RIAA's High School MusicKILL

It finally happened.

And it took a bunch of kids to do it.

Someone stood up to the RIAA.

And once they did, someone else stood up to the music industry's bully puppet that has been terrorizing young people, families, college students and even the dead with threats of lawsuits for stealing music.

Only about a month ago my friend, Steve Meyer, the publisher of Disc & DAT reported to his subscribers that "RIAA defendant, Deborah Foster, who won her case against the association for wrongful cause, and was rewarded with her attorney fees from the organization".

Meyer warned at the time that " With this precedent in place, the RIAA now has to decide if the risks of filing future lawsuits against alleged illegal downloaders is really worth it."

Now it's happened.

A class action suit filed by Tanya Anderson who tangled with the RIAA's truth squad in 2005.

Now the RIAA has to ask itself -- truth or dare.

Do they continue their holy war against average consumers in the name of protecting artists from having their pockets picked by piracy or do they cover their butt, put this thing on hold and hope the class action suit gets dismissed before they resume bullying people.

In the world of music where the only mega albums these days are from Disney Records (Hannah Montana, Hilary Duff and the soundtrack of High School Musical) RIAA is acting like a bunch of lawyers in search of billable hours.

Oh, that's what they are -- a bunch of lawyers...

Inspired by defending these young perpetrators of crime, average citizens are now seeking counsel and getting ready to hit RIAA where it hurts -- in court.

It would have been great if a radio company had the guts to take up the cause and defend one of these unfortunate people. Great headlines. Great karma. It would have sent a message that radio is on the side of young people everywhere.

Okay, that's fantasy. I admit it.

But young people make up the music buying public and radio's position with them is slipping.

Okay, never mind.

Let individual citizens stand up to the RIAA.

You've got to be rooting for Ms. Anderson and any other RIAA targets who come forward. Some of them are innocent and some are guilty.

But no one is guiltier than the RIAA.

Like it or not technology allows stealing music online. Some young people often see a difference between pirating music online and actually stealing a CD from a record store (if they ever went into one). There are legitimate ethical issues here which deserve debate.

But as a practical matter what business sues its customers?

A stupid one, that's who.

Target, Wal-Mart and Best Buy arrest thieves and often prosecute but they somehow resist the temptation of making headlines with how aggressive they're going to be. It's unsettling to the 99% of their customers who don't steal.

The labels have a right to be concerned about stealing music online, but ten years from now (if they are still around) they might have won the legal battles and lost the war.

The RIAA is suing and scaring the hell out of people because --- well, because -- it can.

Now, thanks to this gutsy class action suit against the RIAA, they've got something to lose.

No, not the lawsuit.

The battle to end piracy by targeting the few, the proud, the parents of the teens. Even the many who have done nothing wrong!

Watch out. This has the makings of a mini-series aimed at teens.

Shall we call it "High School MusicKILL" -- about the day the people rose up and said enough!

It's the RIAA killing music.

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Broadcast Networks vs. Social Networks

I know many of you subscribe to this blog and have it delivered to your email every morning.

But for those of you who go to the Inside Music Media website every day perhaps you've noticed that I started placing a Facebook icon in the right hand column to replace the customary "about me" option. (The Blogger service by Google is less than perfect and the site works best in Safari or Firefox, but I realize most use Explorer).

Now, I'm going to confess right up front that I've done so because of the strong feeling that I get from the next generation that social networking is the holy grail for Internet activity. Most certainly it's a player in the future of the music and media businesses.

The next generation is comfortable exposing all to everyone -- or at least what they determine is everything about them that's fit to print.

The key words are about them.

The next generation will readily and proudly admit that they are self-absorbed. That they want what they want when they want it.

They also like to talk about themselves.

So on many student Facebook pages you'll learn whether they have a boyfriend, girlfriend or whether they are male and prefer men or female and prefer women or maybe nothing at all. Is the info reliable? Sometimes it's right on. Sometimes they are playing with you.

My Italian mother always said in effect people don't care about you -- you should care about them.

Dale Carnegie, the author of long-time best-selling book "How to Win Friends and Influence People" revealed a way to get people to like you by advising talk in terms of the other person's interest. Not you're own -- as we in society are prone to do these days.

Either both of them are turning over in their graves or the next generation knows something they didn't know. Arguably, Gen Y knows what they want and they want to tell you about themselves. They also want to "spy" on others (the word "spy" out of the mouths of some of my students).

Social networking, as I have been saying, is the real force to reckon with for media companies both old school and new age. The next generation is coming of age -- leaving email behind, still text messaging for now and untying themselves from their computers.

Yet they remain more connected than ever.

Baby boomers and Gen Xers had clubs, groups, face-to-face encounters. Gen Y to some extent still does but they also have virtual contact through Facebook, MySpace, music sites like Pandora and even video web addresses like YouTube.

And more niche interest social networks are cropping up all the time.

This presents a problem for anyone -- especially a media company -- that thinks it has a future without a social networking strategy.

I decided to practice what I preach (for a change) and jump into social networking.

Actually, I put up my first Facebook page about a year and a half ago. My students ganged up and bullied me into doing it. So I asked my college age daughter for some help and launched my first Facebook page. Next day, I went to class and bragged "It's up for all to see". They said, "where are the pictures of your kids, your wife, your house". One wanted to know where I graded their papers -- Scottsdale or LA (I commute weekly to teach at USC).

I was floored.

So, I will admit my discomfort in posting personal pictures and personal information.

In my profile I said I prefer women which made my wife very happy. But I played it straight. It read like my mother was whispering in my ear, "don't talk about yourself". God knows, I disappointed her on that one by going into the entertainment business.

Then, recently when it became apparent to me that young people were using social networking sites like Facebook to replace email, I really took notice.

Email --- outdated?

With them, it is. And as I am finding it is very easy to communicate within a social network (and many are members of several social networks -- although one major glitch is these networks don't readily allow for cross-platform pollination so to speak).

On my birthday in July, I got tons of nice messages posted to my Facebook "wall" wishing me all the best. It's easy to remember birth dates. Facebook reminds you. And it tells you everytime someone in your network has done just about anything. If they've updated their profiles, you'll know about it (if they give general permission).

I'm liking this.

It's a great way to communicate with my young students and its has me wishing for my older friends and acquaintances to start a Facebook page.

That's probably not going to happen. We get set in our ways when we get older and when I say older I say -- Generation X. You thought I was going to say 50 or 60 year old. Social networking is one of the gifts that young people have given to the Internet.

So, I decided to throw caution to the wind and go against my inclination that it's better not to talk about me -- or show me on the golf course, or picture my friends and see me in front of the theater where I saw Jersey Boys on Broadway. I'm sure most of my contemporaries won't give a damn.

But I'm hoping that over time more and more people will connect through this social network and many others. Companies are forming groups on Facebook. MySpace has been littered (and I mean that word) with commerce -- that's another problem for another post.

In the early days of radio, networks linked stations and their "communities" with programming that would otherwise not be available to them. Sitting in front of their radios, they joined the forerunner to today's Internet social networks. Except their networks were one way -- the broadcaster spoke to them. Technology didn't allow for seamless two way communication back then.

Same is true of network television, book clubs, even social groups that were often restricted to a locale.

Not true today -- the entire world is the locale and everyone is eligible.

Future social networks will be both large and very small depending on how specialized the interests of the group are.

Social networks like MySpace are already a force in introducing new music to a wide group of like-minded people. Young artists get instant exposure -- and even those scoundrels at the record labels manipulate MySpace to gain favor for established artists. Horrors.

And where do you think viral marketing gets serious -- in a social network.

So, the day has arrived when talking about yourself and readily communicating with like minded people is important. It's just here for the very young right now.

And yes, even older people can spy over these networks.

If Mark Mays had a Facebook page I could spy on him (as my students do to their exes and dating prospects). I always wondered whether he had a Texas ranch. What would it look like. Maybe I could even write something on his Facebook "wall" and vice versa. (This is beyond fantasy -- it's a horror story -- but I'm half-kidding).

I could see my friend Gary Stevens' many exotic automobiles and his beautiful home in Florida.

