Tag Archives: Federal Communications Commission

Radio Has an Addiction Problem

listening_to_radioHave you heard the latest? People are addicted to their smartphones. “We now see smartphones as dangerous for young minds,” writes Jean-Louis Gassée in a Monday Note.

More than 30 years ago MIT professor Sherry Turkle postulated that computers weren’t just a tool, but were sneaking into our minds. In doing so, they would change our relationship with the world around us.

Smartphones are Mobile Computers

Turkle would continue her thoughts on this subject in a 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 our ways we think about ourselves and other people.”

Smartphones plus Social Media

When our mobile computers are married to a social media site like Facebook, things get really sticky. Sean Parker, a founding partner at Facebook, wrote about the problem after he left the company saying, “[Social Media] literally changes your relationship with society, with each other…It probably interferes with productivity in weird ways. God only knows what it is doing to our children’s brains.”

Time for Apple to Build A Less Addictive iPhone

The NY Times published an article by Farhad Manjoo that made the case for a less addictive iPhone. Can you imagine someone writing that broadcasters should be making TV or radio less addictive? That watching too much TV or listening to too much radio might be bad for our brains.

Broadcasters today find they have a different problem. They have lost the addictive luster of the past.

The Amazon Addiction

“For many businesses, Amazon is simultaneously a sales channel, a potential service provider and a competitive threat,” says Forrest Research. For broadcasters, Amazon is attacking our retail advertising revenue, by undermining the very businesses we sell to. Today Amazon is the go-to website for retail search, surpassing Google.

Trying to compete with Amazon is a retail challenge. The very retailers’ broadcasters depend on for their revenue.

Retailers measure how well they’re doing by their bottom line.

Amazon is all about increasing top line sales growth. (Wall Street hasn’t demanded Amazon to be profitable yet.)

See the problem?

Trying to beat the Amazon model is a race to the bottom with pricing for our advertising customers.

Free shipping, two-day shipping, lowest prices, biggest selection, customer ratings etc. are among the things making Amazon addictive.

People Made Radio Addictive

Over the years, radio has had personalities that made the medium addictive like Howard Stern, Rush Limbaugh, Dan Ingram, Larry Lujack, Robert W. Morgan, Jess Cain, Dale Dorman, Paul Harvey and many more.

Once upon a time, music formats could be addictive, but today’s access to streaming audio is challenging that beachfront.

Alexa Doesn’t Know My Local Radio Station

My local radio stations are called KISS (WKSI-FM) and WINK (WINC-FM). When I ask Alexa to play either KISS-FM or WINC-FM, I get the Los Angeles KIIS-FM or the WINK-FM licensed to Harrisburg, Pennsylvania.

When I asked Siri the same questions, she couldn’t help me play anything. Siri told me, “Sorry, Dick, I can’t help you with that on your iPhone.”

When your branding is not unique, these new consumer voice activated devices don’t have a clue what you’re trying to ask them. They either make their best algorithm guess or just throw in the towel.

Broadcast Station Call Letters

The FCC (Federal Communications Commission) solved this problem early in broadcasting by assigning each broadcast station its own unique call letters, but broadcasters abandoning those identifiers for branding like Kiss, Froggy, Hot, and others, that are duplicated all across the country, is now a problem in a voice activated world. But it’s not just the brand not being unique, the programming is likewise just as non-unique.

Don’t Be Generic

No one ever became addicted to a generic.

Addiction stimulates parts of the brain that trigger craving and longing, that release habit-forming, feel-good chemicals such as dopamine and endorphins.

Your iPhone does that for you.

You voice activated smart speaker does too.

Broadcasting is show business.

Which do you think stimulates the part of the brain that causes addiction? The show part or the business part?

Answer that question correctly and you’re on your way.

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Best of the Blog 2017

73On this last Sunday of 2017, it’s a good time to look back at the year just past and share with you The Top 5 Most Read and shared blog articles from 2017. Maybe you missed them or perhaps you’d like to read them again.

