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Great Expectations

OR FMI read with great interest the five part series by Matt Bailey on “The Alexa Effect.” In the 5th and final installment Matt shared what he called the “radio weapon Spotify will never have.” What is it? The radio personality. He wrote:

 

  • “A radio personality can tell you the backstory of a breakthrough artist that makes you want to hear her work.”

  • “A radio personality can point out that crazy line in the second verse to stay tuned to hear.”

  • “A radio personality can engage you to smash or trash a song on the station’s social media.”

  • “A radio personality can give you the chance to be among the very first to hear a new song by a star artist.”

“A radio personality can add context that will make listeners excited to hear a song that otherwise would simply be weird and unfamiliar. It’s a deeply personal and emotionally engaging weapon no algorithm can match. When we stifle their voices and their role in introducing new music simply to avoid potential tune-out, we might win a few tenths of a point in the PPM battle, but we will lose the new music war to Spotify.”

Consolidation & Voice Tracking

I don’t disagree with Matt, but I lived through the ramifications of the Telcom Act of 1996 and the consolidation of radio stations, along with the rollout of voice tracking.

Clear Channel called it “Premium Choice,” and we were told it would replace our local personalities with big market talent.

I watched in market after market as radio personalities, who were like members of the radio listener’s family, were sent to the unemployment lines. Relationships that took years, even decades to establish, wiped out in an instant.

Early Media Expectations

I grew up at a time when the family television set received a signal from a couple of antennas on the roof. We had two channels, which meant we received two television networks, CBS and NBC. If you wanted to change the channel, you had to get off the couch and change it. There was no remote control.

Our radios had both the AM and FM bands, but I remember wondering why. I often scanned the entire FM band to hear nothing at all with only the AM band picking up radio signals.

My early media expectations were two TV channels and AM radio stations. The radio provided a lot more variety, plus I had a radio in my room and our family had a single TV located in the living room. I controlled my radio, my parents controlled the family TV.

Media Expectations Change

In time, I would come to expect television to be in color, to be connected to a cable and have a remote control to easily change the multitude of channels I could now receive, from the comfort of my couch.

Radio would expand to the FM band and a whole new type and style of radio was born. The one thing that connected AM and FM radio was the radio personality. Every station had them and the decision to listen to one station over another was because of the radio personality.

In fact, I wrote an article on the power of the radio personality back in 2015 entitled “We Never Called It Content.”

I wrote this article after reading about the latest round of “forced retirements” in the radio industry.

And if you thought this type of downsizing was only occurring in large radio metros, the movie “Corporate FM” told the story of how in the 80s, ninety percent of mass media in America was owned and controlled by about fifty different companies, but after the Telcom Act of 1996 it was down to just six corporations.

New Media Brings New Expectations

Let’s fast-forward to today. I cut the cord on cable TV two years ago and all of my television viewing is streamed. Netflix, Amazon Prime, Sling TV and YouTube provide me with more hours of television entertainment and information than I could ever have time to watch, and I’m retired.

Amazon Echo provides me with all of my audio entertainment and I do mix it up between stations via TuneIn and the pureplays like Pandora and Amazon Music.

I also read a lot and subscribe to several online newsletters that all link to the original source of the material.

Which leads me to this conclusion, my calendar age did not cement my media habits. They’ve been fluid all of my life.

My 21st Century Great Expectations

  • I expect NPR to open up my world to things I should be aware of, that I might not have been. I expect them to also provide me with more depth to the stories in the news. I expect them to have all of this posted online for almost immediate access. They don’t disappoint.
  • I expect my television viewing to be On Demand and commercial free.
  • I expect my music listening to match my mood and be there by simply asking Alexa to play my favorite channels when I want to hear them.
  • Finally, I expect I’m not alone in these “21st Century Great Expectations.”

Rewound Radio DJ Hall of Fame

On Saturdays, I enjoy asking Alexa to play Rewound Radio so I can hear another fabulous radio personality featured in the weekly “DJ Hall of Fame.” The other weekend they featured WOR-FM out of New York City and the air personality was Johnny Donovan. OR-FM air checks are all in stereo and the music mix has plenty of variety. It was a time when Music Radio 77 – WABC dominated the world’s airwaves on the AM band. But the one thing I notice in these weekly trips down memory lane is how integral the radio personality was in the total program. They were a constant companion. They really were radio’s “secret weapon” to attracting faithful listeners.

