Thursday, March 27, 2008

Radio: Ponzi's back!





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In 1918, we had Charles Ponzi.
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Ninety years later, we have Peter “Sgt. Bilk-o” Ferrara.
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Schemes.
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From Ponzi to HD Radio.
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Ibiquity has the license and collects the fees. The HD Radio Alliance, which Sgt. Bilk-o runs, does the fast-talkin’, slow walkin’ hype. Right?
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Like the other schemes, the HD Radio edition begins with a hard-sell sales pitch to hook you in and establish the product. Right?
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How about promoting and marketing HD Radio to the masses? Don’t worry. The HD Radio Alliance will do that for you. All you have to do is give up a large chunk of your inventory to run a hefty schedule of their creative - for free! Right?

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To get involved in HD Radio, a company has to invest in, buy the products, and pay licensing fees to become a participant. Right?
When someone’s invested in the operation in addition to buying the services, you’ve got a lock. Right?
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An average HD Radio package for a radio station runs between $100,000 and $250,000. Right?
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HD Radio is run by a monopoly – Ibiquity. To use their system - the only one approved by the FCC back when Michael "where's my taste?" Powell was its chairman - you have to pay an annual license fee. Its cost is determined by – you guessed it – Ibiquity. Right?
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Selected radio consultants, writers, and media organization heads are hired as carporegimes who act like press flacks and indie promoters to back Ibiquity and the HD Radio Alliance. Right?
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On certain planned occasions, these hired guns will intentionally disagree with the HD Radio Alliance and Ibiquity on their promotion and marketing creative. That way you don’t think of them being on their payroll. Right? Clever but transparent. Right?
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Tech problems? Chances are your engineers told you about them up front – before the install. And those HD Radio salespeople jokingly whispered in your ear how all engineers overreact toward new technology. They even added a “how many engineers does it take…” joke to reassure the decision makers that “all engineers are like that.” Right?
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And the HD Radio Alliance even went one step further by putting a few of the more influential engineers – those that love to read their expert names in the trades - on the payroll to help preach the word. Right?

I’ll leave HD Radio’s tech disasters for engineers to discuss. I’ll just say one word. Hash. Right?
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I've heard you can make a pretty good buck if you drum up positive HD radio press. Right?

Here's an example. Dress a bunch of radio station interns in Devo outfits and send them through the barren streets of downtown Detroit passing out flyers that read “have you heard HD Radio lately?” Though most of them are still lying in the gutters in and around the safe haven of Greektown, the Coot, who put on that dog and pony show, brought along his digital camera to shoot the shot that appeared in a dozen trades. Right?

You’ve got to give credit where credit is due and the Coot deserves his for being real good at what he does. It’s like mayor of his native Detroit. He’s got the combination of Third World-style corruption and incompetence down. He makes Sgt. Bilk-o a happy man. Right?
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Bilk-o really, really loves ya, Cootie, baby! Right?
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HD Radio has to be one of the more bizarre schemes of the twenty-first century. Make all the money while radio does all the cash payments and heavy lifting. Right?
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Ferrara’s a smart guy. He runs the HD Radio Alliance joint from behind the screw factory aka the Clear Channel compound in San Antonio. You have to wonder who’s zoomin’ who in that building this morning. Right?
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You already know who’s zoomin’ who outside the building. Right? Right.

22 comments:

Anonymous said...

Funny...the exact same article could be written about the RIAA and their performance royalty. Who collects the royalty? A division of the RIAA called SoundExchage. Is it a monopoly? Yes. Are radio stations about to be bilked? You bet. Just see what SoundExchange has done to web streaming. It's a scam that's being presented as a right. Artists are being manipulated by their labels to support it. Just read how Jewel told radio one thing at the CRS, and said the complete opposite a few days later in a RIAA press release. She was clearly forced to change her opinion by her label and the RIAA.

Hey, no one is forcing anyone to set up HD Radio. Lots of stations aren't participating. No obligation by the NAB or FCC. But if the RIAA gets its way, there will be a federal law forcing radio stations to pay for play.

I think your Ponzi analogy is far stronger on this example than HD Radio.

Kingfish Stevens said...

