Tag Archives: Apple

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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Jacobs’ Four Questions

15Fred and Paul Jacobs are prolific bloggers; they blog five days a week. Recently, their blog asked four questions about the future of radio. I found them interesting and thought I’d give you my answers to their questions. I’ve provided a link to their original blog post here.

  1. What is radio? I guess I’d have to say my earliest exposure to radio was of the amplitude modulation kind; AM radio. My first radio was a Zenith transistor AM radio with a single earphone. In junior high school, I would build an AM & FM radio station in the basement of my parent’s home and broadcast to my neighborhood. When I went to the FCC field office in Boston to take my FCC license exam when I was in high school the license I would receive said “Radio Telephone Third Class Operator Permit (Restricted Radiotelephone Certificate).” I remember thinking the day I received it, “Why does it say telephone on it?” Nathan Stubblefield, a Kentucky melon farmer and inventor, invented the first radio (many would say). Nathan invented it because he wanted to be able to talk to his wife at home while driving his car. Maybe Nathan and the FCC were just ahead of their time, for today RF goes through the air to our smartphones giving us the ability to send and receive voice, pictures, and data. Today’s pocket computers – smartphones – have synthesized every form of mass communication into a single device. When Apple was putting together the launch of their Beats 1 stream, Zane Low said they spent three months trying to come up with a name to call what they were about to launch. They couldn’t come up with a better name than radio. And that’s what I find teaching at the university. My students basically call everything audio sourced “radio.” Every semester when I poll my students as to what media device they would keep, if they could only keep one, the overwhelming winner is their smartphone. The reason is simple; it allows them to do everything while every other media devices can only do a single application or two. The History Channel did a program on the 100 Best Inventions of all time. Radio was number two. The smartphone was number one. Today’s smartphone is the “transistor radio” of my youth.
  2. What are ratings? I’m a graduate of the Roy H. Williams Wizard Academy and Roy believes that any radio station with about thirty thousand listeners has more than enough to drive business for any advertiser. So what’s the defining measure of a radio station? The quality of the content of its advertising. Ratings were only created for one purpose, to sell advertising. Initially a concept called “applause cards” was used by radio operators. These were simple post cards that could be picked up by consumers at local retailers, filled out, and mailed in. The Association of National Advertisers would hire Archibald Crossley to create a way to discern what people were actually listening to on the radio. Crossley would produce reports from his Cooperative Analysis of Broadcasting (CAB) system. CAB used telephone recall much like Tom Birch did with his Birch Ratings reports. Today, everyone’s hung up on the measurement systems of clicks and clacks of the Internet. Ad Blocking is going to put a real dent into this system that really doesn’t tell advertisers what they wanted to know anyway. The simple fact is no one is measuring what counts. Great creative content gets results and radio needs to invest in employing dedicated copywriters once again.
  3. What is content? I wrote a whole blog post on content that went viral. I won’t re-plow that ground again in this post. If you’d like to read what I wrote, go here.
  4. What is in-car entertainment? I remember when buying a car, one of the options was adding a rear speaker to your AM radio for passengers riding in the back seat. Those were simpler times. I’ve lived through every new device that was going to be the death of radio in the car: 8-track tapes, cassette tapes, CB radios, CDs, CD changers, MP3 players, smartphones, streaming audio. Nothing has. However, the new digital dashboards appear to be so complicated, I fear for the folks who could never stop the blinking 12:00 on their VCRs. The new learning curve to find the radio on new cars might be a problem. My Honda Accord has lots of digital components to my entertainment system, but what I love most is Honda left the volume control knob I can turn. Rick Dees loves rotary pots on his control consoles and will not work a board that has slider pots. 19Crank it up means turning a knob. Radio people are going to have to make sure their car dealers demonstrate, or even set-up for their new car customers, how to find and lock in their local radio stations on these new digital dashboards. If the radio listener can easily find their favorite hometown companion, then they will default to what they know and love best. The reason radio has retained over 92% of its listeners is because all those new media devices mostly took out the new media device that came before it. Free over-the-air radio is unique and special. Let’s all work to keep it that way.

And so that’s my take on Fred and Paul Jacobs “Four Questions for Radio.” What are yours? Please share them with me by writing them into the comment section of this blog. I can wait to read what you have to say.