To date I’ve published 180 articles that have been viewed around the world over 115,800 times.

My Most Read Article in 2017

My most read/shared article of this past year was “Coal Ain’t Coming Back & Neither is AM Radio”. It was published on August 20, 2017. It told the story of how the fate of the coal industry in America was akin to that of AM radio stations. America’s broadcast industry was built on AM radio beginning with the first commercial radio license issued in 1920. This article received the most comments of any I published this year and was widely shared.

Second Most Read Article of 2017

In April, I wrote an article based on a blog reader question titled “The Question Radio Itself Has Yet to Answer.” That big question was, “what can radio do that other media can’t.” I opened the issue to readers to share with me their thoughts before sharing mine. It stimulated lots of emails, sharing and discussion.

Third Most Read Article of 2017

My third most read article would be the follow-up article to the one above, “What Can Radio Do That Other Media Can’t.” It was in this article I shared some of the over fifteen pages of reader comments, as well as my own thoughts. In my summary, I boiled it down to 5 key things: Live, Local, Community, Companionship and Relevant.

Fourth Most Read Article of 2017

In October, after the FCC voted 3 to 2 to eliminate the Main Studio Rule, I wrote “Live & Local?” It posed the question about maintaining the first of the five key things radio can do that other media can’t I wrote about back in April.

In this article, I shared the observations of Maynard Meyer, a local radio manager and owner from Madison, Minnesota who concluded in his statement to the FCC in 2004, “From what I’ve seen through my personal experience, as soon as a hometown studio is closed and relocated, the local service is relocated as well.”

After the article published, Mr. Meyer emailed me and said he still felt the same in 2017 as he did back when he testified before the Federal Communications Commission 13-years earlier.

Fifth Most Read Article of 2017

And finally, the fifth most read blog article I wrote and saw lots of people sharing, was “Radio’s Best Feature.” In it, I wrote about the speed of change in our world today and how to expect it to keep accelerating going forward.

Radio needs to understand its role in humankind. Technology doesn’t transform our human nature.

Our need for love, touch, companionship and community will always be a part of our humanity no matter what technology brings.

Most Read Articles, Period

Two articles I’ve written continue to see lots of traffic and continue to be far and away the two most read on my blog.

They are “SiriusXM Radio is Now FREE” and “The Day the “Dumbest Idea” Invaded the Radio Industry.” Both articles have now been read over 7,000 times.

The first article I wrote for my blog was “Clear Channel Media & Entertainment becomes iHeartMedia” and it was read a total of five times.

Why I Blog

I blog for broadcasters, educators and students.

I blog to provide media mentorship and to pay-it-forward to the broadcasting industry that I have been a part of for 50-years.

I’m grateful for the more than 88,000 people from all over the world who have visited to read an article that caught their interest.

FREE SUBSCRIPTIONS

You can subscribe to this blog for FREE and get a copy of each week’s article delivered to your email IN BOX every Sunday morning. To subscribe, simply go to the bottom right-hand corner of your screen and click on the FOLLOW button. (If you’re accessing this blog via a mobile phone or tablet, that button may not be visible, so be sure to do this on a computer or laptop.)

Next week I will begin my fourth year of blogging with all new articles.

Thank You for reading.

Feel free to contribute your thoughts to the discussion in the comments. Together we can all learn by sharing our experiences, knowledge and wisdom.

Happy New Year!

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Live & Local ?

Stuck in a Time WarpI’ve been attending a lot of radio meetings these past years and one refrain I’ve heard over and over and over and over is that the power of radio is it’s “live & local.”

This week, the FCC voted along party lines 3 to 2 to eliminate the Main Studio Rule.

1934 Congress Establishes the FCC

The first regulatory body to oversee radio was the Federal Radio Commission (FRC) that was established by the Radio Act of 1927. The FRC was created to, among other things, insure that the public airwaves of America were used in the “public interest, convenience and/or necessity.” The FRC was given regulatory powers for licensing all radio stations and insuring the airwaves were assigned to broadcasters capable of providing quality broadcasts. The amateurs were assigned to another piece of the broadcast spectrum which today is known as Amateur Radio Service or Ham Operators.