I might someday be able to do as young people do and go to Facebook to check someone out after hearing from them or meeting them. This is great, but it cuts both ways -- especially if you're an employer looking to hire someone and that someone has drunken frat party pictures posted. See, it could be ugly.

Young people "poke" each other indicating that they like them and wait for a "poke" back. Sometimes its playful, sometimes it's more (remember what I said earlier, they don't always play it straight which makes things very interesting).

So for now anyway I am living in the world of social networking. Try it if you dare because I know I will be writing about this phenomenon many times in the future.

I am also member of A Small World, a high-end web site a member invited me to join that I have no right being a member of. Also, social networks for the very rich are popping up. Doctors also have a social network that they are beginning to use for medical advice from each other. There's a interesting piece in the Wall Street Journal on this.

Sometimes the next generation confounds traditional media.

Here's your chance to stretch yourself and learn a lot about the future of music and media at the same time --social networking.

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TV and Internet On Equal Footing

Move over radio. The Internet is now taking aim squarely at television.

There's an interesting new global IBM study that shows the time consumers spend using the Internet is roughly about the time they spend watching TV. (You can download the report for free).

The study reports: "66 percent reported viewing from 1 to 4 hours of TV per day, vs. 60 percent who reported the same levels of personal Internet usage. Consumers are increasingly turning to online destinations like YouTube, MySpace, Facebook, games, or mobile entertainment vs. traditional television".

The study also gives credibility to what I have been observing with the next generation in that they are quite content to watch movies, DVDs and all sorts of video -- not on their traditional TVs or their families' HD set but on their computer screens.

The IBM report says "Consumers are demonstrating their desire for both wired and wireless access to content: an average of 81 percent of consumers surveyed globally indicated they've watched or want to watch PC video, and an average of 42 percent indicated they've watched or want to watch mobile video".

Traditional media's woes are only beginning.

Radio became increasingly irrelevant to Generation Y when all the planets were in alignment for a doomsday scenario. Consolidation helped them take their eye off the audience. The Internet took off. Music was available for free online. All of a sudden the radio was not one of the focal points for a young person. The computer was. And so was their mobile phone and devices such as iPods.

Television will face the same crisis.

There are still plenty of older people watching traditional TV, but as they feel the economic pinch the networks are scaling back on programming costs. When they need great programming the most they're airing cheaper reality shows and less expensive series.

Cutting costs is not a sign of an industry that is growing.

Google doesn't make headlines by cutting costs.

Radio companies do.

And radio, according to Wall Street, is not a growth industry any longer.

Companies that cut back are on their heels. So based on this, you can almost predict what is in store for television in the years ahead.

The networks cut costs and cut creative quality.

They go shopping for Internet video companies to buy and will likely screw them up because they don't have the skills to oversee or run them.

As it is now, the TV business acts like it wishes it could be YouTube.

This is unfortunate because YouTube has done very little other than to prove that it is a delivery system for video clips. Parent Google is still trying to find ways to make money with it. The next generation will tell you that they are very fickle.

By the time Google figures out how to monetize it, this generation could be ready to move on. Already there are many imitation YouTubes out in cyberspace.

So what can we learn.

TV viewer and Internet usage are on an equal footing. We suspected it. Now we have another study to confirm it.

But don't be fooled.

TV and Internet are not equal.

There is a great divide similar to what we are seeing in radio. Older (Gen X and above) still use traditional media and many use interactive media as well. There are plenty of consumers upon which to run a free cash flow business.

What it is not is a growth business. The Internet -- now, that's a growth business.

You need a lot of tomorrow's to make a future.

Radio and now, television operators can ill afford to act like traditional delivery systems. Content must be good enough to attract the next generation of young consumers.

I have to smile when I see all the attention the Don Imus situation continues to get in the trade and consumer press. He's out. He's back. Al Sharpton is forgiving him. Is WABC getting him? Yet over 50 of my students recently asked, "who is Don Imus?"

The great divide.

Traditional media needs traditional talents and content to entertain their base, if you will. But none of this is going to attract the audience they must have to be viable -- the next generation.

So in the months ahead keep in mind that what television can learn from radio's mistakes is to become providers, marketers and sellers of content to a new generation.

Where they live.

On the Internet.

They have the challenging task of basically running two companies.

One aimed at keeping the older demos happy through traditional means and familiar content.

The other starting from scratch and developing new programs for delivery on technology that may not even be discovered yet.

There's little choice.

The future of radio and TV is not based on transmitters and towers, networks and affiliates. It's based on social networks cropping up all over the world. Gen Y has demonstrated (and now we have evidence to prove) that they will watch the small screen for their entertainment.

In a world of HD and plasma, it will take a real futurist to redeploy the skill sets that made radio and TV so dominant for over 50 years.

Fail and the next generation will be learning about radio and TV at the Museum of Radio & Television.

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Radio's Surge

There's been a lot of debate since President Bush announced one more surge of troops to try and secure the law and order in Iraq.

Without getting into the political issues, the surge reminds me of what radio executives are now doing whether knowingly or not.

You get the feeling that many of the seasoned radio executives who have been in the business and at the top of their companies for a long time are desperately seeking one last push to try and make radio a growth industry again.

Somehow they think that if they come up with one more format they will discover a way to get youth back listening to their radios again.

That if they just try harder to cut costs their companies' stock will go up even though they have no verifiable proof that the next generation will spend less time with their iPods and more time listening to their analog radios.

Ratings?

Some believe that if they attack the company that they are supporting by signing long-term contracts, Arbitron can call it a People Meter but it will really be a diary on steroids.

That if they find just one more, Don Imus they will solve their morning show problems. Or that if the original Don Imus returns with humility that everything will go back to being just as it was before.

Radio people are a proud and resourceful lot.

They didn't grow a fabulous free cash flow business by just showing up for work every day. Radio had a long run as a growth business and their leaders knew what they were doing. Radio even reinvented itself successfully when television was first introduced which is why many radio execs think if they can just make one more attempt at getting young people to leave their computers and iPods, they'll run out and buy HD radios.

It's radio's version of the surge.

Except radio executives want to do it with fewer troops -- so to speak. (Remember in the world of radio less is more).

Decision makers want their GMs, PDs and sales executives to make the last surge with the proper weapons (autonomy, control over local programming, ability to hire more sales people and better train them).

Surge proponents in radio think Google "AdNonsense" actually makes sense. Applying the less is more reasoning, fewer salespeople, lower costs, selling radio as a commodity makes sense to them in an Internet world few really understand.

They were warned.

Few in the radio trade press actually framed the critical issues although futurists like John Parikhal and Mark Ramsey among many others regularly warned of the perils all along the way. It's easy to take the ad dollars when they're rolling in and soft peddle the issues that won't go away.

Not convinced?

Take HD Radio.

Please.

HD Radio or more aptly called the non-sexy name digital radio has lost the war.

But you can't tell that to any radio executive of a major group.

They are all still propping up that puppet government of Ibiquity that is trying to sell the American public that if you reinforce radio's failure to win the audience over to HD by bringing in more ammunition from Wal-Mart, Best Buy and Radio Shack that the tide will eventually turn.

Meanwhile the insurgent underground -- those young people addicted to iPods, cellphones and social networking -- are easily resisting all the firepower these broadcasters are unloading on them.

Radio fails to see that if you can't win the hearts and minds of the next generation, you proceed with the army of listeners you've got. That would be Gen Xers and Baby Boomers.

Never mind that you have no future with Gen Y in spite of your eloquent argument that most radio groups are still thriving free cash flow businesses. Little solace as each year goes on and more young people slip away from terrestrial radio.

So the surge has been on.

But there is no parallel to the U.S. Army's General Patreus whose report to Congress on his surge in Iraq war. You can't ask the "generals" of the NAB and RAB. What do you think they're going to tell their commanders-in-chief, the group heads?

It's working and if you give it a little more time, things will get better. Then the once mighty radio industry will defeat the challenges it now faces.

Radio's surge mentality must end and the commanders running radio need to get real.

You and I know these folks running the radio groups. They are good men (and they're almost all men which says a lot in 2007, doesn't it?).

They are quite capable of winning the piece (spelled correctly here) -- the piece of the media market -- in this day of Internet, mobile devices and pirated music.

