Tag Archives: Internet of Things

It Was the Best of Times & the Worst of Times

65Radio broadcasting began in the “Roaring 20s.” A time in America that saw the first tabloid newspaper appear. Reader’s Digest, New Yorker Magazine, Time Magazine would also be born right along with radio. It was a time of unprecedented economic prosperity and social change. It was a time of a strong backlash of racism, fear of immigration and morality.

The 1920s and the world we are living in today are not all that dissimilar. Today, the wealth inequality is greater than it was in the early 1920s.

And just like those times, almost a hundred years ago, that gave birth to radio we are living in times that are giving birth to the “Internet of Things.”

Immigration: Then & Now

After World War One ended, America got tough on immigration. The most stringent set of immigration restrictions in American history was enacted with “The National Origins Act of 1924.” It restricted the flow of immigrants from Europe (and elsewhere) to less than 200,000 per year. This fear of immigrants reignited the Ku Klux Klan. The KKK membership saw its membership rise to a new high in 1928. Reformers advocated for a more militant, less conciliatory stance.

Today the battle rages on over building a wall between Mexico and the United States and over immigration of Muslims.

Women’s Rights

While women had won the right to vote, they still couldn’t go to college and most professions still excluded women. While women could now own property, they couldn’t establish credit with a bank or get backing for a business venture.

Many felt that the only thing that changed in America when women were given the power to vote was prohibition; the 18th Amendment to the Constitution.

War on Illegal Substances

So while the United States tried to control alcohol in the 20s and failed, today we find America battling another illegal substance battle, marijuana, with much the same results.

People will find a way to do something they really want to do.

Modern Mass Media

The 20s ushered in the first decade of modern mass media. American-made films not only captured the attention of American audiences, but the whole world. Every city would have at least one movie house by the end of the decade.

Because the movies were silent, musicians were in high demand for the movies. And because radio was all live, it too needed musicians to perform during each broadcast day.

Radio Jingles

The 20s also saw advertising agencies now develop departments devoted to the creation of radio advertising and soon the commercial radio jingle was born.

The Worst of Times

The Roaring 20s would end with Black Tuesday, October 29, 1929, the stock market crash and the beginning of the Great Depression.

While this decade created favorable conditions for big business to prosper, the alliance of government and industry left labor unions out in the cold.

It was these times that radio was born.

The Great Recession of 2008 would be the environment that would see the Internet of Things born.

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.

Utopian Hopes, Dystopian Fears

When commercial radio was born in 1920, it was hoped that it would bring about national unity. Those utopian hopes and dystopian fears would fall basically into four different areas.

  1. Radio would create a physical unity in the country bringing people together as one
  2. Radio would bring about a new cultural unity as Americans
  3. Radio would make America a one language nation providing linguistic unity
  4. Radio would bring about institutional unity where everyone wanted the same things and held the same vision

I will let you draw your own conclusions on the success or failure of these goals for radio.

Internet of Things

Broadcasting in America started out as a government-assisted oligopoly. The internet did too. Both, I would argue, now fall into the unlimited category. While I realize this is definitely true for the internet, I know others would quickly point out the limited amount of spectrum for AM and FM radio broadcasting. However, with the growth of FM translators and LPFM stations, it feels like it’s unlimited.

The original system of a government preferred broadcasting system is being challenged today by the Internet of Things.

And covered in dust, is the original fundamental principle of operating in the public interest, convenience and necessity and not merely for maximum profits.

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Out, damn’d spot!

28Lady Macbeth says this line in Act 5, scene 1. The line has made for ironic jokes and marketing schemes. The Bard’s lady, where the blood spot becomes dyed into her conscience and where the king and queen persist in imagining that physical actions can root out psychological demons, Shakespeare’s Macbeth is an exposition of how wrong they are.

This all came back to me when I read about former CBS Radio President Dan Mason speaking at Radio Ink’s Hispanic Radio Conference in March about how many radio spots should run in a typical hour of radio programming; his answer was 8 to 10 units. Whereas the typical radio station these days is running 14, 16, 17 (or more) units every hour and Mason says that’s probably too much.

On Twitter Radio Ink tweeted “Is Dan Mason correct? You should be playing 8-10 units per hour.” I tweeted back “YES.” To which Dan Mason tweeted back “@DickTaylor @RadioInk not easy to execute in today’s environment but this is the goal we have to work toward!” And to which I then responded, “@radiodanmason @RadioInk Agreed. No one ever said it would be easy. But moving in this direction needs to be the industry goal.”

Then the next day Radio Ink printed this headline as their lead story “We Would Pay More For Shorter Stopsets,” from ad agency executives Blair Overesch and Jeff Chase of Walz Tetrick Advertising in Kansas City. Their clients include the World Champion Kansas City Royals and Dairy Queen. They bemoan how their clients become lost in long horrible-sounding commercial clusters.

The Birth of the Radio Ad

When the commercial radio was born in 1920 the only way operators of radio stations could figure out to support the expenses that came with running a radio station was by the sale of radio advertising. They copied the model of newspapers and magazines of that time. And here we are almost a hundred years later and nothing has really changed in this business model, except the birth of the Internet. The Internet of Things (IoT) has been the big disruptor of just about every business model.

Look Outside Your Industry for New Ideas

It’s said that Henry Ford came up with the idea of the automobile assembly line when he visited the meat packing plants of Chicago. There he witnessed how cows were disassembled. It was done on a disassembly line. And so the story goes that Ford had an “Ah hah moment.”