Amateur Radio like AM/FM radio is regulated by the Federal Communications Commission which was established by Congress with the Communications Act of 1934.

Main Studio Rule

So, this week when the FCC voted to end the Main Studio Rule, what did that mean according to the FCC’s regulations that have been in place in 1934 (and per Gregg Skall) updated in 1988 to make them clearer? FCC attorney Skall wrote back in 1991 in his “Main Studio Rule and Staffing” memo:

The main studio rule as clarified in 1988 requires a station to maintain a main studio within its principal community contour “which has the capability adequately to meet its function…of serving the needs and interests of the residents of the station’s community of license.” That rule has now been further revised to allow a main studio to be located either within 25 miles from its community of license reference coordinates, or within the principal community contours of any station, of any service, licensed to its community of license. (See memo, Revised Main Studio and Public File Rules). Jones Eastern requires the station to maintain a “meaningful management and staff presence” at the main studio on a full-time basis during regular business hours.

You can read the full memo here.

LIVE RADIO

Since the introduction of automation systems, syndication, satellite delivery and computer voice tracking, the LIVE aspect of radio has been on the wane. Even in the #1 radio market in America, New York City, stations may or may not have a live operator behind the microphone when you’re tuned in.

When I was starting out in radio, we used to have to announce whether a program was live or pre-recorded so the listeners wouldn’t be deceived about the broadcast. In the early days of radio, virtually all radio was live and so it was the exception for something to have been recorded.

Today, it’s more likely what you are listening to is not live but syndicated, voice-tracked and pre-recorded.

LOCAL RADIO

With the Main Studio Rule, the goal was at least there would be a live person at the station and the studio would be in the community the licensee was licensed to serve.

Lance Venta writing on RadioInsight wrote “But what will it (elimination of the Main Studio Rule) mean in the short term? Probably not a lot. In the long term, be prepared for a much leaner broadcast facility.” You can read Lance’s entire article “The Radio Station of the Future…Today!” here.

The National Association of Broadcasters has been lobbying for the elimination of the Main Studio Rule, and its executive VP of communications Dennis Wharton said “We’re confident that cost savings realized from ending the main studio rule will be reinvested by broadcasters in better programming and modernized equipment to better serve our local communities.”

Brick & Mortar Presence

FCC attorney Scott R. Flick said that the Main Studio Rule was really a government mandate for radio to have a brick-and-mortar presence in an internet age. “Its existence hindered stations from evolving and adapting to the rapidly changing business strategies of their many non-broadcast competitors.”

It’s ironic that the biggest online retailer, Amazon, is now in the process of acquiring a brick-and-mortar presence as the radio industry appears to be moving in the opposite direction.

Public Safety

When a broadcaster doesn’t have a studio in the local community it serves, it delivers its programming through the internet, satellites, microwaves or wired lines. Broadcasters have been quick to point out how these forms of communication are first to go down in natural disasters.

What seems to be missing in this conversation, is a Black Swan event. Will radio be ready for a Black Swan?

Today’s Big Regulatory Difference

The big difference I see today for radio versus its toddler years is how it is regulated. The Radio Act of 1927 provided the foundation for all broadcast regulation right up until today. While more Acts were passed and made law over the years, the basics remain much the same as when they were first made law.

Some of the key provisions in the original Act that we’ve deviated from today are:

  • Limiting the number of broadcasters to foster higher quality radio broadcasts versus having more stations of poor or mediocre qualities
  • Radio broadcasters would operate in the “public interest, convenience and necessity”
  • Radio would be a regulated medium to assure high quality and operating in the public interest
  • Radio would be commercial and privately owned (a condition that made radio broadcasting in the USA different from every other country in the world)

Those who complain that radio isn’t like it used to be only need look at how broadcast regulations have been changed over the past century; the biggest change being the Telcom Act of 1996.

