Commercial Radio’s 100th Birthday

Election night at KDKA November 2, 1920

On Tuesday, October 27, 2020, commercial radio will celebrate it’s 100th birthday. It was on this day in 1920 that “the U.S. Department of Commerce, Bureau of Navigation, which served as the radio licensing agency of the day, issued the first radio license ever to KDKA,” as told on the station’s website.

Radio Call Letters

Ironically, those famous Pittsburgh call letters – KDKA – don’t stand for anything. They were simply assigned to the station with its broadcast license from a roster maintained to provide identification for ocean going ships and marine shore radio stations. KDKA just so happened to be the next set of call letters up for being assigned with a broadcast license.

WJJW

This story is analogous to what happened at my college back in the 70s. I graduated with my bachelor’s degree from North Adams State College in 1974. During my four years at NASC, I helped to obtain the college’s FCC FM broadcast license and become its first general manager. I vividly remember standing in front of a classroom blackboard with my fellow college broadcasters trying to decide what call letters we wanted the FCC to assign to our station. During this meeting a knock came to the door, and the person who knocked handed me an important letter from the Federal Communications Commission in Washington, DC. I anxiously opened the envelope to find that the FCC had granted our request for an FM broadcast license and had pulled the next set of unassigned call letters off the roster to go with our license. Those call letters would be “WJJW.” And like KDKA, they would stand for absolutely nothing and there again, never changed.

Call Letters

Some of the radio stations I listened to over the years had call letters that represented something, like WLS & WCFL in Chicago. WLS owned by Sears, chose call letters that stood for “World’s Largest Store” and WCFL, chose call letters that stood for “Chicago Federation of Labor,” the name of their union. WCFL proudly called itself “The Voice of Labor” at the top of every hour when it was required to give its call letters and city of license.

Do you know what the call letters for WKBW in Buffalo and KHJ in Los Angeles stood for? WKBW’s call letters meant “Well Known Bible Witness” and KHJ had call letters that stood for “Kindness Happiness & Joy.” Neither radio station would mention the origin of their call letters during their Top 40 days.  

Radio stations I worked for and managed also had call letters that represented something:

  • WBEC – Berkshire Eagle Company (the local newspaper)
  • WBRK – Berkshires
  • WUPE – Whoopee Radio
  • WFPG – World’s Famous PlayGround (Atlantic City)
  • KOEL – the first three letters of its city of license, Oelwein, Iowa
  • WLAN – Lancaster, PA
  • WSUS – Sussex, NJ
  • WOND – WONDerful Radio (Atlantic City)
  • WNNJ – Northern New Jersey

Call letters today tend to have been replaced by other forms of identification, like “Kiss,” “Froggy,” or “The River,” with the only problem being that they’ve lost their unique, one-of-kind identity that call letters branding gave them.

When I say KHJ or WBZ, you immediately know I’m talking about a radio station and that the station is located either in Los Angeles or Boston. When I say “Kiss” or “Froggy” you have no idea of which Kiss or Froggy radio station I’m referring to nor where it is located.

KDKA Covers Its First General Election

Shortly after receiving its commercial broadcast license, KDKA began planning its coverage of that year’s general election results to begin at 6pm on Tuesday, November 2nd, 1920.

Four men would climb to a little shack on the roof of one of the Westinghouse Electric’s buildings in East Pittsburgh to report on the results relayed to that shack via telephone. Leo Rosenburg delivered the results, becoming radio’s first announcer on the first licensed American radio station. You can hear a recreation by Leo of that broadcast HERE

About a thousand people tuned in to hear the broadcast and they would be some of the first people that year to learn that Warren G. Harding had beat James Cox to become the next President of the United States.

Election Night 2020

One hundred years later, election night will be quite different. People will most likely learn of the results via their smartphone, and probably not until all the votes have been counted. Due to COVID-19, we can expect that the vote counting process will take days, or even weeks, before a victor is declared.

Remember, your vote is important. Many recent elections have been decided by the thinnest of margins.

Do your civic duty and please VOTE.

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The Play’s the Thing

William Shakespeare wrote “the plays the thing” in his famous play “Hamlet.” Actually, Hamlet says “the play’s the thing wherein I’ll catch the conscience of the king.” Shakespeare had Hamlet planning to catch the king red-faced when confronted with his evil deeds presented in the play. In other words, he hoped to expose the king’s guilty conscience.

