Back with a new article in two weeks.
What’s the Purpose of a Radio Station?
Radio is a business.
Peter Drucker said the purpose of a business is to create a customer.
For radio, that means creating two types of customers: 1) a listener and 2) an advertiser and when done correctly, a radio station makes a profit.
Making Money
For most of my radio career, radio enjoyed a revenue expansion that rivaled the infamous “internet bubble.” Owning a radio station was considered a license to print money. Bottom lines often delivered a profit of 25 to 50% or more, so, while those profits were noticed by Wall Street investors the ownership limits on radio stations kept them away. Investors were frustrated that there was no way to scale up the size of a radio broadcast company.
Telcom Act of 1996
Then President Bill Clinton signed the Telecommunications Act of 1996. It relaxed radio’s ownership rules making it possible for one company to own multiple radio stations in a single market.
Wall Street loved the change! The money poured in from eager investors, and companies like Clear Channel, Citadel, and Cumulus quickly bought as many stations as they could using other people’s money. Mom & Pop radio operations had multiple companies vying for their properties and radio station values soared.
Ownership Limits
In 1953, the Federal Communications Commission (FCC) adopted its so-called 7-7-7 rule to encourage diversity of broadcast ownership. In essence, no single owner could own more than 7 AM radio stations, 7 FM radio stations, and 7 television stations in the entire United States of America.
By July of 1984, the FCC said they sought to encourage media competition and increased the number of radio and television stations a single owner could control to 12-12-12. The FCC Chairman was Mark S. Fowler. The President of the United States was Ronald Reagan. The five member FCC was 3 Republican appointees and 2 Democratic appointees. The vote to expand the ownership limits was 4 to 1 in favor.
“Bigness is not necessarily badness,” Chairman Fowler is reported saying. “Sometimes it is goodness.”
The New York Times reported reaction on Capitol Hill to the expansion of ownership limits this way:
On Capitol Hill, there was mixed reaction to the plan to abandon all limits on broadcasting ownership in 1990, although sentiment has grown in recent years for raising the ownership maximum somewhat.
Representative Timothy E. Wirth, the Colorado Democrat who is chairman of the House telecommunications subcommittee, said, ”The 12-12- 12 rule is just as arbitrary as the 7-7-7 rule.”
Mr. Wirth said a broad bipartisan consensus in Congress favors adoption of ”objective, long-term rules that assure diversity and competition.” He said such rules would provide for increased broadcast ownership but would not completely deregulate it.”
He went to say “If they deregulate in 1990, we could end up with a handful of companies owning every broadcasting outlet in the country.”
President Ronald Reagan
Reagan loved two things, cutting taxes and eliminating regulation. Remember Reagan famously said that “Government isn’t the solution to our problems, government is the problem.” Reagan’s pick for FCC Chairman, Mark Fowler, fully embraced this vision and actively applied it to the FCC.
However, the prediction of Congressman Timothy Wirth wouldn’t come into existence until President Bill Clinton signed the Telecommunications Act of 1996. It would be the first significant overhaul of the 1934 Act in more than sixty years.
Radio station ownership in the first five years under this new act went from 5,100 owners to 3,800.
Instead of opening up ownership to new and more diverse ownership, it created an opportunity for media monopoly. The Wall Street funded radio companies could now buy out the Mom & Pops and the temptation to sell at never-before-seen-multiples was too good to pass up.
Operating in the Public Interest, Convenience and Necessity
When no one really knew what radio broadcasting would become, they did know they wanted radio to be a communications business that would serve its community of license for convenience in good times and of necessity in times of trouble. The airwaves were considered to be owned by the public, so operating in their best interests was a requirement to being an FCC broadcast licensee.
Changing Competitive Landscape
Historically, radio stations competed against one another. Most markets had such battles as, WLS vs. WCFL, WMEX vs. WRKO, WPTR vs. WTRY, KHJ vs. KRLA etc. When FM radio began to take over from AM, a station such as WABC no longer had just WMCA to beat, but now WTKU-FM too, which offered better fidelity and stereo. This new radio competition replicated in every radio market in America.
Then came Satellite Radio, followed by Pandora along with other pureplay streamers, and podcasts so that today, the radio competition landscape lines are blurred beyond recognition.
Mission vs. Platform
Today’s communications company needs to clearly define its mission and needs to earn the trust of all of its stakeholders. That means building trust between its employees, advertisers and listeners.
We need to stop thinking of “radio” as AM or FM.