Make Radio LiVE & LOCAL Again

On May 24, 2004, the Federal Communications Commission (FCC) held a “Broadcast Localism Hearing” in Rapid City, South Dakota.  The president, general manager and co-owner of KLQP-FM licensed to Madison, Minnesota (population 1,767) Maynard Meyer addressed the commission.  He told them (I’ve edited his comments. The full text can be found here. )

“Localism in radio is not dead, but it is in dire need of resuscitation in many areas.  I have been involved in the radio business in announcing, sales, engineering and management for about 36 years, all of my experience is in communities of 5,000 people or less.  We personally live in the communities we serve so we know the ‘issues,’ we work to address them in our programming and have been doing so for the past 21 years.“

“A few years ago, many stations operated this way, but much of that has changed for a variety of reasons.  I think the beginning of the end of local broadcast service started in the 1980s when the Federal Communications Commission approved Docket 80-90.”

Mr. Meyer went on to explain to the FCC how many communities that “on paper” had a local radio station actually found that the transmitter was being fed from another location tens of miles away.  Mr. Meyer went on to say:

“I don’t think this is the best way to promote local radio service.  From what I have seen through my personal experience, as soon as a hometown studio is closed and relocated, the local service is relocated as well.”

What do you think?

 

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Is Your Iceberg Melting?

94This past week was another tough one for the wonderful people who work in radio. Most people who get into radio do it because they’ve caught the “radio bug” and the work becomes their life’s passion. I know that’s how it is for me.

When I caught the “Radio Bug”

From my earliest years, I knew what I wanted my life’s work to be. I built a radio station in my parent’s basement and broadcast to the neighborhood (about a 3-block radius) on both the AM and FM bands using transmitters I bought from Radio Shack.

When I started high school, I earned my 3rd Class Radio/Telephone Operator’s License, Broadcast Endorsed from the Federal Communications Commission in Boston. I wasn’t old enough to work, so I had to get a Massachusetts Work Permit. They didn’t have a category for disc jockey, so they branded me as “talent.” (I never told them I had to take meter readings every half hour in front of a transmitter that put out 1,000-watts of electromagnetic power. If I had, they would never have given me my work permit.)

College Radio

In college, it was radio that paid for my bachelors and masters degrees. I took my college’s carrier current radio station, got an FM broadcast license and was the first general manager.

Radio was in my blood.

RIF’s

After the Telcom Act of 1996, radio began its road down the consolidation path funded by Wall Street. It was during this period of time a new acronym would come into radio’s every day lexicon, RIF’s, or Reduction In Force. In other words, people were being terminated in huge numbers.

This past week, I sadly read about another round of RIF’s taking place among our country’s biggest owners/operators of radio stations. It breaks my heart.

RIF’s from the Manager’s Perspective

We all feel sorry for those that have unexpectedly lost their job. What we often don’t read about is the perspective from the other side of the desk, what the management is going through when these decisions are made at corporate.

I lived through it in 2009 as a Clear Channel Market Manager.

It’s NOT FUN.

With each corporate meeting, I would come home with a flash drive that could not be opened until a specific date/time with who I would have to RIF next.

I RIF’d my entire news and promotions departments.

I RIF’d DJ’s and PD’s.

I RIF’d my national sales manager, my director of sales and local sales managers. With each round of RIF’s I got more hats to wear. The work still needed to be done, it didn’t go away with each round of RIF’s.

I hated my job.

Then my regional manager showed up unannounced and RIF’d me.

His manager showed up after he had RIF’d all of his designated market managers and RIF’d him.

The company president RIF’d the senior regional managers.

Then the CEO RIF’d the president.

It was not a happy time, but believe it or not, being RIF’d to me was better than being one of those that found themselves with more and more hats to wear, with more and more responsibility, without a penny more in pay.

