JacoBlog - Jacobs Media's Blog

When Waterfalls Go Up - Part 2

In yesterday's blog, we talked about how the automakers may need to pay more attention to teens in order to better understand how consumers will eventually use dashboard media.

Too bad that radio never took that advice.  A new study from Coleman Insights indicates that we're at a techno "tipping point" when it comes to teens and the ways they use new gadgets and media to access and enjoy music.

Of course, that's what our "Bedroom Project" was all about, and many of you remember those storytelling videos.  But Jon's research inspired me to go back to our most recent Tech Poll, and just focus on those who are under 18.  It's a sample of nearly 500 young Rock listeners, and their tech reality differs greatly from their older counterparts.

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Here's how to read this Media Usage Pyramid.  The pyramid is constructed in the same order as the total sample, so when you see various dimensions "widen," it's a deviation from the norm.  So, at the very bottom, 85% of our teens own their own cell phone, while only 81% listen to the radio at least an hour a day.  That radio listening percentage is lower than for any other age group, and it speaks to the phenomenon that Jon reports in his study.  (TV viewing is also on the low side.)

But check out Internet use (at least one hour/day).  It's at 93% and leads all other activities/media.  We also have exceptionally high numbers for iPod/mp3 player ownership (87%), video streaming and social networking site usage (both with 80%), and of course, lots of text messaging (61%).  But between the Internet, iPods, sharing music and thoughts on MySpace and Facebook, and using texting as a conduit to friends, these teens are on very different platforms than many adults.

Bottom line?  It doesn't look like the 25-54 data at all.  And that's the point.  Radio's been talking to aging audiences to determine the status quo for at least two decades - instead of talking to the tech movers and shakers - teens - and attempting to understand what's next.  Studying those waterfalls heading upward would be a smart investment in time and money for a medium that's struggling to get its mojo back.

When Waterfalls Go Up - Part 1

As technology moves at lightning speed, it is increasingly difficult for radio companies (and all businesses) to track and respond to it - much less get ahead of it.  When you consider that iPods, Google, YouTube, and MySpace have only been around a few short years, it can be mind-boggling to even think about what we'll all being doing in 2010.

But that's precisely what we're paid to do.  Because as radio has learned - the hard way - continuing the same repetitive motions leads to stagnation, and ultimately being usurped by new media, and perceptions that we've become passé.

So how do we keep up with what's next?  Well, the auto companies are grappling with the same issues.  Finally, cassette decks in dashboards are vanishing.  But do consumers want satellite radios, HD radios, GPS systems, or wireless communications systems?

Tom Steenman, VP of Intel's digital enterprise group puts it this way: 

"It will waterfall up instead of down."

That is, in-car technology is something that young consumers "get" and appreciate, so car makers would be smart to load up affordable cars with the latest gadgets and services.  "It is evolving rapidly, Steenman said.  "The car is becoming the next frontier."  Eventually, telematics (as the automotive business calls it) will work its way up to older demos who have more money to spend.

From our Tech Polls and the Arbitron "Bedroom Project" ethnographic study we conducted last year, that logic rings true.  If you want to know what you'll be doing a few years from now, talk to a few 14 year-olds.  One of our "Bedroom" respondents told us "Email is for old people," and that finding made us stop and think about the differences between adults and teens.

A few years ago, I remember watching my tween-aged daughter IMing seven of her friends simultaneously.  At the time, I wondered who in their right mind would do this, and why she wouldn't just pick up our landline phone and call them all.  A couple of years later, I found myself IMing my co-workers two doors down the hall.  And who needs a landline?

The same might be said for social networking sites, blogs, cell phone texting, and many of the other tech trends that have taken societal hold in the past few years.  They start with youth and "waterfall up."  Radio has all but lost the teen audience, and technology mixed with corporate denial and arrogance ("Where else are they going to go?) have been the culprits.  But it doesn't have to be that way.  Teens will tell you what they want - and don't want - and their preferences are "techno-omens" about what's to come.

Tomorrow, we'll look at teens and Tech, along with Jon Coleman's new study about how we're at the techno "tipping point" when it comes to young people and music consumption.

Backyard Bands

What will kids do this summer when the schools let out next month?  According to Toys 'R' Us, a big trend is "Backyard Bands," spurred on by the success of brilliantly marketed concepts like Disney's Jonas Brothers.

The idea is kids yearn to be Rock stars (thank Reality TV for that), and toy manufacturers are stepping up with a series of DVDs and special instruments so they can learn how to play.  While Rock Band and Guitar Hero are great videogames, actually learning how to play the drums or the guitar is what these cool new toys are all about.  There's the 5-Piece Drum Set from First Act, found only at Toys 'R' Us, the Essential Rock Guitar DVD from Alliance, and the LK-100 keyboard from Casio - just a few of the devices and gadgets for kids who love to emulate their favorite Rock stars from today - and the past.

