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A Clear (Channel) And Present Danger

Earlier this week, Mark Ramsey blogged about Clear Channel's "murky future," and in the process, expressed sadness for company’s employees, listeners in their markets, and for the company itself.  Mark is a passionate radio broadcaster, and one of our best industry observers, and so his comments made me pause and think about the implications of Clear Channel's problems.

As a Detroiter, I know what it's like to be held hostage by a mega-corporation like General Motors.  On the one hand, you can resent their short-sightedness about where the automotive industry was headed.  And you have to acknowledge their arrogance throughout the '60s and 70s, too.  Remember the saying, "When GM gets a cold, Detroit gets pneumonia?" As much as many people here in Motown hate to admit, you reluctantly rooted for GM to do well.  Your livelihood depended on it.

And so it goes with Clear Channel and its dominance of broadcast radio.  Most definitely, the Wall Streetization of our business has taken its toll.  Clear Channel's history as the biggest company in radio has been very checkered, and without a doubt, they have been tarred by a brush often of their own making.  While the famous "Minot Incident" was probably blown out of proportion, becoming an industry urban legend, the fact is that Clear Channel became known for its voicetracking, the canard called "Less Is More," collective contesting, and other "innovations" that have not enhanced our business.

I will never forget reading an interview with Lowry Mays in Fortune magazine back in 2003 when he was quoted as saying, "We're not in the business of providing news and information.  We're not in the business of providing well-researched music.  We're simply in the business of selling our customers’ products."

I remember thinking at the time that it would not have been that difficult for Mays to reverse that quote - and still make the financial gods happy.  Had he simply noted that Clear Channel stations are a great advertising tool for its clients, but the company was dedicated to providing great radio and serving its communities, much of the PR backlash might never have materialized.  Instead, the media seized on the "Evil Empire" moniker, and the bad ink continues to this day, all the way to Washington, D.C.

So, back to Mark's questions.  Do I feel sorry for the company?  Do I feel sorry for its employees? Do I feel sorry for what all of this means for the radio industry?

No.  Somewhat.  Yes.

Crossroads

In early '08, you can clearly see the profound conflicts that are facing our business.  To a great degree, we're at a crossroads, as cost cutting and garnering ratings clash with brand building and investment.

Consider this: PPM will grow and expand in more markets this year, and programmers will be faced with the task of harnessing talk and other non-music content that leads to tune-out.  There's no question that Arbitron's meters are far less forgiving than a listener's memory in the diary system.  Mark Ramsey spoke about this phenomenon - "Mic Flight" - last year at the NAB.  You can graphically see what happens when jocks run off at the mic, especially on stations where talk is either not expected or not especially welcome.  So, conventional wisdom says, shut up, play hits - in other words, bland wins.

And then there're the economic realities, getting worse by the month.  Airstaffers are being fired, PDs are being consolidated, research and marketing dollars are becoming endangered.  A sign of the times, as Tom Taylor reports, is that more and more radio operators are voicetracking 7 to midnight in an effort to save money.  Or they're turning to syndicated shows at night in order to keep expenses down.  And in the process, there are fewer personalities being developed for the future.  The only success stories on voicetracked nights are on the bottom line, because listeners increasingly understand that when stations put very little into the product, why should they invest their time to tune in?

On the other hand, there's the pressure to build great brands in order to compete with the growing number of options available to consumers.  As Connoisseur's Jeff Warshaw points out (also in Tom's trade), most of radio's problems are of the self-inflicted variety: "We did it to ourselves.  People consolidated, borrowed too much, paid too much, cut training, cut innovations, and they're also cutting rates.  When a car dealer is buying advertising and he can buy wonderful stations for cheap rates?  Well, that's why the market is shrinking."

As WiMax makes it way into cars, and AM/FM Radio is forced to compete against everything else on the Internet, our brands and local identity will be our lifeblood.  Of course, that's assuming we still have viable brands, strong personalities, and a local presence left.  Most broadcasters have worked their entire lives to build great radio stations, but in the past decade, many heritage call letters have eroded into mere shadows of their former selves.  No longer do people define themselves by the radio station they listen to, hence the lack of bumper stickers on Camrys and Malibus.

So, what's it going to be?  Slash expenses, shut up, and save money.  Or go against the tide of fear and panic, and rebuild great stations, grow and nurture personalities, build viable roots into the local community, and invest in radio's future.  No one said it was going to be easy.

