Sunday, March 29, 2009

Radio: In search of truth serum


Do you often wonder what alternate universe the radio industry exists in these days?

Let me introduce you to Scott Sperling, the co-president of Thomas H. Lee, one of the two equity firms (Bain Capital being the other one), that ponied up $17.9 billion to take Clear Channel private just moments before radio stocks fell into the incinerator.

Last Wednesday, he told Reuters that Clear Channel and another Thomas H. Lee media investment, the Hispanic network Univision (a $12.3 billion deal in 2006) are "inherently great businesses" and that the recession in the ad market would reverse.

Now let’s visit with BAI Financial Network VP Mark Fratrik, who researches broadcasting and related communications industries.  Last week, he revised his original radio revenue forecast he issued last December.  Based on his most recent studies, he now foresees 2009 radio revenue to be worse than he initially projected with no improvement in 2010.

So whom do we believe?

The BAI study is little more in-line with the latest study from Pulse Research, which in a study prepared for the Cable & Telecommunications Association for Marketing (CTAM), shows that over seven out of ten or 71 percent of US households believe that the economy is heading toward a depression. 53 percent of US households are doing less shopping, 52 percent are eating out less, 51 percent are taking fewer vacations, and 50 percent are attending fewer concerts and theatre performances.  The study also showed that most are not willing to give up broadband and cable TV.

(I’ll buy the broadband part – but not cable.  Just this past week, three people – unsolicited – told me they were downscaling their cable channels – and one intended to drop cable service entirely due to increased use of Hulu and other TV on-line, on-demand services.) 

We're also hearing that in the future rounds of Clear Channel cuts even some of their hard-core, brown-nosing bum-kissers will be getting the axe.    It’s not just the billing and traffic departments that are living on borrowed time. Hell hath no fury than a woman scorned or a loyal-to-a-fault Clear Channel manager being told that the elevators are at the end of the hall.

That’s like calling sewage perfume.  You can actually call it anything you like but you can’t prevent its stink.

 The more I hear and read comments like “we have to contract before we can expand” from Clear Channel execs and their private equity suckers, the more I’m convinced that the last batch of Kool-Aid they make will be for themselves.

Lyin’ Diane Warren at the HD Digital Radio Alliance churned out still another press release, this one announcing a “major milestone.”  According to the Alliance statistics (yes, a flag was just thrown on the field) there are now “1,000 multicast stations” broadcasting and 100 various                      HD Radio models “now available at retail.”  The Alliance also announced still another new ad campaign (yes, another flag on the field), which will be carried at no cost “on over 700 stations in the top 100 media markets.” They called it “extending the broadcasters' commitment to promoting the technology to 42 months.”

Allow me to translate Lyin’ Diane-speak into truth: To be precise, that's 1,000 HD stations that few will ever hear and 100 receivers on warehouse shelves gathering dust. 

The new campaign “will combat the mistaken perception by many consumers that they already own an HD Radio.”  No, I couldn’t make this up if I tried.  An unidentified spokesperson for the Alliance adds that the new flight “will continue educating consumers that they need a new receiver to enjoy the HD experience,” and will word-up their slogan, which will go from “It’s time to upgrade” to “If you don’t have an HD, you’re not hearing HD.”

True genius.

Let’s, of course, not confuse iBiquity and the HD Digital Radio Alliance will the facts.

Sure, iBiquity’s failed miserably in new product development resources and expertise. They followed that with a series of flawed marketing research, sales, distribution, advertising, and promotional resources and skills. 

Have you seen any HD Radio marketing assessments other than Alliance’s own?  Did you see even one independent, impartial market evaluation since the deficient product was introduced?   But I digress. 

How about radio still hawking those Internet radio ratings, which claim CBS Radio and Clear Channel to own the lion’s share of on-air listening?   

The only one buying that hype is the radio industry.   No one that counts in new media believes that misleading hype.  Read Ken Dardis’ current Audio Graphics for specifics.

As long as hypocrisy is in the forefront of radio pitches, the medium will continue to loose ground.

We live in a transparent world.  You can’t avoid it.  The consumer is in control.  Facing up to the reality will be your first step forward.  Deal with it.

32 comments:

HD Radio Farce said...

"The new campaign 'will combat the mistaken perception by many consumers that they already own an HD Radio.'”

