Thursday, August 30, 2007

Permanent vacation season

B.D. – Before deregulation, the most opportune time to downsize was that week between Christmas and New Year.

It was assumed that everyone was on auto pilot and surviving employees were least likely to miss the small things come every first of the year…like a smaller airstaff, sales management, general management, promotion and marketing and so forth.

It seems improbable that there was a time in the not too distant past when radio and TV would not fire…er…terminate anyone between Thanksgiving and Christmas, regardless of cause.

Axing employees during the holiday season was downright Scrooge-ish.

No more.

Today, it’s any time, any place, any date. When you’re out, you’re out.

Still, there are those with marquee value that are best canned on specific occasions.

Like this week.

Radio and TV fancy weeks leading up to long holiday weekends like Memorial Day, July 4th, and the upcoming Labor Day weekend. They provide decent cover to pick off a few perceived dead weighters.

One TV station I’m familiar with is taking advantage of the week to lacerate a news anchor, meteorologist, and a couple of writers. They’re also slashing salaries on a couple of surviving anchors – including one who was their Empress until a few career wrinkles developed.

On her face.

You know what they say in television.

Thirty is the new forty.

Forty is the new “you’re history.”

It’s not “old” anymore. It’s “old and in the way.”

I know of a reporter who’s landed a few fill-in anchor duties and is positioning herself to be in line for the station’s next full-time opening. She just turned 32 – and has already been under the knife for a few nips and tucks.

Young at heart has been replaced by young in face.

Too much experience has become detrimental.

The dreaded question: How many years have you been working in this business?

They can’t ask your age but the year you graduated high school is fair game.

It could’ve been worse. What if Anchorwoman, the FOX TV reality series got ratings? Thankfully, it didn’t and died after its initial showing due to dismal numbers.

That show followed a swimsuit model and beauty pageant winner with zilch journalism experience in her quest to anchor a Tyler, Texas television station’s newscast.

If Anchorwoman got numbers, FOX would be signing up the Naked News anchors for its o & o’s.

Contracts no longer mean protection since a one-time buyout can spruce up an otherwise dismal annual report.

They – whoever they may be – say that you’re not a media maven until you’ve been fired at least once.

That means we now have more media mavens out of work than working.

Here’s the radio set up. You’re back at work following a three day weekend and there’s a new market manager or afternoon drive jock or a traffic director taking on an additional five stations or ten fewer board ops minding the Prophet.

Shock deadens when you learn that the downsizing occurred days ago. That’s the benefit of long weekends. You don’t have to see the just-fired cleaning out their cubbyholes.

It also gives new meaning to escort services. They’re hired to escort the disengaged employees out of the building.

For the civilians – viewers and listeners - an abruptly terminated anchor, meteorologist, sports reporter or air personality is a non-issue.

It’s not like the past. Not even the way it was a couple of years ago.

Rarely is a station faced with high profile protest over a fired TV or air personality.

Ask Imus.

All the hoopla on his firing was media generated. The public couldn't have cared less.

Of course there’s good reason for this. Look over an Arbitron lately? There’s no such animal as a loyal listener. They care less because they’re viewing and listening less.

Isn’t that true, Ms. Couric?

You’ll still hear civilians recalling past news anchors and air personalities – but it’s of a distant past.

How many 30-pluses can name air talent on their favorite radio station from ten, fifteen years ago but can’t identify a single person on stations they listen to today?

And on rare occasion they know the morning drive host’s – can they name anyone else on the supporting cast?

That is, if they still listen to radio.

The same applies to television news anchors. They’re replaced as fast as the number twos used to be in The Prisoner.

And that’s the dilemma traditional media faces.

Lack of loyalty.

Humans are creatures of habit and given the choice will invariably go to what is most familiar.

When familiarity disappears, so does loyalty.

When loyalty disappears so do ratings.

Friday, August 24, 2007

Radio Industry to Clear Channel: How can we miss you if you don’t go away?

Memo to Clear Channel: Will you please stop your whining. Take the haircut. Agree to your revised deal with Frequency License LLC.

$350 mil may be 23 percent less than the original $452.1 million offer – but, come on, you’re still getting a good – albeit more pragmatic – deal.

Just cut your losses and get the hell outta Dodge. Now!