Help Wanted

Whenever I hear people in Radio take the newspaper industry to task for their falling circulation numbers, I can't help but think those print guys know something that we don't about the digital space.  In fact, they are a couple of years further down this difficult road.  This is why you're seeing some definitive innovation and "new thinking" coming out of the newspaper biz.  As a wise man once said, "Necessity is the mother of invention."  And the print industry is now highly motivated to innovate, based on bleeding bottom lines and declining readership levels to do just that.

Check out most newspaper sites.  They have made quantum leaps in the past few years, they're repurposing their editorial departments to service both their hard editions and their websites, and they're producing multimedia materials that never had a place in the actual paper.

Bruce Warren of WXPN has referred to this as "wholeism" - thinking about content as going beyond its normal destination, and instead considering all the outlets where it can be distributed.  Newspaper writers aren't just producing stories and features for print editions - they are now going beyond those old boundary lines to create multi-level content models.  If you question the logic of these initiatives, consider that perhaps Radio is falling behind by not adopting this same way of thinking.

Program Directors in the new world might be re-titled Content Producers, because what they now do will soon be distributed in many different digital applications, from podcasts to videos to audio streams.  And the advertisement in Inside Radio found below (thanks, Steve Goldstein) speaks volumes about how the print world is thinking differently.  Radio would do well to get to this same place, sooner rather than later.

The Lost Art of Being Local

Jacobs Media's Dave Beasing offers insight on the importance of Radio connecting with the community:

An old vacant building in downtown Salt Lake City burned to the ground one night last week.  Fortunately, there were no injuries, and the fire was contained.

Why should it receive even a passing mention on the radio?  Credit KXRK "X96" Program Director Todd "Nuke 'Em" Noker with understanding the significance.  Beginning in 1989, that building was home to Club DV8, the ultimate gathering place for Generation X.  Much like Woodstock, if everyone who claims to have seen Pearl Jam or Catherine Wheel at Club DV8 actually had, the place would have to have been 10-times its size.  So throughout the next day, X96 featured those memories - and played some of the bands that helped shape the alternative scene within an otherwise mainstream city.  That's how you connect with the community.

During one of my first official outings for Jacobs, I visited a client radio station in my Midwestern hometown.  What I remember most is a staff meeting during which I quickly realized: I was the only area native in the room.  Oddly, the consultant from L.A. was the most "inside" person there.  They were already cloning other stations in their format.  What they needed most was to adapt the formula to local tastes.

Our industry's lobbyists are correct when they tell Washington that there's no substitute for the news and information provided by local broadcasters.  But being local shouldn't stop there.  With virtually every station everywhere available online, what makes your station any different?  At the end of the day, it's your ability to connect with the locals on their home turf - a quality that new media will never have.

Story Time

Rick Balis sent me a couple of promos that promote their new online "Museum."  It's all about "stories."  As Seth Godin says in his new book (Meatball Sundae), "Stories spread, not facts.  More than almost any other company, Disney was built on a story.  What's the story of your next film?  Is it authentic, or did your marketing folks dream it up after the project was finished?"

Promo for KSHE's Rock Museum

Download as an MP3 File

One of the reasons why KSHE has endured and flourished over the years is that they continue to tell great stories, and the "Museum" is a digital, viral, living, breathing way to make that happen.  You can market all you like, but if you can tell a great story, and listeners can tell it to others, you've built yourself an enduring, vital, authentic brand.  Now why can't other radio guys figure out that a great story will market itself?

The News From Brokaw

At age 67, Tom Brokaw - typical of Baby Boomers - is still in touch with the times.  Maybe leaving the daily grind to someone else at NBC has even given him a fresh perspective.  So leave it to Tom to deliver the news to the folks at the Washington Post, during a recent tour of their plant, that he doubts they'll even have a printing press there in 10 years.

And really, why should consumers care?  Ask Gen-Y how they get their news and information, last night's scores, or the latest music.  Many laugh at the quaint suggestion that they might want someone on a bicycle to deliver a daily printout that's hours old.  Or that they'd wait through 5 minutes of commercials and 5 bad songs.

Brokaw didn't say there wouldn't still be a need for news journalists, but that there may not be much of a need for newspaper.  Oh, but the "paperboy" is as American as apple pie!  He's downright Rockwellian!  Of course, so were milkmen and ice truck drivers, even though we now drink refrigerated milk without their help.

Once upon a time, the printing press put the Town Crier out of business, but it also created new jobs requiring new talents.  So will digital media delivery.