The freakin' morons at iBiquity and the HD A-LIE-ANCE should have done this in the first-place. I laugh, when I hear stations stating that they are broadcasting in "HD" - consumers assume that their analog radios are working in "HD", not that they need to buy new, cheesy HD radios. LOL! iBiquity claims that they now have upwards of 1,800+ conversions, and 1,000 HD multicast channels, but we know that HD is being turned off in Wash., D.C., and probably elsewhere, which we haven't heard about, yet, en-masse. Bob Struble and Diane Warren are quite the liars - never seen it before in my life!

As for stations streaming on the Internet, there are already 10,000+ Worldwide Internet Radio stations, including Pandora, Last.fm, Slacker, Jango, etc. More lies from Clear Channel about the popularity of their iPhone app - right!

I am getting more keyword searches on my blog for HD Radio, complaining about hissing on their HD radios - this may be in areas where the experimental 10db FM-HD power increase has been authorized. I say, bring the full 10db FM-HD power increase on, and destroy analog radio - it's going into the shitter, anyway! LOL, liars!

Anonymous said...

I have experienced all sides of this issue. I was a jock, a PD, an AE in large markets and a GSM amd GM in a medium market. Today I am on the agency side. Radio has nothing to sell. Value added is not bonus spots and giveaways. There is no creativity, no innovation and most of all no fun or entertainment. As someone who loved the radio business it does not sadden me as much as it disgusts me that companies like Clear Channel, CBS Radio and Cumulus have turned radio into second rate media. Radio has nothing to sell now other than a shrinking, aging audience and I am not sure it can be turned around at this juncture

Detroit Diesel said...

From Business Blog at intuitive.com:
HD Digital Radio Alliance crash-burns, but won't admit it
I'm reading through the consumer electronics trade journal TWICE and bumped into this fascinating article: HD Radio Ads Combat Perceptions.

The story's really summed up in this sentence, that the Alliance's new "radio-ad campaign will combat the mistaken perception by many consumers that they already own an HD Radio."

That's an extraordinary problem to have, isn't it? Apparently the higher clarity, greater dynamic range digital "HD" radio is a baffling proposition to consumers, who either think that if their radio has a digital tuner they're set or that it's somehow related to satellite radio (Sirius/XM).

The metaphor that comes to mind is that it's like the rats organizing and having a rally as the ship they're on slowly swirls through the whirlpool and into the briny depths.

For better or worse, AM/FM works pretty well, it's cheap, pervasive and now that there are so, so many different alternatives for listening to music (for example, I have an 80GB iPod plugged into my car stereo so I have an enormous music library on the road and far more flexibility - and sound quality - than any on-air alternative) it doesn't need to be supplanted.

That's the core problem that Sirius/XM have been having for years too. It's just alien for the vast majority of consumers to think about paying for radio. I mean, it's just airwaves, right?

Meanwhile, the spokesperson for the HD Digital Radio Alliance explains that the ads are intended to make people go to the HD Radio.com Web site so that people will view HD station guides because, as she explains, "we know if listeners find a station they want to hear that is not on the AM or FM dial, they will buy a new radio."

Uh, no. If they realize that there's music that they want to hear but don't have access to on their radio dial, they'll create a playlist on their music player, plug their smartphone into their stereo and turn on Pandora or Slacker or otherwise sidestep the entire over-the-air infrastructure.

That's not the only place they're out of touch with reality, though. Alliance president Diane Warren explains that “In this economic environment, being able to receive all these extra stations around the country for free is immensely appealing.” Unfortunately Diane forgets that you have to buy new radios to get these additional channels, and the cheapest option is almost $100.

Then again, perhaps I'm wrong and lots of my friends and colleagues have their HD Digital Radio devices and are happily listening to all the additional high quality channels. Are you?

Posted by Dave Taylor at March 25, 2009 1:56 PM

Anonymous said...

Radio should be studying the mistakes newspapers have made over the past year and avoid making the same ones. But what do we get? People like Jacobs saying radio can grab newspaper revenue? Hello, wake up? Radio is in the same leaky boat as newspapers and if it doesn't change quickly it will suffer the same fate. That newspaper revenue left years ago, Jacobs. That's why they are now closing down. Radio is right behind them unless it realizes what its listeners want from it. Hint...it's all the things Clear Channel and CBS Radio have taken away.

Transistor Radio said...

Having a brand anchor like Howard Stern might help sell a few HD radios. Having exclusive rights to the NBA might help sell a few HD radios.