This isn’t about saving face. This is about saving your ass. If your biggest deal goes south, you’re a bleeding, wounded animal, ripe for the kill and, right now, your obstinacy is doing nothing other than making a team of rich lawyers richer.

Haven’t you come to grips that the only ones feeling sorry for you are your fellow rats?

For just this once, listen to the Dutch uncles whose counsel you’ve ignored for the past decade.

The spectators I’ve talked to admit that there is something peculiarly entertaining in witnessing the decline and fall of Clear Channel - the company that will forever be known as the one that gave the radio industry a bad name.

It’s a great study for the Harvard Business School – how Clear Channel went from being the name of a media company to a verb whose definition was “screw up” to, finally, a curse.

Clear Channel never got the connection between what they were programming and what listeners wanted and what their clients expected and what they delivered.

It’s not the rank and file’s fault. Not even close. Clear Channel employs some of the most talented and creative people in this business. I’ve talent coached and commissioned Clear Channel’s talent for profitable free-lance projects. The same applies to sales and marketing. Clear Channel constricts talent, which results in an abysmal product while constraining sales to sell it using their method. It’s a recipe for failure.

Do you know how many times I’ve heard, “If they only let us do it this way?”

Facades, no matter how well built, eventually crumble.

Their mash-up mingled lies with a rare truth or two and left it up to the shareholders to figure out which was which.

So, now we have a company that’s closer to dust than flesh.

Last year Clear Channel shareholders discarded the 33 percent premium, which was offered by BainCapital and Thomas H. Lee for the terminally troubled radio division. The deal had to be upped by $800 million. Earlier this year, the standard buy-out price was 15 times cash flow - four times larger than the 2002 level, which corresponded with the level that was reached prior to the leveraged buyout market bust in the late eighties.

The clock is tick-tick-ticking on the BainCapital-Thomas H. Lee-Clear Channel deal. September 25 is the date of the shareholder vote to go private.

There are some things that money can’t buy. One of them is being a fly on the wall at Clear Channel’s headquarters.

The mood in San Antonio has to be like the French during the final days of their doomed aristocracy.

They have problems that even nightmares wouldn’t cover.

Like the dot com bomb, history will record the private equity phenomenon of the past year and a half as another archetypal Wall Street bust.

The abrupt halt of el cheapo financing has inflicted such chaos in the buyout market that it’ll be hard-pressed for BainCapital and Thomas H. Lee to artificially inflate Clear Channel’s true value.

As they say, timing was everything.

On paper, BainCapital and Thomas H. Lee specialize in buying out and rebuilding troubled companies. In reality, they strip them like a car thief and part out the pieces, usually to create new companies and IPOs to dump on gullible investors for a few billion more than they paid for it.

Clear Channel won’t be among them.

It's now a buyer's market, a seller's nightmare and therein lays the silver lining - broadcasters could and should end up back in the broadcasting business! This past decade has proved that only broadcasters know how to make money in broadcasting. The Frequency License LLC deal will bring real broadcasters back into the fold.

Of course it’s not that cut and dry.

Those running radio made it look like an industry managed by circus clowns. Pushing HD Radio as the next big thing while lobbying against an XM-Sirius merger? How about bawling like babies over Arbitron’s people meter glitches in its trial run? Hate to clue you in but the old-fashioned 20th Century diary was already showing high cume, low quarter-hours, and plummeting time spent listening. Then there was FreeFM, Jack and Jill, extreme rock, and a surfeit of other formats that any real broadcaster would’ve rejected.

Radio’s crawl back to legitimacy will take time – and it will, as all other re-invented businesses, have to marry itself with new media in new, innovative ways.

Face it. Who other than real broadcasters should be given the opportunity to bring legitimacy back to the industry?

Radio isn’t dead. It’s an industry in a serious need of a reboot.

Meanwhile, Clear Channel will become an ever-more distant memory in the rearview mirror of broadcasting history.

And that’s the best news of all.

Tuesday, August 21, 2007

Radio: Where’s the smoke detector when you really need one?

I smell smoke.

It’s been wafting in the air, barely perceptible, for the last few weeks.

The sense of the smoke of a distant fire.

Now, it’s getting stronger, closer.

It reminds me of the outdoors as fall turns to winter and the smoke from a fireplace mingles with the cold, crisp air.