We need to think of radio as being the audio leader for creating an environment for convening and supporting groups. We need to be preparing for a future that is still coming into focus.
The Birth of Radio in America
When World War I ended, it didn’t go unnoticed what a powerful role radio communication had played in the outcome. Led by the General Electric Company, the Radio Corporation of America (RCA) was formed in October of 1919. With guidance from the federal government, RCA brought together GE, Westinghouse, and AT&T to develop the radio broadcasting industry in the United States.
In the early 1920s, no one knew what radio might become. RCA would be the entity to coordinate the manufacturing and sales of all radio receivers. They held all the patents from GE, Westinghouse and AT&T and it was RCA that would authorize others to use these patents to produce radio receivers, as well as collect and distribute the royalties to the patent owners. GE, Westinghouse and AT&T could manufacture equipment for their own use, as well as build and operate their own radio stations.
The Interstate Commerce Commission
Initially, the regulation of radio broadcasting fell under the jurisdiction of the Interstate Commerce Commission (ICC). In 1920, interest in broadcasting ranged from amateurs to experimenters and businesses. Some talked, some played music, and some began broadcasting news of local interest and weather reports. In an effort to bring some order to what had become a chaotic broadcasting environment, the ICC decided to place amateur broadcasters into the less desirable air space, below 200-meters, as well as restrict the type of broadcasting they could air. Amateur broadcasters had to agree that their radio stations could no longer air weather or market reports, music concerts, entertainment, speeches, news or other similar information. The ICC would begin to issue a new broadcast license on the 360-meter band for radio broadcasters that would be licensed to provide such services. All the members of RCA, including RCA itself, would begin to build radio stations. Westinghouse would be the first to establish one of these new radio stations, with their own inhouse amateur radio enthusiast Dr. Frank Conrad, and what became KDKA in Pittsburgh on November 2, 1920. Westinghouse followed this station with WBZ in Springfield, Massachusetts and WJZ in Newark, New Jersey.
However, Westinghouse management quickly realized that merely providing a superior broadcast service, which would create demand by the public to buy the new radio receivers they manufactured, would be futile if their broadcasts were harassed and interrupted by uncontrolled amateurs disrupting their ability to be heard.
Quality vs. Quantity
The ICC now had a new problem on its hands. Broadcasters interfering with other broadcasters, and what kind of culture should America’s new, growing middle class, be hearing through their radio sets? Since the decision had been made to not have radio be government controlled in the United States, broadcasters said they needed the government to regulate radio in order to help establish order and control.
Westinghouse proposed a solution to the ICC, to create two classes of commercial radio service.
Broadcasters on the current 360-meter band would become Class A broadcasters and a new service on the 400-meter band would be reserved for Class B broadcasters.
In order to qualify as a Class B broadcaster and receive higher power authority (500 to 1,000 watts), the licensee would need to never play phonograph records on the air, or any other kind of recorded material. Class B broadcasters would only air live talent and performances. Such a requirement would insure the public was receiving radio entertainment that was unique and original and not available on any other radio station.
The new license would also mean that only wealthier and more established organizations would be able to afford to operate radio stations under these new conditions.
Westinghouse’s concept, having government and business working together, was a way to “improve” radio broadcasting through restricting it to “responsible” parties without stepping on anyone’s First Amendment rights as to what a radio broadcast should consist of.
The Radio Act of 1927
This act laid the foundation for what radio broadcasting in America would be for the next several decades. The first being that radio broadcasting would not be open to everyone, but restricted based on quality. The feeling being that Americans would be better served by a few quality broadcast radio stations, rather than a plethora of mediocre ones. The new act also introduced the hard to define concept of “operating in the public interest.”
Radio, unlike newspapers or the movies, was to become a government regulated medium, with decisions about quality and public interest being made through an alliance of government and private interests.
And it was with the Radio Act of 1927, that America decided that radio broadcasting would be a commercial medium operated in private hands. Radio would support itself through the selling of advertising.
Today’s Radio Marketplace
From June 1927, when 705 commercial radio stations were on-the-air in America (all on the AM band and most with transmitter power of under 1,000-watts) to June 2019, we now have 25,819 radio stations (21,209 FM / 4,610 AM) with transmitter power up to 100,000-watts on the FM band and 50,000-watts on the AM band.
The concept of quality over quantity is certainly no longer the guiding principle.
