Monday, September 14, 2009

Radio: Everything you know is still wrong!


Are most of the present decision makers in the radio industry downing shots of Absinthe?

I’m talking about the real stuff that’s laced with thujone.

There is no other probable explanation for their recent hallucinations and psychoactive statements.

Take the announcement Apple made regarding the
inclusion of an FM radio on their new iPod nano.

While the rest of the world was fixated on seeing Steve Jobs live in the flesh following predictions of his imminent death, many in the radio industry could only hear him utter two letters - F and M.


Will this new 5th generation iPod nano erase all memory of the new Microsoft Zune MP3/HD Radio player?

It already has.

While the new Zune HD attempted to challenge the iPod 4th generation touch, Apple’s changed the rules of war and moved on to capturing the market for those who wanted the iPod experience but were unable to afford to.

This is the new entry-level iPod. That FM radio isn’t there as added value. That’s reserved for the rest of the nano’s functions. The 8 GB model retains for $149; 16 GB is $179. The new nano has a wider screen, video camera, microphone, pedometer – and yes – an FM radio.

They really don't get it. Apple is set on capturing what’s left of the radio listening audience to sell
product to from its own iTunes Store. The nano’s FM features a “live pause” to tag music to reference and buy later. Consequently, you know it will convert users to listening to their own music instead of the radio.

They read what's left of the radio trades at Apple. They probably know more about the Arbitron's PPM than you or I do and identified a revenue stream from hit radio listening tweens and teens.

Come on, get real. When is the last time you heard someone say, “Hey, could you turn off your iPo
d so we can listen to the radio?”

When was the last time you heard someone say, “I’d rather have a Zune?”


I'll don my Swami hat and predict that this 5th generation iPod nano will be the most popular consumer electronics gift this Christmas shopping season – and it will bring a large number of first-time iPod users on board – including scores from lower income families and minorities.

For some radio execs the FM frequency on an iPod nano is worthy of a Sally Field moment.
“You like me, right now. You like me.”

If you were under the impression that the practice of embarrassing letter-writing was tossed out with the firing of David “Fum
bles” Rehr as CEO of the National Association of Broadcasters (NAB), I have some bad news.

Fumbles may be long gone but his letter-writing legacy lingers on. It’s now been taken over by the Fumbles stand-in, best known as the NAB Gang of Four. They wrote this embarrassing love letter to Steve Jobs.

If you don’t want to read it, I'll give you the abridged version: “We like you, we really, really like you, Steve.”

For the record, the NAB Gang of Four are Steve Newbury, President and CEO of Commonwealth Broadcasting – and Chairman of the Joint Board of Directors of the NAB; Charles Warfield, President and CEO of ICBC Broadcast Holdings and Chairman of the NAB Radio Board; John David, Executive VP of NAB Radio, and Janet McGregor, acting President and CEO of the NAB.

Did they ever hear of leaving well enough alone?

Did they ever hear of e-mail? Come on. Steve Jobs hasn't read a snail-mail letter in decades.


Moving right
along, you’ve heard that CBS plans to increase radio's promotional and marketing of HD Radio. In the CBS markets I’ve been in over the last few months - at least one promo an hour for HD Radio has been logged on every one of their stations. If no one’s buying into HD Radio after ten years and dozens of "new" campaigns – do you think that maybe – just maybe - it’s never going to catch on and consumers are ignoring you for good reason? To every season – churn, churn, churn.

Now, let’s take CBS Radio’s plot to carry their acquired Last.Fm Internet property on four of their HD Radio channels (WWFS, New York; KCBS, Los Angeles; WXRT, Chicago; KITS, San Francisco). That’s analogous to converting a CD library to eight-track. Nor is it an exclusive feature. You can already get Last.Fm on smart phones.

When will they learn? There’s planned obsolescence and then there’s just plain out-of-the-box obsolescence. HD radio has been the latter since its roll-out. Show me the growth? You can’t.

Prove to me in a real – not imagined - survey, that actual sales and use of HD Radio has shown growth supporting the need for the radio industry to continue supporting it. You can’t.


How about those HD stations that are forced to shut down because of overheating – or because a chain’s regional chief engineer is handling 35 stations in the region can’t get back into the problematical market until tomorrow, or the day after? Well, maybe that’s an exaggeration - unless you’re Cumulus.


While you’re at it, show me your electric bill since you’ve installed your HD Radio transmitter.
You can't and you know wh
y.

