New iPhone – No FM

New iPhone -- No FM was the headline that appeared in an Inside Radio email yesterday after Apple announced its next iPhone.

Inside Radio was just reporting the news but perhaps you remember those fanatical die-hards who swore they would be able to convince Apple CEO Steve Jobs to add an FM radio link to its popular smart phone.

Fat chance.

The radio industry doesn’t understand new technology – that's been proven over and over again, but they also know very little about generational media.

On the same day, Clear Channel came out with a scary news release that – if you didn’t know better, you’d think Clear Channel was the king of all new media.

Let’s dig in – there are lessons we can learn.

The iPhone.

The radio industry wants FM capability on the iPhone – not consumers. Young consumers are even more adamant. Where smart phones have been built with radio access, they have, frankly, laid an egg.

You know this, but radio CEOs don’t seem to be getting the message.

The iPhone is not a radio.

People don’t listen to their phones like media executives listened to Walkman devices and transistor radios before that.

Even baby boomers don’t listen to their phones like they listeners to portable radios.

That’s because mobile phones are interactive devices – not passive. When a young person has a cell phone in their hands they want to do something with it – text, maybe even make a call, surf the web.

You might counter that they listen to music on an iPod and iPods are built into iPhones.

That is true, but guess who is in charge of the music? Observe young people and you’ll see they start and stop, skip and jump through their music libraries because they are the dj, program director and audience. They are in charge. It’s an on-demand medium all the way.

In the Clear Channel release titled “Clear Channel Radio Details Audience, Engagement Stats for Digital Properties; iheartradio Mobile App Thriving” they would have you thinking John Hogan has figured it all out.

But the truth is that Clear Channel has not spent much on all this who-ha. Digital doesn’t even break a sweat in a consolidator’s budget. What Hogan is bragging about is recycled radio programming.

For example, here’s Hogan:

“We now produce and deliver original video, audio and data via broadcast streams and on demand. And the engagement statistics for our digital platforms are simply stunning. It's a tremendous validation of our strategy to grow organically, augmenting the expertise of our programming and engineering professionals with the knowledge and innovation inherent in new media”.

This guy is starting to scare me.

He can’t really believe this stuff, can he? No one else does.

What Clear Channel mostly does is air its programming on the Internet, uses Ando Media to do spot replacement and calls it a 22 million hit success.

Hell, CBS Radio has been doing this long before that lightbulb went on in Hogan’s brain.

Emmis, although pinched by the economy and debt structure of its company, has one of the best interactive divisions in radio. Imagine if it were funded right with, you know – real money.

Slogan Hogan goes on to brag about the two million people who downloaded his iheartradio app.

“iheartradio’s user engagement is especially strong. According to data from Pinch Media (in a February 2009 study of more than 30 million downloads of free iPhone apps), engagement with the typical mobile application drops off precipitously within 30 days. Less than 5% of users who originally downloaded the app return to use it. Clear Channel Radio is seeing exactly the opposite behavior with iheartradio. Some 80% of users have downloaded subsequent updates of the app from the iTunes App Store and a full 20% of those who have downloaded the app come back weekly”.

That's like saying a dead person dies less.

To understand apps, it’s a bit more complex than the pablum Hogan is feeding the news media.

Apple apps (and their other smart phone cousins) are notorious for how many people download them and stop using them or rarely fire them up. Hogan alludes to that above but tries to pass off 20% of the iheartradio downloaders returning as a major milestone.

It’s a failure as far as new media is concerned. If Hogan is happy with what little audience that translates into for local stations to sell, I'm happy for him.

Apps may be the future but getting consumers to keep using them is quite another thing.

I used FlightTrack to check on my daughter’s arrival time before I went to the airport Sunday to pick her up. Obviously, I won’t be using that app for a while, but I would rate it as indispensable when you're flying or meeting someone's flight.

Pandora – what’s not to like, but I can only listen when I have the time and my phone is in constant use. Who is kidding whom here?

Cell phones are interactive devices – programming is only part of it.

