neglected and insulted -- is big into time delayed entertainment. Don't knock it. We are, too. That's why many of us have TiVos or DVR devices. (I watched the Flyers-Maple Leafs game played in Philly from my Arizona home the other night because the time difference makes it hard for me to have a life and watch the hockey games. Flyers lost so I could advance past all the replays of Maple Leaf goals. Who wants live when you can watch when you want and control the experience?). The next generation will decide when to listen to new radio, start it, stop it, advance it, rewind it. Radio stations have lost that power with this generation. (Anyone hyper-ventilating, yet?)

5. The new radio is podcasting. I know. I know. You and I both need anti-nausea medication if this is true because we both know that today's radio companies will screw this up. They'll appoint a national director of podcasting (Maybe Chief Pod) and that person in his or her infinite wisdom will decide what the entire population thinks are the best shows to deliver. They'll probably try to target advertising segments. How awful. Can you not see this happening? Of course, it will fail. The podcasting that will work is the kind built around -- forgive me for saying this dirty word -- content. Local content created by experts.

6. Podcasting will emanate from local radio clusters (that is, if the consolidators haven't given up the fight and started to sell their hard assets off by then). Imagine a meeting at, say, a station cluster in Philadelphia. The facilitator probes to find out the interests of the station's employees (horrors!). She finds that one person is a bed and breakfast enthusiast and knows everything there is to know about Victorian B&B's in nearby Cape May, New Jersey. Done. That person provides the substance. The station uses production values to create the podcast. Steve Butler, who used to run Inside Radio for me back in the day is a Miata freak. I can see Steve, an excellent writer, providing a compelling half-hour podcast on his passion. Imagine what it could sound like with radio station production values. The Columbus Blue Jackets NHL coach Ken Hitchcock is a Civil War buff -- bet you know what I'm thinking.

7. No commercials -- just lots of money. I feel the anger of traditional radio people already and I haven't even finished this piece. I can imagine, what I'm going to read "you've been hanging around college kids too long". "You've crossed over to the other side". "You hate Clear Channel" (I get that one everyday-- and I don't. I love them for personal reasons). Podcasting like a lot of new age content will fail miserably if radio people try to be one-trick ponies and cram the only thing they seem to know -- spots -- into the podcast. No. No. No. This generation wants their content free. But I'd make a fortune (and maybe I will because I plan to take my own advice).

8. The money is in ancillary businesses not the podcasts. Back to my examples: I could put together a Victorian bed and breakfast extravaganza in the Philly-South Jersey market tied in to the daily half-hour podcast. Listeners can opt in to attending, sign up to stay at various B&Bs participating sponsors, buy products that will be made available through your moneymaking new age radio operation. Radio knows how to do this -- remember Bridal Fair? The Miata example? A road rally -- listeners opt in, pay to enter, buy gear, sponsors sell them things during the rally. Civil War buffs unite. There will be advertisers who would like to help you have your next reenactment of the battle of Manassas. (Notice, I haven't even started on pop culture topics). You're not going to like this -- your revenue will not be from commercials. There, I've said it again.

9. All podcasting is local. Just like all good radio which is why I would retool my radio clusters and spend heavily to develop content and aggregate it online, on the phone and everywhere. This is the reason why podcasts -- maybe as many as several hundred a week -- are the next add on to the terrestrial radio business.

I don't know about you but when I think about how seamless my iPhone is going to access applications and how easy it will be to dock and rock with content people can carry around and enjoy on their terms whenever, I get excited.

Go down with HD, suffer fools like consolidators that can't run an accretive business and yearn for the old days when radio controlled the delivery system if you insist.

Or step up and retool.

Go get new skills.

Get help to facilitate the opportunities of the future and you'll be in one of the many new businesses that under one tent will be called new radio.

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Prostituting Radio

The fall of New York Governor Eliot Spitzer -- the hated zealot who among other things forced the record and radio industries to own up to their failings and pay for them -- has now been forced to do the same.

Spitzer resigned as governor yesterday in a scandal over paying prostitutes and the once squeaky clean former New York state attorney general has fallen off his pedestal. Looking at the anguish, hurt and tears in the eyes of his wife Silda, not to mention what his three girls are going through makes it more than a "he got what he deserved" moment of revenge.

A number of my readers have expressed great delight in Spitzer's falling from grace. He deserves it, no doubt. But there are similar issues we in the media business ought to consider.

Our hubris -- our arrogance -- has also gotten us and our industry into trouble.

