Tag Archives: ad supported media

The End of Mass Media

84Jack Nicholson famously said in the movie A Few Good Men “You want the truth? You can’t handle the truth!”

I think he was right.

We can’t.

We say we can. We want to believe we can. But the reality is the truth is scary.

The Future of Mass Media

The reality is the future of our business – mass media – is that it won’t be all that “mass” anymore.

The future will be a media that is built around relevance and quality of message, not volume.

And that’s scary.

Not to just us broadcasters but to the ratings service known as Nielsen. We aren’t going to need to know the volume (aka cume) or AQH (average quarter hour) numbers in the future. The real value that we will deliver will be based on how relevant we are to our listeners and what value we deliver.

The King is Dead

Remember when the catch phrase of the day was “Content is King”?  Bill Gates famously said that.

There were others that felt that distribution was king.

Turns out the “king” is dead for both of these theories and the new king is relationships. And relationships are based on mutual interests and relevancy.

Facebook

What’s the power of Facebook?  Relationships.

Oh sure it uses complex algorithms to manage our relationships, but we are not smitten with algorithms we are drawn to relationships and we friend or unfriend based on the relevance of those relationships too.

Google gets it too.

Each of us is an individual and these social media companies go to great lengths to treat us in just that way.

One Size Does Not Fit All

Commercial radio broadcasting still strives to deliver the “one size fits all” solution. Those days are over.

Radio needs to build, as Seth Godin might say, tribes. People who believe what we believe.

Simon Sinek says that people aren’t attracted to what you do but why you do it.

What’s your WHY?

If there are enough people in your coverage area that will make you a meaningful size tribe of listeners, then do it. If not, find something else that is meaningful.

But trying to be all things to all people – the concept of “mass media” – those days are over.

Advertising

The 800 pound elephant in the room is how to pay for it. Ad supported media is being challenged by the internet in ways that Netflix, Amazon, Google and others that grew up on a different metric are not.

Today supply far outweighs demand in the advertising world.

Even those special live television events that were growing in audience every year are now seeing they’ve peaked. Nothing goes up forever.

The future is creating something relevant to the people you develop a relationship with. The value will be in how strong those relationships are not necessarily how big, in terms of numbers of people, they are.

The future for all media I suspect will start to look more like that of public radio or Christian radio. Each of these mediums has established strong relationships with their listener. They also don’t abuse those relationships with underwriting announcements that either doesn’t fit their audience or by unbalancing the content to underwriting ratio.

Commercial broadcasters seem to take the view that adding one more spot to the hour; the cluster etc won’t affect their audience. They would be wrong. It does.

Keeping things in balance and running seamlessly will be critical to broadcasters whether they’re being consumed over-the-air on AM or FM, or over the internet.

Sales people in this new world will be business evangelists that seek out business owners with innovative ideas and solutions to their problems. Businesses owners who benefit from these relationships with media sales folks will in turn reward the media enterprise with their support.

What’s your WHY?

But it all starts by first defining, as Simon Sinek says, your WHY.

“People don’t buy what you do; they buy WHY you do it.”

Answer that question, and you will have taken the first step.

 

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Radio’s Jobs Didn’t Move to Mexico

75It seems like no matter what line of work you’re in, someone is finding a way to take your job away. If you’re in coal mining, you think the EPA is doing it to you. If you’re in manufacturing, you think its Mexico or China or some other country that pays their workers less and offers no benefits. But is that really what’s happening to jobs?

Where are the (Radio) Jobs?

I got into radio when I was in high school because I wanted to be a disc jockey. (Discs were what records were once called. Records were how we played music on the radio off of turntables, after live musicians were replaced by recorded music on the radio.) My DJ days are long behind me, but I don’t remember anyone from my earliest days being upset that records replaced the need for live musicians to play music on the radio. Do you?

Musician’s Union

I was also a musician. Played trombone. This was another way I earned money to go to college in addition to my radio work.