They are quite capable of adopting and streamlining a positive move to electronic ratings that serves their best interests.

They know the folly of arguing over :10 and :30's when listeners judge commercials by whatever length they are -- and whether they suck.

They know they're going to have to bail out on HD as a means of expanding their channels and adopt it only to improve audio -- and that may be a cosmetic change only.

The surge is killing radio.

Very capable leaders are wasting time and resources chasing yesterday's business model.

Fix your house and build another one -- the house that contains Internet radio.

Internet radio doesn't need a surge.

Even without universal portability and even with price gouging by music rights groups -- Internet streamers have something better than a surge. They have momentum. And they've won the hearts and minds of the people even before they've delivered a business model.

Radio can do it.

Get into the future.

Stop kidding itself.

Stop wasting valuable time that they can't get back.

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What My Students Listened To on Their Summer Vacations

I've decided to return to USC for yet another year to teach several courses including Music, Broadcasting & the Mobile Future.

Today is the first day of classes.

There is an ancient eastern saying "The teacher and the student together do the teaching". For a guy who previously considered eastern thought coming from Hoboken, New Jersey this is an epiphany!

I kid.

But you can see why I have been commuting from Scottsdale, AZ to Los Angeles every week to spend most of the week learning more than I am teaching. And most of my professional readers know me and know this is true. In fact, it's true of every good professor and that's what I try to be.

So what have my young students done on their summer vacations that you might be interested in?

They are even more enmeshed in social networking as plain old email and even instant messaging doesn't quite do it for them any more. By next May there could be real movement in the area of social networking vis-a-vis the next generation.

These young folks took advantage of advances in Facebook to allow them to add music to their sites and a whole lot of other cool features including a box that allows people to tell them exactly what they think of them. (No, I'm not going there on my Facebook page).

They're not using "traditional" email as much. It's easier and more fun to use the built in communications system offered by Facebook.

My students swooned over the iPhone once it was introduced in June. For a generation that wants everything for free and doesn't want to even pay for the music they enjoy, they are scheming for ways to get a $500-600 iPhone in their pockets (can you say mom and dad or another part-time job?).

They watched less television than media people would think even though they finally got away from the burden of doing papers and taking exams. It's true many students had summer jobs but even with more leisure time, television is not the addiction it was for Gen X or Baby Boomers.

What they did do is go online and search for the videos they wanted to see. They even slipped DVDs into their computers to watch programming on inferior screens just because a computer is a great place for them to direct their TV viewing.

This summer they didn't read newspapers, but who don't know that (as we used to say back in Philadelphia). I should correct myself. They may have gone to newspaper websites but these are not the only sites they visit to stay well-informed and I find that they are remarkably well-informed.

They spent a lot of time listening to their iPods -- but you knew that, didn't you? Time spent listening to iPods, if you will, hasn't declined as far as I can ascertain.

They didn't listen much to radio. They still don't know or care what HD radio is.

They love their Internet and love Internet radio and streaming.

50% of them download music legally usually from iTunes. The other 50%? Well...you know.

This generation still doesn't like to pay for anything.

They continue to want what they want when they want it.

And I love them because they are the children of my generation and we had something to do with the way they are today -- different from us and the same. As a generation they are singlehandedly changing the media business for better or worse depending on where you are.

If you're in the media business you may find yourself on a permanent vacation if you can't keep up with the next generation over the coming months.

Their vacation is over and yours never started when it comes to learning from the generation that is remaking your business.

If you're interested I'll pass along some of my observations about this new crop of students over the year ahead.

If the past few years is any indication, it should be quite an education -- for us.

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Music Taxes -- A Broken Record

Little Stevie Van Zandt is one of my favorite characters in The Sopranos.

He plays -- Silvio Dante, the consigliere -- advisor to crime boss Tony Soprano.

Stevie also plays guitar for the other boss in Bruce Springsteen's E Street Band.

I was reading his comments the other day on the sorry state of the music industry. Stevie Van Zandt could be the wise advisor to the record labels -- if only they would listen.

Here's the wisdom of the consigliere as it relates to the music industry we love. My comments, although not as wise, are in italics.

1. "Our stalwart record companies had completely given up on the idea of actually making great records people might want to buy, and had instead decided to charge radio stations for having the audacity to broadcast their records over the airwaves willy nilly so that even the unwashed, unsubscribed could hear them". The Sopranos enjoyed pulling off a few good hits every season but in real life Van Zandt knows that killing off radio station airplay would be a real crime against the artists, radio stations and the public.

2. "Now it's the rights societies turn to go after those thieving huckleberries who run nightclubs, coffee shops, restaurants and hair salons. And don't think for a minute you sneaking, sniveling dentists are safe either. It will take more than laughing gas to save your ass". Stevie points out that the license fee in Australian nightclubs that play records has been boosted from seven Aussie cents per customer to $1.05. If there's dancing, from 20 cents to $1.07 per person.

3. "Performance rights organizations are now going after coffee shops where folk duos play to 50 people". Someday we will probably thank the misguided music industry for stunts like this that will eventually force club owners to hire only artists who don't perform copyright- protected music. These tunes can't be worse than what the majors are putting out there lately.

4. "In Canada the Society of Composers, Authors and Music Publishers is going after barbers, hairdressers, and yes, dentists who play music of any kind (sic) that their customers can hear." Will your dental insurance be going up to cover this incidental cost. I'd rather have my teeth drilled than pay it.

5. "A restaurant in Florida was contacted by a company that said it had to pay a license fee for music or it would be fined. 'But we don't play music,' the conniving scoundrel claimed. 'You broadcast Monday Night Football don't you?' our protector and savior asked. 'Yeah, so what?' 'We own the rights to Hank Williams, Jr's Are You Ready For Some Football, and you're broadcasting it.' " Tell me they're kidding. This would be hilarious if only it were not true.

So the next time the MusicFirst Coalition argues that the NAB is using scare tactics over royalty issues beware.

MusicFirst contends that the eventual royalty taxes that the labels seek from American radio stations will only be between $470 million and $1.116 billion (applying what European broadcasters now pay to U.S. stations)

Currently radio stations pay no music tax in their 24/7 effort to sell product gratis for the less than appreciative labels.

And, by the way, isn't MusicFirst a great name for the mouthpiece of the record industry?

Music interests come first.

Screw everyone else -- even their partners in radio.

The record labels' act is sounding like a broken record.

The next time they make $1 billion sound like its nothing even as the radio industry is in decline then remember Stevie Van Zandt's colorful words.

This is just the beginning.

The beginning of more taxes on broadcasters, venues -- and yes, even dentists.

Just the beginning!

The beginning of the end.

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Let My Evil Empire Go

Clear Channel finally set a date for the shareholder vote that would allow it to go private and make a fortune for the Mays principals and their Wall Street cronies.

The date they chose was at the very end of the legal limit -- imagine that, Clear Channel pushing the legal limit -- the end of September.

Clear Channel has to win the vote.

There is no Supreme Court available to steal this election. And in the state of Texas, when a shareholder fails to return their proxy, it's counted as a "no".

Meanwhile the buyout price is $39.20, but Clear Channel's stock has been bouncing between the low $30's to the high $30 range. Think anyone has figured this out? Think there's money to be made on this stock in advance of the vote, too?

You bet.

Everyone is making money except the poor suckers who bought CCU when it was closer to $90 a share -- or $70 -- or $50 or, hell, even $40 a share.

These folks have taken what's referred to as a haircut.

Meanwhile if they are still holding CCU stock and they bought it that high, well, welcome to the world of shareholder value which to quote the Temptations "is just my imagination running wild".

Shareholder value? $39 dollars a share -- after all you've been through.

After all the reorganizations.

With the purchase and sale of the concert division.

Having survived "Less is More".

Clear Channel style hardball and all.

Sorry for your bad luck but we need to move on. The biggest consolidator of all needs a second life -- and like the "Second Life" online, it's a virtual world.

Virtually everybody but them loses money.

Still, I say "Let my Evil Empire Go".

Let's move on.

Clear Channel reincarnated has lots of employees to lay off to pay for this thing. These folks need jobs before Christmas.

Let my people go -- let them find work for before the holidays. Give them huge severance packages (What am I smoking?)