Groups that invested in HD Radio? Hey, we’ve all made mistakes. Granted, that was a major one. Like the Red Sox selling Babe Ruth to the Yankees, New Coke, Fen-phen, the leisure suit, the XFL, and the Titanic.


But I reserve my favorite Absinthe comment for Clear Channel. Lately, Hogan’s zeros have been laying low – until last Friday when they made the stunning announcement that they would award a total of million dollars in free advertising across radio, digital, and outdoor to the top three agency winners of the annual 4A’s O’ Toole Awards for creative excellence. The first prize winner would get a half-mil in free advertising. Second and third place will land $300,000 and $200,000 respectively.

Clear Channel must have a profusion of unsold inventory.

I’d love to see the spe
cific breakdown. Are we going top of card for rate? Is this really going to be a test to determine exactly what Clear Channel does with a $500,000, a $300,000, and a $200,000 campaign? This ought to be good. Then again, maybe not.
----

34 comments:

HD Radio Farce said...

John,

Long time sinced you bashed HD Radio - I love it! Struble has never mentioned that the Zune HD is going to be marketed in the US, only. Why not - can't find HD Radio in any other countries. No such problem with the iPod Nano, as it uses ANALOG FM RDS for tagging. HD Rado - nothing new here, despite Struble's hype. Rumor has it that Apple didn't include HD Radio because it's a power-hog, and is still too large. How about cost and poor performance, too. I see the exclusion of HD Radio in the Nano as a big blow to Struble and his gang of airways thieves. Good for Apple - they did their homework on HD Radio.

Anonymous said...

You could add radio deregulation to the list of bad ideas.

HD Radio Farce said...

Oh, as far as Last.fm - what good is it to defeat the interactive customization and social networking capabilities of Last.fm (aka., Pandora and Slacker), by hog-gluing it onto the HD Radio channels. It's still no better than listening to someone else's programming. Neeeeeext.....

Anonymous said...

Wouldn't CBS have to pay royalty fees for streaming Internet Radio over terrestrial radio?

Anonymous said...

The sooner the current owners vacate, sell or have their properties taken away the better chance we have of saving or reinventing the medium. If these are the best ideas CBS, Clear Channel and others can come up with, radio is doomed. How did we get such bad management. Did anyone read the Inside Radio NAB issue interview with Dan Mason? That is one clueless bastard.

Anonymous said...

I just read the Dan Mason interview in that Inside Radio NAB issue. Dumb as a stick.

Anonymous said...

By streaming last.fm, CBS will be able to jack the non-existent HD channel streamng numbers. This is exactly what iBiquity is doing with the non-existent traffic to hdradiouniversity.com, by combining it with hdradioalliance.com.

Dr Don said...

Ten years? High-definition TV broadcasting was going on longer than that and it still took forced analog shutoff before the public "embraced" DTV. Sooner or later, someone will come up with must-have programming that may start the ball rolling. Probably sports, financial news, that sort of thing.

Anonymous said...

Does anyone know what the first HD Radio station was, who owned it and the politics behind it? It is the greatest scam ever done to radio. Give all the major chains a piece to assure it does not fail? Then go after them for more money to keep it afloat?

Anonymous said...

Actually, John. HD Radio is over ten years old though the first "official" station did not go on the air until WDMK in Detroit in 2003. CBS, Gannett, and Westinghouse formed USA Digital Radio Partners back in 1991 to create digital AM and FM radio. By 1998, Clear Channel and a dozen other radio groups were on board.USADR was spun out as a separate company. Two years later, USADR and Lucent Digital merged in 2000 as iBiquity Digital Corporation. The royal scam.

Dan Garfinkel said...

HD? Is that still out there? I thought it had gone the way of the dodo and the Studebaker. The rebirth of the radio industry will not come from technology. "It's the content, stupid." Until creative, exciting radio returns to the airwaves, there will be no reason to listen. The record companies are failing because of technology leaving them behind even thought there's plenty of good content out there, radio is failing because the content is terrible, even though the technology works fine.

Anonymous said...

Wait a minute, here. I'm as happy to bash radio execs as anyone. But radio slipping onto the IPOD platform is a great opportunity. This is a two-way street. Yes, Apple can benefit by exposing customers to music that they can then buy and download. But it's also an opportunity to expose Ipod listeners to what radio has to offer.