A fund set-up to promote live music from the playing of recordings on the radio is where the money came from to pay for my performances in local community concert bands. It was called the “Musicians Performance Trust Fund.”

To be eligible to be paid under this fund, you had to join the local musicians union AFL-CIO. I was a union member at age 15.

Truck Drivers

As high wage manufacturing jobs were leaving, many turned to the profession of truck driver. Truck drivers are well paid and people thought, let’s see them automate that. Truck driving employees have been untouched by globalization and automation. You can’t send truck driving in Ohio to be done by person living in Mexico. But that other factor, automation, is now on the horizon.

Uber Driverless Truck Delivers 50,000 Beers

I’m sure you’ve heard about driverless cars and that many expect they will be a reality by 2020 (3 years from now). But while many in the radio industry worried about the loss of radio listening in the car if the car starts driving itself and now everyone can watch TV or surf the internet, I worried that more middle class jobs would soon be automated, never to return.

Wired magazine reported in late October of 2016 how OTTO (Uber bought this company for $680 million) was driving the beer truck down the highway in Colorado without a human behind the wheel.

So it doesn’t take a lot of imagination to realize that we soon will see driverless cabs, buses, trains, planes, boats and a whole lot of people formerly known as the middle class will be out-of-work.

This same thing is happening in higher education too via the internet.

The Fate of the DJ

So where did the radio jobs, like being a disc jockey (DJ) go? They were high-teched. Automated. The industry calls it “voice tracked.” The very technology that did away with the need to have live studio musicians playing music now no longer needs the person that played the recordings of those musicians.

To radio personalities this is not news. It’s been that way since the late 20th Century.

To the multi-tasking, hard-working, over-committed and under-paid middle class it might have seemed as nothing had changed. Heck, they might have even seen the change as an improvement. Certainly recorded music was better in some ways than live studio musicians as it provided more variety in musical entertainment.

It’s Technology, Stupid

The wonderful high-tech devices designed to make our lives so much easier are also taking away the well-paying jobs that created the middle class of the 20th Century.

What’s the world’s 21st Century plan to deal with this change?

Ad Supported Media

The current crisis in ad supported media is that in a world of infinite media choices, and unlimited advertising avails, the money that used to be enjoyed from the sale of advertising is now less than previously realized.

About two years ago I wrote in this blog an article about what I saw as the future of ad supported media. I wrote it after reading Thomas Piketty’s book “Capital in the 21st Century.” I went back and re-read that article and see the trend lines of the graph on page 357 still all moving in the same direction and that should give us all pause.Picketty Chart on page 357

21st Century Media Business Model

All media is moving to a pay-for-play model. HBO, Showtime, Hulu, iTunes Radio, SiriusXM, CBS All Access, Amazon, Netflix, Pandora, Spotify etc. The ad supported model is coming to an end and the pay for what you want is replacing it.

The Wall Street Journal reported in the 4th quarter of 2016 that streaming revenues off-set declining sales of CDs and digital downloads.

People now rent what they want versus own.

And where does that leave your business?

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The Post-Fact Society

68P.T. Barnum, among many others, is credited with saying: “I don’t care what they say about me, just make sure they spell my name right!”

Barnum knew it wasn’t important what people said about him as long as they were talking about him. Only the noise level about Barnum mattered.

When I saw this chart from The DataFace measuring the newspaper media coverage of the two presidential candidates, it was eye opening.  68a It mattered little that most of that coverage was negative. What mattered was they spelled “Trump” correctly.

Fake News

Once upon a time, news came from journalists who worked for newspapers, radio and television stations.

Then along came the iPhone and social media.

Now the same device that could receive text, voice, pictures and video could produce it too.

Social media platforms provided mass distribution without a filter (aka an editor).

This provided the perfect storm for the production of fake news. A cottage industry in some parts of the world, some American citizens soon learned that producing internet stories that would get lots of clicks could be profitable.

Radio & Fake News

Even syndicated radio host Sean Hannity got snared in the volume of fake news being generated and had to apologize for using fake news stories to attack Obama.