Throughout Greater Boston and Providence, there’s a chain of discount stores called Building 19. They’re in the insurance salvage business. They buy damaged goods - bankruptcy stocks, irregulars, railroad salvage, and merchandise that survived a store or warehouse fire.

It’s too bad Building 19 isn’t in the radio business because the fire sales are about to begin and it could be one hell of a meltdown.

How do I know? Sniff the air and ask these questions:

Is it true that lenders will now only deal with those that are real broadcasters?

Does this mean that business plans that read; “Buy them now and figure out what to do with them later” are no longer acceptable?

Does that also mean that those who’ve done a less than desirable job at running properties acquired over the past decade will have a difficult time raising money for any further radio deals?

Could it be that some banks may choose to call in some radio loans?

Is it true that even Payday Loans lock their doors and pull the shades when they see someone from radio pulling into the parking lot?

One more question. What’s in your wallet?

This much we do know. The unruly irresponsibility of the freewheeling credit charging, mortgage lending days have come to an abrupt halt. Radio is real estate. That’s what the chains were telling lenders for years.

Remember the radio real estate pitch? They aren’t making any more of them. They’ll only increase in value. They have to listen to us.

It’s not unlike commercial real estate before the bust when buyers looked at buildings with under forty percent vacancy and bought them as if they were ninety percent occupied.

One of – if not the – very first lesson I was taught when I got into this business was never believe your own hype.

Not everyone in radio heard that one.

Another question. Does that mean opportunities for former owners and operators who have been on the sidelines since selling their original properties for obscene multiples?

The answer is you better believe it.

These were the sharp guys. They wisely took the multi-millions that AMFM, Clear Channel, and CBS paid and invested sensibly. Now, they’re sitting on how many dead presidents?

Lenders want owners and operators who know when to hold ‘em and know when to fold ‘em. That’s something this crop of gamblers didn’t know how to do.

Few knew how to make radio profitable in the long term.

Even fewer knew how to hold on to younger demographics. Most teens still listening to the radio do so because of socio-economics. They can’t afford a computer. They can’t afford an iPod. Those that can are long gone from terrestrial radio. That reality cannot be argued.

There’s a line in the Bob Dylan song, “It’s Alright, Ma (I’m Only Bleeding),” that says, “Money doesn’t talk it swears.” You have to admit – some of the scams pulled in radio over the past decade were blatantly profane.

It’s true with all industries. Some things are never meant to get that big. Radio is one of them. It did best when there were long-range goals based on a station’s performance.

Consistency is the true mark of a champion? Please don’t confuse them with the facts.

All the while, radio chains insisted that their stations were solvent. Are you making money? Sorry, no more questions.

The past decade was all about acquiring. The decade we’re in now is all about operating and turning profit.

The past decade was price is no object. The decade we’re in now is all about rational multiples.

How much is a business worth that shows barely a one percent growth rate anyway?

Ask CL King & Associates analyst Jim Boyle. Overall, he's forecasting the radio industry to lose one percent for the month of July weighed against July 2006 results.

You would be correct if you identified that snapping sound followed by a loud squawk as wings being clipped.

There were more bugs in most radio chain operations than a Patricia Dunn Hewlett-Packard board meeting.

It’s not the business. It’s the people that have been running it. They royally screwed it up and the rank and file took the heat.

But seriously, you can’t feel bad for some of those know-everything regional VPs who are already well past their expiration date. You know the old saying: when one door closes, another opens. For them, it’s a swinging door into the Applebee’s kitchen.

The radio industry is overdue for change and improvement.

Sniff! Where there’s smoke…..

Thursday, August 16, 2007

Radio and the labels: Outlandish accusations and propositions

There’s money in chaos. That’s what the Record Industry Association of America (RIAA) is counting on.

Here’s a quick explanation for those not in the business.

Radio stations that play new and current music have only so many slots open each week to add new music.

Added value tacked on to a title can provide more influence and weight than, let’s say a decision maker’s professional opinion.

The clean version used to be offering a station a promotion – like a free show or a trip to see the artist in concert –in exchange for an add.

Elliot Spitzer may disagree with the process but we’ll let him duke that one out with Ayn Rand disciples.

The dirty version is, of course, payola, where the only winner is the designated hitter.

Blame the music business for payola - not radio. Radio’s only guilt is buying into it.