It’s my first week back from a little R&R, so I thought I’d try to convey a more optimistic tone.

SPOILER ALERT: This week’s blog has nothing to do with radio, television etc. but everything to do with life in troubled times.

The Plague

Alright, maybe this doesn’t sound like I’ve struck the right cord, but please bear with me.

From late 1592 until early 1594, people living in London were dealing with the bubonic plague, a scourge that had been around for thousands of years . The plague during these two years would kill more than 10,000 Londoners.

London was home to William Shakespeare’s Globe Theatre. So, when the plague was ravishing London, much like COVID-19 is ravishing the United States, everything closed down.

All of the theaters of London actually closed down for a full year to prevent the spread of the black death. This occurred in the midst of Shakespeare’s career and life.

Good Times Don’t Last, but Neither Do the Bad Times

When the plague subsided, and Shakespeare’s Globe Theatre re-opened, people starved for entertainment lined up for his productions. Gate receipts were huge and inspired the Bard of Avon to write “Romeo and Juliet” and “A Midsummer Night’s Dream.” In fact, Shakespeare used his plague experience as source material in “Romeo and Juliet.” You might remember the scene where Friar John is sent to deliver a message to Romeo about Juliet’s fake death, but due to being suspected of living in a plague infected house, Friar John is quarantined and never completes his delivery.

When the plague’s second wave during Shakespeare’s lifetime came in 1603, he continued to write his plays, completing “King Lear” and “Macbeth” as 30,000 more Londoners would perish. They would become some of his best loved productions.

Living with a Pandemic

William Shakespeare lived his whole life in the shadow of the bubonic plague and along with another influential Elizabethan playwright, Thomas Nashe, shared the view that there might never be a medical solution to the plague. Steven Greenblatt, professor of Humanities at Harvard writes that both men would focus their words on what they felt was an even greater plague, that of “being governed by a mendacious, morally bankrupt, incompetent, blood-soaked and ultimately self-destructive leader.” Writing in The New Yorker Greenblatt states:

“But the strange thing about these lines from “Macbeth” is that they are not intended as a description of a country in the grip of a vicious plague. Instead, they describe a country in the grip of a vicious ruler. The character who speaks them, Ross, has been asked how Scotland fares under Macbeth, who is nominally the country’s legitimate king. But everyone suspects what is the case, that he has come by his exalted position through underhand means: “I fear / Thou play’dst most foully for’t.”

The results have borne out the worst suspicions. In office, Macbeth has ruthlessly pursued his enemies and betrayed his friends. Egged on by his “fiend-like” wife, he will do anything to make himself feel perfectly secure—“Whole as the marble, founded as the rock.” But, though he always finds people willing to carry out his criminal orders, he only ever feels more anxious: “cabined, cribbed, confined, bound in / To saucy doubts and fears.” And, under increasing pressure, calculation gives way to raw impulse, the reckless confidence that his instincts are always right: “From this moment / The very firstlings of my heart shall be / The firstlings of my hand.”

So, it would seem, we are living in times not so different than those of Shakespeare and we should strive to produce our own best work in these most troubled of times.

Build Character

Overcoming adversity is character  building. It shapes us into who we are and who we will become. It creates the confidence to overcome and the learning mechanisms to deal with the things that don’t go our way.

Create Resilience

Learning to deal with and address adversity is what creates resilience.

-Jim Haudan, Co-Founder and CEO, ROOT

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Rest and Relaxation Part 2

From the seashore to the mountain tops. Always socially distancing.

Back with a new blog article next week.

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Rest and Relaxation Part 1

Taking a little time off for some sea & salt air.

Back with a new blog article in two weeks.

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The Biggest Threat to Local Radio

The latest survey from the RTDNA (Radio Television Digital News Association) shows how precarious the advertising revenue stream that sustains your local radio station is during these global pandemic times.

Of 350 radio managers surveyed, declining revenues were cited by almost 40% of them as the biggest threat to their continued existence.  

Ad Market Recovery Coming in 2021

We’re a little over six months into a global shutdown caused by a novel coronavirus, that is expected to impact our world directly for almost two years, and have lasting impacts that may stay with us for the rest of our lives. It could be very tenuous for local radio stations to be able to survive until a recovery starts sometime in 2021.