The Ad Pie
As I read about how radio revenues are doing, I’m struck that both public and private radio broadcasting companies are reporting that local advertising revenue is dismal for Q2. However, major radio stations that enjoy eating from the national trough, saw this category of advertising as their only bright spot for radio ad revenue.
While digital revenue is hoped to be a new area to grow advertising revenues for radio broadcasters, the reality is that Facebook, Google and Amazon are already gobbling up about 90% of those dollars, so how fertile is this area for broadcast radio?
Reading comments being made about radio advertising conditions, I was struck by what Beth Neuhoff, CEO of Neuhoff Communications had to say when Radio Ink asked her, “what are local advertisers saying about the economy?” She responded by saying: “Local advertisers seem less focused on the economy and more concerned about over-saturation of the competitive landscape.”
It’s something that I believe the radio industry should be just as concerned about when it comes to OTA (over the air) broadcasting.
Gone are the days when putting another broadcast station on-the-air is a license to print money. People who aren’t use to quality, always will chase quantity.
The Competition for Attention
A recent news item caught my attention. The English Cricket Board says “There are 200 million players of Fortnite…that is who we are competing against.” Welcome to the 21st Century and the attention economy, where everyone – yes, EVERYONE – is competing against everyone else. This blog competes for attention against not just other blogs, but everything else in our over mediated, world. It is our technology that has caused us to be over-saturated.
Blame Gutenberg
Johannes Gensfleisch zur Laden zum Gutenberg was a German blacksmith, goldsmith and inventor. It was Gutenberg’s introduction of movable type and oil based ink printing that ushered in the communications revolution via his printing press. This was the beginning of mass communication.
Wireless Communication
The next big development would come in the form of wireless communication. First Marconi, turning wired Morse code into wireless transmission. Then the advent of voice communication followed by voice and picture communication via radio and television.
The series Downton Abbey perfectly captured how was received in the home during season five.
Smartphones
The introduction of the smartphone bumped the radio off its perch as the #1 invention of the 20th Century. The smartphone, along with the internet, changed the way we communicate with one another. They would destroy the original communications concept that professionals would communicate to amateurs. Those days are gone. Social Media Theorist, Clay Shirky, says “in a world where media is global, social, ubiquitous and cheap” and where audience is now a full participant in the communication process, it’s no longer about “creating a single message to be consumed by an individual but about creating an environment for convening and supporting groups.”
Gaming
The advent of online video gaming, such as Fortnite, is not just creating that environment for convening and supporting groups of like-minded video game players, but is competing for our time and attention. “There’s 200 million players of Fortnite,” says Sanjay Patel, managing director of The Hundred, part of the England and Wales Cricket Board. “That is who we are competing against. So, if you don’t interrupt young people in a different way, if you don’t engage them in a different way and you don’t talk to them in a different way, they’re not just going to automatically come into your sport.”
And it’s not just Cricket or something happening overseas, America’s national pastime, Major League Baseball, has seen an attendance drop of 233,000 at their ballparks from the same time period in 2018. And the 2019 NFL preseason opener, the Hall of Fame Game from Canton, Ohio broadcast on August 1st, looks to be at an all-time low in TV ratings, for the second year in a row. Down about 15% from last year’s game. Crikey, what does this mean?
Too Many Choices
We live in a world with too many choices and as broadcasters, we need to face that reality. Again, to quote Clay Shirky, “the decision we have to make is not whether this is the media environment we want to operate in, it’s the one we’ve got. The question we all face now is how can we make best use of this media?”
Where Have All the Salespeople Gone?
Fact: the number of people working in the advertising industry is in decline. What makes this noteworthy is that America has been in an economic expansion.
For the past thirty years, advertising jobs have grown in line with the economy, why not now?
I See/Hear Lots of Ads
In my youth during the 60s/70s, it was estimated that the average American was exposed to around 500 ads per day. Those were the days where advertising was delivered by what we now quaintly refer to as “traditional media;” newspapers, magazines, billboards, radio, television and direct mail.
In today’s world of smartphones and internet, digital marketing experts estimate that the average American is exposed to somewhere between 4,000 and 10,000 advertisements per day.
With this explosion in advertising, why are salespeople disappearing?
Google It
Or Facebook it. Or Amazon it.
In reality, the world’s largest advertising companies are these three technology giants and they have realized virtually all of the growth in digitally based advertising.
Programmatic Buying
The advertising business has always been one based on building relationships, be it directly with the business owner or with an advertising agency. Programmatic buying eliminates these relationships by the use of algorithms. This allows for the placement of more advertising, on a variety of platforms, with the need for fewer people.