Following 1996’s radio deregulation, the radio chains – those that bought up everyone else – required non-traditional revenue (NTR) to meet the bottom line and service debt. Deals were cut with independent record promoters to offer them the inside track – the ultimate influence – for labels to get their music added at radio.

The radio industry went full-tilt boogie pay-for-play.

Money talks, good music that can’t afford the payoffs, walks.

The label promotion chieftains – those in charge of working radio for adds – are pressure- cooked to get their music on radio. Radio airplay still translates to sales and influence on other media – including music video channels - and song charts.

Indie promotion afforded an easy way out for labels, allowing its salespeople solid radio airplay guarantees on pay-for-play titles. The labels hired the indies with a “don’t ask, don’t tell” premise.

The labels created and recreated payola many times over the last fifty years – maybe more.

It was profitable for radio during the “legal payola” years since it had the upfront on the deal. Based on market size, indies doing rep for the labels charged, $75,000 to well into the six figures per year in a lump sum – paid in advance - for control of radio playlists.

Call it the path of least resistance.

Labels never spend their own money on anything. They spend their artists’ royalties. That’s where their wrath should be directed. Lunches, dinners, parties, giveaways, contest costs are charged against an artist’s royalties.

To the labels, honor is an archaic notion at best and sardonic naiveté at worst.

The pay-for-play deals came to an abrupt halt when the FCC defined “legal payola” as illegal.

With that plug pulled, radio and the labels started snarling at each other like rabid dogs.

Just like radio, the labels have gone through their own expensive consolidation and the pay-for-play costs started hurting their bottom line when the teen acts pool they depended on went dry. With fewer royalties to extract – the labels need their own version of NTR.

The labels struck first by telling radio its free ride was over, insisting that if radio wants to play music, they’ll have to pay the RIAA through its SoundExchange collection agency for the privilege. And that includes any music – new or old.

Call it payola in reverse or Revenge of the Weasels.

There aren’t any laws on the books requiring radio to do so – but the RIAA is targeting easy-to-sway lawmakers to change the rules and make it official.

The National Association of Broadcasters (NAB) is trying to fight back – but, like a drunken brawler on a Friday night, David Rehr hasn’t been able to land a punch on the RIAA. Instead, he took a few on the chin and a couple in the gut when the RIAA in its MusicFIRST Coalition disguise came a’callin’ on the House Judiciary subcommittee hearings a few weeks back. Their goal is to establish and make law a sound recordings performance royalty for broadcast radio.

The RIAA tries to pawn the MusicFIRST Coalition as a true coalition of recording artists.

It’s not.

They armed themselves with folk singer Judy Collins and singer Sam Moore, formerly of Sam and Dave.

Why Judy Collins? We haven’t heard much from her since the Clinton era. Turns out she’s released a new album, Judy Collins Sings Lennon & McCartney– and this hearing made for a great opportunity to get in a few plugs for it.

Moore, who still gets airplay on stations that haven’t switched from oldies to classic hits, did his sordid saga on the free ride radio has by freely playing his music without offering compensation.

Sam, you’re targeting the wrong enemy. Stax, your Sam and Dave days label got slicked out of owning your music masters some thirty-plus years ago by Atlantic Records. It was legit. Someone on the Stax side neglected to read the fine print.

Since then Atlantic has become part of Warner Bros. and now that company is run by the aging kid who bought his way into the biz by liquidating his family’s booze bank, Edgar Bronfman, Jr.

Memo to Sam: I was the only one in a Borders record department the other day. While scanning the R&B compilation CDs, I found six R&B “greatest hits” albums that had Sam and Dave tracks. I also noticed that all your old Stax albums were on CD, too. Now tell me - when was the last time you got a royalty check from Edgar?

Moore also dropped Bo Diddley’s name as another artist, in ill health, and forced to tour to make ends meet. He continued to do shows even after his left foot was amputated. A few months later Bo nearly shed this mortal coil when he suffered a stroke.

I scanned the record store for Bo’s music, too, and also found tracks he recorded in a half dozen R&B compilations as well as a CD copy of Bo Diddley – The London Sessions.

Who owns Bo Diddley’s long-time label Chess these days? Glad you asked.