The question I ponder often is, was this period of radio history akin to the vaudeville period of theater. It filled the right hole at the right time but won’t ever be coming back again.

I welcome 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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SiriusXM Radio is Now Free

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What would you do if you woke up one morning and saw this as the headline in all the radio trades? Have you ever considered the possibility of this happening? Well lots of people woke recently to this headline “Angie’s List is now free: What this means for your business.”

Call it a subscription, a membership fee or a paywall, what happens when they are eliminated? In Angie’s List’s case, less than one percent of Americans were members at the $40/month fee that had been in place. Paying that fee let people see the reviews of other members that had experienced certain businesses or services they had used. Now everyone can see those reviews. Angie’s List had developed a reputation for its members writing rather substantial reviews as well as being a website that is strong, trusted and contains valuable content.

Why Did Angie’s List Tear Down Their Paywall?

Angie’s list is a publicly traded company. Their stock is down seventy-five percent from three years ago. Management is under pressure. Tearing down their paywall means increased page views. When page views go up, revenue goes up. See the strategy?

Could SiriusXM Follow Suit?

Satellite radio currently captures about ten percent of radio listening and mostly in vehicles. The new digital dashboard entertainment centers will be a gateway to Pandora, Spotify, Apple, YouTube and more. Having an XM button on my Honda Accord, I know that my access can be selectively turned on or off by SiriusXM. When they do one of their free listen promotions, they don’t turn on all the channels, just the ones they think will hook me to listen. So, I would imagine, they could create a group of channels that could be on all the time and carry a limited commercial inventory attractive to national advertisers. Like the most popular musical venues, such as adult contemporary. Even if they only turned on the top five music formats, it would mean drivers could listen to them wherever they drove across America, plus SiriusXM would have the ability to pop in promos for their other channels that remained behind a paywall. It’s almost too scary to consider the possibility.

Teens Love Streaming

Teens love streaming audio and their smartphones. According to the Music Business Association and their data partner LOOP, teens spent 51% of their listening time on a typical day streaming their music versus only 12% of their time with AM/FM radio. This is a media usage habit being formed in the next generation. It not only affects traditional AM/FM broadcasters but satellite radio as well. This is a problem that needs to be addressed.

NextRadio App

Thanks to Jeff Smulyan and Emmis, the NextRadio App is the way FM broadcasters can get their audio into those smartphones, without running up a user’s data plan. However, Sprint has already removed many audio streaming services from running up their data plans by letting their customers listen as much as they want at no extra charge. Since teens avoid paying any fees whenever possible, free is always an attraction.

Less Than 1% of World Pays For Streaming Audio

AM/FM radio has been built on free. That’s an advantage that too often gets taken for granted. According to Nielsen 61% of people find out about new music via their AM/FM/satellite radio.

Price is the number one reason more people don’t pay for streaming audio. Out of a worldwide population of over seven billion people, about forty-one million buy some form of audio streaming; 0.58% of the world’s population. That percentage turns out to be lower than the total number of people who have a Netflix subscription around the planet.

23,870 AM/FM Radio Signals On-The-Air

The FCC just published their latest numbers for broadcast stations as of June 30, 2016. We are approaching 24,000 signals for radio in America. 19,194 of those signals are FM and 4,676 are AM. Plus we have two satellite radio signals, Sirius & XM, which are now under a single owner.

Pay & Free

It doesn’t take a whole lot of imagination to see satellite radio one day deciding to have the best of both worlds. Offer premium pay channels to those willing to pay for them and at the same time create a free tier of channels that could be ad supported by national advertisers.

What history shows us are things that happen in other industries and services eventually make their way around to virtually all of them. It’s only a matter of time.

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The Choices We Make

You are what you are; you are who you are, by the choices you have made. You can change what you are, you can change who you are by changing the choices you make going forward.

To make things simple, let’s break down the choices into large choices and small choices. Large choices would be things like changing careers, getting married or divorced, having kids, picking a college/course of study etc. Small choices are exercising or sitting on the couch watching TV, having that extra cookie or not, going to the football game or listening to it on the radio etc.