The downside of programmatic buying is that a company’s ads may be placed in low-quality or even offense editorial material. That’s been very troublesome for advertisers.
The High Tech/High Touch Pendulum
Throughout my broadcast career, I’ve watched the pendulum of change oscillate between a communications industry that is “high touch,” aka people talking to people, to one that is “high tech,” aka machines/automation talking to people. This pendulum oscillates on a fairly regular cycle between the two extremes.
Maybe we’re close to the apex of the pendulum swinging in the direction of high tech, and it will be moving back toward a world that demands people interacting with people again. We’ve been here before.
Digital Truths
In the current generation of digital media, we know that two things are true:
- No one is looking for more ads
- High Quality Content Rules
So, what’s the answer?
Every form of media needs to look in the mirror at itself and be honest about its advertising content and the quantity of ads it’s running. (Note: Running more low quality ads was never a solution to making your budget number.)
Whether we’re talking about the songs we program, the banter of our personalities, the content of our talk shows or the quality/content of our ads, it’s ALL important in a world where high quality content rules.
Media sales today is more about building partnerships than transactions. It is one where consistency and trust are the foundation upon which today’s sales professional becomes a sustaining resource to the businesses they serve.
Human Relationships
Advertising is influencing and influencing is fueled by relationships.
Whether it’s the relationship between an air personality and the audience, or the sales professional and the client, there’s real value in building human relationships and partnerships.
The airline industry today could save as much as 35 Billion Dollars employing the use of pilotless planes. But according to Fortune “54% of passengers refuse to board a remote-controlled plane.”
Representative
I know I’m not alone when I call a company for help and find myself frustrated having to deal with an automated voice system. Very quickly I find myself yelling over and over and over “REPRESENTATIVE.”
Are we approaching the age of algorithm burnout?
We will always opt for a real live human to work with, over a digital one.
That’s why there will always be a job for media sales professionals who are both knowledgeable and emotionally intelligent.
The Great Ad Hack
The other evening, I watched the Netflix documentary “The Great Hack.” It chronicles how big tech is taking our data, that we freely give away online, by both making money with our information and manipulating us.
The documentary makes one realize there’s a lot for us to be worried about.
Data Privacy
In an internet connected world, do we have any secrets? Everything about us is being stored, as we share our information via social networks, our credit card companies, our banks, our medical services – just about everyone we interact with online.
During the course of the documentary, professor David Carroll tries to see his data points as collected by Cambridge Analytica. Spoiler Alert: Professor Carroll wins a lengthy court case to obtain his data points. Cambridge Analytica never produces them but instead paid a fine and plead guilty for failing to do so. Not producing the data points was more important than revealing what they knew about Professor Carroll and giving the world an inside look at what they know about each of us.
Now Cambridge Analytica is liquidating to prevent anyone from ever seeing the data points they collected on anyone.
Our data privacy has always been important, but we’ve traded our privacy for speed and convenience in our internet connected world. The documentary points out that collecting and using our data points is a trillion dollar business that last year saw data surpass oil in value, making data the most valuable asset on earth.
The Persuadables
What Cambridge Analytica did was target people whose minds they felt they could change for the purposes of winning elections for their clients. In the military, such a tool is called Black Ops or False Flag tactics. Its psychological warfare used to induce confessions or reinforce attitudes and behaviors favorable to the user’s objectives.
Cambridge Analytica knew they didn’t need to change everyone’s mind, just a critical mass of people to achieve their client’s objectives.
Why did they do it? They wanted to make money, lots and lots and lots of money.
Advertising is Propaganda
The advertising “mad men” of Madison Avenue came from the propaganda operations of the United States military during World War Two. They took what they learned and applied it to selling cars, refrigerators, homes, soap etc. Great advertising seeks to persuade the reader, listener or viewer to buy a product or use a service.
Is it any surprise to anyone that as social media was born, these same methods would be applied to this platform, only on a level that was not possible through traditional media?
“These platforms that were created to connect us are now being weaponized,” says Carole Cadwalladr, investigative reporter for The Observer newspaper. “It’s impossible to know what is what, because nothing is as it seems,” she adds.
Tech Giants Crush Ad Market
Sara Fischer writes in Axios that the big tech companies like Facebook, Google and Amazon are consuming more advertising revenue than most other ad supported media combined. The reason? They have our data points and know how to effectively use them to get us to do what they want. You can read Sara’s full article HERE.