You see that's what's missing... The Alliance made an assumption and guessed people wanted radios that sound better. Is that what listeners want??? When in reality radio sounds good enough, but what they want is something worth listening to. Free music is everyplace today, playing more free music, isn't a rare commodity anymore and more free music has lost some value. Besides the reason gadget guru’s love their Ipods is because virtually every song known to man can be played on a device no bigger than a deck of plays cards. A long time ago before Clear Channel the jocks added something worthwhile to the listening experience. But these days most sound more like robots reading whatever the liner card says. So we’re stuck more music that somebody else likes and jocks that sound like robots, or no jocks at all.

Boys, find a void and fill the hole. You're attempting to sell a brand extension that nobody was asking for, except for maybe Clear Channel who forgot what business they were in. They just want to sell more crap to anyone who can pass the credit check.

Anonymous said...

Did you really expect Scott Spurling to tell the truth? We have these brilliant Harvard MBAs taken for suckers by some good ole boys from San Antone. I don't think Scott wants it to appear that he was hog tied and tarred and feathered in this deal. The question is how will Lee and Bain get out of this mess? They cannot do the usual strip and parcel on this one. They are too closely tied together. Spurling is going to have to grin, bear it and wear that game face for a long time. He is not going anywhere but neither is Clear Channel. They are stuck.

Anonymous said...

John, even you have to admit that Arbitron is having problems with its PPM. I think you made the best point about audience measurement in that the Internet streams will serve as the best measurement of all because they are exact real time numbers and on line stations can archive items and sponsor them for on demand listening. This brings me to the point about the NAB cutting that stupid deal with the RIAA. What was the purpose of that? Unless there is a motive we are unaware of, the NAB negotiated away radio's only remaining strength. I cannot believe that no major chain has given up and dropped the HD radio scam too? Did iBiquity get the chains to be investors too? There is something fishy about this.

Anonymous said...

Cable TV is being threatened by on line sites like Hulu. I think we are in the midst of some major changes in the way old media is used. Your "great convergence" is the perfect description. Radio, TV, everything is migrating to one source which we can then listen to and view on multiple platforms. I don't understand the radio industry's infatuation with HD radio. It just doesn't make sense period.

Anonymous said...

Radio has been in its own alternate universe since 1996. What's new other than the fact that the industry has managed to burn itself out with staleness and sameness. It can't sell time because it has nothing worth anyone's time to sell.

The stupidest move was for radio to keep supporting the HD format while letting the NAB negotiate the worst possible deal it could make with the RIAA and SoundExchage which effectively will make it impossible for this industry to survive as most move to on line video and audio.

Maybe when the labels go out of business for their own greedy moves the only music will be indie and free and internet radio will have a future.

Anonymous said...

"…As someone who loved the radio business it does not sadden me as much as it disgusts me that companies like Clear Channel, CBS Radio and Cumulus have turned radio into second rate media. Radio has nothing to sell now other than a shrinking, aging audience and I am not sure it can be turned around at this juncture"

That about says it all for me. I'm in the same boat as this poster. I loved my years in radio, but honestly can't see a future for it. When I stepped away -- in one of the last go-rounds when us old guys were being purged for kids more than 10 years ago now -- I stepped aside and tried to shrug off the change gracefully. Time for a new generation to lift the business up, I told myself. Unfortunately, no one got the chance. I've tried to keep my clients interested in radio, just out of love of the business, I guess. But it's getting to be a harder and harder sell. Last week I met with an old client about his shrinking budget and we tried to map out the best value for the dollars he had remaining. After we finished the budget, he looked at me with a laugh and said: "I can't believe you didn’t mention radio." He was ready to overrule me, if I'd suggested it, but I had to admit that except in very rare cases I'm no longer suggesting radio as part of any campaign. Never thought I'd say that. It's a sad day indeed. If there's a light at the end of this tunnel, I sure as heck can't see it.

Anonymous said...

Hey Lyin' Diane -

It's over. Hang it up. If you value ever getting another job in this business you would be wise to give up this HD business now. Booble and the boys will get out and you will be stuck as the mouthpiece for everything that is wrong with the radio business.

Where will you be one year from now, Lyin' Diane?

Anonymous said...

Man, you are right. The only way radio can survive is when these companies unload their properties for their real worth which isn't much. The fire sales will bring radio property prices down to realistic levels. That combined with renegotiating the illegal contract between the RIAA and NAB will begin the turn around. It will give radio two portals - the Internet and terrestrial. Yes, the latter is fading but there are still millions of radios that require nothing more than turning them on. Yes, radio could have a resurgence but it will take the fire sale to make it happen. BRING IT ON.

Anonymous said...