The biggest probelm with HD radio is the simple fact that if you are chasing listeners away with horrible programming on the radio they already have, they probably are not going to PAY for a new radio to listen to more channels of crap. HD radio is the Emporer's New Clothes.

still another ex cc said... said...

His days are numbered. You can only carry on this scheme for so long and this one is already overdue. Once a snake always a snake.

still another ex cc said... said...

His days are numbered. You can only carry on this scheme for so long and this one is already overdue. Once a snake always a snake.

Jack Fryday said...

I look forward to following the paper trail in this endeavor. It had to get the approval of the NAB. The NAB sold it to Michael Powell who was the FCC Commissioner at the time and Ibiquity and Peter Ferrara Bilko convinced all the major chains they had to invest in this flawed digital broadcast system to combat the threat of satellite radio.

It was the ultimate con job. Even most NPR stations fell for it at the time.

It is only a matter of time when an investigation will take place on HD radio and when it does and records have to be produced I think many will be very surprised to see some of the "names" on the HD radio payroll.

One of the guys you mentioned is a charter member who is also doubling as a consultant to automobile.

Real money is being made on HD and everyone is prospering except radio (and with the exception of Clear Channel and that is a story in itself)

Anonymous said...

Just as an aside, I'd be curious to know how much of iBiquity the NAB owns? Is that a wise investment for a non-profit?

When they finally bury HD Radio, mark my words they will claim they were a victim of the recession.

All these scam artists will resurface, and that will be the story they'll stick with. And no one close to the situation will contradict them because they will look just as stupid as the names they put out front.

As for Sound Exchange setting up a ponzi scheme, since when is it a ponzi scheme for artists to expect to be paid royalties for their work?

Back in the old days, artists got fair value for giving radio free access to their work. I guess given the state of radio, they just don't perceive it as valuable to be heard on radio any more.

Sort of like when you were young and you slumped down because it was so uncool to be seen riding with your mom. Who wants to be known as a musician who's on radio?

Anonymous said...

"As for Sound Exchange setting up a ponzi scheme, since when is it a ponzi scheme for artists to expect to be paid royalties for their work?"

The artists are not under contract to radio. They're under contract to the record labels. It is well within the purview of record labels to pay artists fairly for their work. They choose not to. They instead want to bilk money from radio, and keep the majority of the money for themselves. Then give the artists the minority to split with session musicians. That isn't paying artists for their work. It's a ponzi scheme where you pay record labels, and they decide if and when some of that money trickles down to the people who make the music.

Radio stations charge everyone, including politicians for access to the airwaves. It is their right as first provided under the Radio Act of 1928. The ONLY exception to the access fee is the music industry. They have been getting a free ride for years, and their disrespect in this matter is going to cost them.

Dave Kennedy Weston, MA said...

As an outside observer I can clearly see that the RIAA and the HD Radio Alliance are two different entities. I can also see where one influenced the other. Seeing the way radio reacted to satellite radio which was at best a limited threat to terrestrial radio (1-5% @the most)by blindly jumping on the flawed HD radio wagon I am not surprised that the RIAA sees an opportunity to get money out of the radio industry, as well.

It makes a good case of what you say about those running radio chains right now and how little they know about their own business. They are easily manipulated. I can't blame the RIAA though I do agree that they are completely wrong. If these artists are complaining about not getting their royalties they should take it up with their record labels. The record labels run the RIAA. The RIAA tells them it's not the labels fault, it's radios and they fall for it.

Radio has to get tough. It lacks leadership and management from what I can see.

Dave Kennedy
Weston, Mass.

PocketRadio said...

"On certain planned occasions, these hired guns will intentionally disagree with the HD Radio Alliance and Ibiquity on their promotion and marketing creative. That way you don’t think of them being on their payroll. Right? Clever but transparent. Right?"

I know of two consultants/consulting firms, after dealing with them, realized they are nothing but IBOC-shills. One in particular, posted two days ago, griping about negative comments about HD Radio, but didn't allow any comments to be posted (all considered spam). Hilarious post, as I shared this on iBiquity's and CCU's Google Finance sites. HD Radio is a sham:

“HD Radio on the Offense”

“But after an investigation of HD Radio units, the stations playing HD, and the company that owns the technology; and some interviews with the wonks in DC, it looks like HD Radio is a high-level corporate scam, a huge carny shill.”

http://www.eastbayexpress.com/2007-03-07/music/hd-radio-on-the-offense

yny said...

