Thursday, October 30, 2008

Radio: HD Radio's holiday horror

I’ll hand it to the HD Digital Radio Alliance. iBiquity CEO Bob “Booble” Stuble, HD Digital Radio Alliance head Peter “Sgt. Bilko” Ferrara, and his sidekick and soon-to- be replacement Lyin’ Diane Warren sure know how to flaunt their fraud with zeal.

They’ve announced their “Holiday ad flight” – 30 second spots pitching why “HD Radio receivers make great gifts.” The selling points include “clear sound” and “no bills to listen to all the new content like that other radio service.”

The spots will also encourage listeners to text SANTA or GIFT to 58011 so they can be kept – as the Alliance puts it – “up to date on the latest HD Radio specials and discounts.”

Not that anyone’s asking, mind you.

The flight, which participating radio stations have committed to, runs - at no-cost - from November 5 through December 28.

If you want to scrutinize their killer creative (as in their creative would kill if the product wasn’t already dead) – go to the HD Digital Radio Alliance – and type in User: AWESOME; Passcode: awesome. And, no, I didn’t make any of this up.

So here we go again. Those selling against radio will use this campaign as a mission to prove that radio can’t sell products – not even its own.

You and I know that it’s not radio that’s ineffective– it’s a dead-on-arrival product that no one wants, needs, or remotely cares about.

Standard & Poor’s is estimating a 2 to 2.5 percent drop in electronics sales this season.

However, just yesterday the Clear Channel owned-Inside Radio claimed in a propaganda piece about HD Radio sales that: Electronics are expected to be the bright spot in what retailers forecast will be a difficult holiday season.

Decisions, decisions. Whose forecast are we to trust?

Standard & Poor’s, a company whose business it is to provide financial data and information?

Or Inside Radio, a daily Internet-delivered radio trade owned by a company with an investment in iBiquity, the developer and licenser of HD Radio?

Inside Radio also claimed that – here are the exact words – the Alliance hopes to sell its one-millionth HD Radio by the end of the year.

I never said they didn’t have a sense of humor. I will say that they don’t mean to.

How much longer will the industry afford to overlook the chronic misdeeds of iBiquity and the Alliance?

I’ll bet Boobles has the iBiquity shredders ready to slice and dice documents and a degaussing machine ready for the hard drives before the FBI, DOJ, and FCC traipse through their records. It’ll be interesting to see who got what out of this sour deal?

If pay-for-play was the appetizer, HD Radio is the main course.

A few days ago Clear Channel put a press release announcing the long-term contract renewals with its senior programming team.

Among those in renewal mode is Executive VP of Content Development Tom Owens.

A totally irrelevant job for a totally irrelevant person.

It mentioned that Owens “supervised the roll-out of (Clear Channel’s) HD Radio programming, including the co-development of the Clear Channel Format Lab, which created more than 75 original formats and supplied programming to more than 300 HD Radio multicast channels…”

Let’s stop right there.

What the release neglected to mention was that of the 300-plus formats, only 46 remain due to “lack of demand,” and just a scant seven custom format channels are being hyped on Clear Channel's I Heart Music web site.

I’d have to believe that Owens had a team of programmers working with him to develop these 300-plus formats. That’s a lot of time and talent – wasted.

As they say in Covington, Ky., he forgot who brung him to the dance or he can talk the talk but can't walk the walk.

Just think. Instead of trying to developing new formats – he could’ve had his programmers fine-tune the accessible Clear Channel formats that can be heard on analog terrestrial radioinstead of the ones on HD Radio that can’t.

But, nooooo! That’s too logical.

We already have too many radio stations on terrestrial AM and FM.

Show me the supply and demand of HD Radio. You can’t. But I can show you plenty of examples of artificial demand.

If every man, woman and child in this great country of ours had complete and total access to HD Radio – it would obliterate the radio industry. You’d have listeners spread out on to too many radio stations for any one station to show effective reach and frequency.

Do the math. This blue sky world for HD Radio would put all radio out of business. No one station would have enough listeners to justify advertising.

But in keeping with Wall Street ethics, it’s so much easier to reward failure these days.

Monday, October 27, 2008

Radio: The Objectivism of my affections

At least Former Fed Reserve head Alan Greenspan admitted he was wrong.