There were many folks who told me to find another line of work, but they didn’t know that broadcasting was the only thing I ever wanted to do.

Except for one other thing, teaching and mentoring the next generation.

My education was in teaching. Both my bachelors and masters degrees were in teaching.  My best teachers were those who worked in the field first and then came into the classroom to teach.

Paying It Forward

My long term goal was always to one day teach at a college or university the very things I had done all of my professional life.

My big opportunity presented itself at Western Kentucky University’s School of Journalism & Broadcasting in 2010.

When I was RIF’d by my regional manager, I had met or exceeded every goal I had been given and was paid bonuses for my accomplishments. I was even named one of radio’s Best Managers by RADIO INK magazine. The issue of the magazine with me in it came out almost the day after I was RIF’d. Funny how life is: good things happening at the same moment as bad.

One Door Closed, Another Door Opened

When my last management job came to an abrupt end with Clear Channel, my broadcast professorship door opened at WKU.

Let me tell you, going from being a radio market manager to broadcast professor is a steep learning curve. But with the help of Charles H. Warner at NYU, John Parikhal of Joint Communications and others, I successfully made the transition and became successful at teaching. In fact, my new broadcasting educational work branch opened my eyes to all kinds of new and exciting learning opportunities.

I started this BLOG and a column for RADIO WORLD magazine during this time.

Those have lead to numerous invitations to appear on podcasts, Vlogs, articles, and broadcast interviews with others sharing stories of my work and experiences.

I’ve done research on the radio industry and their employment needs in the 21st Century. I’ve presented panels every year at the national conference in Las Vegas as well as been an invited broadcast expert on many panels at both BEA and NAB.

I’ve presented seminars at state broadcast associations and done training sessions for broadcast companies.

In short, I’ve been more active in broadcasting on so many levels than I ever was as a radio manager.  And I’ve loved every minute of it.

But I’m not going to candy coat what’s happening, not only in radio but in all ad supported media. It’s a revolution.  Not an evolution.

In revolutions the first thing that happens is destruction of the old. We’re still living through that period right now and it’s not fun. I get it.

Our Iceberg Is Melting

Back in 2008, many people picked up a copy of Ken Blanchard’s book “Who Moved My Cheese?”  I know I did. It’s a great read.

But maybe the book everyone in broadcasting should be reading today is “Our Iceberg Is Melting” by John Kotter. Kotter is an award winning author from the Harvard Business School.

Like Blanchard and Johnson’s Cheese book, Kotter writes a simple fable about doing well in an ever-changing world.

The fable is about penguins in Antarctica that discover a potentially devastating problem to their home – an iceberg – and it’s melting away.

It’s a story that will resonate with anyone in broadcasting today.

Read about how the penguins handle their challenge a great deal better than many broadcasters are doing today. Kotter’s book walks you through the eight steps needed to produce positive change in any group.  You will not only enjoy the read, but will be guided with valuable insights to deal with our 21st Century world that is moving faster and faster every day.

The Big Take Away

When corporate, middle management and all employees are on the same page with regards to change, it is amazing what can happen, despite adverse conditions.

These are lessons for people who already are in broadcasting, for broadcast students, enlightened colleges are already teaching the concepts, skills and providing the tools that will be needed going forward. My students know that the future is not bleak. They understand the history of broadcasting that brought us to where things are today and they are as pumped as you and I were when we were their age to craft the future of broadcasting in the new century.

I’m excited.

They’re excited.

The best is yet to be.

 

 

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The Question Radio Itself Has Yet to Answer

86That was the subject of an email I received from a reader of my blog recently. The writer went on to eloquently state why he felt the way he did, even citing articles on the topic. He had my interest and I asked him if we could speak on the phone.

The BIG Question

This reader’s (who asked to be kept anonymous) big question was “What can radio do that other media can’t?”

And it’s a very good question.

In 2017 when many are using the internet for things that only radio could provide in the past, is radio’s future being the poor man’s smartphone, tablet or iPod when it could be more?