There's more than a summertime contest here for Rock and Classic Rock stations.  We have long encouraged stations to put together "Take Your Kid To A Classic Rock Concert" series.  Now, it's about forming a backyard band.  For formats that often struggle to attract new and younger audiences, we should take a page from the Disney model, and reflect a trend that is happening right before our very eyes.

Follow The Money - Part II

Here is part 2 of the guest post from Paul Jacobs who offers his insight on how radio needs to invest in solutions to reach younger consumers:

Assume for a minute that radio's revenue growth via the traditional commercial platform is going to continue to be challenging.  And if your station specializes in lower demand demographics like 18-34s and Teens, you know that radio has fallen out of favor with many key advertisers, with no apparent turnaround on the horizon.

Yet, many major advertisers haven't changed their target demographic strategy.  They've changed tactics.  And radio, especially formats like Alternative and CHR, has to respond to this shift in order to survive.

Here's the facts:  A recent report from PQ Media found that spending on "branded media" - event sponsorship and marketing (+12%), product placement (+34%), and advergaming and webisodes (+35%) - grew nearly 15% last year to $22 billion.  And who are most of these advertisers targeting?  The hard-to-reach youth market - Alternative and CHR's target listeners.

So, for radio, there's an obvious disconnect.  The problem isn't younger-targeted radio station's demographics or our audience size (which is considerable).  It's the way we're delivering listeners to advertisers, many of whom are moving away from the paradigm being the third spot in a five spot cluster.

Alternative and CHR stations have proven expertise in creating compelling events (and generating considerable profit from them), but there's a long way to go on digital platforms.  Most aren't structured properly to satisfy changing advertiser needs.  In a flat traditional advertising revenue market where owners and Wall Street are demanding growth, doesn't it make sense to ask some hard questions about the entire business model of these stations and consider some radical surgery?

Looking at it a different way, youth-targeted radio formats might be able to lead the way to revenue growth for the radio industry.  There are billions of dollars available chasing youth (maybe even more than for aging baby boomers).  Maybe these stations need to consider some serious experimentation by re-structuring their promotional, digital, and sales models.  Maybe they need to, in the words of Jason Calacanis at Summit 12 - "surrender" to the reality that the current business model is not the road to revenue growth.

Let's invent a new one, and in the process, begin to reinvent the way that radio interfaces with advertisers - and the audience.

Follow the Money

Today we have a guest post from Paul Jacobs who offers his insight on how radio needs to invest in solutions to reach younger consumers:

A recent article in The Detroit News about how the automotive industry is rapidly moving away from traditional media toward digital solutions to reach younger consumers, who they place a high value on, generated the following quotes:

"We are always looking for digital extension or a live event to complement our advertising." - General Motors spokesperson

"Buzz is created when people are talking about an event, or a message gets spread all over YouTube." - Michigan State University advertising professor

"Digital marketing opens up new possibilities for building ongoing customer relationships." - Chrysler's marketing chief

If that wasn't enough, they showed this chart:

It's time to stop all of the hand-wringing about PPM, declining revenue, satellite radio, and all of the other excuses.  Sure, these are problems, but the solutions are right in front of our faces.  Who does event marketing better than radio?  And what medium lends itself best to digital solutions?

It's time to invest in solutions.  Follow the money.  It hasn't disappeared, it's just moved.  And radio needs to move along with it.  Quickly.

Cryin' In Our Beer

Jacobs Media's Paul Jacobs weighs in on a missed opportunity for radio:

Miller Brewing, a long-time major advertiser on radio and television, has decided to abandon electronic media for the rollout of Sparks, a citrus-flavored malt drink laced with caffeine.  Instead, they've decided to place all of their money on a web site (www.sparks.com) and to develop a word-of-mouth program by giving away the product at events and sponsoring gatherings like art shows.

The target?  Generation Y, the 60+ million generation of 16-30 year-olds.

What Miller is doing makes sense, but only to a point.  We're big fans of street and guerilla marketing, and we more than realize that this generation is listening less to radio than its predecessors.  But that isn't the point.  The fact is that no medium does as effective a job - even today - of reaching this demographic as radio.  But that is obviously no longer enough.

Miller is looking for new and different ways of reaching this life group, and that's the painful lesson for radio.  If all we can do (or all we are known for) is the 60-second commercial, then we will continue to get passed by.  Miller isn't dissing radio.  They are, however, making a strong statement that Radio needs to develop new delivery models that are in-sync not only with listeners, but with major advertisers like Miller Beer.