He’s not blaming our economic meltdown on an imprecise perception of our financial system, which differs from Emmis CEO Jeff Smuylan’s claim of radio’s tribulations being "…. problem of perception, not consumption."

Greenspan’s circuitously put the blame on Ayn Rand, whose Objectivist philosophies governed his decision making.

Greenspan's first wife, Joan Mitchell (no relation to current spouse Andrea), introduced him to Rand’s beliefs.

Poor Alan. Now, he’s finding himself – as he put it - “in a state of shocked disbelief” that financial institutions couldn’t manage themselves without regulation.

Isn’t that the same shocked disbelief most radio chiefs have over the common perception of the present state of the radio industry?

Maybe radio should also blame itself for its credulous confidence in Rand’s Objectivism.

We don’t need regulation. We can be trusted. The industry will take care of itself. How many times were we sold those lines in the early nineties?

Today, we ask ourselves the question, what is worth less – a radio stock or the 1999 Ayn Rand U.S. postage stamp?

(Go with the latter if for no other reason than the illogic of Rand honored by a government bureaucracy with a tax-supported stamp.)

If Objectivism had a theme song, it’d be “Forget Domani.”

The Telecommunications Act of 1996 was a much-needed rewrite of the out-of-date Communications act of 1934. It redefined Congressional regulation of the emergent telecommunications industry and allowed for increased competition for development of new services in broadcasting, cable, and telecommunications.

The problem with it was the poorly written, loophole-laden radio revisions, which radically changed rules to favor of incumbent licensees.

The two bumbling idiots President George W. Bush appointed as FCC Chairmen Michael Powell and his successor Boy Kevin Martin - only made its tribulations worse.

Despite deregulation, which the industry claimed would provide radio the freedom to effectively compete against new media - radio stocks have been beleaguered for years.

Flawed corporate structures destroyed radio’s greatest asset – to be local and immediate.

Poor programming resulted in declining TSL. In turn, radio advertising became less effective, and clients went in search of alternative media to sell their products.

Instead of facing those facts radio played the blame game – the Internet, iPods, and video games.

Thanks to the NAB, instead of recognizing new media and technology as allies to work with, they became radio’s enemies.

And radio broods over why Steve Jobs will never put a terrestrial radio receiver in an iPod or iPhone?
Facts, schmacts. We’re a few days a way from radio acknowledging the eighteenth month in a row of declining ad revenue.

Were you really surprised when you heard that Interep went belly up?

The radio industry doesn’t even know which horse to bet on in the Presidential race. Years ago, Sen. John McCain did his former “my friend”, former Secretary of State Colin Powell a favor by pimping his son Michael for FCC Chairman job to George Bush. But all bets are off now that Colin’s Baracking the vote. Son Michael broke ranks with his father by endorsing McCain.
Just as well. John McCain still believes FM is an acronym for Find Me. Wait, maybe he’s right!

Say hi, how-are- ya to the Radio Communicators Group (RCG). It’s made up of the usual suspects from embattled radio chains and executives from the NAB, RAB, the HD Digital Radio Alliance, and the Holy Beejeebub Mystic Knights of Radio – all of whom are already involved in too many organizations and committees that fruitlessly attempt to put a positive spin on the state of the radio industry.

Groucho once said that he’d refuse any organization that would have him as a member.

Pick an economic indicator – any economic indicator. They’re all showing, as John Fogerty sang, that “we’re in for nasty weather.”

The golden age of rampant buffoonery has come to a close.

And it’s not just radio.

Survival’s all about standing tough. Doom and gloom is a self-fulfilling prophecy. Believe in it and you’ll be history.

Successful radio operators must confront reality and not permit terror take hold. The one emotion that overrides greed is fear.

The recession we’re about to experience should be viewed as opportunity for the most talented and dedicated among us to come alive and thrive.

Just in case you didn’t get the memo - we are in the entertainment business, y’know.

Potential listeners will be drawn by programming and promotions that truly deliver to their wants and needs.

Mediocrity in any product is destined to fail.

It’s time to get the spectators off the field. We need genuine talent and creative programming, promotion, marketing, and sales to survive. Excessive voice-tracking and audio wallpaper formats won’t cut it.