Following a paper trail, I learned that in 1969, Chess Records, always notorious for not paying royalties to its performers, sold the company to GRT records. GRT dumped the Chess catalog in 1975 to a company called All-Platinum Records. All-Platinum turned out to be tin-plated and went belly-up with the Chess masters ending up with MCA in a liquidation deal. MCA is now the Universal Music Group.

My question. When was the last time Bo got a royalty check from Universal?

What the RIAA is doing is trying to circumvent labels from paying royalties owed to its artists by putting the culpability on radio.

Collins and Moore represented “semi-retired recording artists” under the RIAA’s MusicFIRST Coalition banner.

I couldn’t find Sam Moore’s concert schedule but Collins is good for fifty to eighty concerts a year - hardly what one would call a semi-retirement itinerary.

As the Internet radio on-line trade RAIN pointed out earlier this month, following the Sam and Judy show, “a statistical analysis (based on terrestrial radio airplay) reveals that the largest individual beneficiaries would be the major record labels... by several orders of magnitude.”Best case scenario? Moore’s all-things-are-perfect best shot would be an annual check of $12,000. The RIAA would take the rest - $50 million - and split it four ways with the multinational labels it represents. Collins’ take would be top out at $900. She spends more than that on a case of wine.

Still, if tertiary artists like Sam and Judy could bring down the House that effortlessly – imagine what’ll happen if the RIAA calls in the Eagles.

Most artists feel that radio has more coats of slime than the labels.


Take U2. They paid a king’s ransom for radio airplay following the disappointing response and sales of the album Pop. Except for classic rock stations, they were over at commercial radio.
In 2000 "The Ground Beneath Her Feet" from the Million Dollar Hotel soundtrack, garnered zero airplay in the U.S. since there was no money attached to it because the band’s management chose not to free up some earmarked U2 royalties for pay-for-play. A promo single was released but it wasn’t worked – nor played - at radio.

Later that year, when the album All That You Can’t Leave Behind was released, U2’s management authorized the label to dip into the U2 royalty bank to work “Beautiful Day,” its first single.

It became one of the biggest, most played radio hits of that year – and the band was back in action.

The band covered all bases and even stroked one of the indies working All That You Can’t Leave Behind in its album credits.

In 2002, U2’s management declined to authorize pay-for-play dollars for the single release of “Electrical Storm.” It hit number four on the charts in the UK, number five in Australia – but died at number seventy-seven in the U.S. – and received no commercial radio airplay.
In 2004, big bucks were put on “Vertigo,” the first single from the album How to Dismantle an Atomic Bomb – and like “Beautiful Day,” it was all over radio.

And you were under the impression that radio plays U2 because they’re talented?

Right about now, if you’re not directly involved in the radio or record business, you have to wonder if the rationale of our media and culture industries - beyond the need to make money and entertain people - is to discover, cultivate, and reward talent.

Sadly, no. It’s more like that biker bumper sticker that reads, “Gas, grass or ass – no one rides for free.”

To the multinational labels, honor is an archaic notion at best and sardonic naiveté at worst.

A few weeks back I intentionally ducked the mob mentality that surrounded the release of a 40-page study titled, titled Don't Play It Again Sam: Radio Play, Record Sales and Property Rights. It was written by a University of Texas, Dallas professor - Stan Liebowitz. Among other things, it implied that radio airplay actually hurts record sales.

I refused to feed into it.

Regrettably, others did and the radio industry’s brusque protests put it on the front page of every trade paper and music industry web site. That provided the RIAA the opportunity to paraphrase Shakespeare: Radio doth protest too much.

When some trade magazines and music web sites asked for my response – I gave a three-word answer, “Liebowitz is misinformed.” Period.

In all fairness, maybe radio doesn’t have the clout it once did when it comes to exposing new music – but it continues to have a notable influence on sales and other media.

The subculture radio flouts is from the world of small, independently owned and operated labels and their artists who are not represented by the RIAA. Their exposure comes from Internet radio, downloading, street buzz, and airplay on a few public and college stations.

The labels already have an in to put down Internet radio should they so desire: the Digital Millennium Copyright Act (DMCA), which was signed into law in 1997. The RIAA intentionally concealed the law from Internet radio until they showed an influence on sales.

The RIAA holds the cards since other digitally-delivered media, like MusicChoice cable and Sirius and XM satellite radio have been paying the freight to the RIAA for the DMCA since its inception.