There's lots of stations and assets that could be sold at the right time for the right price and don't forget in a few years the remnants of Clear Channel with all the top markets its keeping is another pay day waiting to happen.

John Hogan needs something to run.

The Mays brothers need a day job.

Let My Evil Empire Go.

Kumbaya.

For over ten years consolidation has been a distraction to the radio industry.

Let's pray for a "Yes" vote so we can collectively move on to the future with a somewhat less powerful and might Evil Empire that has let its shareholders down, let its people down and let its industry down.

Down -- like the value of Clear Channel stock today compared to when the promises began.

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Place Your Bet -- iPhone or Blackberry

You've seen me write with some regularity about the revolutionary new iPhone from Apple's creative mad man Steve Jobs.

My readers -- you -- are divided as far as I can tell.

One group has gone ga-ga over iPhone and all its coolness while the other says it's a toy -- not even a significant work tool.

And I've concluded that you are both correct.

The iPhone lovers and early adopters know that this device which does just about everything a young person holds near and dear is the future.

The Blackberry (and other smart phone proponents) rightfully argue that iPhone is no Blackberry -- and I've known a Blackberry - and you're no Blackberry (to paraphrase the Lloyd Bentson retort to Dan Quayle in the Vice Presidential debates when Quayle wrapped himself around the image of John F. Kennedy).

What we seem to have here is a very significant question -- who is seeing the future?

Is Steve Jobs bringing the iPhone to the market that will make a Blackberry someday seem complicated and ridiculous?

The iPhone is no Blackberry or Treo or traditional smart phone.

Blackberry eats iPhone's lunch on email and many other business-type tasks. That's why it isn't going away any time soon.

But the future with young people coming up through the ranks may not be favorable to traditional smart phones. You could argue that when young people get a job they will have to do more than flick through iTunes, photos and email.

Maybe yes.

But maybe Jobs knows that the next generation plays a lot -- plays music, games, text messages constantly and that even in the real world you won't be able to separate a phone from an iPod.

The next generation is not like any other.

They multi-task constantly (not good, in my view - they should prioritize).

They have had unprecedented access to portable music for most of their lives. You could argue that the iPod part of the iPhone is an equal partner in its attractiveness with the voice function itself.

The next generation navigates the future by integrating fun into their lives and I don't think that will change when they get their first big jobs.

Who could have ever thought a simple cell phone -- you know, the thing that's great to have with you in case your car breaks down -- is no longer a phone but an entertainment center.

Which is why I say, place you bets -- I don't really know, I can only speculate -- is the smart phone of the future a media device or a business tool?

Right now, you can't really have both although some phones try to sell themselves that way.

And each generation is lining up to bet on its future.

Anyone in the media business would be wise to follow this carefully over the next few years because the replacement for the Walkman, the radio, the cell phone, the iPod and even the computer as it relates to the Internet will be a mobile device.

If not the iPhone, something else.

If you're betting on the future you may want to place your time and money on the device that will play the content you will be creating.

In that case the real smart phone may very well be the iPhone in spite of the business tools that are currently not included.

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Introducing "The Truth Meter"

So I returned to Scottsdale from LA the other night when I received the first of what would be 21 -- count 'em, 21 -- emails from a radio industry consultant taking me to task for advocating the Arbitron Portable People Meter (PPM).

The emails got nastier as the night went on, but the sender is no dummy.

He's brilliant.

Rude, but brilliant.

Unfortunately he suffers from the same disease that is taking radio down right now -- the "I'm right, you're wrong if you don't agree with me" attitude. Certainly his concerns and the concerns of others should be passionately pursued.

And Arbitron should be held accountable for the integrity of the People Meter because it is key to radio's future.

Having said that, I swear I felt like I got caught wearing a mink coat by PETA (the animal rights group). All I said was -- get off the diary and get into the future.

I didn't say PPM was the greatest thing in the world.

It isn't. It's flawed.

I never said the results are perfect or even up to par yet. But I am saying -- move on or move over.

The radio industry has to stop this.

The National Association of Black Owned Broadcasters has a right to demand validity from the People Meter. Kick Arbitron's butt, but stop the mixed messages and delaying tactics.

Radio groups are signing PPM contracts faster than Lindsay Lohan can go to rehab.

Cox's Bob Neil, who has been known to hire a programming consultant or two at times, is pissy about the People Meter which is okay, but don't tell Arbitron "to be careful what you wish for" as he reportedly said after Cox became a PPM client.

Is that a threat? All you're doing is threatening your own future.

Ironically, these same radio consolidators are the ones bankrolling the Arbitron People Meter. You'd think they had no control over Arbitron by the way they throw fits, issue threats and trash the very ratings they are supporting by willfully and knowingly signing long-term contracts for PPM service.

You can't have it both ways.

Don't get me wrong PPM issues are fair game now and forever.

Got issues over docking habits by meter wearers? Hold Arbitron to the fire. Go ahead. It's your right. You're paying for it.

But don't get your meters bent out of shape.

Farid Suleman, the shrewdest of shrewd cats, negotiated a seven-year deal with Arbitron to use the People Meter ratings at his Citadel stations -- that's akin to Southwest Airlines buying options on jet fuel years into the future to hedge on price increases. Now Farid is free to move around the ratings world as he pleases.

If Farid winds up trashing the thing he just locked up for seven straight years, shareholders should then hold him responsible.

I'd like to see Arbitron develop a Truth Meter.

It's only for radio executives.

And Arbitron executives.

It doesn't record radio listening because we all know that many radio execs have XM or Sirius in their Lexus's.

My new Truth Meter is designed to pick up double talk.

Let's track how many radio presidents say one thing to the advertising community and yet another to the trade press.

Let's see if we can develop a Truth Meter that will track what executives say in closed door meetings with advertisers, executives, media people, their own salespeople -- people who could make them money using PPM.

What The Truth Meter can do is record the double-talk that some radio executives babble to Wall Street and the trade press and balance it with the butt-kissing that they are most certainly doing (or will be doing) to advertisers who -- and read this part loudly -- like the People Meter.

Hello.

Advertisers -- the people who make radio money -- want this thing.

Stop trashing it.

Make it better.

Make it validate true radio listening as much as statistically possible.

Someone wrote me and said they couldn't understand why I sold out to Arbitron. That I if I still lived in Cherry Hill, New Jersey (as I did when I owned Inside Radio) I wouldn't go soft on them. California and academia changed me, they argued.

I'm not making this up.

They're right. California has changed me. I don't freeze in the winters anymore.

And academia hasn't changed me.

My students have.

How many times do I have to say that young people don't want to listen to radio anymore. They don't like it.

You bet that's changed me. It should wake you up, too, if you're running radio stations.

Without the next generation, radio has no future.

Radio, you've put up (rushing to sign all those PPM contracts). Now it's time to shut up.

There's lots of smart talent in this business and still many good leaders. Try a different tact.

For your sake get into the future so you can move onto bigger problems like existing in a media world competing with iPods, iPhones, Internet, downloading, social networking and video content.

Strap on the Truth Meter every time you're tempted to shoot yourself in the foot so we can have a nice digital recording of stupidity at its best.

You don't publicly attack what you've signed long-term contracts to support.

Own up.

Radio has a sorry record of supporting initiatives critical to its future.

• The industry took forever to lobby automakers to install FM-capable radio in cars.

• Dragged their feet arguing over AM stereo and in the end it didn't matter.

• You saw what happened when the radio industry allowed the debate over digital audio to drag on. Satellite radio came along. Terrestrial broadcasters complained about not having enough channels to compete with satellite radio or even the Internet for that matter. What you got was HD radio -- too little, too late.

• Terrestrial broadcasters made the wrong decision on the Internet and instead wasted the last ten years while content delivery slipped away from transmitters and towers.

• They have no mobile strategy other than a radio -- a device young people have forsaken for iPods and cell phones.

It's no surprise that radio execs are now doing what they do best when they critically delay the implementation of the People Meter and stall to keep inferior paper diaries over electronic ratings -- in the digital age already!

There's little doubt where all this turmoil will get radio.

Just check its track record for a look into the future.