The radio and record businesses have been involved in payola for a long time. Spitzer caught them one more time. Radio has been complicit in payola situations on individual and sometimes corporate levels throughout the years. It could be argued that Spitzer gave radio what it deserved in the most recent examples where they got caught.

What I want to focus on is what happens to radio executives when they get great power -- financial and otherwise -- over people.

In radio we saw the Mays family roll up unprecedented clout. At one point in the early days of consolidation Clear Channel had a cottage industry in litigation because they, well -- they could sue anyone. Some fought it and few prevailed. Others like my friend John Rook were left devastated and ruined.

They are getting their just due now -- exiting out the back door -- to occupy an unsavory place in the proud history of radio. This may someday be the legacy with which they and their heirs will have to live. I guess the money they've amassed along the way makes it easier for them.

This is not just about Clear Channel. Look at the other big consolidators.

Take Teddy Forstmann. He moved in and hired radio's best known bean counter to eventually devastate the Citadel and, later, ABC radio stations. CEO Farid Suleman still hasn't learned his lesson. He's playing dodge ball with the blame and because he still has the power is making his talented people pay for his mistakes with their jobs. Suleman will likely go on to count beans elsewhere someday having earned a lot of money (he makes $17 million a year at Citadel).

There have been many other insults and abuses along the way:

1. Private planes, excessive entertainment and excessive executive pay while employees were saddled with budget cuts -- that is, if they were lucky enough not to lose their jobs.

2. Gutting radio stations -- in effect prostituting the product -- to make shareholders and investment bankers think that they were buying into a growth business.

3. Paying millions in "finders fees" for bogus "introductions" for station acquisitions while simultaneously forcing managers and programmers to double up on responsibilities to save money.

4. Failing to promote women and minorities to managerial jobs (other than sales) when most other industries became convinced such actions would be good business.

5. Selling out the smaller owners who were forced to sell (true, at nice profits) when the NAB helped get consolidation legislation passed in 1996. They sure didn't have the option to stay on and compete as a mom and pop owner.

In our industry, whores and prostitutes are not the ones that are being hired as high class escort services. They are often the ones we are employing to be custodians of the people's airwaves.

Look, I'm certainly not saying that all operators are prostitutes. There are many good ones out there. Emmis' Jeff Smulyan is good to his people. Bonneville's Bruce Reese is always decent. Greater Media's Peter Smyth is good, steady and fair. I've had my differences with Cox's Bob Neil over the People Meter but he runs a quality group. Lincoln Property stations are top-notch. There are many more --- forgive me for not mentioning all of them.

So, radio people should take little joy in seeing Eliot Spitzer gets his well-earned comeuppance.

The real satisfaction will come when the people and companies who killed off the radio and record industries are gone.

To be rid of them is the real satisfaction and what I truly believe is the starting point to remake radio into a joint terrestrial, interactive and mobile platform of the future.

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The Noise You Can't Hear Yet

Call me suspicious, but the Clear Channel buyout is supposed to close shortly and Randy Michaels keeps hiring more radio people for the television and newspaper business.

What's a person to believe?

There are a lot of funny things about the Lee and Bain $29 billion Clear Channel bailout starting with the price.

That price was determined over a year ago and since then the radio business has continued to tank on every level including local and national sales and share price. Still, these folks at Lee and Bain have not asked for the usual renegotiation to obtain a more reasonable price. What's up with that?

Dumb or smart like a fox?

Shareholders have gone along with this long national nightmare. Their Clear Channel stock had dipped to below $29 as arbitragers were buying the hell out of it because the sale price is $39. It was up to $36.10 at the closing yesterday. This deal is going to happen.

Meanwhile, Sam Zell's main operator, Randy Michaels hired another good radio man to work in the television and newspaper business. Go figure. Lee Abrams is leaving XM Satellite after a long career there to join Randy in Lee's hometown of Chicago. Lee is a friend and an excellent programmer. He'll be chief innovation officer for Randy. Too bad he's not going to program any radio stations. Maybe Lee can manage the Chicago Cubs.

Abrams. Frank Wood. Bobby Lawrence and some lesser players from his Jacor days have rejoined Randy's noise you can't ignore.

It could be that Michaels is comfortable with the people he knows. And that radio people make good executives in other business, too -- something I write about all the time. If so, Michaels is just hiring good people.

On the other hand, this is still Randy Michaels -- new age TV and newspaper executive.

I've written before how I believe there will somehow be a connection between the sale of the Clear Channel stations to Lee and Bain and Zell and Michaels. I admit it's speculation but I'm going to air it again.