These bastards could lie over truth serum. All they know is how to manipulate, lie, cheat and find every excuse to make people believe their outlandish lies.
Radio is dead.

Anonymous said...

Radio still operates from the old school and refuses to recognize "transparency" being part of a business's equation. Radio still believes they are a medium that has to be listened to. They don't understand that everything from music, news to yes, even traffic reports can be gotten on line and can be programmed for our individual needs. By the time radio realizes what it could have had and what it lost it will be too late. The proverbial "fire sales" unless they happen now will also be too late to save radio. The clock is ticking close to the bell.

Anonymous said...

All the sodium pentathol in the world isn't going to get radio people to tell the truth or even accept the truth on how radio as a product is perceived by the masses.

It's old and in the way. I am not a fan of satellite radio. You have to admit that a statement is made when someone is willing to buy a unit and pay a monthly subscription to hear radio programming they can't get from their local stations.

Now with the growth of wireless it is only a short time before internet radio will have even a better reach and frequency of listening than satellite. When that happens what will become of terrestrial radio?

I am also glad you mentioned the phony baloney internet radio ratings. I read Ken Dardis's report too. I don't see how Arbitron and others can argue with those facts and figures.

I cannot see why someone would subject themselves to voice tracking and national formats on line when there are so many formats and variety available from on line radio. When CBS and Clear Channel brag about their internet ratings its just one more lie they are force feeding their audience and clients.

While we move forward radio continues to fade into the past.

Anonymous said...

Screw you, Gorman.

SOS/DD. What do you know? Fred Jacobs consults way more stations than you do? He' is more successful than you are. So what?

Anonymous said...

How can anyone take these clowns seriously?

Anonymous said...

If Clear Channel managers have to kiss ass they may as well kiss ass using product from the guy they just hired as the new CFO. After all, he can say he tested the product himself and it's good and it got him the job. Okay, Hogan, bend over and wait for your big fat kiss just like the one you used to give Randy.

Anonymous said...

Hey Stoopid!!! Fred Jacobs is a flying rear-end! YOU are simply a horse's ASS!

Anonymous said...

John, You are so right on about this.

I am not in the radio business but was a fan of radio. I used to travel a lot and enjoyed hearing local radio from different cities. Recently, I had to do a lengthy drive which took me through much of the country. I never heard such crap. The same music, the identical formats, even the same air personalities (or robots) in city after city big and small. In fact some of the best radio I heard came from small town stations that still maintained their own identity but there weren't many.

I like all kinds of music. Rock, alternative, oldies, country, album. I don't like hip hop or slow music. What I used to look forward to in my traveling days turned out to be a complete bore a decade later.

To be perfectly honest I believed you were exaggerating the point about radio in your blog. Not any more. You are completely factual in your assessment of it.

I will tell you right now that the next time I find myself taking an extended trip, I will plug in my iPod with my just-purchased plug in.

Anonymous said...

Radio should be taking those BIA reports seriously. If you think revenues are bad now - guess what?

Ask any manager. It is about to get much worse. It isnt just the economy either.

TSL is in a free fall too.

I Made the switch said...

While the NAB and RAB look for excuses and blame on declining revenue, the Internet ad groups have a different story to tell. You can always tell the winners from the losers. Winners don't have lie. The losers have no choice.
March 30, 2009
Internet Advertising Revenues Surpass $23 Billion in ’08, Reaching Record High
Q4 '08 Revenues Total $6.1 Billion; Growth Continues Despite Difficult Economy

NEW YORK, NY (March 30, 2009) – Internet advertising revenues in the U.S. remain strong, topping $23 billion, according to the 2008 Internet Advertising Revenue Report, released today by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC). Despite a difficult U.S. economy, interactive advertising’s continued growth, albeit at a slower pace, confirms marketers' increased recognition of the medium’s value in reaching consumers online where they are spending more and more of their time.

Full-year 2008 revenues totaled a record $23.4 billion, exceeding 2007’s performance, itself the former record of $21.2 billion, by $2.2 billion or 10.6%. By comparison, a variety of sources indicate weakness in overall advertising spending. The Nielsen Company, for example, reported that U.S. advertising for the full year 2008 was down 2.6% compared to the full year 2007.
Fourth-quarter revenues of $6.1 billion mark the first time the interactive advertising industry achieved, and surpassed, $6 billion in a single quarter. The figures represent a $154 million or 2.6% increase from 2007’s fourth quarter, which had revenues of $5.9 billion.
This is the fifth consecutive year of record results.
“We are seeing an ongoing secular shift from traditional to online media as marketers recognize that ad dollars invested in interactive media are effective at influencing consumers and delivering measurable results,” said Randall Rothenberg, president and CEO of the IAB. “In this uncertain economy, where marketers know they need to do more with less, interactive advertising provides the tools for them to build deep, engaging relationships with consumers—the experience marketers gain from this will deliver dividends especially after the economy turns around.”