The eMarketer and Zenith Media data as graphed by Axios Visuals really shows where things are headed. (see below)
Can Traditional Media Win?
The playing field today is so unlevel, it begs the question, if traditional media – newspapers, magazines, radio, television – can even have a fighting chance to win advertising dollars.
As a consumer, do you think you stand a chance to not be influenced by the tech giants when they are using your own information against you?
I encourage you to go deeper in this subject by both watching the Netflix documentary “The Great Hack” and reading Sara Fischer’s column “Tech Giants Still Crush the Ad Market Despite Looming Threats.”
Then I hope you will share your thoughts in the comments section of this blog article.
The future of our world is being shaped by the lack of data privacy.
I’d love to hear your thoughts.
WPLJ Changed Format
OK, that’s not exactly new news. The latest New York City PPM Ratings show that WPLJ, now airing EMF’s Christian Contemporary K-Love format, went from a 3.1 (6+ Mon-Sun, 6a-12mid) before the format change to a 1.5 rating.
WPLJ Didn’t Die, It Changed — Again
On May 31st, the last day that WPLJ aired a Hot AC format before switching to a Contemporary Christian format, you would have thought the station had turned in their FCC license from all the hand wringing going on in the commercial radio community.
WPLJ, who’s call letters stood for White Port and Lemon Juice, began its life as WJZ-FM in the 1940s, later switching to WABC-FM 
in the 1950s and simulcast 770AM-WABC. In the late 1960s it became one of the early album-oriented rock radio stations in America. On February 14, 1971 it was renamed WPLJ to clearly separate it, and its programming, from its Top 40 sister, Music Radio 77 – WABC, at that point in time the most listened to radio station in the world.
In June 1983, WPLJ changed from its album-oriented rock format to a hits format. (It was May 10, 1982 that 77-WABC changed its format from Music Radio to Talk Radio.)
On Thursday, December 17, 1987, WPLJ changed its call letters to WWPR to better promote its marketing slogan “Power 95” and its new Top 40/CHR format.
A year later, the call letters were switched back to WPLJ. 
In 1991 when Scott Shannon was hired, the branding was changed to MOJO Radio and by 1992 the station had transitioned to programming a Hot AC format calling itself “95-5 PLJ.”
Things Change
The only constant in life is change.
The history of New York’s 95.5 FM signal has been one of both call letter and programming change since it was birthed in the 1940s. EMF changing the format to its popular and successful K-Love format does not spell the end of anything. It’s a new beginning.
Audience Surge
Those final days of the Hot AC version of WPLJ saw its raw Nielsen numbers take the station’s listenership rank from 13th to 3rd in the Big Apple.
It had nothing to do with the music played, or any of the other programming elements the station used, but it had much to do with the personalities that returned to WPLJ. The people behind the microphone caused a surge in people tuning in 95.5 FM. WPLJ listeners wanted to hear their favorite radio personalities one more time.
Radio’s Secret Weapon
To me it was living proof that radio’s secret weapon for attracting listeners is its air personalities.
Similar audience increases were witnessed in Washington, DC on WRQX and in Atlanta on WYAY, as each of those radio stations’ air personalities, past and present, said goodbye before turning over the keys to EMF and their national religious format.
EMF
The Educational Media Foundation (EMF) has grown into a Christian radio behemoth. It’s a nonprofit 503(C) 3 corporation that is supported by the listeners to its radio stations that become donors. Much like Public Radio, EMF radio stations conduct twice annual fundraisers and all listener contributions are fully tax deductible to the extent allowed by law. EMF’s broadcast network is the largest Christian media radio network in the United States, now reaching over 47 states.
EMF states their primary purpose is “to create compelling media that inspires and encourages our listeners to have a meaningful relationship with Christ.” “The programming is designed to provide encouragement, inspiration, and a deeper understanding of the Christian heritage.”
It must be fulfilling its mission, as its listeners have continued to fund EMF’s growth year-after-year, and there’s no reason it will stop anytime soon.
Funded by Listener Support
Could your radio station fund itself by listener support? Have you invested in your programming and air personalities to create something so special that listeners want to support you for fear of losing the service you provide?
It certainly makes you stop and think about your value to the market you serve.
The WPLJ signal is one of the best FM signals in New York City and I’m sure that in its evolution to Contemporary Christian programming will allow it to enjoy a radio life for many years to come.
You might say, WPLJ has been born again