As you can see, MAGNA sees most of the recovery occurring with online videos, mobile, social media and search. Traditional media like radio, print and local TV will still find themselves in the fight of their lives.

Last week, I wrote about “The Better Advertising Mousetrap” and how, due to the internet, combined with powerful computers and algorithms, social media was able to sell advertisers, “certainty.” I wrote how the internet had created a new marketplace, that of human futures, at scale, and this was producing trillions of dollars for these internet companies, making them the richest companies in the history of humanity. The real advantage social media has over traditional media is their development of persuasive technology that exploits a vulnerability in human psychology, which even when you know how it works doesn’t inoculate you from its power to change you.

You can read that article HERE

Other Threats to Radio

Radio people, both past and present, bemoan how corporate cuts and consolidation have cut deep into the industry’s ability to innovate its programming. Also, the plethora of media options available to today’s radio listener is overwhelming, especially with the advent of the smart speaker and audio streaming.

Expect that growth in advertising will be in the digital realm, while traditional media like AM/FM radio and TV, barely stabilize.

Gordon Borrell and his associates concur with this outlook in their latest sneak peak of their research.

Social Media

Hootsuite and Altimeter just published their latest report titled: “The Social Transformation.” In it, they say “executives often underestimate social’s economic, cultural, and transformational value. Understanding the true value and potential of social media has become more imperative as organizations look for new possibilities in the post-pandemic economy.”

  • 77% of CEOs report digital transformation efforts have significantly accelerated
  • 70% of CEOs are prioritizing changes to customer behavior as the most important factor setting their future direction (Source: Deloitte)

This report lists three main areas that businesses need to focus on to truly realize the value of social media:

  1. Learn how to tap into social media’s unique ability to develop and deepen relationships across multiple stakeholders.
  2. Realize and extend social media’s ability to drive efficiency and value beyond marketing and communications.
  3. Leverage social media’s existing organizational structure and processes to catalyze digital transformation.

Radio personalities were the industry’s “secret sauce” that help local radio to build deep relationships with its listening audience. Likewise, tenured sales people built similar relationships with local radio advertisers. Sadly, both areas of the business have seen a Reduction In Force (RIFs) that has severed these important relationships forever. Into that vacuum has come social media and its addictive powers to build strong relationships with its users.

Deep Relationships Require Sustain Engagement

The report also reveals that respondents (64%) using social media have found it helps their business to build strong relationships with their customers. Through in-depth interviews, Hootsuite and Altimeter found that “relationships develop with sustained engagements that lead to conversations across multiple channels, not just on social media.”

Holding All the Aces

Traditional media is looking down the barrel of an advertising juggernaut. It’s hard to win when your opponent is holding all the aces.

In 50-years of working in the radio industry, not one of my favorite radio stations knows anything about me. After just 10-years on social media, there’s virtually nothing that these companies don’t know about me.

See the problem?

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The Better Advertising Mousetrap

Ralph Waldo Emerson is said to have coined the phrase: “Build a better mousetrap, and the world will beat a path to your door.” When it comes to advertising, social media has built the better mousetrap, and you and I are helping them to improve it every day.

The Social Dilemma

There’s a new documentary on Netflix called “The Social Dilemma” about how social media is impacting our lives, and is truly eye-opening. I encourage you to watch this documentary if you subscribe to Netflix, but especially if you’re in advertising and marketing. In fact, it would pay you to subscribe to Netflix just to view this documentary; it’s that important!

This blog won’t be about many of the important social issues raised in the documentary, but instead I plan to focus on how traditional media, like AM/FM radio broadcasting, is fighting a battle for advertising with the internet companies that isn’t a fair fight. Broadcasters are in essence coming to a gun fight, wielding a knife.

This shouldn’t come as a surprise to regular readers of my blog, because back on February 25, 2018, I wrote an article titled “Radio Has an Addiction Problem,” that quoted MIT professor Sherry Turkle’s 1995 book “Life on the Screen, Identity in the Age of the Internet” saying “computers don’t just do things for us, they do things to us, including ways we think about ourselves and other people.” Turkle said that computers weren’t just a tool, but were sneaking into our minds and changing our relationship with the world around us.