Search remains the main driver of revenue growth according to the report, showing a 19.8% increase over 2007. Digital video, though still a small overall contributor, more than doubled its revenue with an increase to $734 million from $324 million in 2007, demonstrating how both marketers and consumers are embracing this dynamic platform.

As in 2007, retail, financial services, computing and automotive remained the four largest verticals among Internet advertisers in 2008. Consumer packaged goods, an industry vertical historically slow to embrace interactive advertising, notably increased its share of total Internet ad revenues by 60 percent over 2007. The Internet is now the third largest ad-supported medium, marking its increasing significance to marketers and consumers.

“Though some categories in the fourth quarter slowed or even dipped, reflecting the current economic challenges, the overall performance is up, confirming interactive’s ever-growing importance to the successful marketing mix,” said David Silverman, Partner, Assurance, PricewaterhouseCoopers.

The following chart highlights full-year revenue data breakouts; dollar figures are rounded.

FY 2008
Share of revenue
$’s (000)
FY 2007
Share of revenue
$’s (000)

Search 45% ($10,546) 42% ($8,805)
Display Related: 33% ($7,640) 33% ($7,072)
-Banner Ads 21% ($4,877) 21% ($4,456)
-Rich Media 7% ($1,642) 8% ($1,656)
-Digital Video 3% ($734) 2% ($324)
-Sponsorship 2% ($387) 3% ($636)
Classifieds 14% ($3,174) 16% ($3,321)
Referrals/Lead Generation 7% ($1,683) 7% ($1,584)
E-mail 2% ($405) 2% ($424)
Conducted by the New Media Group of PricewaterhouseCoopers LLP, the Internet Advertising Revenue Report was launched in 1996 by the IAB, and aggregates data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues with the data compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, ad networks, free e-mail providers, and all other companies selling online advertising. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.

A copy of the full report is available at: http://www.iab.net/AdRevenueReport

About PricewaterhouseCoopers:
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 154,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

About the IAB:
The Interactive Advertising Bureau (IAB) is comprised of more than 375 leading media and technology companies who are responsible for selling 86% of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive’s share of total marketing spend, and of its members’ share of total marketing spend. The IAB educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C. For more information, please visit www.iab.net.

IAB Media Contact:
Marla Aaron
212.380.4714
marla@iab.net

PricewaterhouseCoopers Media Contact:
Steven Silber
646.471.4059
steven.g.silber@us.pwc.com

Or

Linden Alschuler & Kaplan for PricewaterhouseCoopers:
Suzanne Dawson
212.329.1420
sdawson@lakpr.com

Anonymous said...

Anonymous said...
"Screw you, Gorman.SOS/DD. What do you know? Fred Jacobs consults way more stations than you do? He' is more successful than you are. So what?"

From another anonymous loser in the radio business - LOL!

Anonymous said...

Wonder how these radio groups will announce their bankruptcies?

Anonymous said...

They'll buy spots on the internet!

Anonymous said...

I blame Fred Jacobs. Oh wait. Some dumbass already did. Personally am amazed that this little Gorman world seems to think a single programming consultant, working a single genre of music, flipping a format in Detroit over a decade ago(the same market,by the way where Gorman failed spectacularly and spent all his time personally attacking other radio people-- INCLUDING DOUG PODELL -- which created negative benefit to his listeners, all 32 of them) has nearly single handedly ruined as much as you morons think he has. He probably wishes he was the all powerful Oz you seem to think he is but it's insane to believe any of this moronic vitriol. Blaming Clear Channel or Cumulus or Arbitron or George Bush or Alex Rodriguez is one thing but a programming consultant? Puhleeze.

Anonymous said...

Personally, I blame Garner Ted Armstrong!

Anonymous said...

Maybe Roy Masters is at the bottom of it all...

Anonymous said...

Anonymous said... "Wonder how these radio groups will announce their bankruptcies?"

I wonder, how iBiquity will announce their Chapter 7/11? Struble seems to be setting up his COO, Jeff Jury, by giving him more exposure:

http://hdradioalliance.com/

Jury is becoming Bob's asspiece.

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