Forget what some of your “not my fault” consultants are telling you. Successful radio will utilize the Occam’s Razor model. Shave away all of the irrelevant assumptions and extraneous information to the bone and work with what is left.

You know and I know that we have too many radio stations. Some of them will go dark and those that do will deserve to.

Those that understand the need to provide entertainment when times are tough will survive and build a firm foundation for the future when our economy improves.

The Jacks and Jills are over the hill. Just like Ayn Rand.

Tuesday, October 21, 2008

Radio: Who do you trust?

Let’s rest the perception argument for a moment and look at radio’s problem another way.

Radio lost trust.

It has gone from being a soundtrack of popular culture to something that gets in the way of it.

Talk radio is self-serving. Rock radio is hopelessly lost. Traffic reports are more often wrong than right. Most presuppose that a talk station’s newscast has a schema.

You cannot put the words radio and fulfillment in the same sentence any more.

As a replacement for providing listeners what they want and need, they are given what a small few self-proclaimed experts believe they can get by with.

Listeners, they feel, will submit to and benefit from whatever programming is presented to them. They are treated as employees of the radio station – not customers.

Don’t like it? Leave. And they did. Radio’s favorite acronym – TSL – isn’t what it used to be.
Remember how that Janus Funds rep pimped their investment in Clear Channel seven, eight years ago? “They have to listen to the radio. They don’t have a choice.”

And, truth be told, nearly everyone in the radio business started believing that one. Some still do.
Most radio chains are in denial of the transparent world we now live in.

As open source became commonplace, radio became a closed source.

Not only are there alternatives to listening to the radio, there are places on line where the disgruntled can vent about a multitude of products they feel fall short of serving their needs.
If radio wants to be around for the next decade it will have to create a culture of trust with its listeners.
That’s another reason why the major radio chains have to pare down – in some cases drastically pare down its radio properties to a pragmatic operational size.
Understand that there is nothing to hide. There are no secrets.

Remember when AMFM rolled out the Jammin’ Oldies format on a number of their stations? The format wasn’t even an hour old and the stations were running a number of pre-recorded announcements, allegedly from listeners who loved the station and made the switch.

Do you think anyone believed that hype?

Did it enable trust between the radio station and its listeners?

And it’s only gotten worse, much worse, since then.

Here’s a fact. Radio is not dead. Even now, there are listeners in search of formats.

Their obstacle is that terrestrial radio doesn’t know how to reach them.

There are certain laws and rules that never change. The law of physics and the rules of running a successful radio station are two that come to my mind.

No matter what the mode of transmission, provide compelling content and your potential audience will find you – even if it’s not easy to.

Let's pay a visit to WNYZ/New York – known by its growing loyal listener fan base as Pulse 87.

It’s essentially a low power analog TV station licensed to New York on Channel Six but is promoted and marketed as a terrestrial radio station. It carries an inimitable hit music dance format on its audio subcarrier – 87.7, which some – but not all FM tuners can receive. Pulse 87 is also accessible in streaming audio.

With exception to some spotty areas, Pulse 87’s terrestrial signal can be heard in New York’s five boroughs, much of Long Island, Westchester, Rockland, and areas within Northeastern New Jersey.

Its format features familiar rhythmic hits mixed with the new music and the most-requested dance club tracks.

In reality, it’s what you could call the natural progression of the original Hot 103 (which became Hot 97 following a frequency change) dance hit format.

So it should be no surprise to learn that person behind the programming of Pulse 87 is Joel Salkowitz – the architect behind the original Hot 103- Hot 97 when that format dominated New York in the late eighties and early nineties.

At a time when a station I knew well - Z-100 was battling WPLJ – Joel took Hot 103 – with a directional signal, no less (that changed with the frequency switch), and filled a huge hole for a format playing dance music mixes of the music from Z-100 and PLJ’s playlists.

This past March, Mega Media Group, the company that is leasing the audio signal from licensee Island Broadcasting, cut a deal with Arbitron to have Pulse 87 rated on its PPM surveys. It’s not counted in Arbitron radio surveys since WNYZ is not licensed as a radio station by the FCC.

But a customized Arbitron research report showed WNYZ with 540,000 person radio cume in the New York metro – a surprisingly strong showing for a station not heard on a standard frequency position.