The Coot is shilling his stations and automakers. Pocket Radio, you are correct about his blog. He quickly eliminates any comment that even remotely challenges anything he says. I left a reply when he did his bedroom project to ask if any of the video comments were staged (they certainly appeared to be in comparison to many focus groups I have taken part in). It never appeared in his comments.

Back to HD radio. It is a product with no client base. It is too expensive, unreliable and most of the content I have heard (by way of matching internet streams) is poorly done.

Anonymous said...

Seriously, it is a Ponzi scheme of sorts. What happens when HD radio comes crashing down? What about the investments radio made in it. I think we will see digital radio in our future and it will be delivered through the internet - not HD radio. Peter Ferrara has to be laughing all the way to his account in the Caymans.

PocketRadio said...

yny said...

"The Coot is shilling his stations and automakers. Pocket Radio, you are correct about his blog. He quickly eliminates any comment that even remotely challenges anything he says."

Yea, recently he posted about the tactics of Satellite Radio, so I did the same about HD Radio. My posts lasted for maybe an hour, but were quickly removed. I've seen Bilk-o post there, and Michelle (HD Alliance?)
kisses his ass...

Anonymous said...

Radio stations charge everyone, including politicians for access to the airwaves. It is their right as first provided under the Radio Act of 1928. The ONLY exception to the access fee is the music industry. They have been getting a free ride for years, and their disrespect in this matter is going to cost them.

Good luck with that. Your problem is that the RIAA's actions are driven by two new realities. One, it needs money and can no longer afford to give away music via radio without collecting a royalty.

But more importantly, radio has made itself into not just an ineffective tool for promoting music. It's now actually harmful for artists trying to attract young listeners to be heard on radio because the medium is viewed as hacky and lame. So radio's argument is basically: let us continue to hurt your image with the customers we want and take money out of your pockets while we do it.

Radio did this to itself by destroying its relationship with its audience and killing its credibility as the guys who know what's cool. Not to suck up to Gorman, but when WMMS was hot, kids from Cleveland would arrive at college in New York and everyone would want to know what WMMS was playing. That's why record labels didn't care that there music was going out for free. Because that was unbeatable marketing. Radio destroyed all that. I'm not sure if people in the business ever really even understood it. In any case, it's over.

But yours is a better argument than NAB's. Those idiots tried to get Congress to view the royalties as a tax, which of course it isn't. Even the idiots on Capital Hill didn't fall for that one. Once more NAB tried to frame an issue, only to miss by a mile. It's amazing the lack of clout this industry now has.

paul vincent zecchino said...

Doesn't BigRadio/iNiquity reek of Mob Tactics? Aren't rigged fees, junk shows, stooge receivers and shill-parrot engineers' staged debates all hallmarks of Mafia-style BigKorpsorate shams?

Just the fact that Price, Waterhouse is lurking in the background, surely snappily attired in tinted shades and those plastic bunny-teeth currently favored by Mob-psycho types...

And how could we overlook that 'Killer App', Jamming?

Isn't that what HD does - Jam? When shopkeepers didn't pay 'protection' fees, gangsters had goons smash their windows.

Tch tch. So uncivilized.

Isn't jamming a more genteel way to demolish competition and make listeners discard billions of radios worth trillions and buy HD stooge radios? Wasn't it sweet of a complicit FCC to 'legalize' jamming on behalf of these window-smashers?

Here's the juice: Citizens rejected 90s grifts. Yeah, a few HD stooge-radios slow-walked outa stores, but consumers waltzed 'em right back in, double time, sorely disappointed by lousy performance and inane 'streams'.

It's over. Yeah, BigRadio and its blowhard engineer-stooges are 'going digital', but citizens aren't.

BigRadio/iNiquity airs dull faire, jams competitors, and bullies questioners. Is that why BigRadio's formerly loyal listeners are Gone, Baby, Gone?