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Disney Gets The Last Laugh

Could it possibly be that Disney did something right when everyone else thought they were doing everything wrong?

Radio Disney, the kids radio format, may now find a reportable audience when Arbitron's Portable People Meter (PPM) is set to become the new standard in audience ratings. The meter measures all media within its path and kids don't have to fill out diaries. Their listening can now count.

Formerly, Radio Disney was the joke of consolidation.

A bunch of AM stations with horrible signals patched together to offer the Disney kids programming to the tween-agers. This in spite of the fact that the quality of the kid's programming was rather good.

Of course, the consolidators laughed.

Who would want to buy crappy little AM stations when big, expensive mega-signals were available through the legalized monopoly game known as radio consolidation?

Michael Eisner, that's who.

The much maligned bull-in-the-china shop former boss of Disney who absolutely kept Disney's corporate powder dry while Wall Street led the invasion of the money snatchers to buy up FM signals and big signal AM stations.

This would be a footnote to consolidation except the joke was on the radio consolidators, Wall Street greedy-people and shareholders themselves. It turned out the blind were leading the blind.

Disney didn't buy up the big properties that were available and it could have. Yet all through consolidation Disney's ABC remained one of the top billing radio groups based on what it had previously purchased and presently operated. Big billing from excellent, established money-making major market stations.

They just kept buying these little AM stations for Radio Disney and doing deals with small station owners that turned their facilities over to Disney kids programming. It was the coalition of the willing except, unlike the term "coalition of the willing" commonly used to describe the few nation partners in the Iraq conflict, this coalition actually won the war.

Disney/ABC kept the assets they owned and then, later, did a complicated (and tax-friendly) sale to Citadel making tons more for its investors.

Oh, and while the record labels were consolidating, cutting back, being seduced by Steve Jobs and suing their young customers, Disney was out running an old-fashioned record label.

You know, the kind that sells -- dare I say the word -- CDs!

Through its Miley Cyrus (aka Hannah Montana) and other sub-teen goodies it started to outsell rap, hip-hop and mainstream artists on a regular basis. Even outselling the holy grail of the record business these days -- compilation albums.

And High School Music 2 broke all-time cable records Friday night.

So, let's do the math.

Disney sits out consolidation -- that's one big one for them.

Disney keeps its existing ABC Radio stations, a top biller during consolidation without getting into the post-consolidation acquisition frenzy -- that's two.

Sells the entire shooting match to Farid Suleman at the exact right moment and cleans up -- three!

Disney proves to be the one company to run a record label that is trending upward in the face of dying CD sales and music piracy without having to sue one of its cute little young people -- more than the RIAA can say, by the way.

Skillfully integrates its television and film platform into everything else it does -- just as master marketers do.

I've lost count of all the things Disney did right?

All of this flew in the face of conventional wisdom.

All of it.

Look, I'm not here to rile up the Disney haters or demoralize the rest of us. But you can't say they didn't take the road less traveled during consolidation.

I'd simply like to point out that conventional wisdom is overrated.

If Wall Street likes it, I personally look in another direction. And Disney did that while it was a considerable public company.

Turns out that the new kids on the block -- (the new rich) radio consolidators were blinded by the money and couldn't see the light. Radio had no future without the next generation and no one way paying attention to the next generation -- except, well you know who.

Consolidators were paying attention to Wall Street analysts who in the end didn't know their head from a hole in the -- market -- to use a radio term.

In other words, to borrow a phrase from that great 21st century sage and soothsayer Steve Jobs, "think differently" was the business plan that radio and the record business never adopted.

Their motto instead was "Think Indifferently" which bought them the mess they are now in.

Saggy stock prices.

No upside.

An uncertain future and lower shareholder value.

Who are the Mickey Mouse operators now?

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Fix The Record Business -- Make a Hit

I can't help being haunted by this deep-seated conviction of mine (as unrealistic as you might think it is) that the big four record labels would be in a much better position today if they could make hit records.

I know, I know -- they have many other problems.

Steve Jobs and the iPod.

Legal and illegal downloading of music.

The growing unpopularity of their main staple -- the CD.

The decline of their hitmaking partner -- radio.

I know, already.

But, I still get the feeling that if these labels knew how to make a hit -- to find the next music genre -- they'd be in a better position to survive and maybe even thrive some day in the digital future.

In the late 60's when the British invasion, Motown and Philly Sound were cranking out hits, it didn't matter that these songs were played on scratchy, crappy little AM stations (okay, some were not crappy, but all were fidelity-deficient). The music sounded better on vinyl (until it got scratched) than on the radio.

Young people listen to illegal music on their computers' awful speakers -- that is, when they can find something to be passionate about.

With all due respect to hip-hop, it ended a while back. The labels just don't have much else to replace it with.

Kelly Clarkson -- please! Are you saying that's your future music business?

Sound-alike songs that drone on and on in angst are not even worth stealing by the next generation.

They hope for better. Never stop trying to find it. That's more than we can say about record labels.

The labels are too corporate.

Too consolidated.

Too constipated -- stuck on the same themes, same sounds.

They've cut back. Taken their ear off the street. They replaced their so-called "golden guts" executives with "no guts" people.

Take a chance.

Invest in finding the next "British Invasion" so we can let the baby boomers music follow them up the stairway to heaven someday.

Here's a novel idea -- make a hit.

Maybe you'll sell more CDs.

Maybe you'll get stoked about selling tons of downloads for less. (Sell the downloads as cheaply as Verizon sells text messaging and you'll turn a losing business into a winner).

And if you can't come up with a new hit genre soon -- and I mean soon -- don't stick your nose up at Miley Cyrus (aka Hannah Montana) who is having you for lunch on the Disney label.

Oh, and she's selling CDs to tweens in this digital day.

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Record Labels Are Starting to Scare Me

Universal and Warner within the past few weeks announced that they were making investments in companies that handled artist management or web networking.

The big four labels are not going to turn it around any time soon being a record company. CD sales continue to nose dive.

Warner is spending $110 million to buy more of Front Line Management, an artist management company that represents Jimmy Buffet, Christina Aguilera and others.

Universal bought a position in Loud.com, a hip-hop social networking site that offers cash prizes and recording contracts.

This scares me.

I know you could say, Jerry, you're always saying the record labels have to get with the current trends being driven by the next generation. You would be right to remind me of that. Yet.

Management?

Touring?

Sponsorships and merchandising?

These are not skill sets of the average record executive I've come to know.

So maybe I'm scared because of comments like the ones made by industry analyst Bishop Cheen: "The Big Four have always been predatory and artist management is a very personal kind of business. With the big majors this has not always been their strongest suit, but diversifying is still absolutely the right strategy".

Okay, someone else is scared, too.

Right move.

Wrong people.

Wrong skills.

I guess the record industry can't win for losing and they're doing a lot of losing these days.

If the majors really wanted to see the light, they have to understand the next generation. I contend they do not.

If the major record labels really think buying new age companies with age old thinking will lead to success, save your dough.

The labels want to arrive at the future without having to earn the right which is why you should not be too surprised if the latest epiphanies coming from record labels are not only too little and too late but too misunderstood -- by them.

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AT&T's Pearl Jam Fiasco

I guess AT&T will think twice in the future if it -- or anyone working for the cell phone giant -- tries to censor a rock performance.

They got burned when AT&T admitted to Lollapalooza concert officials that portions of the show were cut from the webcast.

During the performance of "Daughter" these lyrics were sung by Pearl Jam to the tune of Pink Floyd's "Another Brick in the Wall", but they never made it onto the webcast:

"George Bush, leave this world alone." (the second time it was sung).

"George Bush find yourself another home".

Listen for yourself.



If it makes you feel any better, AT&T apologized for censoring the song.

It doesn't make me feel much better.

The Internet is a vast space that promises freedoms of all kind. Freedom of expression is one of them. We tolerate many things in the name of freedom. This kind of action makes me wonder whether some fail to comprehend the importance of so-called "net neutrality".

Many companies don't like the words "net neutrality". They want people to trust their judgment.

Trusting anyone's judgment other than your own is forfeiting the rights that go along with freedom of speech. That's why this incident is an important one.

You could look at it as a mistake with an apology and that's that. But it's really a wake-up call.