Monetizing Social Media

Social media quickly realized that in order to sustain itself it needed to monetize its service. Google’s search engine business was a Silicon Valley marvel for not only harnessing the power of the internet but simultaneously building a revenue engine that grew right along with it. Tim Kendall, now CEO of Moment, was one of the early people at Facebook, charged with coming up with a way to make money. He said that he decided that the “advertising model was the most elegant way.”

Advertising

The advertising business has always been about selling exposure to the people who use the product. Newspapers sold access to its readers, radio sold access to its listeners and television sold access to its viewers.

“Half the money I spend on advertising is wasted;

the trouble is, I don’t know which half.”

-John Wanamaker

Businesses have always wanted to get the biggest bang for their advertising buck, but realized that in the world of advertising, there were no guarantees, that is until social media came along. Mel Karmazin, former broadcasting and satellite radio CEO put it this way when he met with the founders of Google: “You’re messing with the magic of sales.”

Jaron Lanier, who wrote the book “Ten Arguments for Deleting Your Social Media Accounts Right Now,” explains that what social media is doing more effectively than traditional media is “changing what you do, how you think and who you are…it’s a gradual, slight, imperceptible change in your behavior and perception.” It’s similar to a magician performing slight-of-hand tricks, and making you believe things that aren’t real.

“This is what every business has always dreamt of, to have a guarantee that if it places an ad it will be successful. That’s (social media’s) business, they sell certainty. In order to be successful in that business you have to have great predictions. Great predictions begin with one imperative, you need a lot of data.

The internet has given us a new kind of marketplace that never existed before, a marketplace that trades exclusively in human futures. Just like there are markets for pork belly futures, or oil futures, we now have markets that trade in human futures, at scale, and those markets have produced the trillions of dollars that have made the internet companies the richest companies in the history of humanity.”

-Shoshana Zuboff, PhD, Harvard Business School

Author of “The Age of Surveillance Capitalism”

“Any sufficiently advanced technology

is indistinguishable from magic.”

-Arthur C. Clarke

Getting Your Attention

Every company whose business model is to sustain itself through the selling of advertising is competing with other companies for your attention. Traditional media is competing with every social media company to get as much of your time and attention to their platform as they possibly can. Remember, when you’re not paying for the product, you are the product.

The advantage social media has over traditional media is their development of persuasive technology. It’s designed to intentionally apply to the extreme behavior modification in the user, and cause them to take a desired action. It does this through the use of positive intermittent reinforcement, just like a casino slot machine lures you into thinking the next pull of the handle will release its fortune. Social media works to create an unconscious habit, programming you for a deeper level of control than you even realize is happening.

Social media has learned how to exploit a vulnerability in human psychology, which even when you know how it works doesn’t inoculate you from its power to change you.

No longer is social media a tool we use, but is a tool that uses us, creating this technology based environment designed for mental addiction through psychological manipulation.

“There are only two industries that call their customers ‘users’:

illegal drugs and software.”

-Edward Tufte

Most concerning about this change is that it’s being driven by a technology that’s advancing exponentially. In contrast, our human brain has not really advanced at all over the same period of time. The rate of change is beyond our human comprehension, even for the very people who are designing and building these computer networks.

“The race to keep people’s attention by social media isn’t going away. Our technology is going to become more integrated into our lives, not less. The AI’s (artificial intelligence) are going to get better at predicting what keeps us on the screen.

How do you wake up from the matrix when you don’t know you’re in the matrix?”

-Tristan Harris, Center for Humane Technology Co-Founder

“Whether it is to be utopia or oblivion

will be a touch-and-go relay race

right up to the final moment…”

-Buckminster Fuller

Today, the internet is a more efficient way to sell our attention to advertisers.

Now you know why.

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What Will a Post-COVID-19 World Be Like?

While this global pandemic has caused everyone a lot of heartache, due to missed family events, vacations, employment and educational disruptions, it has also forced us to make some changes we might want to keep when COVID-19 is in the rearview mirror.

Work From Home (WFH)

Working from home, for those whose job permitted it, eliminated daily commutes. Just this one change has meant giving those families more time together, more money to save or spend on other things and more life satisfaction overall. For our environment, the reduction in fuel consumption has been a plus as well.