Put another way – those 540,000 had to seek out Pulse 87. They had to find it. It did not find them.

Pulse 87 is promoting in all the right places and know where their potential audience resides. And even its fans are spreading the word. Even on YouTube.
And how about that? Here's a radio station that found trust!

Thursday, October 16, 2008

Radio: But Sirius-ly, folks!

Sirius-XM satellite radio CEO Mel Karmazin got his merger through the DOJ and the FCC but he may have to cut a Faustian bargain to keep Wall Street on his side. Either that or Mel knows something we mere mortals don’t.

Mel was being Mel in his keynote interview at the Dow Jones and Nielsen-sponsored Media & Money conference in New York earlier this week.

"We're probably one of the top 25 media companies today," he said of the Sirius-XM merger. "I think it's very clear that we will be the most successful company in the audio entertainment industry. I know certainly, as ranked by revenue, we'll be there soon. Now we just need to grow our free cash flow and demonstrate that.”

As David Byrne sang, “Same as it ever was.”
Well, not quite. Sirius closed at 39 cents yesterday.
Last month Mel told Wall Street that Sirius-XM will be down $350 million this year on revenue of $2.4 billion.

Sirius-XM is saddled with $2.1 billion in debt. $1.1 billion of it has to be refinanced in 2009 and $300 million comes due in February.

Just ask the stock market how the $700 billion bailout is helping it out.

So how does Mel get his money? Reverse psychology. Faust? Luck? Hubris? All of the above?

Try Mel Math and the automotive industry.

First, let’s get the facts out of the way. General Motors is burning through over $1 billion in cash per month. Most analysts believe it could run out of money to run the company in less than a year. Its sales are down 18 percent, and the company’s lost $57.5 billion over the past 18 months.

Chrysler chairman and CEO Bob Nardelli blasted a memo to his staff, which read in part, “As the company evaluates strategic options to maximize core operations and leverage its assets, we engage in a dialogue with these parties. We do so keeping in mind our vision, our mission, and the best interests of those who have shown tremendous support for this company — including you, our employees, dealers, suppliers and customers.” Translation: We’re in deep and talking merger with GM.

Ford had a second-quarter loss of $123 million. So far this year it’s lost over $1 billion (it lost a mere $1.6 billion in all of 2005).

And that’s not counting the slump in sales from foreign auto manufacturers.

Nonetheless, Mel Math has12 million cars being sold in 2009 – half of them equipped a Sirius-XM satellite radio receiver. Of that half Mel claims half will become full-fledged subscribers – adding up to three million new subscribers, assuming none of them are already subscribers.

In Mel Math that adds up to $300 million revenue growth for Sirius-XM.

“Even if Detroit has a very bad year,” said Mel to the Media & Money audience, “Even in a market where cars are not doing well, we can still feel successful.

If Mel could strap Sirius XM receivers on a galloping horses, he would – and he’d count half of them as subscribers.

In the real world, subscriptions bring in 95 percent of the company’s revenue. We know the remaining five percent is not coming from ad revenue. So where is the other five percent coming from?
What about the fact that Sirius-XM is spending more on operating costs than it’s bringing in with subscriptions and advertising? What about the cost of replacement satellites?

Are you beginning to figure out what a flim-flam this is?

Satellite, shatellite!

Here’s another Mel Math factoid: Slightly down is the new up.

MLK said “I have a dream.” MAK said “I have a scheme.”
And Mel being Mel always has a back up plan. If everything else fails, he'll go old school and push for shareholder authorization to issue more shares and go from 4.5 billion to 8 billion. That Mel Math - gotta love it!
To restore credibility in U.S. business, CEOs must candidly come clean on the scale of problems a company is facing and purge any absurd valuations, inflated balance sheets, and hidden liabilities that are veined through financial balance sheets. But don’t look for that to happen here.

Then there’s the company morale. The Sirius-side is driving the bus. Roughly fifty Washington DC based XM-side employees prematurely learned they were about to be fired when someone in HR accidentally or on purpose, depending on who you talk to, put a termination date on employee payroll files. It’s projected that Sirius-XM will terminate eighty employees in total, including a few from the New York Sirius-side.