“NPR and SiriusXM, in addition to the new exploding podcast marketplace, have had no trouble creating personalities and programs,” but my reader writes “why does FM commercial radio continue to stick with playing the hits, past and present, at the expense of personalities, thinking it will make them money when the biggest radio companies have trouble paying off debts on the stations they seem to have paid too much for?”

Well it was a well-known fact all of my radio life that you make money in radio at the time you buy a radio station. Buying it right makes all the difference. And those big radio companies went on a buying spree using other people’s money (Wall Street) and it’s much like student loan debt, no one worries how much debt they’ve accumulated until they are asked to replay it.

Is Local Radio Local Anymore?

My reader quotes Westwood One’s Chief Insights Officer Pierre Bouvard from an AdExchanger interview as saying “A local radio station gives you traffic, sports, weather, great music, funny DJs and talks about your town,” he said. “Spotify has these robotic music playlists, which are awesome, but there’s no one telling you what happened at the Giants game last night.”

My reader says Pierre (who was my first Arbitron representative back in the 80s) makes a good point, but wonders if Pierre ever took the time to hear what passes for much of local radio these days. My reader feels that much of today’s FM radio stations do a combination of great music and robotic, Spotify-ish playlists, and relatively little in the way of “traffic, sports, weather…funny DJs and talk about your town” stuff.

Sadly, I’ve heard similar things said at radio meetings where the person starts off by saying “now don’t quote me on this, but…”

TELCOM Act of 1996

It was President Bill Clinton who signed the Telcom Act of 1996. That act was supposed to bring competition to the phone and cable television industries thereby lowering costs of each to the consumer. While that didn’t happen quickly (some might wonder if it ever did) it did cause the quick consolidation of the radio and TV industries. We went from a country where the largest radio operator could own 12AM-12FM-12TV stations to virtually whatever their pocketbook could afford. And with Wall Street Bankers waiting in the wings, what a company could afford was a lot.

Low Power FM & Translators

For the non-radio folks who read this blog, Low Power FM signals and Translator signals are virtually the same thing, with the exception being that Low Power FM stations originate programming and translators don’t. Both are received over the air on the FM radio dial. Both have increased the number of FM signals on-the-air in America today.

The latest FCC (Federal Communications Commission) report as of the end of December 2016 shows that there were 4,669 AM radio stations on the air in America. Over on the FM dial, 16,783 signals now beat the airwaves (FM, FM educational, translators and low power FM).

To put things in perspective, at a time in America’s radio history when the number of FM signals equaled the number of AM signals on the air, 75% of all radio listening was to FM. So you can only imagine what it’s like today.

93% of Americans 12+ are reached weekly by AM/FM radio says Nielsen.

So while the Telcom Act of 96 caused radio to consolidate under fewer owners who own more stations, adding to the signal overload was the advent of low power FM and translator signals. So much to program and no one home to do the work.

Enter computers, voice tracking, and syndication. This is same computer technology that is employed by Pandora, Spotify, Radio Tunes, SoundCloud and many others.

When TV Challenged Radio

In 1952 TV was born again. It was birthed just before World War II but the war years put broadcast radio/TV development on hold. After the war ended, things began to ramp up quickly for TV.

In 1953, Elmo Ellis was hired to fix 750AM – WSB in Atlanta. Ellis would write about “Removing the Rust from Radio Programming” for Broadcasting/Telecasting (now called Broadcasting and Cable magazine).

One of the points Mr. Ellis made was that a stack of records and a turntable do not a radio station make, though many broadcasters persisted in that very belief.

It was the very same philosophy I employed when I launched a “Music of YOUR Life” radio station. I felt that to be successful, you needed more than just Al Ham’s music list, you needed the personalities that complimented the music.

Both my reader and I are in complete agreement in that a radio station is more than just a song list.