Ad Supported Media Fight for Survival

In an effort to make a little coin, trusted media sources began accepting advertising that would lead their readers, listeners, viewers to unaffiliated sources that would serve up this fake news. In so doing, they inadvertently now wore the stink of the fake news creators. The public quickly could not discern the researched and sourced news from the made-up variety.

One PM Central Standard Time

Radio and television journalism didn’t always operate this way. PBS produced an excellent documentary about the coverage of the assassination of President John F. Kennedy. The program was called “One PM Central Standard Time” and it covered how “the most trusted man in America” Walter Cronkite waited until Kennedy’s death was confirmed by  multiple sources before going live with the news to the nation over the CBS radio and television networks.

The Being First Obsession

Things changed when things started being published digitally. In this world, advertising paid based on clicks. Quantity beat quality. Sensational beat facts. Going viral meant big money to these new media folks. Plus the concept of “native advertising” means that advertising copy is presented to look like editorial.

All of these little changes contributed to consumers becoming less and less able to tell real news from what was fake news. Which has led to many not believing anything today’s media tells them.

And that’s a very sad state of affairs for journalism.

“Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.”
–Thomas Jefferson

21st Century Business Model Challenge

Starting with newspapers, then radio, then TV then digital, the business model has been one of ad supported media. The model is broken.

Disruption first destroys the old ways of doing things before the new ways are discovered and take root. We are living in that destruction period of disruption.

Our challenge lies in building a business model that will support solid journalism, quality entertainment and community service.

What others have shown us is that in a 21st Century world it will take a collaborative effort from people from all over the world to help build the new way.

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The Day the “Dumbest Idea” Invaded the Radio Industry

shareholder valueLast week I wrote about killing the goose that lays the golden eggs. It was my way of comparing the Aesop fable to the world of American radio. It got a lot of discussion. But I felt that while I touched on how radio operators twenty years ago wanted to harvest all the golden eggs immediately versus waiting to get one each day, by virtue of a last minute insertion into the Telcom Act of 1996 that basically removed the ownership caps on radio, there was – as Paul Harvey used to intone – ‘the rest of the story’ to be told.

The rest of the story involves “the dumbest idea.” I grew up about a decade after World War Two ended. This was the period when America enjoyed an extended period of economic growth and a shared prosperity. By “shared prosperity” I mean it was a time when the workers who produced a product or service shared in the profits produced by the company. Managers and workers would see their income grow together. As everyone’s pay increased, there was more discretionary income to spend. This was the rise of the middle class in America. All boats were rising with the economic tide.

In 1968, I started on-the-air at one of my hometown radio stations while in the 10th grade in high school. I was paid the minimum wage; $1.60 per hour. Did you know that 1968 was the year when someone making the minimum wage had the most buying power for that rate of pay? The equivalent in 2012 dollars is $10.34 per hour. So what happened?

Somewhere in the 1970s things changed. Firms began to focus on themselves. The productivity gains produced by the workers were no longer shared with the workers. Since no one complained, this new way of doing business continued.

The 1980s really saw this new operational style take hold. And as it did, incomes for the middle class stagnated. When the middle class incomes stop growing, the ramifications on the rest of the economy are magnified. Workers no longer have discretionary income to spend. This was initially covered up by women entering the workforce producing two wage-earner incomes. Then when that ran its course, credit cards, second mortgages would keep the party going under false pretenses.

Today we are in a vicious cycle of decline.

What changed in the 1970s was a new idea about what metric should be used to measure the success of a business. Before this new idea was born, Peter Drucker’s measure was the rule. The purpose of a business, said Drucker, was to create a customer. But that went out with leisure suits, the new crop of business wizards would proclaim. What replaced it was something that even GE’s Jack Welch has called “the dumbest idea in the world.”

What was this dumb idea? Increasing shareholder value.

In an effort to offset declining profits and performance, a new operating modus operandi was conceived that the purpose of a corporation is to maximize shareholder value. To make sure the captains of industry got the message, boards of directors would change their compensation packages to cause these business leaders to focus on increasing the company’s stock price. What could possibly go wrong?