The downsizing, which eliminates duplicated formats and jobs created by the merger, will contribute to the $425 million in cost reductions according to Mel Math.

One spywitness told me that Sirius XM is insisting on a nationwide radio non-compete clause as a condition for receiving severance pay.
It's called a SBT. You're screwed, blewed, and tatooed.
Sirius and XM are scheduled to merge their programming by November 5.
Meanwhile, there’s this other medium called Internet Radio or Streaming Audio for those that find the word “radio” offensive. Unlike satellite radio, Internet radio is free, format choice is endless, and the stations are worldwide.
For less than $30 you can buy Aluratek's USB Internet radio juke box, which provides easy access to over 13,000 stations from over 150 countries. That’s a few more options than satellite radio offers.
Will that make Sirius XM forgotten but not gone?

Survivors of the Sirius XM massacre don’t worry about filing their predecessor’s shoes; they worry about the day when Internet radio is commonplace, which should coincide with when the company’s satellites fall out of orbit and burn up in the atmosphere.

What’s the line in that Eagles song? “They’ll never forget you until somebody new comes along.”

Tuesday, October 14, 2008

Radio: Andy Cuomo - pretty fly for a white guy

When New York Attorney General and klieg light moth Andrew Cuomo appointed himself the guardian of minorities in media his first mission was to show those lily-white WASPs at Arbitron that they weren’t going to push his homies around.

Andrew Cuomo. He’s pretty fly for a white guy.

You know its kinda hard just to get along today
Our subject isn't cool, but he thinks it anyway
He may not have a clue, and he may not have style
But everything he lacks, well he makes up in denial
So don't deflate, play it straight
You know he really doesn't get it anyway

Now let’s hear from an actual minority – in fact how about a CEO from a minority-managed public company, whose stations program to an African American audience?

Come on down, Radio One CEO Alfred Liggins III.

How does he feel – since he has a very real stake in this – about the Arbitron PPM?

“Anytime you adopt a new technology, there are always short-term dislocations.” That’s what he told Washington Post writer Paul Farhi last weekend.

“There’s going to be a learning curve…but [electronic measurement] is a reality. I’d much rather get reality on the road than delay, delay, delay.”

He gets it.

The PPM is a tool to improve a station’s programming. With it, programming problems can be immediately identified and rectified.

Now let’s hear from Jeffrey Lieberman, the head of Entravision Commutations, which owns a chain of Spanish-language stations. Here’s what he told Farhi about the PPM, "It's not accurate and it's not reliable."

Is it because his stations didn’t fare as well with it?

Is that why he calls the PPM a “flawed system?”

As Calvin and Hobbes cartoonist Bill Watterson once said, “It’s not denial. I’m just selective about the reality I accept.”

It gets better. Now, the Attorney General of New Jersey Anne Milgram is playing follow-the- penguin with Cuomo and filed her own law suit on behalf of her state to block Arbitron from using the PPM to measure radio listening in the Garden State.

Her subpoena calls Arbitron’s PPM “…flawed, statistically unreliable and undercounts the listening habits of minority consumers." She’s seeking documents concerning the sampling of Arbitron's PPM system in the Houston, New York, Philadelphia, and New Jersey markets, submissions by Arbitron to the Media Ratings Council (MRC) regarding accreditation, and correspondence between Arbitron and advertisers or radio broadcasters regarding implementation of PPM.
I guess she never heard the old saying - delay is the deadliest form of denial.
Arbitron’s President and CEO Steve Morris filed a countersuit and said, "We are asking the United States District Court to uphold our First Amendment rights and to prevent the New Jersey Attorney General from attempting to restrain publication of our Portable People Meter listening estimates.”
Rival media are snickering at us - and not behind our backs, either.
You've heard the joke. People are worried about the future of radio - or at least those of us who work in radio are.

At a time when radio needs all the allies it can get why must this industry pick a fight with the audience measuring service that could help it the most?
Once again, only the lawyers will get rich.

Wednesday, October 8, 2008

Radio: Portable people meter eater

And you wonder why there’s a trust issue with the ad community and the radio industry?


It’s bad enough that radio’s not even being considered on some buys. If you really want to drive another nail in the industry’s coffin continue to protest Arbitron’s PPM.