Response to Jim Boyle's comments in RBR

In a recent issue of Radio Business Report (www.rbr.com), CL King financial analyst, Jim Boyle, offered his prescription for what Radio can do to jumpstart its business.  Here are Boyle's comments:

"Can a different revenue stream start and sustain a radio rebound? Yes, by monetizing the P-1 listener. Radio groups fetch about 2%-3% of revenue from internet initiatives, but that hasn't stopped 2007 from being a down revenue year. So what else is out there? We would strongly recommend that radio look to the second of its two constituencies. Not just its advertisers, its audience! Radio's most loyal, engaged listeners are dubbed P-1 listeners. We believe radio should sell small local content and branded items to its biggest fans. Consumers have become highly trained by eBay, iTunes, Amazon and others to frequently purchase impulse or planned items via the ease of well-established micro-payments. There will be many failed attempts by Radio to monetize listeners, but potentially some large successes. Most people forget that the cable network that allowed cable to garner non-subscription revenue from the subscriber, Home Shopping Channel, started as a Florida radio show.

We also believe radio station personnel and younger employees are more likely to come up with successes than the corporate or top executives. We bet you that no P-1 would ask, what is the cost-per-point of a daily e-mail of the best jokes (on-air and off-air) of the Morning Zoo DJs? Or what is the cost-per-thousand of a station logo baseball cap? Or what is the AQH rating of a mobile flash alert of the latest club event? Radio should establish a second revenue stream or resign itself to being the 'new Newspapers.' A second consumer-fee revenue stream would bolster the industry and excite investors and it could even make radio a creative and fun business again, in our opinion."

First, it's noteworthy that a financial analyst has even offered possible solutions to what's ailing Radio.  For the most part, these guys crunch numbers, talk to a lot of people, and provide their best guesses about a sector's financial health.  But that was then.

Nowadays, everyone has an opinion.  And perhaps that's healthy.  Because if Radio is going to find a solution set that truly addresses its deepening problems, maybe it will come from an unlikely source.  This is why Boyle's "outside/in" thoughts caused me to truly consider his thinking.

First, the P1 aspect of his solution.  These are indeed the people who are loyal, engaged, and emotional about Radio stations.  We need them - badly.  But for the most part, Radio continues to look past them, trolling for diarykeepers and possible PPM cooperators.

Yet, it's the P1s who are still showing up for events and even for meaningless, unentertaining advertiser promotions.  They still call the request lines, and they are habituated by our morning shows.  And the incredibly great news is that the majority of them are locked and loaded in Radio station databases.  We have simple (and free) access to them - in many cases, by the thousands.  The question - as Boyle asks - is how do we best utilize and mobilize them to Radio's advantage?

Most stations choose to bombard them with weekly emails about events and advertiser specials, rather than learning from them, nurturing them, and stimulating them to become evangelists.  The data that we've collected at Jacobs Media, after nearly a decade of web polling, suggests that approximately 75% of all database members are P1s.  You don't need a telemarketing company to find your fans - they're in your email club.  Yet, most programmers cannot tell you the true gender and age makeup of their databases, much less their sexual or political orientation, despite the fact this is essentially "free research" during a time when research budgets are dwindling.  Boyle is correct when he proffers that most stations totally under-utilize these all-important fans.

And beyond that, the P1 potential to provide us with "answers" through Listeners Advisory Panels is untapped by most stations.  Most consumer product companies rely heavily on their biggest fans to help guide their quality control, while providing new ideas for the future.  Rarely does Radio turn to these core listeners for advice, confirmation, and guidance.

Add to that the concept that Radio could be interviewing its database members to learn about their buying habits.  Imagine surveying these core listeners to find out which ones are planning on buying/leasing a new car in '08.  Or the fans who will be getting married.  Or buying a home.  These ready customers can be aggregated, and should become part of a station's advertising strategy, because Radio can provide hot prospects to its advertisers - for a price, of course.

In the sales cubicles, how much longer is radio going to put up with account reps who don't get it and never will?  At Jacobs, we are continually asked to "sell" formats and stations with great histories, legacies, and ratings to local sales staffs that are unenthused, undermotivated, and often just clueless.  Stations that have decades of history, brand name personalities/celebrities, and consistent successes are being severely undersold by account reps who are uncommitted, unknowledgeable, and ineffective.

Is that radical to look to Radio's legions of P1s in station databases who may be in professional cul-de-sacs of their own, toiling away at meaningless jobs?

These are people who love your station, and passionately tell others they should be listening.  You don't have to teach them who's on the morning show, persuade them about your format's value, or hype that spring concert the station does every year.  They know it all - chapter and verse.  And they would be much happier selling advertising on behalf of your station than the copiers, used cars, and window sash treatments they're stuck pitching now.