Unlike Internet radio, their royalty fees were built in to the cost of doing business at satellite and cable. Internet radio, where far less than one percent of its operators show profit, was initially led to believe they were exempt.

Eventually, it’ll come down to one resolution: never underestimate the value of a cash bribe.

Did you read where Clear Channel doled out $1.2 million in the first half of 2007 for lobbying on Capitol Hill while the RIAA funneled a little less than half that amount - $658,000 to be exact - during the same time? Of course, one will never know if a few close-to-the-stage Police tickets exchanged hands as an unregistered bonus. Like cash bribes, there’s prodigious value in a primo ducat. And no one knows that better than the RIAA.

Clear Channel’s lobby payments were for securing private equity firm issues – but a few dollars were set aside to fight the RIAA.

Read that carefully. That’s for the first half of 2007. If Clear Channel continues to rain money on Capitol Hill at that clip, we’re talking $2.4 mil worth of influence peddling by year’s end. If the RIAA matches their first half, their lobby bill will top out at $1.3 million.

It’s not a done deal for the RIAA but the NAB had better start writing some mega-sized checks to their own lobbyists to stay in the race for radio.

The one good piece of news for the radio side came from Nashville entertainment business attorney Fred Wilhelms who’s noting some shell game improprieties with the RIAA, Sound Exchange, and the MusicFIRST Coalition triumvirate. Wilhelm’s been wise to – and on the label’s inefficiencies and crafty deceptions for years.

If you’re the gambling type, bet on the side that pulls off the best pay-for-play job at the Congressional level for the remainder of 2007.

What’s the difference between an indie and a lobbyist? Not much.

And if the RIAA didn’t invent Dr. Liebowitz, they should’ve.

Wednesday, August 8, 2007

Radio's Fox Hunt

You can’t put the toothpaste back in the tube.


Carly was right. Those were the good old days. These aren’t.

But it’s never going back to the way it was. Never. Get over it.

Clear Channel is bailing stations en route to privatization and CBS radio’s dumping out of unprofitable markets.

It confirmed what many of us knew already. The radio industry was never supposed to be that large and with so few players.

Actually, the radio industry had the wrong few players.

Of those running radio chains, some believe themselves to be gods – and demand that the programming, marketing, and managing of their stations must be created in their own image.

English novelist John Galsworthy once said, “Idealism increases in direct proportion to one's distance from the problem."

Let’s scan the past decade. The only post-deregulation winners were smaller chains and the mom and pops that sold their stations to Chancellor/AMFM, Clear Channel, Radio One, and CBS for mind-boggling multiples. They were in such a buying frenzy to acquire properties that they neglected to notice that real estate wasn’t part of the deal. Often, the seller kept the transmitter real estate or sold to a third party. Buy the house, rent the yard and driveway.

Their business plan? Buy ‘em now and figure out what to do with ‘em later.

Problem: They never figured it out.

When the time is right, I want Rupert Murdoch’s News Corp. to buy radio stations. Lots of them.

Murdoch knows efficient programming, marketing, and the importance of innovation far better than most running radio today. You program what’s best for your audience – not the shareholders. They’ll come to love you when you hire the best people and let them do their jobs, and – surprise – show profit.

Many brains are more effective than one.

I know a lot of people that work for Fox. They don’t complain about their jobs. They’re encouraged to be creative, take chances, and maximize opportunities.

At work, they smile.

So what if he owns a sizeable portion of the world’s media from books and magazines to cable and Internet?

Wikipedia his name and the list of media-related businesses he owns worldwide will go on forever.

Big business isn’t the problem. Poorly run big business is.

Rupert gets it. He hires the right people in the right positions – and provides them with support – not fear, which has become radio’s m.o.

When faced with a quandry – as he did with the Fox network a couple of seasons back when ratings tanked for a season – he didn’t order a St. Valentine’s Day massacre. He he had his team identify the problems and correct them.

Take MyNetwork TV, which was cobbled together in just a few of months to fill the void for UHFs that found themselves networkless when the WB and UPN merged. They experimented with telenovas – inexpensive prime time soap operas, starring controversial actresses of yesterday-year like Bo Derek and Tatum O’Neal.