How much clearer I can make it? The party’s over. Wall Street’s not the only entity that has to be accountable to its clients.

Radio, television, newspapers, and direct mail are being deemed variable because new media are capable of providing precise marketing components for its clients.

There’s no ticket to slide. A truckload of hype sheet pie charts about who’s allegedly listening to what doesn’t cut it anymore.

The ad community has tightened its belt a few notches. That means promotion and marketing departments have to incorporate the tools and services that prove most effective to monitor a campaign. It’s all about measuring a campaign from exposure to consumer acquisition.

Say goodbye to non-accountable media spending. Radio dollars for an ad campaign are no longer a given. They haven’t been for awhile. And they won’t be if radio fails to evolve with the times.

If you’re a radio AE – get used to hearing this word. Accountability. Nothing else matters.

You’re up against new media that has the ability to attribute execution to distinct media tracts.

Arbitron diaries just don’t cut it in the 21st Century. Capish?

Diaries are for media mastodons.
I’ve had to live with Arbitron diaries being my report card, my career maker-breaker, and my sole raison d'être for survival in the radio business for my entire adult life.

In the seventies and eighties? No argument. Audience measurement by Arbitron diary was far from flawless – but it was the best of all statistical analysis available to measure radio listening.

Still, I could never visualize active young adults pulling that diary out of their hip pocket and logging into it every time they changed the station on their car radio while crusin’ down the highway.

My stations always rated best in Pulse, Mediastat, Mediatrend, and the other dozen or so phone-retrieval measurement services that are now distant memories.

But clients and agencies bought Arbitron. That’s what I would live or die by and accepted it. We all did.

Let’s be honest. By the nineties we knew the diary was dated. There was this new media contrivance called the Internet.

New technology was in development to provide improved radio ratings measurement – but this industry was as resistant to change and advancement as the village blacksmith was when the car was first introduced.

Now we’re nearly a decade into the 21st Century and we’re living a media new world order. The PPM is the best audience measurement the radio industry has. Accept it.

For those reading this that aren’t in radio business, let me explain. The Arbitron PPM, an acronym for Portable People Meter, is a pager-sized device that detects and records all the radio stations that survey participants hear during the day.

So you may work or shop or visit a location that has a radio station on that isn’t one you’d ever listen to – but while there you are hearing that station’s programming and – most importantly – spots.

To claim the PPM is unfair to minority stations is a frivolous stall tactic that makes the radio industry look bush league and passé.

In Philadelphia and Houston, where the PPM was tested, some stations whose programming appeals to a minority audience showed a decline in listenership compared to the results from estimated Arbitron diary surveys in the same markets.

It’s likely that the stations in question had embellished TSL logged by diary holders that wanted to give props to their favorite station.

It’s also likely that some PPM carriers spent time in places where stations other than their personal favorites were detected from a nearby radio.

I believe a recorded PPM over an estimated diary and I can’t comprehend why anyone wouldn’t want real-time listening over guesstimates.

If a station’s on the losing end in a PPM survey and runs the risk of declining ad revenue – it’s up to the management of that station to what we did when we were measured by diaries and had a down book: fix the problem or change the format. Duh!

New York Atty. General Andrew Cuomo is an idiot and a fool for getting involved and turning this into a legal matter.
Did you hear what he said?

He called the PPM "an affront to racial and ethnic minorities in New York and around the country" and that it "threatens the existence of diversity in radio and muzzles the voices and viewpoints of millions of Americans."

Cuomo’s lucky he didn’t get charged with impersonating Al Sharpton. I think Rev. Al should sue him for plagiarism.

The sooner Cuomo abandons this clanger, the better off the radio industry will be.

Speaking of deception, did you read the latest piece of propaganda from iBiquity and the HD Digital Radio Alliance?

This is one of those occasions when you get a press release you just can't ignore, no matter how much your instincts tell you to hit the delete key and move on.

Will someone please admit Booble, Bilk-o, and Lyin’ Diane to the Betty Ford Clinic for Habitual Liars?

Their new press release reads that: “more than 1.5 million HD Radio chips shipped.”

Chips shipped? Chips – not radios. Once again, iBiquity and the Alliance speak with forked tongue.

