Radio Is Anti-Social

Radio’s Problems Are Not Financial.

Okay, that’s an oversimplification.

Of course, a 9% decline in revenue in 2008 and a horrendous start to the new year is a problem. That’s not what I’m saying.

The reality is that if radio is recession proof (and this is more than a recession we’re all having) – it still would be in trouble.

Back before the official economic downturn, you may remember that a one or two percent growth rate for the industry was the new way to spell success. In fact, I’m sure the major radio consolidators would have loved to break even this year.

There are some who think other factors such as Internet streaming hurt the industry, but Internet streaming is not even a viable business yet no thanks to the record labels and their efforts to make new media pay more in royalties than traditional media.

Perhaps you’ve seen reports that even online streaming in whatever state it is in currently has begun to decline and this decline can be directly attributable to the growth of social networking.

The big boys who run the major radio groups think I’m speaking in tongue when I talk about social networking. To them, it’s just MySpace or Facebook and yet most don’t even know what social networking is.

Where is John Slogan Hogan’s Facebook page? Wouldn’t you like to “friend” him on Facebook? In the world of social networking almost everyone accepts a “friend” invitation but in the case of consolidators like Hogan, don’t place any bets.

To the old school, you’ve got this here phone, maybe the old Blackberry to communicate with corporate and keep your social life in order and that’s it – nothing else has changed.

But what I’m saying is everything has changed – except traditional media executives.

Radio CEOs aren’t the only dinosaurs – look to TV and you’ll see a misguided breed of executives cutting local news from local television stations to cut costs. They should be increasing local news and distributing video, starting social networks and offering content separate and apart from their TV broadcasts.

Newspapers – just forget it.

Those old cats may know how to use a computer but most certainly don’t understand social networking for if they did, they would stop trying to cram a newspaper onto a website and start thinking of improving their local reporting, acquiring gifted writers and columnists and generate new news content that might also include video, music and whatever comes next.

Record labels should know better.

Their young audience of consumers started walking out on them nine years ago and they’re still heading toward the exit. Label executives are among the most clueless because while they now “get” that Napster wasn’t a fluke, they refuse to break the mold and reinvent the record industry as a discovery service.

Will someone please stand up and get into the music discovery business?

Of course, in radio it has always been a sacrilege to speak against the industry’s practice of “no innovation”. Among the most inept enablers are the Radio Advertiser Bureau and the National Association of Broadcasters – two useless organizations that over history have done more harm than good -- in my opinion.

Consolidators fed Kool-Aid to talent, programmers, managers, sales managers, salespeople and support help when they were assembling these big radio groups on tons of unserviceable debt. The employees hung in there and did what they were asked but over the ensuing 13 years consolidators couldn’t make radio a public business.

There seems to be no bottom to their stock prices.

Clear Channel, Cumulus and Citadel are on the brink of bankruptcy. No one who knows anything about the financial markets can dispute that statement. They may find a way to postpone the inevitable but not avoid it.

Why do you think they call it “inevitable”?

The current employee cutbacks – that really started taking place a long time ago but are now deemed to be exponential in scope – are directly in proportion to radio consolidators’ inability to run the assets they bought at inflated prices.

There’s no way to sell radio stations at or near what consolidators originally paid for them and that’s a pretty lousy business.

Lee & Bain are taking gas on their Clear Channel purchase and remember they are propping up Cumulus, too. It sucks to be them.

Consolidators are so desperate that they are rushing to produce cheap national shows for local licenses that they rent from the public. They still call it local radio but it’s really Repeater Radio. It’s just national cost-cutting.

And, radio CEOs are still being pigs.

Cumulus reportedly told their employees there would be no bonuses even if their employment contracts called for them even as Lew “Tricky” Dickey is making the rounds to the trade press saying that the $8 million he received as an incentive for signing a new employment contract is not really a bonus -- yet.

Just like Mark and Randall Mays are not taking their bonuses this year – unless you see how their contracts call for making up a lot, if not all, of this year’s compensation losses in the coming years.

Hell, I’d take that pay cut, wouldn’t you? It’s called a raise.

There are many reasons the radio business is in the toilet – and none of us can deny that a handful of arrogant, not-ready-for-primetime CEOs head the list.

But there are real and significant reasons why the heart of radio’s problems is not financial.

Money can always come back through increased advertising revenue – or, at least improved ad revenue.

But listeners are not likely to come back – especially the 80 million or so members of Gen Y who see nothing special in a radio or what’s broadcast on it. And without the next generation, radio has no future.

The fact that decision makers do not understand that a technological and generational revolution has taken place on their watch is the final nail in the coffin.

For example:

• The next generation’s radio, TV and newspapers are – social networking. Facebook increases in popularity while even streaming sites decline. Radio? Forget about it. Seriously – try to engage a radio CEO in this discussion and they’ll think you’re wacky. But it is the opposite. They are crazy for not learning about the thing that is killing radio – not a decline in revenue – a decline in understanding how important social networking is to the next generation.

• Even older radio listeners are putting up Facebook pages and joining LinkedIn. Because radio CEOs don’t get that the Internet is a perfect place for communication, information and entertainment to converge. And, we’re so arrogant we thought it was going to be the perfect place to stream our terrestrial signals.

• Broadcasting as a concept is outdated. There is no reason on God’s earth to broadcast to someone in, say, morning drive. Morning drive begins when today’s techno-socio consumer say it does. And when their cell phone rings or they text, they stop listening to their mobile content. So morning drive can be afternoon or evening. But radio CEOs don’t get it. In 1939 maybe – and through the age of consolidation – listeners had to listen to get the content beamed to them. Now, there are other choices.

• Even popular Internet “radio channels” like Facebook and Last.FM will slow in growth if they can’t figure out a revolutionary way to tap into social networking.

• In the old West, you needed a horse to get around. Once the Model T came along, folks needed a car. Then, we needed more than one car per family. Now, you need the Internet to get around – and social networking is the super highway. Working from home – turn right at Earthlink and Comcast.

• The worst thing a radio company can do is to dismiss its talent, local personalities, news reporters and the like. Because these people are the one foothold that radio broadcasters have into the digital future. And, of course, what do you see consolidators doing? Clearing out employees faster than the fire marshal at an overcrowded nightclub. How stupid is that?

• Failure to budget for the digital future – even before their radio stocks became penny stocks – best illustrates how radio consolidators intended to be a one-trick pony. Consolidate and sell for a profit. Now, with radio on the decline and the economy in no man’s land, they can’t get out.

• News, music and communication is no longer separate the way traditional media companies want it to be. Today’s consumers expect to click when they want to hear, click when they want to read and click when they want to see. Radio, television and print alone is so – 90’s.

So, perhaps you can see why I say radio’s problems are not financial.

For radio, money is only the start of their problems.

Even recessions and Depressions eventually end and prosperity returns.

But not to livery stables, steam engine railroads and candle makers.

You’ve got to be in the right business to eventually become a financial success again and music media companies like radio groups, record labels and television broadcasters awkwardly find themselves in the wrong businesses.

New media is an afterthought to them.

The next generation is apparently not worth the work and commitment to pursue the way baby boomer teenagers were once pursued by rock and roll, top 40, classic rock, modern country and the like.

Today’s radio CEOs are bankrupt alright.

In their knowledge of social networking, mobile content, generational media and the digital future.

If they were a stock, they’d be delisted.

If these CEOs were an elected official they’d be voted out of office.

But in radio, give them a raise, turn your head while they fire their assets, keep quiet while they make your stock worthless and look the other way while they act like you’re the one who doesn’t get it.

Bankrupt, indeed.

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