It bombed. But, unlike what you’d expect from most radio chains, fingers weren’t pointed, heads didn’t roll, and sacrificial lambs weren’t slaughtered.

Instead, net affiliates were told, “We’ll try something else.” That buys confidence.

There are no sacred cows. There are no fall guys.

I’m not implying that no one ever gets fired at Fox. It’s just that there’s a lot less of “firing your own mistakes” over there.

Murdoch gets grief for owning the Sunday News of the World and the daily Sun – both sensationalistic tabloids – but he also owns the London Times. I have no problem with that.

Who says you can’t own more than one format?

If there’s one person with the ability to reinvent radio and marry it to new media, it’s Murdoch. He beat his competition to MySpace. Try as they may to sue him for copyright infringement, arson, and anything else they can hang on him, it’s obvious that his competitors are frightened, jealous, and furious with themselves for not doing it first.

Viacom unceremoniously kicked its split-division CEO and President Tom Freston to the curb for trying to resusciate the eMpTV networks while Murdoch snatched up new media, including the aforementioned king of all social networks.

Fox already dominates cable with regional and national sports channels, movie channels, racing, action sports, and it’ll launch its Fox Business Network in October. That’ll be a good fit with Dow Jones, which he’ll also be assuming control of shortly. Expect CNBC’s current deal with DJ not to be renewed.

Question number one: How long will it take for Fox Business to pass CNBC?

Question two: How many CNBC anchors, hosts, and reporters will make the jump to Fox when their current deals are up?

Let’s channel poet and philosopher George Santayana who once said, "Those who cannot remember the past are condemned to repeat it."

Three words: Cable News Network.

Murdoch has had his problems. There’s the L.A. Dodgers, TV Guide, the Boston Herald. I’m sure there are a few more. I think. Oh, yeah – the New York Post. Or does that deal have everything to do with intellectual property?

No one ever accused Murdoch of not taking risks. That’s how he made his fortune.

There are those that believe he was late to television, cable, print, sports, and new media.

Wrong! He was right on time.

Rules number one, two, and three for the world’s most successful companies:

1. If it ain’t broke, break it, and fix it better.

2. Timing is everything.

3. Never believe your own hype.

You can’t always pinpoint him politically. He’s leaned G.O.P. – and backed Bush in both elections – but now he’s rumored to in Hillary’s camp. Oh, the dichotomy!

Murdoch and radio? It’s just my opinion. We could use a rising tide.

I don’t have a clue as to Murdoch’s assessment of the radio industry – but what does it say to Wall Street if he – and other respected media moguls who are currently on the sidelines - choose not to get involved?

Thursday, August 2, 2007

Dark Payola

Here’s another one that flew under the radar.

Billboard announced yesterday that the playlists of both Yahoo and AOL Internet radio stations will now bear influence on the trade magazine’s national single chart – the Hot 100.

In the record business there is nothing – absolutely nothing - more important than chart position. It’s what label sales weasels use to sell clients on what music to stock at retail.

Yahoo and AOL carry well over 100 formats each, which range from mainstream to vaguely eclectic.

AOL also simulcasts eleven XM Satellite music channels on line but it wasn’t clear if those stations would be included in the Billboard chart tally.

What this means is that AOL and Yahoo Internet radio stations are heading in a direction where they will eventually be considered by labels as being relatively on par with terrestrial radio stations in their influence on the national charts.

Don’t go listening for innovation here. Their mainstream formats mimic what terrestrial radio stations play. They also employ a couple of the same notorious radio consultants that have pacts with terrestrial stations - the ones that suffered new lows in their time spent listening. Garbage in, garbage out.

Billboard has been using data from Nielsen Broadcast Data System (BDS), a nearly fool-proof system that tracks actual airplay on terrestrial radio stations and Nielsen SoundScan, which determines actual radio sales based on bar code tabulation for their Hot 100 chart.

In February, 2005, Billboard added digitally downloaded songs to its Hot 100 modus operandi – and rightfully so since their sales account for a small - but rapidly rising - percentage of total music sold.

SoundScan, which also tabulates tracks legitimate downloads, reported that, in the first 29 weeks of 2007, 462.1 million digital tracks were sold. A total of 582 million digital tracks were sold in 2006, which was up 65% from 2005’s 352.6 million.

Billboard deserves kudos for recognizing the increasing influence of Internet radio to the mass audience.