Home: The Place for Dinner & a Movie

Staying at home has meant that our giant screen TVs have become our movie screens. This hasn’t been lost on film makers, as they are now making movies more readily available to watch at home.

Additionally, retailers and food providers are now competing to deliver their goods to your home as fast as Amazon Prime does.

Road Trip America

Since COVID-19 has seen countries around the world take down their “Welcome Americans” signs, we’re discovering America’s great outdoors. RVs & camper sales are up, and the nation’s parks and campgrounds are full, as we take to the woods where social distancing has always been part of the experience.

Restaurants & Broadband

While dining al fresco is fun and provides social distancing for diners, many cities are closing down their main streets to vehicle traffic in order to make them both pedestrian and dining friendly.

Much like we are using our smartphones to order restaurant take-out, high speed internet service is now essential for work, education and entertainment in our homes.

Small Business Survival

Dion Rabouin, author of Markets, writes that “small businesses are losing confidence in their survival.” We’re six months into this global pandemic and American small business is nowhere near returning to “normal.”

The current unemployment situation reveals that in every state, more people are unemployed than jobs available. That means moving to another state won’t make a difference for an unemployed person because the same problem has hit every single community in the country.

K-Shaped Recovery

Maybe more worrisome is that we are seeing a K-Shaped Recovery, taking place due to COVID-19. Which means a recovery where the rich become richer, the big become bigger, the poor become poorer, and the small become extinct.

We’re seeing this now with Wall Street’s growth, versus Main Street’s demise.

Following the “Great Recession” of 2008, we saw something similar happen as America went through recovery. Though it happened gradually and occurring almost unnoticed by many,

This global pandemic is the equivalent of pouring gasoline on a fire, it acts like an accelerant. Things that were going to come to pass in time, are now happening at warp speed.

While big box retailers and Wall Street are dancing with delight, mom-and-pop shops and local service establishments are fighting for their very survival.

Local Radio & Newspapers

Having a K-Shaped Recovery means that local media enterprises, that depend on Main Street for their advertising revenue, will suffer the same consequences.

Big media companies having more access to the technology that’s playing a role during COVID-19 will shape the recovery. Big media companies are less dependent on Main Street, as the bulk of their revenues originate on a regional and national level.

The same inequality that has been bifurcating American society since the early 80s and has made achieving revenue goals for local media companies more difficult with each passing year, is reaching a tipping point with COVID-19. The very rapid evolution of society during this global pandemic is exacerbating inequality; of people, businesses, health, education, and opportunities.

Even after we have discovered therapeutics and/or a vaccine to deal with COVID-19, the way the world was pre-COVID won’t be returning.

The answers to the challenges of the future will not be found in the past.

The truth is that we need to continually innovate how we innovate if we expect to ever return to an era of renewed productivity growth.

-Gregg Satell

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Car Radios & The Future

AM Car RadioThe first mass-market car radio premiered in June of 1930, but due to a second World War it wouldn’t be until the 1950s that car radios became common.

Another factor that slowed their growth was cost. Those early six vacuum tube car radios cost around $130.

To put that into perspective, you could buy one of Henry Ford’s model A’s for $450.

Motorola

The Galvin Manufacturing Corporation, founded by brothers Paul and Joseph Galvin, were early pioneers in car radios. Paul Galvin realized their radios needed a brand name and came up with the name of “Motorola,” a portmanteau (a word blending the sounds and combining the meanings of two others, for example motel (from ‘motor’ and ‘hotel’) or brunch (from ‘breakfast’ and ‘lunch’) of the words motor car and ola. “Ola” back then was a slang word for anything audio.motorola car radio installation

Motorola introduced the first dash-mounted AM car radios in the 1930s. It wasn’t until 1952 that a German company, Blaupunkt, would introduce the first FM car radio. AM/FM car radios followed the next year.

1952

I was born in 1952, and like other Baby Boomers my age, radios and cars have always been one.

While transistor car radios were introduced in 1955, it wouldn’t be until the 1960s that they became affordable. It should also be noted that dashboard radios were still an option in 1963, however, they were a very popular option and more than 60% of all cars on the road in America had one.