Is it radio's salvation? No. But is it a valuable opportunity? You bet it is. And John, if you were programming a station I'll bet you'd be looking for ways to take advantage of it, which is what good program directors should be doing.

Anonymous said...

i see both sides in this matter. gorman never hesitated to break new music on stations he was with and consulted. it was part of the image he was trying to create. however in his case he had the audience coming back for more. in those days if you were not listening to wmms (or waaf, wphd, wrqk & other stations he consulted) you felt you were missing something. today radio is different. automated, voice tracked, tight corporate playlists. the excitement and information don't exist like that on radio. as a result it is easier to turn someone from listening to some mediocre playlsit to one you create on an ipod. i think gorman's point is that some ipods have better playlists than radio stations. there are very few stations like the old wmms today. maybe kcrw and some other public & college stations but that is it.

Anonymous said...

To Dan Garfinkle: You are sooooooo right.

If they shut every HD radio station down tomorrow would anyone even notice other than iBiquity?

Anonymous said...

I agree with John. Making this kind of iPod inexpensive enough for those with less money was the reason for including FM. One thing is certain. If someone has an option to listening to the radio they do whether it be an iPod, satellite or streaming audio. I can see as time goes on the iPod nano users will spend less time with their radio and far more with their other iPod nano options and playlists. Until radio begins creating compelling programming again everyone will be searching for alternatives. Music is not dead except on radio in its current formats form.

Anonymous said...

Gorman's got it right. If Microsoft or Apple sold so few pieces (less than a million HD radios sold in 5 years) they would have abandoned it years ago. It's just not what consumers think they need.

Anonymous said...

There are so many... Thanks for sharing these, John. I find it so odd that even though these companies are trying to save HD radio all are jumping from promoting the Zune to loving the iPod Nano. One of our morning shows was instructed to hype up the Zune. Yesterday they met with our nearly-dead from exhaustion PD who told them to stop talking about the Zune HD and talk up the iPod Nano instead because more people will buy that but at the same time keep pushing HD radio too. Does that make any sense?

Anonymous said...

Clear Channel has plenty of unsold inventory. Why do you think they are doing those "commercial free" hours on their stations? They also have plenty of dead outdoor boards and cannot even afford to print new boards for their own stations. Case in point is on Prospect Road in Cleveland heading west just a few blocks from the Cleveland Clinic. You will see a huge board for WGAR which is completely faded out and bleached beyond recognition from the sun. I noticed that their digital boards are running a lot of public service because they cannot sell those either.

BB said...

Many empty Clear Channel billboards along the Pa. Turnpike outside of Philadelphia.

Anonymous said...

My prediction is that there will be an investigation into iBiquity, the choice of IBOC, the HD Digital Radio Alliance and the unholy relationship it had with Kevin Martin's FCC and continues to have with the major chains and certain radio consultants. It is so overly blatant I can't understand why this has not happened already. There has to be a lot of money being transferred from the left pocket to the right. I hope the new FCC comes down hard and heavy on these thieves.

Anonymous said...

"Clear Channel has plenty of unsold inventory. Why do you think they are doing those "commercial free" hours on their stations? They also have plenty of dead outdoor boards and cannot even afford to print new boards for their own stations."

1.) "Commercial free hours"--i.e. continuing to make the people who pay the bills the bad guys. Golly...that'll get those big spenders in the door. 'Hey, come drop $10,000 with us and we'll spend every second outside of the 60 seconds you pay for telling listeners that you're the reason programming sucks'. If people actually gave a damn about "business", this crap would stop (along with 8 minute spotsets, but that's another conversation).

2.) "Dead outdoor billboards"--I thought the whole purpose of all this consolidation was to bring 'synergy' among different platforms. Is there some sort of accounting reason CC Outdoor couldn't be used to promote radio stations? Or is the idea of outside promotion so abhorrent to current management that it just isn't even considered? Radio has forgotten to remind people it's still around.

Coca Cola, Budweiser, Geico, Home Depot--all well known companies that spend millions on advertising, sponsorship, & promotion materials (and, theoretically don't NEED to advertise)...and yet radio groups think their properties are so well known they DON'T need to promote them? Who put these "leadership" people in charge???

The Ipod thing is a novelty. Nobody will buy an Ipod because of a FM radio inclusion. The only use for FM on Ipod I can see is during emergency broadcasting (you know...once somebody drives to the station to displace the voice tracking...).

HD Radio Farce said...