Radio needs an “Ah hah moment” when it comes to its business model. But what could it possibly be? Where would we go, as an industry, to find this new business model? Not in the world of ad supported media, that’s for certain.

Casino Gambling & Changing Business Models

Casinos in America started in Nevada in 1931. New Jersey would be the second state in America to legalize casino gambling in 1978. So for almost half a decade, Nevada – Reno & Las Vegas – had a monopoly on this type of gambling activity. New Jersey would also enjoy a boom from casino gambling during the 80s and early 90s as the seaside resort saw a new casino opening up every year. Casinos made money on gambling. Period.

What changed was the wave of states legalizing casino gaming all across America in their search for new revenue sources. Vegas and Atlantic City would find that trying to live off of just gambling handles was quickly eroding. Their business model was being disrupted.

The Most Profitable Resort in Las Vegas

Can you guess which Las Vegas casino makes the most money? It’s not located in the heart of the “The Strip” where thousands of visitors walk by every day. It’s actually Wynn Resorts.

Billions of dollars move through Las Vegas every year. Casino operators do everything they can think of to have visitors gamble away as much of their money as possible while they are in Vegas. But Wynn changed the casino business model for his properties. Steve Wynn decided that with the explosion of casinos across America, he needed to move in a new direction. He needed to become less dependent on high rollers sitting at gaming tables for the bulk of his revenue. Non-gaming activities at Wynn’s Wynn & Encore Casinos account for 67% of the company’s revenues.

Focused On the User Experience

Steve Wynn is totally focused on the visitor or user experience when he builds a casino. He gives his full attention to every detail. This type of focus can be seen in the Bellagio, a casino Steve Wynn built over 16 years ago and has since sold. It’s number two in revenues in Vegas.

Becoming Less Dependent on Advertising

The smart radio operator will take a chapter from Steve Wynn’s playbook and move their stations off of full dependency on the ad supported business model. Steve Price at Townsquare Media appears to be doing just that with ad supported radio at the hub of their strategy. Price said he wants Townsquare to be the largest local digital content business, the largest live event business, and the largest digital marketing services business in their radio markets. Chairman and CEO Steven Price says, “We believe our diversified strategy remains sound, demonstrated by the stability of our local advertising business and the outsized growth in our other businesses.  In addition, we further diversified our business, with approximately half of revenue now derived from sources other than the sale of terrestrial radio advertising.”

Monetizing a Media Company Beyond Advertising

It’s not about throwing the baby out with the bath water. Steve Wynn didn’t abandon gambling. In fact, Steve Wynn makes more money than every other casino operator in Vegas by doing everything just a little bit better than his competitors – both in Vegas as well as elsewhere. He just unhitched his properties from total dependence on gambling revenues. I believe Steve Price is pursuing a similar path as Wynn with his media company. I believe that Townsquare can run 8 to 10 radio ads in an hour and make money. Moreover, make money for his advertisers by putting them in a radio spotlight and increase TSL and audience ratings by making his listeners happy with the proper balance of advertising and entertainment. Done in this way it is a win-win-win.

What’s your plan?

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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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Radio: Landmark or Beacon

albert-einstein-2Even though it was 110-years ago that Albert Einstein would disrupt the world with how we saw the universe and how we saw time, space, mass, energy and light, we still invoke his name when a person does something brilliant. We say they’re an “Einstein.”

Unfortunately for Einstein, his groundbreaking 1905 theory that would be the foundation for a new way of thinking in physics – quantum mechanics (which gave us things like lasers, microprocessors and iPhones) – wasn’t embraced by this genius. It would be his undoing for the rest of his life.

In the world of higher education, the importance of publishing in an academic journal is more revered than publishing on LinkedIn (where other forwarding thinking professionals hangout) or on a personal blog that’s available to the world. What once was – really isn’t anymore, except to those who cannot accept that today we live in a world made up of platforms, not products.

Radio suffers from a similar dilemma. To traditional broadcasters, radio is something that needs an FCC license, radio tower, antenna and transmitter that sends a signal out over the AM or FM radio bands. I always smile when I look at my old Radio Telephone Third Class Operator Permit that I earned taking a test administered by the Federal Communications Commission at the Customs House in Boston back in 1968. Notice it had the world “telephone” in the name.

Kentucky melon farmer Nathan Stubblefield was an early experimenter in radio broadcasting. Only Nathan wanted his wife to be able to talk to him while he was driving his car from their farmhouse. For you see, in those early days no one was quite sure what this new technology would or could be used for.

“The next big thing always starts out looking like a toy,” says Chris Dixon.

So when people started streaming over the Internet and calling it “radio,” traditional broadcasters looked down their noses at it in much the same way that journalists looked down their noses at the new media platforms like Buzzfeed and Vice Media invading their world.

Einstein teaches us something more than E=mc2, it’s that we need to learn to accept the new platforms that disrupt the world as we knew it and are creating the world that will be. Radio, higher education – most likely your business too – cannot afford to be Einstein-like in our future thinking. The world is moving faster and faster. 50% of today’s jobs won’t exist in ten years.

The iPhone, the Connected Car, Buzzfeed, Bitcoin etc are all platforms.  Radio, colleges, newspapers etc. are all products. Understanding this dichotomy is critical.

In Abraham Pais’s book “J. Robert Oppenheimer: A Life” he writes that Einstein’s inability to adapt to new platforms failed him and that he became a “landmark, but not a beacon.”

And so the choice in our world today is to adapt or die.

Welcome to the age of disruption created by the Internet.

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