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Day of Reckoning

20There’s an old saying “Nothing lasts forever.” Do you remember flying on TWA or Pam Am? How about shopping at Woolworths? Broadcasters will remember names like Group W Westinghouse Broadcasting, or Taft Broadcasting, or Nationwide, or RKO General that would put the successful Bill Drake Top 40 format (with the non-stop innovations & promotions of 93-KHJ’s Ron Jacobs) in major cities across North America. They’re all now a memory.

In a time of limited radio signals, radio could control its inventory and increase stakeholder ROI by raising rates as it increased the size of its audience. That’s now a memory.

Next came the Local Marketing Agreement (LMA) to soak up all those Docket 80-90 FM signals that were squeezed into the FM band but found themselves economically challenged. More signals meant a new way to make more money. That’s now a memory.

LMAs were “training pants” for the Telcom Act of 1996 that would unleash a consolidation of radio and television ownership like the world had never seen. Companies would rush to acquire as many radio signals as they could as fast as they could. And do what with them? They would figure that out later was the common response. Owning more stations was a way to make more money, until it wasn’t. That’s now a memory.

You might have thought that would have sent a message that there are limits. It didn’t.

Today the game is translators. And the number of radio signals continues to grow, all seeking funding through advertising, just like every other form of media out there today.

So is the ad pie growing? Not according to Adam Levy at Motley Fool who saw advertising drop nearly 4 percent in the second quarter of 2015.

When the advertising pie isn’t getting bigger, two things usually happen: 1) budgets get cut and people lose their jobs and 2) more spots are added to the hour. Unfortunately, all through consolidation and the Great Recession radio companies have been doing both. They are like the Federal Reserve wondering what you do when you already have cut the interest rate to zero to stimulate the economy. Not a fun place to be.

Suggested Solutions

 Not to be all doom and gloom on you, I think there are some things that can be done to turn things around. The first thing is to focus on something and own it. Steve Jobs would put it this way “Just get rid of the crappy stuff and focus on the good stuff.” The way Jobs took Apple from near extinction to the world’s most valuable company was by his relentless focus on creating a small number of simple and elegant products.

Seth Godin calls it finding and serving your tribe. Radio needs to give up the quest to be all things to all people and learn to be something some people can’t live without.

Some stations can be the national brand in town, but everyone can’t. Likewise if people can get what you do someplace else, then why do they need you? This is the secret of “less is more.”

Radio stations need to have the agility to make decisions on the front line. Top down management is out, front line management is in. Mary Berner, the new CEO of Cumulus gets it. She has been reported in the trades saying “Cumulus will rely less on top-down management and more on letting managers do the job they were hired for.”  She also understands that while IoT (Internet of Things) is the future, it’s not the place Cumulus needs to focus on today. It’s about changing the culture and the way the company operates first. Getting the programming right and improving sales of those radio programs next.

I remember when I starting working for Clear Channel and hired to turn things around in my market, the company had a big push on selling the web and developing that component. I told my sales manager after the conference call ended that was not going to be the case for us. First we needed to get the programming and radio sales on fire and then – and only then – would we begin tackling our web based program. It worked too.

The hardest thing sometimes is not doing things, but figuring out what to stop doing. Jobs was good at this at Apple. You need to invest some serious thought about what you need to stop doing in your radio property. Again, less IS more if done right.

And the last suggestion I have is directed at colleges and universities. We need to be focused on the business model of radio and putting more of a focus on the business side of radio and radio sales. Radio owners and operators I talk with aren’t clamoring for more DJs or news people like they are for more sales people and innovators that will create the next revenue stream for their property.

In the end, your audience size won’t matter if you don’t have a business model to monetize it.

 

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Colleges That Give-up Their FCC License

fcc-logoI recently wrote an article for Radio World about the impact of colleges that sold their student radio station’s FCC license had on the pedagogical program at those institutions. You can read that article in Radio World here.

 

 

Today, I’d like to share with you something else I learned in talking with educators from around the country while researching this article. The FM license in every case connected the student station to the community. It was the heart and soul of the operation. When the license was sold and the station would become an online Internet only radio station it lost that connection.