This could also be a way of bringing some youth to Radio as well.  I won't even go into the wisdom's of Boyle's comments about injecting younger people's opinions into Radio, as this is something that Jacobs Media has championed ad nauseum over the years.  As formats have narrowed into the 25-54 "sweet spot" (or "black hole"), America's youth have continued to drift away from Radio, and toward more attractive, welcoming media options that offer more control, variety, and choice.  We saw enough of this in "The Bedroom Project" we conducted last year for Arbitron, so Boyle's observations about how Radio might harness new ideas from younger employees instantly elicited our nods of agreement.

We know only too well there are thousands (well, maybe that number has diminished in the past few months) of dedicated radio professionals, dying inside about what is happening to our products and content.  Many are simply untapped by the companies they work for, as Radio's leaders believe that the rank-and-file simply do not have the answers, and are best suited to simply carrying out "the plan."  If the solutions aren't at the top, perhaps there are successes and innovations waiting to be heard on the ground, closer to listeners, and consumers in general.

So, thanks Jim Boyle, and RBR, for swimming upstream and shaking the tree.  That may be the way out of this mess.

Gallup & Cell Phone Only

A funny thing happened while I was reading the latest USA Today/Gallup poll.  Just like always, Gallup interviewed a representative poll of about 2,000 adults in order to determine American attitudes about the candidates and the country.

But in a small box, Gallup explained that for the first time, they are now integrating "Cell Phone Onlies" into their national samples.  In fact, for every 1,000 interviews, there are now 130 CPOs in the sample.

On the one hand, Gallup notes that the effect of excluding those without landlines from research studies is negligible.  Yet, after reviewing their procedures, they feel the need to include CPOs in their research.  (By the way, once they find a CPO, they ask "For your safety, are you currently driving?"  If the answer is "yes," the interviewer finds a better time to make a callback.)

Since we raised the question about the Cell Phone Only dilemma after our first Tech Poll in '05, this situation has become a research issue.  This is a growing population group, and they need to be represented in important research projects.  In this blog, we have urged research companies - beyond Arbitron - to start including CPOs in their studies.  Of course, this includes radio research companies - the ones who help us determine audience needs and tastes.

Now Gallup has stepped up to the plate.  Who's next?

Moanin' About Phones

“If it's the Psychic Network why do they need a phone number?” - Robin Williams

Arbitron is probably asking the same question, as it is becoming more and more difficult to track Americans on their phones in a rapidly changing telecommunications environment.

Consider the following headlines and news stories:

"Cell Phone Spending Surpasses Land Lines" - Yup, 2007 was the first time ever that U.S. households spent more on cell phones than land lines.  As Allyn Hall, consumer research director for In-Stat , pointed out, "What we're finding is there's a huge move of people giving up their land line service altogether and using cell phones exclusively."

"Who Needs A Land Line?  Probably Not You" - Citigroup's Michael Rollins issued a report about the "teleconomy" and these factoids speak volumes:
        - The telcos are losing residential phone subscribers to VoIP and cellular phones at a rate of 7-8% a year.
        - By 2010, wireless-only households are expected to jump to 27% (from 13% in '06 and an estimated 17% in '07).
        - Wireless penetration should jump from an estimated 83% in '07 to 87% by the end of this year.

"AT&T Announces Intention to Withdraw from Pay Phone Business By End of 2008" - Why do you need a pay phone when there's a phone in your pocket?  The data shows that pay phones have fallen from 2.6 million in 1998 down to about 1 million today.  AT&T will hand over what's left of this business to independent providers.

Arbitron knows all about this data, and as our initial Tech Poll data revealed back in 2005, the "Cell Phone Only" problem is big, and getting bigger - especially among younger people who are ditching their land lines faster than ever.  The National Institute of Health - amazingly, the government agency that tracks the CPO situation - reports that nearly 28% of 18-24s and 3 in 10 25-29s fall into this group.

This is why Arbitron is moving from a phone-based sample frame to one that is addressed-based.  The thinking is that a large percentage of these households will fall into the CPO group, and then it's open season to encourage them to participate in the ratings process.

Changing realities require different tactics.  For stations that focus on 18-34 year-olds, better representation can't come soon enough.  And these same stations clearly need to be developing plans to ensure their content and personalities can be received by the growing throngs of cell phone users in their markets.  AT&T, Arbitron, and other major players are making the adjustments.  Radio needs to figure it out, too.