Providers have no right to censor content on the Internet.

Consumers have other options.

They can take this advice from CNET writer Marguerite Reardon, "any provider that blocks access to content is inviting customers to find another provider."

Now Pearl Jam on its website is asking fans to report "examples of AT&T censoring artist performances around political content."

AT&T has gotten itself into a lot of trouble.

The citizenry can't be too outraged when freedom of expression is concerned.

To borrow a phrase from one of AT&T's ad campaigns back in the day in making the apology they made "the right choice".

It would be better if they now championed "net neutrality" instead of reluctantly tolerating it. If not, AT&T will pay a bigger price the next time it has a lapse in good judgment.

The Internet is everybody's place -- not the domain or fiduciary of big corporations and government.

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Beyond IBiquity's HD Radio

By Jack Hannold, Guest Contributor

(Note: I am always grateful for the thoughtful comments and emails I get on my various posts. This one I thought was extremely noteworthy so I am presenting it to you today -- Jerry).

“Utilizing HD Radio for additional revenue opportunities other than audio programming is more promising than traditional broadcasting applications.”

That’s how Jerry began his July 20 post under the headline, “Finally, A Good Use for HD Radio.” And he’s right. With competition from MP-3 players and cell phones – and with the kinds of programming the big corporate broadcasters are giving us – the future of radio, digital or analog, looks pretty bleak.

But whether broadcasters are more interested in duplicating their main channel programming in digital or in adding ancillary services unrelated to their main channel content, there’s a more promising technology available than Ibiquity’s, at least for FM stations, and you may never have heard of it.

It’s called FMeXtra, and it’s from a small Silicon Valley firm called Digital Radio Express, Inc.

FMeXtra has five important advantages over HD FM: (1) greater signal coverage area; (2) fewer interference problems; (3) lower initial installation cost; (4) no on-going patent royalty payment for use of the system; and (5) better audio quality. And those first three advantages are clearly the result of the way FMeXtra works.

Instead of HD FM’s two independently generated digital signals, each of which occupies the nearer half of a “first-adjacent” channel (e.g., for 92.3, the first adjacent would be 92.1 and 92.5), FMeXtra uses the part of the bandwidth within the station’s own channel that would normally be used for an analog SCA signal to transmit its digital signal.

(For those who don’t know, SCA on FM works exactly like the second audio program, or SAP, on stereo TV, except that it’s not meant for the general public. It’s usually used for subscription services – or, in the case of public radio, for things like reading services for the blind. That’s why SCA is not a feature on ordinary FM receivers.)

Partly because the HD FM signals are outside a station’s assigned channel, the power of each is limited to one-two hundredth of the power of the host analog FM signal. Because they’re so weak, and thus subject to interference from distant first-adjacent stations even within their host analog signal’s protected coverage area (while the host analog signal is not), HD FM signals are often unusable at distances where analog stereo reception is good.

FMeXtra’s digital signals, by contrast, are usable whenever the combination of signal strength and adjacent and co-channel interference levels make analog stereo FM reception usable. [Note 1.]

The one-time installation cost is lower because the FMeXtra encoder costs around $10,000, and can be installed in almost any modern FM transmitter in less than an hour. No other equipment changes are necessary (and stations with analog SCA’s can switch to one or two mono digital SCA’s, in addition to having two full-fidelity digital channels to duplicate their analog programming in digital sound).

With HD, which feeds three unrelated signals to the transmitting antenna, it’s usually necessary either to replace the high-efficiency “Class C” output stages, if not the entire transmitter, or to use a second, lower-powered transmitter for the digital signals with a combining network to feed all three signals to the antenna – or to use a second antenna for the digital signals. The cost can easily exceed $100,000. There’s no need to do that with FMeXtra, since the digital signal, in engineering terms, is a true subcarrier. It’s an integral part of the FM signal, and requires no special transmitter.

As for on-going patent royalty payments from stations, Ibiquity requires them, based on station revenues (much like ASCAP and BMI copyright royalties on music), but DRE doesn’t. The only patent royalties on FMEXtra are those paid by the equipment manufacturers.

And FMeXtra uses the advanced MPEG-4 accPlus version 2 codec, providing better audio quality than Ibiquity’s proprietary codec. [Note 1.] What’s more, Ibiquity has changed its codec without filing engineering data with the FCC. For that reason, Jonathan Hardis, who represents the National Institute of Technology and Standards on the National Radio Standards Committee, has petitioned the FCC to stop the HD rollout. [Note 2.]

The only thing HD has going for it that FMeXtra doesn’t is a digital AM system. But that system is so bad that it’s arguably more of a minus than a plus. Even some of the most ardent anonymous defenders of HD FM on the radio blogs – most of whom are probably employees of the big corporate broadcasters that, collectively, own a controlling interest in Ibiquity – shy away from defending HD AM.

On AM, the HD system doesn’t just occupy one-half of each first-adjacent channel; it occupies all of both first- and second adjacent channels! And the signals have one-sixteenth the power of the host analog signal, not just one-two hundredth. Major 50-kilowatt stations make background noise on first- and second-adjacent channel stations over 100 miles away during the day. And with nighttime authorization of AM HD, the band will soon be unlistenable after dark.

I recommend Barry McLarnon’s 2006 essay on the utter insanity of HD AM. [Note 3.] If you’re not technically savvy, read it anyway. Just skim over the engineering terms you don’t understand, and read his trenchant analysis of the political machinations that have got the FCC aiding and abetting the NAB’s attempt to foist Ibiquity’s hare-brained technology on us. It’ll tell you every thing you need to know. (And keep in mind that Barry McLernon, as a Canadian, doesn’t have to worry about offending the powers that be in U. S. radio!)

NOTES:

[1] “Road Testing the FMeXtra,” by Tom H. Jones. Radio World, Nov 8, 2006.

[2] “Should IBOC Rollout Be Stopped?” by Leslie Stimson. Radio World, July 25, 2007.

[3] “AM IBOC Power Levels = Mystery: It's Time to Call a Halt to the AM IBOC 'Experiment' and Start Talking Alternatives,” by Barry McLarnon. Radio World, July 19, 2006.

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Invasion of the Internet Radios

My friend, Joe Benson, whom I am proud to say I had the good sense to employ when I was programming in Philadelphia, sent me an email over the weekend.

In it he said, “You need the Roku (SoundBridge Internet radio) before you need an iPhone. You already know what the iPhone isn't doing for first time buyers at $600 a whack. Let's get you one of these (Roku only) at $300 or for the stylish "tube" that you connect to your stereo for $129. (Go ahead and splurge). I promise you will love this and never turn it off. If it would only take batteries”.

Joe is a consummate radio guy like many of my friends who eat, drink and sleep radio – terrestrial radio!

But Joe’s also a renaissance man. He’s wise to the virtues of the Internet and its power with the next generation.

Now, we're beginning to see the first generation of really serious Internet radios that are not attached to a computer. Here's a recent article in The New York Times that gives a taste of things to come.

Although they are certainly not perfect, the idea of getting the diverse world of Internet stations on a radio -- say, next to your bed or in your office -- is going to be tempting. One model you'll read about (Roku) is pre-set for 100 stations.

No need to look for djs that say "fewer commercials and more music", you'll really get it here.

Plus genres that the terrestrial radio band can't deliver. There's simply not enough room on the dial.

That brings me to HD -- the High Definition misnomer applied to a cheesy radio you can hardly even find at retail outlets. You know, the radio that when you bring it home, disappoints immediately for lack of good programming. If you were nuts enough to buy one, you'd be rewarded with barely a handful of stations that are lukewarm to making HD content exciting.

In other words, HD radios are losers.

Inside Radio recently did a series of stories on the consumers inability to actually buy these things in the very "big box" stores that proponents are bragging about.

The salespeople have no knowledge of the product.

The radios are not prominently displayed if the store has them at all.

And, of course, as I just mentioned there are so few HD stations -- and virtually none -- with programming worth the sticker price of the radio.

But, the advent of Internet radio untethered from a computer gives us a look into what "radio" will be like in the not too distant future. Consider this:

1. Buy an Internet radio today and instantly you have more variety and more choice than a terrestrial radio can deliver now.