Rear Speaker & 8-Track Tape Player

I can still remember the time my parents were buying a new car and one of the decisions that they had to make was whether or not to add the new car radio option that had just come out, adding a rear speaker to the dashboard radio.Car 8-track player radio

The first aftermarket option I remember my parents adding was that of an 8-track tape player. I loved this device because it allowed me to listen to air checks of my weekly radio show on my daily commute to college. I wanted to improve my style and presentation.

Cassettes & CDs

The 8-track tape players in cars would soon be replaced by cassettes, allowing people to make up their own “mix tapes” of songs they loved to hear most.

Compact Discs (CDs) eventually replaced cassette players in the car dashboard, and for those of us that didn’t want to change CDs, one at a time, it was a thrill having a six-CD changer located in the trunk that allowed for even more variety with the touch of a button.

iPods & Smartphones

Steve Jobs once said he wanted to be able to have a 1,000-songs in his pocket, and from that vision, came the Apple iPod. iPods could eventually be plugged into the car’s audio system and now offered a virtually unlimited supply of music and audio books at the touch of a button.

The iPhone would offer all that any iPod ever could, plus so much more. It became the computer in our pockets replacing a multitude of single use devices, including the car radio.

Entertainment CenterDigital Car Radio

Today’s automobile dashboard offers occupants a complete entertainment center that immediately connects to a person’s smartphone via either Apple’s CarPlay, Google’s Android Auto, or a manufacturer’s proprietary system. Today the vehicle’s onboard entertainment system plays a big role in people’s car buying decision and it can also add from a thousand to two thousand dollars more to the price of a vehicle.

Self-Driving Cars

TV Car RadioWith the evolution of self-driving cars, you can expect that more and more vehicles will come with video capabilities as well as audio, and also that the competition for who can provide the best in-car entertainment will be fierce and passionate.

Traditional radio programming staples, like Two-fer Tuesdays, ten-songs-in-a-row and no-repeat workdays aren’t going to cut it.

The global pandemic has caused two markets to significantly heat up:

1) suburban house sales and

2) new car sales.

Today’s reality is that people who now find themselves working from home, don’t want to be stuck in a little urban apartment and are moving to homes that offer more space to enjoy. Likewise. those individuals whose work demands they still commute, no longer feel safe on mass public transportation and are upgrading their ride.

Understanding how these changes will impact the future of your media enterprise is critical.

 

 

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First Things, First

covid-19If someone had asked you, “Where do you see yourself in 5-years?” I seriously doubt anyone could have imagined they would be smack dab in the middle of a global pandemic. But that’s where we find ourselves at this moment in time.

No matter what you may think will return us to the life we had before COVID-19, nothing even begins to change until we have two things: therapeutics to cope with this novel coronavirus and a better understanding of how this dastardly disease can be squashed like a bug. In the meantime, everything else we try is merely a Band-Aid on the problem.

TRUST

A good radio friend posted on LinkedIn a graphic from the Radio Advertising Bureau (source: Kantar 2017)  “Trust in News” purporting radio to be the medium, Americans turn to for trust.

Radio & Trust

Well, we are now half-way through 2020, and I wonder what relevance that this research conducted in 2016 and published in 2017 has in a COVID-19 world. Probably, slim and none.

In fact, the NRRC (Network Radio Research Council) is recommending that all network/national buying and selling be based on the Fall 2019 Nationwide survey, and not those surveys conducted since the start of COVID-19, saying “the impact of the COVID-19 pandemic has caused unprecedented divergence of traditional patterns of media consumption, including AM/FM listening and the streaming of audio.”

If we can take to the bank anything from the world we are living in now, it’s that anything pre-COVID-19 is now FUBAR*.

How COVID-19 Has Changed Our Media Consumption

Since the onset of this global pandemic, the home broadband bundle has significantly been changed. Most consumers are adopting a stand-alone broadband service and not bundling it with Pay-TV or home phone or even their mobile phone. Why is this happening? Researchers say with another recession looming, people are watching all of their pennies.

With people working from home (WFH) and driving less, Out-Of-Home (OOH) media has been clobbered. Revenue projections for the Billboard industry show it will be down over 19% in 2020, compared to radio (down 13.7%) and local television (down 12.4%), according to MAGNA. Before COVID-19 hit, OOH was one of the fastest-growing and most stable linear media channels. Zenith thinks that OOH revenue will be down even more, predicting it to be down 25% in 2020.