Paul Vincent Zecchino
Manasota Key, Florida
28 March, 2008

Anonymous said...

"radio has made itself into not just an ineffective tool for promoting music."

Radio may not be as cool as it once was, but it's still the most effective tool for promoting music. Why? Because of critical mass.

Sure there are thousands of options, but that's the problem. If you are a new band and get radio airplay, you will sell more than if you don't. No matter which demographic you're seeking to reach. All of the artists who are using alternative means to get their new music out have had some measure of airplay during their career, whether we're talking about The Eagles, Radiohead, or Nine Inch Nails.

The issue the labels have to deal with is their own geometric expansion of music formats. In the old days, labels might have 20 artists. Today, each label has more than a hundred in dozens of formats. I was looking through the artist list at Capitol and was shocked at how many artists they have under contract. Too many artists, too many releases, all requiring huge release budgets, none of which sell more than a million copies. There's your trouble.

All of these artists and formats have had an effect on radio. It's part of why radio ratings are dropping: Because the audience has splintered to the point where it takes ten stations in a market to achieve the same ratings that one station got 20 years ago.

This lack of musical focus may be great for fans, but it's bad for sales. Effective sales requires focus. And that doesn't exist in music today. It's total anarchy. And it's carried through to radio.

Radio would be best served by leaving the anarchy of music radio, and providing more focused entertainment for listeners.

Anonymous said...

The Eagles? Nine Inch Nails? Radiohead? You're making my point for me. Those bands are all 20+ years old. Today, artists don't break in on radio. Radio's just along for the ride and the RIAA wants it to start paying the fare.

Your point about record companies is a great one. With every catalog so crowded, people need a trusted source more than ever to sort out everything and point them to the good stuff. If radio hadn't turned to shit, it would be more of a kingmaker than ever. But we all know what happened to radio programming. There's no credibility there any more.

I know the numbers. Yeah, people listen to radio. But it's just a timekiller today. Active listenership is over. Disney Channel has sold more records than all of radio combined.

Go do some personal research and hang out with some teenagers. If your market is like mine, they won't be able to name a single station or personality in the market. And the last time they heard radio, they'll tell you it was because they were in the car with their parents and left their iPod at home.

Bottom line: If radio could still sell records, the RIAA wouldn't screw with it.

bobyoung said...

The Coot is one of the biggest sellouts there is, I will echo several posts already here: He only approves things he agrees with and one of the biggest things is IBOC. He loves it, thinks it the neatest thing to have come along since his really cool looking vest. I wonder how much Bilk-o pays him? Aren't those little HDettes cute?

PocketRadio said...

"HD Digital Radio Alliance To Focus On Consumer Conversion"

http://www.fmqb.com/Article.asp?id=636323

John,

You should do a piece on HD Radio's new "It's Time to Upgrade" campaign - an obvious attempt to confuse consumers with the digital TV transition.

PocketRadio said...

Glenn Fleishman, a reporter for the NY and Seattle Times, is a paid IBOC-shill, and runs this website:

http://digital-am-fm.com/

"Glenn Fleishman"

http://en.wikipedia.org/wiki/Glenn_Fleishman

Kim Kommando is another paid IBOC-shill:

http://komando.com

As far as Jacob's Media, I unsubscribed, and I am finished posting on his blogsite.

PocketRadio said...

"For many small broadcasters, HD Radio is an economic decision"

"And it’s not just the licensing fee from iBiquity – which some suspect will be going up – it’s the ancillary stuff that you may not’ve thought about. For instance, one operator tells me here in Vegas that SESAC now wants an additional 10% for the HD primary channel, and then another extra 10% for the HD-2 channel – and I’m not generating any new revenue off of them, while my costs are rising. Somebody else saw the 'embedded encoding' announcement that came out of Las Vegas on Sunday, which promises lower costs for HD – and says that’s great, it will cost me less to generate the signal. But that’s not the whole picture. He’s in the position of having bought some stations that enjoyed a nice low licensing rate from iBiquity. Now – he may not be able to continue getting that rate."

http://www.radio-info.com/newsletter/pdf/TRI04152008.pdf

You are right, John - look whose fees may be going up!

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