History lesson. That’s the same exercise that nearly devastated the record industry in the late seventies.

When the RIAA certified album sales based on shipping instead of tangible sales, major labels began pressing and shipping a million copies of albums they were pushing to claim a platinum award.

For close to six, seven months Billboard and other trades were filled with full-page ads from the labels proclaiming that their albums were being shipped platinum on the first days of its release.

The best one was when Casablanca pressed two million copies of a Cher disco album (during a dry spell when she wasn't having chart hits) just so its president Neil Bogart could factually announce on the Today show the following Monday that her album was certified "double platinum" on the day of its release.

The labels nearly went broke with this practice and frantically leased warehouse space to store their returns. I recall hearing the story about WEA Corp., the distributor of Warner Bros., Elektra, Atlantic Records and their subsidiaries, renting a three-story warehouse in Chicago, near O’Hare, that was filled top-to-bottom with album returns.

The industry joke was albums that were shipped platinum were returned double platinum.

Remember when every retail outlet from a drug store to a discount retailer had cut-out album bins filled with these d.o.a. albums for a buck apiece? Once the accountants seized control of the labels, the RIAA was forced to base their gold (500,000 copies) and platinum awards (1 million) based on sales (via bar codes) - not shipping.

The same practice applies here. Shipping chips to where? A warehouse? I wonder if the Hong Kong shipments were counted with the help of a faulty abacus.

Monday, October 6, 2008

Radio: Worth less or worthless?

I don’t believe most in radio realize how close to extinction the medium is.

When talking media extinction, radio tries to drag everyone else into the tar pit.
Here’s how radio’s trying to save its day with Radio Heard Here and HD Radio.

Here’s the newspaper pitch.

You tell me who has the best campaign.

Still, all the promotion and marketing campaigns mean nothing if there’s no substance beneath the hype.

And how about that? The only site they can do their future fossil fuel pitch effectively is on line.

You’ve probably heard about WOAM and WPMJ, that AM-FM combo in Peoria, Ill. going dark.

The AM was a local 1,000 watter with a local morning show and a canned adult standards format for the rest of the day.

The FM was one of those rimshot class A’s, actually licensed to Chillicothe, Ill. – about twenty miles to the north of Peoria. It carried Citadel’s True Oldies format off the bird.

The owners, Kelly Communications, were considered local folk, even with their Longboat Key, Fla. business address. They were the only independently owned and operated stations in the market.

Its silence merited a news item on one of the local TV stations.

It’s nothing new and nothing particularly unusual. Radio stations have gone dark before – even in the best of times.

But this is different. You know it and I know it.
Radio’s Greater Fool Theory had already played itself out years ago.

In spite of the last great dumb deal when Disney cunningly dumped ABC Radio on Citadel, it was obvious three to four years ago that radio was rapidly losing ground with both ratings and revenue and this wasn’t going to be just a transitory occurrence.

That Citadel deal was sprinkled with the added infamy of being done the same week that Disney acquired Pixar from Steve Jobs.

We may not know the name of the first radio chain to go into receivership but we know it won’t be the last.

The louder these chains deny they’re sinking, the closer they are to insolvency.

Their lenders don’t want to be owners and operators. They know they're worth less today than they were yesterday and could be worthless tomorrow.

Like other near-extinct species, the old guard in radio couldn’t adapt to the changing environment. It’s not radio that’s totally over, it’s just over and out for those that ran this industry like it was still 1999.

How many radio companies are not trading for under a buck? Westwood One’s stock is worth a stick of gum and it’s beginning to look like Salem hasn’t a prayer.

CBS Radio put 50 stations on the block, claiming they’d have deals in place in thirty days. That was – what? – sixty six days ago and counting?

How about those equity players that assumed they’d have their radio fortunes in place and planned to be cashed out by now?

Instead of leafing through their Abercrombie & Kent catalog for an elite destination to winter in, they’re finding themselves in the same boat as those incensed bourgeois looking for someone to blame for the financial meltdown.

They assumed they’d enjoy the thrill of victory, now they have to get used to the agony of defeat.

Can you imagine when some of these deals end up in the courts?

Your Honor, I believed everything in the radio industry was on the level.