Lee and Bain are not operators. If radio consolidators -- the ones who supposedly know this business -- can't run their groups to reflect shareholder value how will Lee and Bain do it.

I don't think they can. And their game plan will be what you would expect from takeover specialists -- build it up and sell it off or cut the size and build up the retained assets.

Part or most of the Clear Channel stations -- the ones Michaels put together for the Mays family -- could return to Michaels who will then build a radio group and interactive platform to show those Texans how to make money again.

Or maybe I've underestimated the magnetic and powerful lure of the newspaper business. Ya think?

This is the calm before the storm. The noise you can't hear yet -- to bend Michaels often used motto.

Whether Zell and Michaels get the Clear Channel stations they want or not it's hard to believe they won't add radio into their mix and show everyone where they left off.

God forbid if Lee and Bain keep the Clear Channel stations -- especially if you work at one now. Lee and Bain would have a death wish. I think they are smarter than that.

And I don't think major radio talent has to work in the newspaper business when one of the most prolific radio programmers of modern times has returned from the dead.

Stop the presses!

Something is up.

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NPR’s Death Wish

Last week the CEO of National Public Radio – Ken Stern, was relieved of his duties. That is significant because since 1999 he has made all of the right calls.

How, you ask, could someone who has been responsible for making NPR so powerful be let go?

Welcome to our world – the world of terrestrial radio.

Among Stern’s acknowledged accomplishments:

1. Doubling NPR’s audience to 26 million a week.

2. Built an endowment from basically very little to over $300 million (former McDonald’s heiress Joan Kroc’s large gift didn’t hurt, either).

3. New, quality programs such as Day to Day, News and Notes, Tell Me More and The Bryant Park Project.

4. Increased domestic and foreign news bureaus topping most major newspapers in the number of reporters.

5. Announced a big new Washington headquarters for the network.

Now, Stern has spent his political capital.

Here’s his crime against humanity:

“Interviews with eight current and former public radio officials suggest Stern failed to convince local stations — and especially their representatives on the board — that he saw a clear and healthy role for them in the digital future. And several also said he lacked the light touch and charismatic aura of his predecessor, Kevin Klose, that served Klose well in dealing with board members and prospective donors.”

The issue is over the role of the local NPR stations that have for too long feasted on the resources of the mother ship. NPR provides quality programming and local stations raise funds through on-air beg-a-thons to finance operations.

In effect, local NPR stations have acted as repeaters – broadcasting the increasingly popular NPR programming.

Stern was big on making NPR content available to other platforms beyond affiliated stations – the Internet, podcasts, etc. and it has helped build the brand. In fact, NPR is arguably the best at using new media platforms to disseminate the brand.

Now, the ugly part.

Local stations – thought to be behind Stern’s ouster, are concerned that NPR is giving away too much of its programming to new age platforms. In effect, forcing a powerful but wrongheaded issue of what local stations will do if listeners can get NPR programming elsewhere.

They have committed the fatal radio mistake – forgetting the role of local radio.

So what if some NPR listeners migrated away from the local stations and listened online? It’s not the end for local NPR affiliates – IF …

If, they start raising money for local programming. The one criticism I hear over and over is that local stations just act as affiliates. They could and should do more local programming. Then, their programming would be of interest to local listeners.

But they would likely have to take a page out of Stern’s play book and even make their local programming available to the Internet, podcasting and the mobile beyond -- not to mention raise more revenue.

I can tell you that NPR programming is wildly popular with the next generation that I work with. When local stations like KCRW do local programming, these young listeners eat it up.

In the end, we’re not learning much about the problems that have beset the radio industry over the past ten years.

Radio programming is best when it is local.

I’m not pretending to be an expert on NPR and I don’t know Stern. He’s supposedly a lawyer who could use a copy of Dale Carnegie’s “How to Win Friends and Influence People”.

Still, he’s right on the money taking NPR into the 21st century.

If his permanent replacement retreats from Stern's position that all NPR content should be made available wherever the audience can listen, then he or she will please the affiliates and anger the listeners.

It’s corporate politics.

It’s being expedient.

It’s a death wish.

Only then will NPR, the network, be downgraded to, say – terrestrial radio status – a local business that wanted to protect its profits by imposing national economies of scale.

And we see what terrestrial radio has accomplished – a mass exodus of listeners away from their local brand.

The genius in NPR is that outstanding content was being delivered in traditional and new media platforms under Stern. The politics of affiliated radio stations threatens to turn something special into -- just radio.

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