Both large and small choices impact our lives. The difference is immediate with large choices but the small choices, over time, can be just as impactful. We just don’t see the change all at once, so they give the appearance of not having any impact, but that’s what makes them so deceptive. The reality is both are as important.

So what does this have to do with radio and TV? Listening to the radio or watching a TV show is a choice we make. We do it often to feel good. Feeling good releases endorphins in the brain that stimulate the pleasure center. It can become an addiction.

Today’s entertainment consumer has lots of choices. They also want to feel good. So it’s only natural that they are going to seek out those entertainment choices that stimulate their brain’s pleasure center.

Netflix and YouTube are two video services that are doing a better job of providing this video pleasure than broadcast TV. YouTube and Pandora are two audio services that are doing this better than broadcast radio (in the opinion of their users). YouTube, as you can see is a double threat, as it is strong in two different media areas and is a real force to be reckoned with. New habits are being formed; new entertainment addictions.

Once upon a time, people jumped through lots of hoops to receive a radio or TV broadcast. Today, all of those choices are quickly and easily available on their smartphone or tablet. Mobile is the fastest growing segment of media in the world. Mobile advertising holds unlimited potential for those service providers that get chosen and make themselves a habit.

The consumer is making little choices each and every day. Broadcasters have ignored them because they seem small and insignificant. But I’m here to tell you that those little choices are just as impactful to your future as if they were of the large variety.

Broadcasters too, have a choice. Accept the new reality and embrace change or let the change happen to you.

Remember, death by a thousand cuts is still dead.

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Radio’s NOT Like it Used to Be

Marconi Wireless(Spoiler Alert: It never was, starting with day 2) When I hang out on social media – or imagine this, have a real face-to-face conversation – with my radio contemporaries that grew up listening to radio in the 60s & 70s, the conversation invariably turns to “radio’s not like it used to be.”

From the moment of its birth, radio has been one long experiment.

It took hold when Marconi International Marine Communication Company, Limited began to make money with wireless over-the-air transmissions. Marconi was in it for the money. He really cared little how it all worked. He wanted to build more powerful transmitters and cover greater distances. He didn’t sell his technology but leased it. He also trained and employed the wireless operators who used his equipment.

So, imagine you’re a wireless operator on Christmas Eve 1906 and you’re at sea monitoring your dots & dashes – all that you’ve ever heard come through your headphones – when at 9 PM EST on Christmas Eve you suddenly hear a human voice coming through your headphones. Then singing. Then a violin playing. And finally a man speaks a Christmas greeting. What would you have thought to yourself?

The man who did this was Reginald Fessenden. In addition to being a brilliant scientist, he also sang and played the violin. From his transmitting station in Brant Rock, Massachusetts his first wireless transmissions of voice and music were heard up and down the Eastern seaboard. He would repeat this again on New Year’s Eve.

In the United States the final commercial Morse code transmission was sent on July 12, 1999. The last message sent was the very same as the first message sent by Samuel Morse in 1844, “What hath God wrought”, and the prosign “SK”.

What brought this all to mind was a news item that has been circulating recently about a survey by Morgan Stanley that was released by Quartz.

The survey is a positive for radio. In a survey of 2,016 American adults taken last November, AM/FM radio use was #1 with 86%. Number two was YouTube, number three was Pandora and number four were “TV music channels”.

The first four were all advertising supported and thus free to the user. The fifth on the list was also the first paid service; SiriusXM radio (tied with iHeartRadio).

So one thing that hasn’t changed is that most people would rather access free-with-ads entertainment versus paid-without-ads entertainment when given a choice.

However, this survey has spurred a lot of discussion in the radio world. Broadcasters are divided on what this survey is really telling us. Owners/operators are saying that it shows “radio ain’t dead.” Broadcasters that have been consolidated out of the industry are saying “not so fast.” And to some extent, they’re both right.

As Mark Ramsey pointed out on his blog, “86% of respondents saying its part of their usage routine” is what radio folks would call “reach” and does not really address frequency of usage or “time spent listening;” two key radio metrics.

Conspicuously missing from the Morgan Stanley list is a service I use and enjoy TuneIn radio. I wonder why?

So where does that leave us?

I think it’s a twist on one of Henry Ford’s most famous quotes:

Whether you think radio is or is not, you’re right.

Radio owners/operators have it within their power to create the future for the radio industry. So what’s it going to be?

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