Sing it Kenny, "You got to know when to hold ‘em, know when to fold ‘em / Know when to walk away and know when to run /You never count your money when you’re sittin’ at the table /There’ll be time enough for countin’ when the dealin’s done."

You think it’s rough selling a house in this economic climate? Try selling a radio station!

Housing’s fate is from predatory lending. Radio’s is predatory borrowing.

To some it’s a meltdown, to others who had their money stashed in places other than Wall Street, it’s the real correction. There is money out there. Smart money. The kind that detects a product’s real worth.

Then there’s supply and demand. Nothing’s selling if no one’s asking.

Friday, October 3, 2008

Radio: More NAB Fumbles follies

NAB President David “Fumbles” Rehr did it again.

He doesn’t just step in it, he rolls in it.

Fumbles, you poor bastard, those $10,000 payoffs just don't go as far as they used to.

All that NAB money you’ve been funneled into his coffers and Rep. Ed Markey (D-MA) delivers a bill, the Radio All Digital Channel Receive Act, which would, if passed, essentially work in the reverse of what it was supposed to for the NAB and the radio industry.

Fumbles said, “This legislation will extend and enhance these services as radio stations embrace our digital future."

But the bill, which would amend Section 303 of the Communications Act of 1934, contains a subsection (z), which reads: "Require that apparatus shipped in interstate commerce or manufactured in the United States that is designed to receive signals broadcast in both the satellite digital audio radio service and the terrestrial AM or FM broadcast service be equipped with technology that is capable of receiving and playing digital radio signals as transmitted by terrestrial AM or FM stations."

Translation: Only satellite receivers manufactured that provide reception of analog AM and FM band would be obligated to include digital HD Radio, too.

So what do you do if you’re a manufacturer of a satellite radio receiver that also incorporates the AM and FM band?

You stop making them.

Not only does the consumer not get HD Radio – now they won’t even get analog AM and FM.

You just made Mel Karmazin a very happy man, Fumbles. Non-members always make out the best with the NAB with you at the helm.

Just yesterday I asked someone who sells satellite radio receivers how many customers ask for one that includes AM and FM.

He said none.

How many customers ask about satellite receivers that include a port for their iPod or reasonable facsimile?

He said many.

Bright boy, that Fumbles.

And, no, I don’t think Rep. Markey has any plans of returning that $10,000 donation. Times are tough, you know. You broke it, you bought it.

Fumbles, you’re small potatoes compared to what the rest of that $242,051 the communications-electronics industry stuffed in his coffers this year.

Who knows? Maybe Markey was playing both sides against the middle to get a taste from all sides of the communications biz.

Fumbles’ your biggest snag isn’t that gargantuan loophole you failed to notice. The bill had no teeth to begin with. The FCC and DOJ already approved the Sirius-XM merger. It’s flat lined – no ups, no downs, no nothing – just like you.

I must add that this is the same Fumbles who had his coat holder aka NAB executive VP Dennis Wharton rush out a press release on the Webcaster Settlement Act of 2008, quoting himself saying, “With this legislation now headed to the White House for President Bush's signature, NAB looks forward to sitting down quickly with SoundExchange to craft equitable streaming rates that enhance the online music experience and expose more artists to our listeners.”

Fumbles and Coat Holder Wharton actually believe they’ve got the stuff to go mano a mano with the RIAA’s SoundExchange to negotiate a royalty rate for streaming audio from terrestrial radio stations?

Fumbles, beware. SoundExchange will rip your heart out, shove it in your mouth and make you eat it. And that’s just for starters.

You can’t out-hype them with long-winded open letters and toy ducks.

This is the music industry. They invented hype.

Every scam you think you know, they did it first and did it best.

And Fumbles, this is just Round One from SoundExchange.

When they finish carving you wide and deep over streaming royalty rates, they’re going to lay the terrestrial radio performance tax on you. They've been working Capitol Hill on this one steadily for the past year.

While you were sending Congress ducks, They were was sending Congress bucks.

Fumbles, accept this fact. People are born with assured predispositions that bias them to points of view, which are foreordained and not in any way the product of logic and study that they believe they bring to issues. Some are predestined to be liberals, others conservatives, and many apathetic. They have almost no control over their viewpoint or their philosophical and emotional inclinations.

Put another way, you’re a born loser.