"I hope the new FCC comes down hard and heavy on these thieves."

The FCC is part of the problem, as they ignored the severe interference potential of IBOC. The NAB, CEA, iBiquity, NPR, and the NRSC are all vulnerable. The NPR has duped Congress out of tens-of-millions for conversions to HD. Payments were made to Rep. Dingell's election fund, during his supposed invetigation (2008) into the FCC's practices, by Struble, Jury, Rehr, Ford, CEA, CBS, and Clear Channel, so the investigation never mentioned IBOC.

Anonymous said...

"Ten years? High-definition TV broadcasting was going on longer than that and it still took forced analog shutoff before the public embraced DTV."

Is Congress going to authorize 800,000,000 HD Radio converter boxes, without funds from auctioning off vacated airways - right! I'de love to see a hard date for analog radio shutoff - no one is buying HD radios, so it would mean the death of analog radio. Maybe, that wouldn't ba a bad thing, at this point. Struble is trying to eventually go IPO, so he will destroy analog radio in the process, and retire to some contry without reciprocity laws, when an investigation into iBiquity finally takes place.

Anonymous said...

John, You are right on the money again. I stopped into the Apple store to find out the kind of person who was asking about the new iPod nano.
It has been mothers and teens and preteens.

Anonymous said...

The Zune HD went on sale today. Does anyone even care?

Anonymous said...

What the radio industry refuses to understand is that Microsoft is an Oldsmobile 0r a Buick to younger demos. Apple did it right with the iPod. They created a market that prefers the design and functionability of Apple products like the Mac. Maybe they have a tiny 10% of the market. Let us revisit that figure five years from now. Macs have become far more compatible with PCs and for some the Mac experience of not getting viruses, a better screen/picture, + user friendliness will convert more PC users to Mac. The younger generation will gravitate to Macs not PCs. Apple already won the MP3 war and will win the smart phone war, too. Microsoft had given up on the Zune. I don't know who resurrected it or why but this new unit is definitely dead on arrival. Zune HD. Sounds like HD Radio. A big nothing.

Anonymous said...

Will someone please investigate this HD Radio scam? No one is buying the radios. No one is listening to programming (obviously). The license fees, the legal fees, the HUGE electric bill from the transmitter. Those OVERHEATING HARRIS TRANSMITTERS themselves! This was not well thought out. A select few have to be pocketing some nice fees. This house of cars has to come tumbling down soon. Radio cannot afford to prop this failure up much longer. The Feds will have a field day with this scam if and when they finally get to it.

Anonymous said...

"Those OVERHEATING HARRIS TRANSMITTERS themselves!"

LMFAO!

Anonymous said...

"This house of cars has to come tumbling down soon."

Struble just finished a trip to NYC to talk with the Wall Street analysts about going IPO. Talk about a scam - I wonder, what lies Struble has told Wall Street. If iBiquity goes public, all of its records will be available forpublic inspection, including their balance sheets. I'm sure the HD Radio sles figures will be fudged, and surely won't show how many have ben returned. Can anyone say "Enron"?

Anonymous said...

John, I have to agree with you on teens and tweens and the new iPod Nano. I see and hear absolutely no "buzz" about Zune. I asked my two daughters (14 & 16) about Zune. They have no interest in it. Zune is not "lifestyle". They have one friend who got a Zune as a gift and still saved up to by an iPod. She uses the iPod. The Zune has gone to her preteen brother. Both of my daughters own iPods which they saved up for. They rarely listen to the radio and say their friends who don't have iPods yet knew about the new Nano and hope they will be getting them either as gifts or are looking at them as something to save for. My daughters learn about new music from the iTunes store and sites on line. Considering their age they spend very little time listening to teen pop. Their music selection is very broad and sophisticated for their age.

Anonymous said...

i checked out the new zune. good features. improvement over first. but i am sticking with my ipod & hope to make my next mobile an iphone. yeh, im committed. i also know what ill get my niece for xmas this yr. the new nano.

Detroit Diesel said...

Sounds like CBS and Sirius may be obsolete soon...


Airline, media and auto companies risk bankruptcy: study

NEW YORK (Reuters) - U.S. companies in the airline, automobile, television and publishing industries are about four times more likely to file for bankruptcy in the next year than companies in other industries, according to a study.

The study by Audit Integrity, which usually analyzes accounting risks, used a quantitative model to track liquidity, debt levels, profitability, market prices and governance and fraud risk measures at more than 2,500 companies.