Less Is More

The problem today is that with the “land rush” by broadcasters to own as many signals as they can, we have seen our country’s biggest broadcasters put themselves into a debt situation they cannot get out of and smaller broadcasters have signals and streams to manage but not the revenues to properly execute them.

If we go back to the beginning of broadcasting in America, we see that the FRC (Federal Radio Commission) that predated the current FCC felt that quality over quantity of radio stations should be the rule of measure. By limiting the number of stations, the FRC was attempting to insure the content of those stations on the air would be of the highest quality and also by limiting the number of stations; the advertising revenue that is the life blood of free over-the-air radio could be sustained.

What Can Radio Do That Other Media Can’t?

This brings me back to the question my reader originally posed and asked me to answer.

But before I do, I’m going throw that question out to my other readers – to date over 80,000 from all over the world – to weigh in with their thoughts.

What do you feel radio can do that other media can’t?

Is any radio station you know of doing it right now?

Is this a sustainable future for over-the-air radio?

I’m looking forward to reading your thoughts.

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Don’t Let Radio End Up Like Yahoo!

49I just finished listening to Jason Jennings’ podcast about how Yahoo went from being a company worth $120 Billion to its sale to Verizon for $4.8 Billion. I think the wisdom that Jason shared is very applicable to the radio industry’s journey through consolidation since the Telcom Act of 1996.

Jason says the selling of Yahoo is like a train wreck; you don’t want to look, but you just can’t help yourself. I know many who’ve said similar things as Wall Street invaded radio with its goal of “increasing shareholder value.”

So how can radio learn from Yahoo’s mistakes? What are the lessons Jason shared that apply to radio? Let me share with you the Top 5 Lessons of Yahoo:

#1) Know What You’re All About

Yahoo never really defined itself and the revolving door of CEOs contributed to this with each one bringing a different vision – or no vision – to Yahoo. Or as Jason puts it, the company didn’t have a purpose; they never knew what they were all about.

As radio was deregulated and its original mission of serving the public interest, convenience and necessity was abandoned, nothing replaced radio’s reason for existing except for “increasing shareholder value.” Not surprising as radio people were replaced by Wall Street investors.

#2) Have a Set of Guiding Principles

Radio’s guiding principles were first established by the FRC (Federal Radio Commission) and then by the FCC (Federal Communications Commission). Under President Ronald Reagan – and his government is best that governs least approach – radio’s deregulation began. President Bill Clinton would open the flood gates of consolidation with his signing of the Telcom Act of 1996.

With no guiding principles, investors were free to move in all directions; and they did, buying up not just radio stations but many of its manufacturers and service providers for radio.

It’s like the old saying, if you don’t know where you want to go, any road will take you there.

#3) Using a Business like a Personal Piggy Bank

Radio investors and many top radio executives began using radio as a personal piggy bank, only taking care of themselves and focusing on the immediate quarter with no long term vision, strategy or investment. Too many just lined their pockets and left.

#4) Trying to Be All Things to All People

Jason says “great companies stick to their knitting. You can’t be all things to all people.”

Radio was originally about serving their community of license via over-the-air broadcasting. It delivered local news, local sports, local community events, local bands and more by local radio personalities who lived in the communities they served. It was focused like a laser beam on local, local, local.

#5) Don’t Copy the Competition

Radio today is trying to copy Pandora, Spotify, Apple Music and others. Radio today is trying to also copy YouTube, Facebook, Pinterest, Twitter and SnapChat. Radio is trying to copy just about every other business advertising model and without any guiding principles has been economically treading water.

Yahoo’s SVP Brad Garlinghouse wrote his infamous “Peanut Butter Memo” in October of 2006 that pleaded with the company to narrow its focus and clarify its vision.

Brad felt that Yahoo was spreading its resources too thinly. Business Insider recently wrote “This internal memo from 10-years ago shows Yahoo still hasn’t solved its biggest problem.”