Nieman Lab writes “Radio listening has plummeted. NPR is reaching a bigger audience than ever. What gives?” And the answer is, 2020 is the year that NPR will make more money from underwriting on its podcasts than it will from its radio programs.

Follow the Money

Local radio is very dependent on Main Street, but Main Street is in the cross-hairs for defaults, bankruptcies and evictions due to COVID-19.

Much like NPR is experiencing with its online products, retailing is becoming an online activity with American consumers. Economists knew that many cities had a retail footprint that was too big for the local consumer economy to support. COVID-19 merely accelerated things.

In fact, COVID-19 has created a quantum leap for e-commerce in 2020. What was projected to take place over years, has been compressed into a few months.

The United States Census Bureau reports that in the second quarter of 2020, e-commerces retail sales in America rose 31.8% from the first quarter and were 44.5% above the same period in 2019. The Census Bureau says that compared to the share of total retail sales, e-commerce sales grew as much in three months as it had over the past five years.

We are living a period of rapid technological change. Columbia Business School economist Laura Veldkamp says, “We are changing the way business is getting done, we’re changing the way we’re shopping and the way we’re eating – we’re changing the way we’re having meetings.” She points out that:

“the pandemic, like the Depression and World Wars I and II, is fundamentally altering people’s tastes. Some businesses will be left behind, as consumers get accustomed to videoconferencing instead of commuting, and buying groceries and other goods online instead of braving stores, malls and restaurants.”

Unemployment Tsunami Ahead

Economists are worried what’s ahead when it comes to unemployment in America. They see exponential growth in claims for the Pandemic Emergency Unemployment Compensation (PEUC) program and a weakening U.S. labor market. The PEUC has grown from 27,000 people on April 11, 2020 to 1.3 million as of August 1, 2020. Worse, the number of PEUC recipients has stayed at over 1 million people for four straight weeks and has actually been increasing each week.

“The real tsunami is coming,” says Mark Zandi, chief economist at Moody’s Analytics. “My guess is at this point hiring in the industries that have been hit hard is going to abate.” Plus we know that United Airlines plans to furlough 3,900 pilots, Delta 2,000 pilots and American Airlines are alerting their employees to furloughs of 19,000 companywide.

The Conference Board Consumer Confidence Index declined in August for the second consecutive month hitting a new pandemic low. Consumer optimism, along with their financial prospects also declined. Both are continuing on a downward path.

The Long Road Back

Economists see a long road back for the United States economy. A National Association for Business Economies (NABE) survey of 235 members July 30-August 10, 2020 showed that 60% predict that it will not be until the second quarter of 2022 (or later) that our economy may finally rebound to where it was in 2019, pre-COVID-19.

Economy Rebound

The Party’s Over

When you’re having a good time, it’s hard to call it a night and leave a party. Sometimes it’s due to FOMO (Fear Of Missing Out) and other times, it’s because no one likes to see good times come to an end.

The Oracle of Omaha – Warren Buffett, puts it this way:

‘They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.’

Commercial broadcasters, by and large, have enjoyed the radio broadcasting party of the 60s a little too long. So many of the programming models haven’t really changed since the days when I was still a disc jockey, yet the world has changed, and changed exponentially.

Radio broadcasters, like NPR, that have embraced a vision of where media consumption is headed, are seeing their investments paying off.

Those that haven’t changed, are finding today’s environment extremely challenging.

Local radio’s fortunes have always been tied to Main Street, not Wall Street.

COVID-19 has disrupted Main Street’s business model.

The old rules don’t apply any longer, but, we don’t really know yet if this is another giant bubble or the future of our world.

Realizing that the time horizon for answers could be two years out, one wonders, will you be able to survive till we have the answers?

 

*A military term defined as F’d Up Beyond All Recognizability

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Radio’s Moment in Time

Fleming

Sir Alexander Fleming

Like it or not, we’re making history. 2020 will be a year studied by future generations when it comes to, what to do and what not to do, when faced with a global pandemic.

History only gives us two prior events that don’t even come close to what we’re going through today, the 1918-1919 flu pandemic and the 2008 financial crisis. COVID-19 is so much more than either one of those for a multitude of reasons.

1920 Commercial Radio is Born

Following the two-year 1918 flu pandemic, commercial radio would be born in November 1920 with the licensing of Westinghouse’s KDKA in Pittsburgh.