Everything!

The concept was embraced by both America’s business schools as well as industry. Unfortunately, the new policy not only didn’t solve the problem it was supposed to address but by unintended consequences created a myriad of new problems no one foresaw.

Tell me if any of these “unintended consequences” sound familiar to you: short-term decision making, relentless cost cutting, staff reductions (RIFs), less investment in the business, virtually no innovation, low workforce morale, no raises in pay, reduced benefits, non-stop mergers, increased debt, lost ability to compete, declining R.O.I., and economic stagnation. I’m sure you can add to this list based on your own experiences. For a more detailed look at this, you should read Steve Denning’s “Why ‘The System’ Is Rigged And The U.S. Electorate Is Angry,” the inspiration behind today’s blog post.

So twenty years ago, in 1996, President Bill Clinton signed into law the Telcom Act of 1996. This would bring “the dumbest idea in the world” to the radio industry. Wall Street jumped into the new shiny investment opportunity; radio. Everything that every other industry was experiencing from this new operational style was now rearing its ugly head in the broadcasting industry. All with the same negative impacts.

Not all organizations adopted this dumb idea of operating. They stuck with Drucker’s rule. And it’s the same with the radio industry. The smaller radio operations do operate differently. Their success has others sitting up and taking notice.

However, most organizations – and not just in broadcasting – are still in denial. The evaporating middle class is not good for an industry that lives off of advertising. Advertising is pitched to the masses who are the consumers that drive over seventy percent of the American economy. I wrote about the future of ad supported media last year after I read Thomas Piketty’s book “Capital in the 21st Century.” You can read that blog post here.

Based on the tumultuous presidential election season we’ve seen so far, it would appear that the American society has awakened and is now “as mad as hell and not going to take it anymore.” Cue Howard Beal here.

Steve Denning writes: “We are now at an ‘emperor has no clothes’ moment.” It’s now clear that this way is not working and is not only leading to systemic value destruction but an economy that no longer works for the middle class.

If we’ve ever needed real leadership in America, it’s now — and from all directions.

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Evolve or Lose Relevance

23In two months, the world’s largest radio meeting will once again be taking place in Las Vegas; the 2016 NAB Show. Ironically, since leaving the radio industry and entering academia at Western Kentucky University, I attended my very first NAB show in 2011 and have every year since. So as visions of massive crowds and very sore feet dance in my head, I thought I’d look back over those past years and see how the theme of these meetings has evolved.

In 2011, the NAB highlighted that media consumption had become more digital and connected. TV everywhere strategies, mobile TV, the connected TV and the use of social media dominated the show.

In 2012, everyone was shouting about 4K video, ISP content delivery and the evolution of special effects technology. Everywhere you went you were shown 3DTV (I didn’t care for it, personally.)

In 2013, the NAB show hosted its first ever 2nd screen Sunday and the impact of more than one screen (the television set) vying for the viewer’s attention was fully recognized if not totally embraced by broadcasters.

In 2014, the NAB show wasn’t so much memorable for what it had but for what it didn’t have 3DTV. What had once been prolific throughout all the convention halls was now nowhere to be seen. 4K video & TV was now all the rage with Japan’s NHK demonstrating 8K video & TV. NHK said they will be recording the Rio Olympics in 8K and plans to televise (in Japan only) the 2020 Olympics in 8K. When you see TV pictures this detailed, you can instantly see why 3DTV bit the dust. 4K and 8K feels three dimensional and you don’t need any funky glasses.

Which brings me up to last year’s NAB show in 2015 where the theme was “Evolve or Lose Relevance” voiced by NAB President/CEO Gordon Smith. Smith urged broadcasters to embrace the new technologies like ASTC 3.0 & 4K for TV, and NextRadio’s mobile app for FM radio on mobile devices. Smith also talked about the spectrum auction which begins in March 2016 and characterized the auction as both “exciting and daunting.”