Tomorrow: A Cell Phone Only adopter that may surprise you, and possibly determine how news coverage about the presidential race might change.

What People Are About - Top 10 Trends For '07

Jacobs Media's Keith Cunningham talks about the biggest entertainment trends of 2007, and what they might mean for '08.

In a televised special last year, Saturday Night Live's Lorne Michaels said, “If you’re not about what people are thinking about that week, then I think you don’t have any relevance.”  Our friends at Nielsen recently released their year-end look at the top trends in the U.S., I thought I’d highlight a few to illustrate what Americans were about last year, while giving us clues to ’08 trends.  And not surprisingly, Nielsen’s findings back much of what we’ve seen in the annual Jacobs Media Tech Surveys:

VIDEO GAMES: Gamers continue to supply some incredible TSP (time-spent-playing). World of Warcraft, the most popular online game, has a mind blowing average TSP of nearly 17 hours per-week. (That’s a TSL that radio stations would kill for.) And retail darlings like Halo and Madden still look more than addictive with about 7 hours of TSP per-week, on average.

If this isn’t a reminder of the incredible pressure Radio is under to create unique and compelling content, I don’t know what is. As we all know, it’s not just TV, the Internet, or digital music that’s cutting into Radio’s usage time. Video games, in many cases, are earning more weekly attention from their consumers than Radio.

And in the interest of combating the war for usage time, you have to ask whether voicetracking and “re-expressing” assets (i.e., gutting the hallways) are really Radio’s solution to creating more compelling content so that usage time and cost-per-point will increase. Electronic Arts, Activision, and other gaming companies aren’t cutting back on content creation. Research and “programming” development are the fuel that drives their business.

ONLINE: Google and Yahoo! have a wide lead in the number of unique visitors per-month, with about 110 million each. How’s that for reach? And if you run radio stations in Austin, San Francisco, Portland or Seattle, and you’re not blogging or giving listeners the opportunity to post online or participate with programming, think again. Those cities lead the pack with adults who read or participate with blogs. While the numbers aren’t astronomical – around 15% - is there any reason to think they won’t increase quarterly in most markets around the country? This small little stat is merely the tip of a much larger “customization” iceberg. “Power to the people” is not just a cliché; it should be Radio’s mantra for the foreseeable future.

MOVIES/TV: It’s no surprise that Spider-Man 3 and Shrek were the biggest movies of the year, and that American Idol and the Super Bowl topped TV trends, but did you know that Lost and Heroes were the top “time-shifted” primetime shows? Not unlike Radio’s revenue pressures, TV execs are under the gun, as time-shifting means eyeballs on TV advertisements will continue to diminish.

Time-shifting is here to stay and it represents a severe revenue problem that’s only going to become more poignant for television. We saw this up close and personal in our trend finding – Control, Variety, Choice – in “The Bedroom Project.” Is product placement and downloadable content the solution? Some think so. Interestingly enough, American Idol, Fast Cars & Superstars, and Extreme Makeover Home Edition top Nielsen’s list for Television Product Placement Occurrences.

MUSIC: The most interesting finding for music stations is that with little airplay (aside from Radio Disney, of course), High School Musical 2 topped the Top 10 albums list. Think about that for a minute and let it sink in. And remember that Gen Y drives those sales, a demo Radio has all but abandoned.

Those who think there isn’t money in Gen Y are clearly not paying close-enough attention or willing to make the commitment to go after these dollars. All of us at Jacobs Media are still waiting for, and willing to help a company develop programming strategies for Gen Y. The younger demos are literally Radio’s future, and yet PPM’s 6+ ratings are thought to be too fringe to be useful. A medium that used to appeal to everyone is limiting its own potential.

There is some good news for Rock, however, as Daughtry and Linkin Park come in at #2 and #3 on Nielsen’s list. And The Eagles and Nickelback had themselves a great year as well, ranking 6th and 8th, respectively.

If you’re a marketer, programmer, in sales, or an on-air talent or producer, Nielsen’s findings should be of interest to you. It’s like having the keys to the “House of Mass Appeal.” There’s a lot more data included in the full report – click here if you’d like to download a copy. Kudos to Nielsen for making it publicly available.

If you like this type of stuff and want to know more about what your audience is up to in 2008, we hope you’ll join us for Jacobs Media Tech Survey IV. It will uncover some important, new, actionable data for 2008. If you haven’t already RSVP’d, contact Lisa Riker at lisariker@jacobsmedia.com.