 

Now the irony is that all of these student radio stations didn’t stop broadcasting over the FM band and then become Internet radio stations. No, they already had been streaming on the Internet and had listeners from all over the world in many cases. So why didn’t that continue to sustain these radio stations?

 

Let me make a comparison to help you understand this a little better. When you buy a magazine, do you read only one article and then toss it away or do you turn all the pages and look at other things in addition to that cover story that first attracted your attention and caused you to purchase the magazine? You read, if only skimming, the entire magazine. You spent time with that publication and became a little more invested in it. If you subscribe to the magazine this would be akin to being a P1 listener to a radio station.

 

When you see an article from a magazine online do you read the whole magazine or just the article that captured your attention and then leave? You do what we all do. It’s one and done. No investment in the magazine, just the article.

 

Well, what I learned is that it apparently isn’t all that much different when it comes to student streaming radio stations. It’s more of a hit and run.

 

There’s also a problem with student online radio stations in that they have limited connection capacity in most cases. That means only a limited number of people can listen to the stream, unless the college makes a big investment in expanding the capacity in the number of listeners can be connected at the same time. This is somewhat solved if a student station goes with a large online aggregator like TuneIn or Live365.

 

But let’s be real, when you enter a store and everything in the place is priced the same – FREE – which would you chose? The best you could find. Good Luck student stations.

 

Contrast that with student radio stations that broadcast over FM radio. What you find is that they are now only competing within the local community of service and in that playing field, have a chance to break through and be heard.

 

Over 92% of Americans 12-years of age and older still have the radio habit and listen every week. When it comes to listening to streaming stations on the Internet the percentage of penetration doesn’t come close. And those that do listen to streaming Internet music are very likely tuned to Pandora, if the current data available about such things is to be believed.

 

Another thing I heard was how more and more of these student radio stations were working to get a LPFM license so they could return to the air on the FM radios in their community.

 

When Zane Lowe was getting ready to launch Apple’s Beats1, he told the trades that a big part of the three months leading up to the launch was spent trying to come up with a better name for the new service than radio. They couldn’t do it.

 

Radio is the brand, because it works.

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What if…

I had the opportunity to sit in on a webinar on “The Creative Economy” that is considered to be the direction the future of business is headed in compared to the traditional business methods of the past. What is meant by the term “The Creative Economy?” It’s one where business revolves around the customer versus the past where the customer revolved around the business.

The Creative Economy also breaks from tradition in the sense that it means the goal of a company is no longer about making money for the stakeholders but about delighting customers. But, you ask, isn’t “maximizing shareholder value” the mantra of Wall Street? Good question. Listen to what these CEOs have to say about that mantra:

            Jack Welch former CEO of GE: “the dumbest idea in the world”

            Vinci Group Chairman/CEO Xavier Hulliard: “totally idiotic”

            Paul Polman, CEO of Unilever: (has denounced) “the cult of shareholder value”

            Marc Benioff, CEO of Salesforce declared this still-pervasive business theory “wrong”

I guess it’s quickly losing favor with those who should know.

The Internet and “The Cloud” are enabling “The Creative Economy.”

Which brings me back to my initial question, “What if…”. What if radio stations were supposed to be small operations? What if the radio industry wasn’t meant to scale?

When I entered the radio business, companies were limited in the total number of radio stations they could own; in the entire USA. It was known as the 7-7-7 rule. A single company could own not more than 7 AM, 7 FM and 7 TV stations in all of America.

What this created was competition between owners of radio stations in a market. Each station was a team of people working as hard as they could to win the audience in that market. The focus was all about the listener or the viewer. Win the most listeners/viewers and advertisers would soon follow to showcase their wares on that radio or TV station’s airwaves.

Hearing “The Creative Economy” described on this webinar was like radio déjà vu.

In 1996, President William Jefferson Clinton signed the Telcom Act of 1996 into law. That was the moment that the “land rush” for broadcast properties began and Wall Street became heavily invested in the radio industry. Wall Street would bring its “maximize shareholder value” mantra to broadcasting.

This point was really brought home to me in 1999 when my stations were sold to a large radio consolidator. The head of this “big box” radio operator told us that we needed to “sell, sell, sell” that it was all about making money for the company and “maximizing shareholder value.”