But keep this in mind. Unlike terrestrial radio, which has to answer to a higher authority - the Federal Communications Commission (FCC) - Internet radio is not governed by their rules and regulations.

It’s not an insinuation. It’s just a fact.

Welcome to the uneasy mix of the sinister and the innocent. You’ve heard the old saying: the innocent never remain that way for long.

There’s growing trepidation that what’s being called “dark payola” could influence Internet radio stations that cut private royalty deals directly with the labels.

The labels, of course, hate that name. They prefer “direct licensing.”

Here’s how it works.

Say you have an Internet radio station or stations and want to take a chance at negotiating a private deal with the labels to get a lower royalty rate than the one that will eventually be set by the Copyright Royalty Board.

Private. Remember that word.

The stations that do the direct deal with the labels during this interim period will end up with a better royalty rate. At least that's what they're told.

But there’s always, always, always a catch when you deal with anything that has the stink of the RIAA on it.

This direct licensing agreement opens the door for major labels to apply a percentage of playlist control on participating Internet stations.

Consider “dark payola” the reverse of what payola was between the labels and terrestrial radio stations.

The labels don’t have to hire a third-party to pay the Internet radio stations for airplay. The station cuts a direct deal with the labels to pay a lesser amount of royalty payments in exchange for ownership of x-amount of slots on their playlist.

Since the deals between the RIAA’s SX and participating Internet stations are private – their listeners have no awareness that some, if not all, of the new music they hear is under the labels' dictate.

Full disclosure is unnecessary.

The RIAA’s SX is careful not to deny the practice since today’s technology can easily out premeditated playlists.

In fact, in what might’ve been a little bit of speaking out of school, John Simpson, the executive director of SX, told the San Francisco Weekly in June that he didn’t consider “dark payola” a problem since Internet radio stations could also cut deals with indie labels, too.

And never forget that payola is as much about keeping someone else’s song off the playlist as it is to get one on.

It’s a money maker for the labels. They get their kiss in the mail plus, unlike their payola deals with radio, where they had to employ third party independent record promoters to do the dirty work – labels can now deal directly with Internet radio stations, should they so choose, and eliminate the cost of paying third-party retainer fees and spiffs.

I’ll be probing to see how many artists actually receive checks in the mail from the RIAA’s new extortion – I meant to say royalty deals, considering that the most of the labels represented by that organization have been cited for failing to pay royalties to their artists for music they sold.

This is nothing new. Peter Noone, leader of Herman’s Hermits, which sold millions of hit singles and albums in the mid sixties told Bob Lefsetz’s Lefsetz letter ( that he never received a single royalty check from his label, MGM Records. Eric Burdon? How about you? Lou Christie? Gloria Gaynor? Sam the Sham? Did Roy Orbison ever see even a penny of royalties after he signed with the label? And how about those on MGM’s sister label, Verve? Did Al Kooper and the Blues Project ever get a check in the mail? How about Frank Zappa and the Mothers? Janis Ian?

Ask Steve Popovich about Sony Music (

The labels, like all nearly extinct species, can’t acclimatize to a shifting milieu. It’s not that the conventional way of a label buying their way on to a playlist is totally over, but it’ll never be what it used to be even if the RIAA manages to corrupt a few Internet radio stations along the way.

If you don’t provide a popular culture soundtrack, listeners will go elsewhere. Just look at the end results of the decade of decay at terrestrial radio.

You already know the end of the story. Somewhere along the line someone’s going to take a hit for not playing the game and the fall guys will rat out those stations on the labels’ payrolls.

Before we wrap, let’s pay a quick visit to Soma-FM, an Internet radio company in San Francisco, which broadcasts eleven separate diverse formats on line, including Underground Electronica, Chillout, Ambient Groove, Downtempo, Lounge, Space Music, Indie Rock and Alt-country/Americana.

The webmaster running the joint is Rusty Hodge.

Coincidentally, his business partner in Soma, Elise Nording also works for the Independent Online Distribution Agency (IODA), which promotes indie music to Internet, terrestrial, and satellite radio. IODA distributes MP3s from indie bands that signed up – and can afford – the service.

You’re thinking the music matters?

And what does that mean to independent artists that can’t pay the freight?

The silent treatment?

Just asking.