This is where it gets real interesting and exciting for me. If you offer a podcast five days a week and build an audience, that podcast has to find a way to get us to come back to it daily and the only way to do that is the same way we did it in the analog world – create an addiction.

I’d venture a guess that the majority of Clear Channel’s recycled programming will not cause the addiction.

So, let’s see if we can steer our friends at Clear Channel’s Central Command onto the right course.

Free advice.

1. Don’t bother to stream your terrestrial content – at best, it will provide minimal increase in listenership and you’ll eventually cannibalize your sales with low Internet rates. Make radio listeners listen to the radio and create new content for the digital market.

2. 50 podcasts per local station – five days a week.

3. Do not use existing radio talent for this. You can learn about podcasting by studying the habits of the next generation not from the habits of radio CEOs reflecting on the way they used media in their youth.

4. Each podcast should be produced and sold locally. Build franchises. It’s okay to have money streaming in from sources other than your terrestrial formats, right? Money is money. And, don’t call it non-traditional revenue. It’s digital revenue.

5. Start charging for unique content. If 18,000 people in your market like jazz and you can produce one program a day, charge a micro payment each month to satisfy the itch in the audience for that which traditional and satellite radio fails to scratch.

6. Your goal should be to create an addiction and you do this through quality programming and social networking. If you’d just devote your full resources to creating new shows, they’ll make money.

7. Stop bragging about your digital success. This generation doesn’t believe anything they hear from a radio person. Hell, advertisers don't either. Remember that lie radio told its listeners “fewer commercials, more music and the best variety” on stations that played tons of commercials, less music and the same old records over and over.

It is particularly painful to watch the radio industry tout itself as the second coming when in reality it is so poorly regarded by – well, consumers.

Knock yourself out. Talk it up. But in the end Clear Channel, Cumulus and Citadel are facing bankruptcy.

After a while, even they stop believing the b.s. that is pumped out of their PR machines.

Did you know that Citadel is one step closer to filing for bankruptcy since they went public with the fact that they have retained an investment bank for what sounds like an imminent restructuring? Here’s how they slipped it in a recent 8-K filing last week:

“On May 28, 2009, Citadel Broadcasting Corporation (the “Company”) engaged
Lazard Freres & Co. LLC (“Lazard”) to provide financial advisory services in evaluating the Company’s financial options, including a possible refinancing and restructuring of its capital structure”.

Clear Channel is playing chicken with its lenders according to Tom Taylor in yesterday’s Taylor On Radio-Info commenting on a New York Post story.

And Cumulus, well – they’re in short pants as well with bankruptcy a real option.

I mention this because the CEOs of radio companies have made several mistakes but here are the three that are going to lead to radio's demise:

• They took on more debt than they can repay so unless the economy is booming and new media goes away, they’ve made their nice free cash flow business a slave to their bad financial decisions.

• They fired their assets – the talent, managers, salespeople, support personnel who could constitute a ready-made digital company of the future at the worst time in their history when they needed these folks the most.

• They fail to understand that new media is not warmed over ideas for the Internet or a telephone. They don’t study any generation – let alone the next one that has brought so much change to the fore.

In fact, now they’re stuck with stations they can’t run, with networked and syndicated shows they won’t be able to sell at a time in history that favors more localism and scrutiny of traditional broadcasting.

Maybe that’s why John Slogan Hogan – never one to miss an opportunity to suck up – ended his news release like this:

“The company also today officially launched a digital channel focused exclusively on the Obama White House”.

I’m not making this stuff up.

“In just five minutes, listeners are now fully briefed on the latest developments from the Obama Administration. There is enormous interest in the current Administration, so we’re serving up a channel that is all things Obama,” said Evan Harrison, executive vice president of Clear Channel Radio and president of the company’s digital unit.

More sucking up:

“This Administration has embraced technology in an entirely new way and offers a new level of transparency. Starting today, we’re delivering that to our digital audience of 22 million.”

Here’s a thought.

Hire back all your fired employees. Send them to garages all over the U.S. to create their own skunk works to show you the way into the digital beyond.

Help them help you.

Then, you will no longer have to embarrass yourselves or the radio industry with half-truths and pandering to politicians.

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