What may have been most daunting and certainly not exciting was to have been an AM broadcaster at this meeting – or any of the meetings of the last five years. Move along guys and gals, there’s nothing for you to see here. HDRadio was there every year and I think they had more cars outside of their convention hall than any previous year featuring their spiffy HDRadios, a technology that has been better embraced by the automakers than radio broadcasters for the most part. And of course, there were drones. Lots & lots & lots & lots of drones. Big drones, little drones…a drone for every size and budget. I’m wondering if the FAA will start coming to these meetings along with their friends from the FCC.

The only thing I haven’t seen addressed over these past five years is what seems to me to be the elephant in the room. Everything is supported on a business model that has been around since commercial broadcasting began in 1920, that being the selling of advertising. The covenant with the consumer of radio/TV programs was we will give you the programming for free if you allow us to expose you to our advertisers; a business model that worked extremely well through the birth of the Internet and dial-up connections. It would be the introduction of broadband and its rapid expansion that would challenge everything.

Blockbuster vs. Netflix is a good example. 2004 Blockbuster has 9,000 stores and almost $6 billion in revenue and only 4.4% of American homes had broadband. Netflix was mailing DVDs to its customers. 2010 Blockbuster files for bankruptcy, 68% of American homes have broadband and Netflix had been streaming to their customers for three years. Today Netflix has a market cap of almost $33 billion.

That really brings home the concept of “evolve or lose relevance” doesn’t it?

So what will the business model for media be evolving to? That’s the billion dollar question. Nobody knows. But what we do know is that Apple gave up its free iTunes music streaming at the end of January 2016 and now will only offer a paid subscription model. Disney’s ESPN is suffering the “agony of defeat” as more consumers cut their cable bundle (for which it’s reported that ESPN gets $7 per sub) and is causing this revenue stream to dry up while the cost of bidding for live sports events continues to escalate. Everything appears to be moving in a direction of asking the consumer to pay for what they want – like they do for HBO, Showtime, and Netflix etc.

So what’s the plan Stan for broadcast radio and TV? Or for any advertising supported medium for that matter? I think about this a lot.

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Looking Back at My 1st Year of Blogging

635867993253266683346579856_blog4Hard to believe I started this blog one year ago. It seems like only yesterday. Ironically, it was Sunday, January 3rd – the same date as today’s date.

Those early days were pretty lean when it came to readership, only a couple of folks to a couple of dozen in those first cold and blustery winter months of 2015. Most blogs – like most diet/exercise programs begun with a new year – last about four months. This blog is celebrating its 1st birthday and its readership has grown dramatically. Thank YOU for being a reader.

 Here were my top 3 most read blog posts of 2015:

We Never Called It Content

Larry Lujack, The Real Don Steele, Robert W. Morgan, Dale Dorman, Ron Lundy, Salty Brine, Bob Steele, and so many, many more. These names I’ve dropped are all no longer on the radio. Terrestrial radio anyway. We radio geeks like to think they are now Rockin’ N Rollin’ the hinges off the pearly gates. https://dicktaylorblog.com/2015/09/06/we-never-called-it-content/

Top 3 In-Demand Radio Jobs

What is the future for jobs in radio in our digitally connected world? Three jobs in particular stand out as being in demand right now and look to be still in demand as radio celebrates its 100th Anniversary in the year 2020. The first won’t surprise anyone, the second is a job that only recently became critical and the third is a job that’s been a part of radio since day one. https://dicktaylorblog.com/2015/02/22/top-3-in-demand-radio-jobs/

Why I Fired My Top Salesperson

My students are always stunned when I tell them about the time I fired my top salesperson. “Why would you do that?” they always ask. Today, I’m going to share that story with you.

In today’s competitive world, top performers are usually cut a little slack. There’s nothing really wrong with that, unless it breaks a culture of honesty, fairness and trust.   https://dicktaylorblog.com/2015/11/01/why-i-fired-my-top-salesperson/

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I learned that my readers, while coming from all over the world, are mainly located in the United States, Canada and United Kingdom. My readership has grown to near 18,000.