2. Internet radios will provide better fidelity (if that's your hot button) and ease of use now that they are available outside a computer. More listening options. More places to listen.

3. When universal WiFi or WiMax (Sprint) is available, portable Internet radios will proliferate.

4. Plans are already afoot to allow listening to Internet streams in cars. Once the public has the choice, they may opt not to choose a terrestrial radio if that doomsday decision is ever offered to consumers.

5. HD radio has about as much a chance of competing with portable Internet radios as you and I have of competing with Tiger Woods on the golf course.

My point: if you're in the radio business right now, I'd be making plans to get out.

Not today.

There's still a lot of baby boomers and Gen X'ers around to make money on terrestrial radio.

But as I have said many times radio will not be a growth industry again in our lifetime.

The latest new projections from the respected Wall Street analyst Jim Boyle are headlined: "Small-Mid Markets Thrash Big Markets, Again and Again; June Radio Overall Drops 3%; Q3E Might be Dismal".

There's a relatively new book by Seth Godin called "The Dip" -- that teaches you when to quit and when to "stick" which I highly recommend to anyone in traditional radio. It's only 80 pages and I'd go to Amazon right now and get it delivered asap.

I hate to say radio has no future. I really do.

But terrestrial radio is in trouble.

Bright guys like CBS Radio President Dan Mason can maximize listening to the available market as he's beginning to demonstrate since he returned to the helm, but it will take a lot more interest in new forms of delivering content for radio companies as we known them to survive.

Internet strategies are going to be needed beyond simply doing the obvious after every one else.

You know I have said this about record labels. Radio is in the same boat.

So, the bad news is what we're reading day after day from almost every trade publication and news source -- radio is declining.

The good news is that the people who made it the exciting medium it once was -- not the "geniuses" of consolidation who ruined radio at the absolute worst moment in time, are out there and available for Act II.

The new portable Internet radios now coming to market are yet another reminder that the changing of the guard is going to happen whether we remain in denial or not.

Why not actually make joining the Internet streaming revolution a strategy that wins significant investment capital and strategic thinking going forward?

Create content where the next generation lives.

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iPhone Can’t Get No Dissatisfaction

It’s hard to find an iPhone user that doesn’t love his or her phone.

You might have thought by now, the coolness should have worn off.

I have a program director friend of mine who lives in Hollywood Hills. He dumped his Blackberry for an iPhone even though he gave up slightly better coverage with his Verizon service. He's not atypical. A lot of people are overlooking AT&T's slow EDGE system to own this revolutionary device.

Articles have appeared on Mac websites that refer to initial research showing as high as a 75% satisfaction rate among early adopters of the Apple iPhone.

When has the record industry had a 75% satisfaction rate?

How about radio?

Or satellite radio?

Or, well, you name it.

The reason this is so critical is that the iPhone is the prototypical mobile device of the future. We may laugh at how primitive the iPhone looks and feels two years from now when many users go out to buy their replacement models. The mini-computer known as an iPhone has exceeded expectations and that’s hard to do.

You’ll see the “imagineers” at Apple tease us with new features and new capabilities in the coming months and years. It will be very difficult, in my opinion, for competitors to catch Apple or slow down this juggernaut if it isn’t done right now. I don’t see that happening.

What’s most significant is that everyone in the music-related media must permanently start thinking in terms of delivering content people crave in the mobile space.

Radio was the mobile device for a generation or two.

Arguably, Sony's Walkman was the device to a generation.

Now, it's the iPod and soon will be the iPhone.

It is hard to get traditional media to think about the plain old Internet. This must change.

Even providers of audio and video will necessarily adapt.

Morning drive will be delivered in 45-minute segments to mobile devices. It will have video, audio and text. You can't call it radio.

Streaming audio will no longer be necessary. Go ahead, try and listen to streaming audio on an enabled mobile device. Our concept of real-time entertainment will have to change.

Entertainment devices will be including the necessities of the next generation – texting as long as it remains popular.

Consumers will demand video – easily accessible – for portable use. The mobile phone of the future will act as a storage device as well.

The smart phone will be a mini-computer – not full service as we’ve come to expect from laptops, but very useful and easily transportable.

There are a lot of businesses that are going to have to find ways to create, market and monetize their content for the mobile market to stay engaged and profitable. This is not easy because the rules keep changing. Technology sometimes hands us a winner (such as the iPhone) and other times shows us a loser (just about anything Sony these days).

In order to keep consumers satisfied, the music media business is going to have to be more agile, resourceful and creative.

When an iPhone can win high marks for satisfaction from consumers who paid $500-600 for them then you can be sure they are going to set a high bar for the content these devices feature.

Traditional and new media -- start you engine. The race for quality content is on.

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Starbucks Records: Number One With A Latte

Starbucks seems happy with the sale of the Paul McCartney CD "Memory Almost Full" and is apparently getting ready to expand its record label -- Hear Music.

Anyone ought to be excited about selling CDs – even blank ones – nowadays. Still McCartney couldn't come close to the number of albums Disney sold to tweens featuring Miley Cyrus as Hannah Montana.

Business for the major record labels sucks that much.

Warner announced more losses this week. I guess more cutbacks are coming. They'll need to either do that or make more hit records. Cutbacks are easier.

Warner may lose Madonna. Or it may not.

Madonna is rumored to be negotiating a $100 million Live Nation concert deal. Or, as a pessimist might say, Madonna is posturing for her renegotiation with Warner. Can you imagine Warner losing Madonna with little else to replace her?

One thing seems certain.

No matter what your future model for the record business is – it probably won’t work.

The record business is a business that does not need to exist.

What they do is no longer necessary. The labels may have to get into another business because selling CDs is becoming like marketing 8-track tapes.

Selling ring tones and concentrating on publishing may keep the wolf away from the door for a few more years, but really, folks, it’s time for the labels to reinvent themselves or say bye-bye.

What Starbucks is doing is tinkering with the traditional record business model of selling CDs. Its CEO had been making noises in the past about putting MP3-type docking stations into stores to allow coffee drinkers to also fill-up on music. Of course, Starbucks filters more than its coffee. It decides what type of music makes it into its stores. They're like Clive. Better yet they're the Juan Valdez of music. This is very specialized work, but Starbucks seems to know what its customers want.

As most of you know when a song shows upward progress on the Billboard charts it earns a "bullet" thus the phrase "Number one with a bullet" for songs that reach the top of the charts and still have momentum to stay number one.

Then Starbucks is, well, "Number one with a latte" -- enough momentum to make selling CDs in the store worthwhile to the coffee trade -- not necessarily the music business. Kudos to Starbucks for coming up with a new way to sell CDs, but selling CDs is not the future of the music industry.

Someday music will efficiently be universally and routinely delivered over-the-air on some type of mobile device -- not so much in retail outlets. The consumer will then be able to listen and buy that quickly and easily.

And I can promise you they won’t be paying 99 cents or anything close to that.

Music may eventually cost what sending a text message costs – and you know how much money mobile operators make off of text messaging when it's so affordable to young people.

This ought to be a sign from the music gods to the labels that cheap music sold in bulk is a good business to be in. But they just can’t give up their dependence on fossil fools – the labels that insist you buy a CD.

I see live music performance as where the new music business is heading. There is growth ahead for live performance because you can only experience it live. A live recording of a concert is a cheap imitation. Okay, maybe not that cheap, but an imitation nonetheless.

It’s one of those vanishing non-Internet dependent businesses like t-shirts or food. You’ve got to wear clothes (I think) and we all have to eat (except Nicole Richie and the Hollywood crowd).

So many in music media are afraid of the future. It must be a human condition. But the future will be very different and very profitable.

It’s just that the people who are in the music related media today probably will not be in it tomorrow – unless or until they cross over to the other side.

Bulk is good on more than Barry Bonds. Selling music cheaply and easily is the future model for the sale and distribution of songs.

Live is better than dead -- more of a future business than pre-recorded music. Humans still crave live performance even if it's a live performance of the dead -- The Grateful Dead, for example. You know what I mean.

And we’ll be dead as an industry if our futures don’t embrace these two trends: cheap music sold in bulk (like text messages to teens) and the potential for unprecedented growth of live music performances.