Shorter commercials won't cut it - they don't want "blinks."  Event sponsorships are old school.  And banner ads on our web sites are so 1999.  Radio needs to wake up and completely re-structure the ways it can deliver its most valuable asset - huge cumes - to advertisers.  And we need to hire salespeople who understand these new platforms and their potential for advertisers, not cost-per-points.  Clients want creative, multimedia solutions, not packages.  The model has changed.  Radio must change with it.

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.

Money Talks

What was the "net worth" of the biggest artists in the music world in 2007?  The LA Times just did an interesting analysis, combining the total revenues that artists accumulated, based on all sources: concert box office, album sales, and even digital tracks sold through iTunes and other web sources.  Depending on the artist, of course, the revenue mix is interesting.  Classic bands benefit heavily from tours, whereas you have to respect the artists that have a balanced mix of concert revenue and music sales.

The results are surprising in some places, and maybe they're not.  The leader of the group is The Police with over $140 million in total revenue.  Obviously, the tour was the key driver, and it helped them move a considerable amount of album catalogue.  Also in the Rock world, Van Halen and Bon Jovi round out the Top 10.

Josh Groban comes in at #2, based on the sales of Noel, but also a successful concert tour.  Justin Timberlake is also in the mix in the third position, while Country shows up well with Kenny Chesney, Faith Hill/Tim McGraw, and Rascal Flatts in the Top 10.

Those of you with teens and tweens won't be surprised that Miley Cyrus (Hannah Montana) cruises in at better than $86 million.

In the 11-20 positions, other familiar names pop-up, including Springsteen, The Eagles, Genesis, Billy Joel, and finally Linkin Park.

And that raises the issue about where Active Rock and Alternative bands are in the overall mix?  Had these calculations been done 10-15 years ago (thus excluding digital sales), you would have to believe that Metallica, Pearl Jam, the Chili Peppers, and even Nickelback would have hit the upper registers of this chart.  But in 2007, it was Classic Rock, Country, and Disney - just about everything else wallows by comparison.  As is the case in the ratings as well, money most definitely talks.

We Cut Off Our Noses

Leave it to Warner Music CEO, Edgar Bronfman, to ruefully look back at the past several years and realize how shortsighted the record industry has been.  Lauding Apple - especially the iTunes and iPhone innovations, Bronfman explained to the GSMA Mobile Asia Congress Conference in his keynote: "We used to fool ourselves.  We used to think our content was perfect just exactly as it was.  We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding.  And of course we were wrong."

But the sound bites that jumped out at me were when Bronfman admitted the music industry "moved at a glacial pace" and "inadvertently went to war with consumers."  And yet, the lawsuits against teenagers who have engaged in file sharing continue as the entire world of artists, managers, and techies moves away from the labels.  Ask any teen or twentysomething about how they feel about record companies, and you'll get an earful.

And what about the war the labels have been waging against broadcast radio over the past year, first by attempting to "de-explain" the relationship between airplay and sales/brand building?  And more recently the Performance Tax folly against radio stations?

You know that things are crazy when you see a beleaguered industry lash out at everyone - up to and including former friends, allies, and partners.  Radio deserves better.

Sonic Youth

Leave it to Little Steven to take a major step designed to engage young people to appreciate Rock and its rich history and heritage.  While it's great that video games like Guitar Hero glorify the music, or that TV programs like CSI and half the commercials we see use Rock music as their soundtracks, our friend Steven Van Zandt has a new initiative that you should know about that takes Rock right to America's classrooms.

Steven's plan is to create a 40 chapter course (DVDs, CDs, web) for all of the U.S.'s middle and high schools - at no charge.  The idea is to teach about the roots of Rock, and the course actually has the blessing of The National Association for Music Education.  Working with Scholastic to make sure the course meets all the guidelines, Steven is in the process of enlisting rock journalists and players to participate.

It's interesting that in the midst of a youth crisis for both broadcast and Rock radio, the solutions could come from some unlikely sources - the video game industry through games like Guitar Hero and now Rock Band, as well as initiatives like this one from Steven.  As the struggle continues to keep young Americans interested in both radio and Rock, this is a venture that every Rock radio station should and could support.

As more and more young people in America begin to discover the roots of Rock and its rich heritage, it benefits all of us working inside and on the fringes of the music business.  Steven lives by the Lou Reed credo that his "life was saved by Rock n' Roll."  As he has done during the past several years, he continues to turn the tables and make an important contribution.

Rock on, Little Steven.