Some of the posts I consider to be some of my most insightful you might have missed, the links are posted below:

https://dicktaylorblog.com/2015/03/15/the-future-of-ad-supported-media/

https://dicktaylorblog.com/2015/09/13/is-radio-ready-for-a-black-swan/

https://dicktaylorblog.com/2015/10/25/the-limitations-of-a-spreadsheet/

https://dicktaylorblog.com/2015/04/05/attention-to-detail/

https://dicktaylorblog.com/2015/10/18/how-do-you-measure-employee-performance/

Posts from this blog have been re-published in Tom Taylor’s NOW – Radio’s Daily Management Newsletter, radioINSIGHT, North American Radio Network, Radio Ink, James Cridland’s newsletter, and RAIN among many others (I know I’m leaving some wonderful publications and people out, my apologies in advance). Thank You for sharing my thoughts.

I’ve been invited to appear on Vlogs and podcasts by Owen Murphy, Ryan Wrecker and Larry Gifford as a direct result of my blog. Thank You too.

Next week I will begin a new year of blogging my thoughts about radio, education and the changes each is working through during the communications revolution caused by the Internet of things (IoT).

I hope you will continue to enjoy reading my posts and learning something from what I share. You’re always invited to share your thoughts in the comments section. I learned at the Wharton School that while no one can predict the future, it is amazing when minds come together and share their perspective of what the future holds, how close to what will happen can be revealed.

Let’s grow together in media mentorship.

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Next week, I will take a look at the plight of the small to mid-size Internet streaming broadcasters’ dilemma in light of the Copyright Royal Board’s rates for 2016-2020 and why what’s happening is not new. It’s déjà vu.

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A New Revenue Model for Radio

When radio was coming into existence, the early owners of radio stations were manufacturers of radios. (I’m really simplifying things here, but bear with me.) They knew if they didn’t broadcast radio programs that people desired to hear, they wouldn’t sell many radios. They didn’t look at those early radio stations to make money as much as they looked to them to sell radio sets.

AT&T didn’t make radios. AT&T provided phone service and phone lines. AT&T to better understand this new thing called radio put a radio station on the air. Not wishing to have it cost them money, they figured they needed to come up with a way to make their station self-supporting. The best model at that time was the one used by newspapers and magazines; the selling of advertising. So AT&T sold the first radio commercial on their station; WEAF.

As more people and businesses went into the radio business, the selling of advertising became the model for making money. It’s been that way for nearly 100 years. But that was before the great disruptor; the Internet.

Every ad supported medium is faced with the same crisis; how to support itself when advertising isn’t getting the job done.

Rachel White is working on this problem for The Guardian. This newspaper began in the United Kingdom and today has become the most-read serious English-language media outlet in the world thanks to the Internet.

Rachel is The Guardian’s new global director of philanthropic and strategic partnerships. She’s charged with replacing the traditional ad-supported business model with fundraising. (Sounds like how NPR and PBS operate, doesn’t it.)

In a world where advertising has become increasingly fragmented, the challenge for news organizations is to maintain editorial integrity without selling out to the demands of advertisers.

Much like colleges and universities seek endowments from their well-off graduates or others who share in the vision of the institution, Rachel White is part of an innovative philanthropic model for sustaining an independent media platform.

Rachel is tasked with the mission to create major relationships with organizations such as the Gates and Rockefeller Foundations.

The Guardian isn’t doing away with advertising. It will continue to sell advertising to those organizations that wish to be associated with a journalism enterprise that takes a strong and independent stance. It’s just making sure it is never put in a position where advertisers can bias editorial decisions.

“If you think about the future of media, how do you fund media in the long term?” White was reported as asking. “Media underpins democracy. So how can philanthropy underpin that democratic model?”

Which got me to thinking….if radio’s business model came from print and print is now exploring philanthropy, might this not be an idea for local radio too?

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