This “pump up the troops” speech left me cold. I was brought up in a radio world that was about operating “in the public interest, convenience and/or necessity.” I was brought up in a world where if we treated the members of our team well, our team focused on delighting the listener, the advertisers would flock to our station and the owners would be rewarded for doing everything right. That view of life served me well my entire radio career.

Needless to say, I opted not to remain with this new company.

However, I would find myself playing “musical chairs” going forward as it was getting impossible to not be working for a company that hadn’t adopted this modus operandi.

Steve Denning, who writes for Forbes, lead this webinar and pointed out that economics was driving the change for companies worldwide. He told us that no company is doing it all right. Companies like Apple, Amazon, Google and Salesforce are moving in the right direction. In fact, Tim Cook is better at navigating the change to this style of management than Steve Jobs ever was and it no doubt is contributing to Apple being the most valuable company in the world. To give you an example of what it means to focus on the customer first, consider Tim Cook telling an investor in Apple this:

“If you want me to do things only for ROI reasons, you should get out of this stock.”

That was kind of radio world I grew up in. We always tried to do the right thing for our employees, our listeners, our advertisers and the money would follow.

I’m encouraged that radio people who sold out when Wall Street was buying, are now getting back into the radio business with that same ethic, spirit and sense of innovation that seduced me into a four decade long radio career. They understand the concept of “The Creative Economy” because that’s how they built their radio companies the first time around. They also understand that today, radio is more of a concept of operation than a method of delivery.

I’m excited to be working with the next generation of radio broadcasters at my university knowing that radio’s future has never been brighter.

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A War on Talent

When iHeartMedia wooed away Kurt Alexander aka “Big Boy” from Emmis’ Power106 to their Real92.3 it was a big deal in more ways than one.

The top performing radio station for Emmis was their one station in Los Angeles, KPWR. That is until Alexander departed for KRRL-FM across the street. His leaving impacts both ratings and revenue.

It reminds me of the walking across the street of Scott Shannon in New York City. Shannon left WPLJ where he had been a morning fixture at the station for 23 years to take over mornings at WCBS-FM. Unlike Alexander in LA, Shannon didn’t go head-to-head with his former radio station but to a different format than the one he had just left. However his impact on both stations is much the same. WPLJ went down and WCBS-FM captured the #1 position beating WLTW for the first time.

At a time when the major radio companies are saying things like “flat is the new up” the only way for a company to grow its revenues when the revenue pie isn’t growing is to re-divide how the existing pie is being cut up. To do that means to raid another company’s talent in an effort to increase their ratings while decreasing market competition.

If we look at how talent gets created we find it’s not a quick process. In the case of Alexander, Emmis spent 20 years and millions of dollars turning him into a morning radio star. Shannon has been at the radio game since his army days, tenaciously practicing his craft to become the hall of fame legend he is today.

Radio is not about transmitters, buildings, music etc. it’s about people. People make the radio business fun; personalities behind the microphone and personalities on the street selling the ads. Strong personalities on both sides of the mic are what make for a winning radio station. Neither can be taken for granted.

Emmis didn’t think they were taking Alexander for granted. Heck they were paying this former body guard $1.45 million along with some sweeteners, but iHeartMedia was willing to up the ante to $3.5 million (which Emmis reportedly was willing to match). But what evidently Emmis couldn’t match were the other perks that a company the size of iHeartMedia could create that a company the size of Emmis could not.

The BBC has also been subjected to a talent raid. Apple enticed presenter Zane Lowe to join their iTunes Radio division which led to several more following Lowe to the Cupertino based company. The BBC has a worldwide reputation for great programming, programming talent and the discovery of new music.

The audio entertainment world is like the animal kingdom where the small animals get eaten by the bigger animals in the food chain of life.

Competition for talent that has proven it draws a big audience, not just on-the-air but also online and through social media has never been more sought after. Competition for talent that can package, present and close advertising sales also has never been in more demand.

It’s a war on talent. Good for talent, but an Excedrin headache for small operators battling the big boys; made all the more difficult in a lackluster advertising environment for many radio operators and an ever increasing amount of radio signals vying for that shrinking advertising pie.

The radio dial – including online streamers – may have become infinite, but the revenues that support it have not.

Radio Darwinism has escalated to the global village.

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Remember When Radio Was Agile?