Beside radio, the list of inventions that would shape America in the 1920s were the automobile, the airplane, the washing machine, assembly lines, refrigerators, electric razors, instant cameras, jukeboxes and television.

TV wouldn’t really take hold until after the end of World War II.

Transistor Radio

In the 1950s when TV invaded American homes, and pushed the radio out of the living room, there were many who prophesied about radio’s demise. What would give radio new life was the invention of the transistor radio and the placement of radios in the dashboard of automobiles.

One of the songs of my youth was by Edwin Starr, a song called “War.”

War, huh, yeah
What is it good for
Absolutely nothing
War, huh, yeah
What is it good for
Absolutely nothing
Say it again, why’all

War, huh, good god
What is it good for
Absolutely nothing, listen to me

While I can’t say I disagree with the inhumanity of war, saying it was good for “absolutely nothing,” is to not acknowledge the volume of technology we enjoy today that was developed as a direct result or evolved from military conflict.

War accelerates technological developments on a global scale.

Penicillin

One of the most important inventions of the 1920s was the development of penicillin by Sir Alexander Fleming, a Professor of Bacteriology at St. Mary’s Hospital in London. Sir Fleming’s studies of bacteria led to the creation of an antibiotic that kills bacteria and prevents them from growing and multiplying.

Because Sir Fleming wished to get penicillin into the hands of as many of the sick who desperately needed this antibiotic, Fleming never applied for a patent.

One sometimes finds, what one is not looking for. When I woke up just after dawn on September 28, 1928, I certainly didn’t plan to revolutionize all medicine by discovering the world’s first antibiotic, or bacteria killer. But I suppose that was exactly what I did.

— Alexander Fleming

Ironically, it wasn’t until after the bombing of Pearl Harbor that mass production of penicillin would occur. By D-Day in 1944, penicillin production had been ramped up to produce enough of the antibiotic to treat all the wounded in the Allied forces.

Prioritizing People

If history teaches us anything, it’s that Americans win when policy makers prioritize people. The GI Bill for example, gave returning veterans a chance to acquire skills, and seize educational opportunities that would have been difficult for them to pursue on their own.

Herb Kelleher, co-founder of Southwest Airlines and its first CEO, built his airline on the principle of prioritizing people. Forbes wrote:

For almost 30 years we’ve been asking, “What if you could build a company that is as human as the human beings in it? What if you could create a culture that inspires passionate people to come to work fully awake, fully engaged, firing on all cylinders because they know they are doing epic work?” 

What if you could create a culture that inspires people to come to work, fully engaged, firing on all cylinders?

Herb did it.

Kelleher said, “I’d rather have a company bound by love than a company bound by fear,” and for 46 consecutive years Southwest Airlines growth and profitability showed what that can produce. Sadly, Herb Kelleher passed away at age 87 in 2019.

If there’s any industry that’s been hard hit by COVID-19, it’s the travel and leisure industry. So, how is the current management of Southwest handling this business crisis? On July 26, 2020 Southwest management announced it will not furlough or lay off any workers on Oct. 1, the first day it is allowed to, per its CARES Act terms saying, “We have no intention of seeking furloughs, layoffs, pay rate cuts or benefits cuts through at least the end of the year.”

Where Are We Headed?

No matter what business or industry you’re in, we’ve reached that moment in history where it’s time to focus on where we want to go and not where we’ve been.

The COVID-19 global pandemic is a war on our health. Like military conflicts, it is causing the world to change at an accelerated pace.

The challenge for all of us is to seize the moment and not be afraid to reimagine every aspect of our lives. How and where we live, how we educate the next generation, what our business models should look like, and how we embrace diversity and talent on a global scale. It’s our moment in history to let go of the past.

100 Years of Commercial Radio in America

2020 marks the 100th Anniversary of America’s Radio Broadcasting Industry. In the 1950s, television forced radio to re-invent itself and become the industry that many people, like myself, grew up with and made our career.

I’m sure the radio people of the Golden Age looked down their noses at how radio was changed by my generation, but we created a communications  product that reached virtually every American.

COVID-19 and the internet are forcing radio to do that once again.

As Walt Disney famously said, “If you can dream it, you can do it.”

What’s your dream for this moment in time for radio?

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