If Yahoo had a culture problem, radio by way of mass consolidation had an even bigger one. First, as Wall Street money flowed in and radio stations were bought up, each of those stations represented its own culture that would need to merge into a larger culture. Then these new larger radio groups would try to change the culture from a local scope to a national scope. National radio personalities like Ryan Seacrest, Rush Limbaugh and many others would replace local personalities. National radio contests would replace local ones. Live and local for the most part would soon only appear in the history books on radio.

Culture is created at the top. Over the last twenty-years, radio’s consolidation has seen a revolving door of top leadership. The culture of radio has been a moving target for both industry professionals and listeners alike. Culture is built over time. There is no “quick fix” for building culture.

Absent a company culture, what fills the vacuum is one of everyone for themselves.

Now twenty-years later, there are signs of new growth as people who believe in live and local, and operating in the public interest, convenience and necessity are entering the business.

In many small markets, this way of operating never got sucked into the vortex of consolidation.

Even some of our country’s biggest radio companies are focused on getting back to the core principles radio was built upon.

Radio, the first broadcast transmission system to reach a mass audience, almost 100-years later is still the leading way to reach a mass audience.

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Radio’s Dilemma (or Opportunity?)

38Radio’s a business. Peter Drucker said “The purpose of a business is to create a customer.” A business also needs to make profit or it won’t be in business for very long. On that we can all agree.

Surprisingly, many business people who know this still go out of business, often because they focus on the profit part and not the customer part. Plus those businesses either never had or lost their competitive advantage.

Radio’s dilemma is it lost that competitive advantage. That being having an FCC license to broadcast. Not everyone could obtain a broadcast license – they were limited by the Federal Communications Commission (FCC) – or had the ability to profitably operate a broadcast property. Profitability is when you earn money in excess of your cost of capital.

The radio business made a lot of money. Many enjoyed cash flow margins north of 50%. Its success attracted more people into radio ownership because it “looked easy” and made a bundle of dough. As more radio stations came on the air, it drove up wages, increased competition and increased multiples for valuing radio properties when they were bought and sold.

If this type of growth and expansion was all that was taking place, the “circle of (business) life” would have seen the radio industry slow down as the overcapacity from all of the new radio stations fought over the not-as-fast-growing advertising pie. It’s similar to what happen to the casino industry as expansion took off in America after just Nevada and New Jersey were no longer the only two states to license casino gaming.

Enter the great disruptor; the Internet. Radio, as we all once knew it, would be changed forever. For the Internet would now provide the world with an infinite number of “radio” options, like Pandora, Spotify, iTunes, RadioTunes et al. All trying to be ad supported like OTA radio.

Clay Christensen wrote about what happens when an industry is disrupted in his book The Innovator’s Dilemma.  He tells the reader how incumbent companies often respond to their disruptors with disastrous consequences.

Radio looked at the Internet as a “free broadcast license” and put their OTA signals onto a stream and then tried to squeeze a little extra profit by running separate ads on the stream versus over the air. It created a little extra money for the radio business but created a less enjoyable listener experience.  Sean Ross recently wrote in his newsletter “Ross On Radio” how different and better a radio station he listens to online sounded when he actually traveled to the market and heard the same station over the air. The difference was in the breaks and it was HUGE.

It doesn’t have to be all doom and gloom.

Southwest Airlines has enjoyed four decades of profitability. Like Walmart, Southwest had a root purpose for existing. Sam Walton’s Walmart mastered logistics to keep prices to his customers low and Herb Kelleher’s Southwest focused on constant improvements to make travel by air more affordable to more Americans. Like all successful enterprises, they put the customer first and profits were the result of doing everything else right.

For radio to be successful on the Internet, it needs to create a better user experience that attracts and delights the listener or that creates a new and different user experience that will enrich the end users’ lives. Radio, over the air, FCC licensed radio has the best platform to promote its Internet products. The possibilities are infinite. But each product must have a purpose beyond just making a buck.

Businesses that grow have a purpose beyond profit. Businesses that focus their growth on profits won’t have either growth or profits.

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