Have you heard about the latest management movement?  It’s called “Agile” (but it can also be called “Scrum”).

Actually, to be more accurate, there’s “management” and then there’s “Agile.”  They are not one in the same.  Another way to picture them is one is a vertical style of management and the other is a horizontal style of operating.

The vertical style is familiar to anyone working in one of today’s highly consolidated public radio companies that own hundreds of stations.  The top of the management pyramid says “jump” and the troops respond with “how high?”  You may also find that the company circulates a “Best Practices” manual and wants every station to implement it even though a person on the front lines may wonder if these are “best practices” in their particular case.

The military model was the genesis of the vertical style of management.  New York City’s tall vertical skyscrapers are literal structures of top-down management.

Then I started reading about Agile.  Agile is a horizontal mindset.  Everyone in a company is working towards the same goals and on an equal plane.  The planning and execution is a shared endeavor all designed with one goal in mine and that is to delight a customer.

While both vertical and horizontal styles are business models and the purpose of a business is to create a customer (and ultimately a profit), the radical difference is vertical puts that profit goal front and center and has everyone focused on achieving that goal.  The horizontal style says if we delight our customers, then the profits will follow.  The customer is front and center and the focus of everyone who works at the company.

I’ve worked with couple of the big consolidators and I’ve heard the CEO’s message of how much the stakeholders had invested in the company and how we all needed to be focused on reaching or exceeding our goals.

But that’s not the style of radio I entered.  Back in my early days, the radio station; often owned by folks who lived and were active in the community, the focus was on our listeners and our advertisers.  Everyone in the radio station worked towards the same goals of delighting our two constituencies.

We didn’t call it “Agile” or “Scrum” but doing GREAT radio and operating in the public interest, convenience and/or necessity.  OK, not to get too Pollyanna, there was a vertical structure of sorts – a GM, PD, SM – but we all worked side-by-side in the same building and everyone did whatever was needed to be done to delight our customers.  It was a team effort.  It was a horizontal style of operating.

What changed was the Telcom Act of 1996.  That new law would change the face of radio through massive consolidation of radio stations.  All of these little horizontal operating enterprises would be stacked one on top of another until we had a vertical style of operating.  Now a group of folks would declare they were “the adults in the room” and start passing out thumb drives filled with spreadsheets full of revenue goals.

Nowhere were there discussions of delighting the customers.

Tim Cook, CEO of Apple, has made it abundantly clear that Apple is not always going to do things that simply fatten the bottom line and that if you are an investor in Apple that doesn’t like that way of operating, maybe you should invest your money someplace else.  Apple is going to delight the customer  – as Steve Jobs so simply stated – by making insanely great products.

How’s that focus on the customer working out for Apple?  Very well, thank you.  Apple has posted the largest net quarterly profit in history. Not in just Apple’s history but in the history of the world.

Radio is a fabulous business!  Radio entertains, informs and is there in times of emergencies to hold a community together.  But radio performs best when it is operated horizontally and not vertically.

Mary Meeker in her most recent “Internet Trends report at Re/Code” had a slide in her 180-slide deck that spoke most passionately I think to this concept of operating horizontally.  That slide was titled “Diversity Matters….It’s Just Good Business” and here is what the body copy of the slide said:

            “One of the things I have learned about effective decision making is that the best decisions are often made by diverse groups of people.

Saying or hearing these words is magic…..

‘That’s really interesting.  I had never thought of that way before.  Thank you.’”

That sure sounds to me like Mary was making a plea for companies to re-think how they operate and level the playing field by moving to a horizontal style of operating.

The reason the radio industry was so attractive to Wall Street investors was because it was a high cash flowing business that appeared easy to operate.

My roller skating coach used to tell me “Dick when you make it look easy, then you’re doing it right.”  Radio used to be doing it right.  It’s really a lot harder than it looks.  It’s time to go back to that way of operating.

OR – you can continue doing things the way you did last year and watch “flat revenue growth be the new up.”  Doesn’t sound like the radio industry has much to lose by changing their ways.

The good news is there are radio operators who are returning to the business that see the opportunities in the horizontal approach to radio station operations.  It’s a movement that will not only be good for the radio industry but the listeners and advertisers served by the industry.

It’s called Win-Win-Win.

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