Bankruptcy filings have jumped sharply in the past year.

"Even if we're coming out of the recession, companies have been substantially weakened," Audit Integrity Chief Executive Jack Zwingli said in an interview.

"The concern was that the economic environment had changed and the risks on company balance sheets have changed."

Zwingli said investors needed new models to detect bankruptcy risk as the combination of the U.S. recession and more complex corporate debt structures meant that bankruptcy could now happen with little advance warning.

Among companies with more than $1 billion in market capitalization, the study showed that No. 3 U.S. drugstore chain Rite Aid Corp was most at risk of bankruptcy in the next year. The study gave the company about a 10.5 percent chance of filing for bankruptcy in the next 12 months.

Despite a recent investment deal, satellite radio operator Sirius XM Radio Inc, was second on the study's bankruptcy risk list, with about a 9 percent risk of filing for bankruptcy in the next year.

Both Sirius and Rite Aid are struggling with heavy debt loads stemming from recent acquisitions.

Sirius acquired XM Radio in 2007 while Rite Aid acquired the Brooks and Eckerd drugstore chains in the same year.

Representatives from Rite Aid and Sirius were not immediately available to comment on the study.

To test its model, Audit Integrity also applied it retroactively to companies that recently declared bankruptcy.

Companies such as Smurfit Stone Container Corp, BearingPoint Inc, Tronox Inc, Trump Entertainment Resorts and Circuit City Stores all scored a 99 on Audit Integrity's bankruptcy measure, which would translate to about a 10 percent risk of filing for bankruptcy.

Rite Aid and Sirius both scored a 98 on Audit Integrity's bankruptcy risk scale.

According to the study, companies that filed for bankruptcy in the past year typically scored between 84 and 99 on the company's measure, with the notable exception of Lyondell Chemical Co, which scored a 51.

Lyondell creditors said they were shocked by the bankruptcy filing in January when the company suddenly ran out of cash.

The study showed that American Airlines parent AMR Corp had an 8.7 percent risk of bankruptcy in the next year, while auto parts supplier Federal Mogul Corp had an 8.6 percent risk. It put the chance of a bankruptcy at manufacturer Textron Inc at a 7 percent.

Goodyear Tire & Rubber Co has about a 6.9 percent chance of bankruptcy according to the study, while Continental Airlines was given a 6.6 percent chance.

Rounding out the top 10 were media and entertainment companies CBS Corp, Las Vegas Sands and Liberty Media Corp with a 6.2, 5.9 and 5.6 percent chance of bankruptcy, respectively, according to the study.

(Reporting by Emily Chasan; Editing by Ted Kerr)

HD Radio Farce said...

It's early in the game, but John was almost dead-right on the Zune HD and the new, cheaper iPod Nano:

http://tinyurl.com/2umcv4

The Zune HD is ranked #11, and falling, while the iPod Nano is ranked #14, and rising.

"Zune HD Quickly Selling Out at Amazon, Newegg, Best Buy"

"Of course, as commenters have pointed out, it's possible, if not probable, that Microsoft is using the time-tested tactic of short supply to make sure it sells out everywhere. Until we get some hard numbers, there's no way to tell. In the meantime, here's how it shakes down (notice Microsoft's online store seems to have plenty of units)."

http://tinyurl.com/mnxok6

Of course, just like what iBiquity did with the Insignia Portable HD Radio at Best Buy, the Zune HD retailers have short-supplied the Zune HD to make it appear the it is selling out. Of course, there are plenty of Zune HDs at Microsoft's on-line store.

Anonymous said...

John,

You sure called it right with the Zune HD:

Amazon: Bestsellers in Electronics

2) Apple iPod nano 8 GB Black OLD MODEL
3) Apple iPod touch 32 GB NEWEST MODEL
5) SIRIUS Stiletto 2 Portable Satellite Radio/MP3 Player
8) Apple iPod touch 8 GB NEWEST MODEL
15) Zune HD 32 GB Video MP3 Player
17) Apple iPod classic 160 GB Black NEWEST MODEL
23) Apple iPod touch 64 GB NEWEST MODEL
37) Apple iPod nano 8 GB Black NEWEST MODEL
78) Zune HD 16 GB Video MP3 Player

http://tinyurl.com/ybwwrqv

The Zune HD 16 GB is a non-seller, and many more consumers still by the Sirius portable than the new Zune 32 GB!