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What Elton John and Mark Cuban Have In Common

Elton John says dump the Internet and return to the good old fashioned face-to-face way of living.

Elton John is a great performer, but he’s a technophobe when it comes to the Internet.

Mark Cuban, the colorful and rich owner of the Dallas Mavericks, made $5.7 billion by selling Broadcast.com to Yahoo at the exact right moment.

Cuban says the Internet is now dead.

That not only hurts, but he rubs it in by saying the Internet is for old people. What is it with old people? Just a week ago I wrote a post about how students think email is for old people.

This is going to give the record industry and the broadcasting business a headache as they still haven’t jumped into commerce on the Internet yet unless you want to call downloading or streaming terrestrial stations an Internet strategy.

This is all mind-boggling. Are Elton John and Mark Cuban saying the same thing?
Can Mark Cuban sing “Honky Cat”? Just asking.

Cuban is quite a bit more believable.

He thinks cable and satellite networks are better than the Internet for building more complex interactive services. With Cuban it may be an issue of lack of bandwidth upon which to distribute video programming – and after all, HD TV is his business.

Phone companies and cable systems are not really compatible for HD video. Clustered cable networks might provide the atmosphere for high speed, high band-width applications.

This is a scary thought – cable systems as an intranet. Cable systems as the future. Many people still remember having to deal with cable boxes, poor service and high rates when cable invaded home television in the 80's.

Yet Cuban has a point.

Another point to watch is the signs we’re beginning to see that the “world wide” part of the world wide web may not be as attractive or essential as we once thought.

Young people live within social networks, as I’ve reported previously. They can do it all on Facebook or MySpace. They can get their video from YouTube.

These same young people are marching to the mobile future – lusting after an iPhone and its ability to bring them the web as we know it today. But tomorrow, our world may not be as wide. We may be willing to live within a smaller community online and we most certainly may do so to access things like HD programming if that’s what we want.

It’s odd in a way to call the Internet old and outdated, but technology now moves at the speed of light – at least in terms of development.

For media companies that have yet to conquer the Internet or adapt it to their traditional business models, welcome to the future.

We don’t know where it’s going, but we’re all going there.

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Pooping on the People Meter

You’ve got to hand it to the radio industry.

Late to the party on everything.

Digital radio – real late.

The Internet – still not there.

Electronic ratings – only by the hair on their chinny-chin-chin.

After years of the kind of resistance and lack of leadership radio marched into the 20th century (not the 21st!) by adopting Arbitron’s Portable People Meter (PPM). It was way overdue.

Once the big boys were on board, the others followed. The People Meter has been operational in Philadelphia and Houston for only months now and the radio industry is on the road to destroying it.

Some major groups are running their mouth publicly because they have gripes.

Cox. Radio One. Beasley.

Look, there’s lots to gripe about.

PPM is new. It’s a more modern way to capture listening. The radio industry seems to want the new People Meter results to equate to the old, deficient diary results. That’s why they carp about ethnic placement. Fret about early signs that respondents are growing weary of carrying the device and failing to take it out of the dock every day.

God knows there are tons of other issues that the obsessive/compulsive radio industry has been raising. And they have a right to raise these concerns.

But, not publicly.

Now, led by major groups, the radio industry is taking this fight to the street – Wall Street! Horrors!

The last time radio aired its dirty laundry on Wall Street was when Clear Channel trumped up an excuse to initiate “Less Is More” by shouting from the mountain tops that radio has a clutter problem.

The radio industry then made a federal case out of the length of commercial spots. It must be nice to fight in public.

But it’s not smart.

Ask any listener how to handle “Less Is More”,

Play fewer commercials. They don’t care about the difference between a :10 and a :30 or a :30 and a :60. They’re all commercials. Deal with it.

Let’s make the People Meter simple.

Forget the diary.

Forget comparing to the diary.

Forget having it both ways.

Forget threatening Arbitron in public – it only hurts you. If you feel Arbitron isn’t taking you seriously, you can retaliate at renewal time. A few big companies can impact Arbitron’s bottom line. Hell, Clear Channel alone can put a hurt on Arbitron.

Where are radio’s leaders?

Let your djs have the big mouths. You should use diplomacy. If not for the sake of your reputation but for the sake of the industry that is on its way to another black eye – the one it is giving itself.

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The Ingrates Previously Known As Artists

Sam Moore, of the duo Sam & Dave, thinks Cox Radio President Bob Neil is a racist.

Last week Neil told a Congressional committee getting ready to butt into the artists’ attempt to squeeze more money out of the radio industry: "I saw the (congressional) testimony yesterday, and the reality is a lot of those people would be sitting in a shack somewhere in a small town if it wasn't for the fact that radio supported their music when it was coming up.”

Moore, who should change the spelling of his name to “More”, is screaming bloody murder.

Moore doesn’t like Neil's use of the term “those people” so automatically a man like Neil who doesn’t have any history of being a racist is now a racist.

The only race involved in this dispute is the music industry’s race to self destruction.

Moore was appearing with other singers including Judy Collins trying to give Congress an excuse to stand up for “those people” – the ingrates previously known as artists. Congress doesn't need an excuse. And it has nothing to do with the color of one’s skin as Moore ought to know best. Radio was and is his best friend and greatest advocate.

Neil told FoxNews.com’s Roger Friedman, “The songwriters may make a million dollars over a lifetime on their royalties…But the performers made a hundred million dollars up front on record sales and concerts. Now they’re coming back and telling us to pay them. We won’t.”

Translation: it’s up to the record labels to take care of their own.

Neil is also talking big. Let’s hope he means it.

He is threatening to charge artists to play their records if the performance tax is passed. Properly disclosed, this is not payola.

It’s pure genius.

Lucky for the record industry and the greedy artists that most radio executives have no guts.

They may also have no brains.

Radio has been derelict in its efforts to remind audiences, the industry and regulators that radio did not profit directly from record sales. Maybe a little payola that was not worth the aggravation (remember, the labels were the ones paying the payola). Maybe you could argue that playing music was cheap programming, but radio could counter by calling it free publicity for record sales.

One of the things that is hurting music radio right now is dependence on music supplied by the labels that long ago lost the ability to find what the public wants.

That public now uses the Internet to audition what it wants to buy, steal or share. Radio can’t do much about it and the record labels have futility attempted to intimidate consumers into relying on old models.

Ironically, radio really does have a huge weapon in this fight and it’s bigger than a mere threat.

Radio actually needs to find and feature a wider variety of music. They are their own worst enemies with lousy music and too little variety. Over the past 20 years about all radio stations could do is change its sweepers and liners to try and make listeners believe they were getting fewer commercials and a wide variety of music.

Now, radio can actually deliver what their listeners have been clamoring for -- more variety.

In a way I’d like to see the artists get their performance tax because maybe a few Bob Neils might step up and show the artists why they should be careful what they wish for.

The labels would have you think that first you write a song, then singers get paid for the song that hasn’t been played on the radio yet (singers aren’t paid when a record is played on the radio only the writers are although some singers make side deals).

Radio stations are trying to get anyone who will listen to understand that there is no hit music if radio doesn’t play the songs – still the case even as the Internet has grown in its influence with younger consumers. Some day radio may not matter, but Internet radio will matter especially when WiFi or WiMax enables universal Internet on the go.

And we all know that taxing can easily become contagious.

If only radio had the guts to line up behind Neil’s threat. Let Congress see the showdown that is developing. By acting on behalf of these ingrates, Congress could actually hurt the very music industry it would presumably be trying to help.

It sucks that record labels have had a history of screwing their artists out of the fortune they were able to make on their backs.

But make no mistake about it – without radio – the record labels would have made nothing.

The fix is fairness.

Radio is the sales engine for popular music. It pays rights fees. Those fees could be reapportioned to pay the "poor" musicians who want Congress to act.

And, Internet radio should be encouraged and nurtured – not punished through unfair copyright fees.

Digital rights management (DRM) should be removed from all music now before the labels train another generation that the best way to share music is to steal it.

The labels have run the music industry into the ground.

Let’s hope the radio, satellite and Internet radio industry doesn’t let it do the same to them.

Go on record now and back the Neil promise to charge the labels for airplay. Watch the bully run.

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