Cell Phones Are Not Transistor Radios

There's new research I thought you'd like to know about that is in direct conflict with what I have been observing in my work with the next generation.

I'll report. You decide.

Let's breakdown a fairly recent RCW Wireless news account:

"A recent study from TNS Global Telecoms found that 43% of all mobile users listen to some form of music on their phones, and 73% of smartphones double as music players. And while the use of MP3 players on phones is up 78% in the last year, mobile radio uptake has seen a whopping 140% increase".

The high use of mobile devices for listening to music is not surprising, but mobile radio listening is. The reason may be that this study was worldwide in scope including countries where radio has not yet committed consolidated suicide.

"TNS — which polled an astounding 16,000 consumers in 29 countries for the study — also found that 45% of users list AM/FM as one of the top three factors in purchasing a mobile phone".

I'll make you a money bet that if you polled U.S. consumers only, you would find AM/FM's effect on purchasing a mobile phone almost negligible.

Ask anyone.

Who do you know that requires AM/FM access on a mobile device? The next generation will tell you that they have moved on beyond radio. It's simply not important to them.

"Meanwhile, a recent study from the Pew Internet & American Life Project found that 17% of U.S. mobile users play music on their phones, nearly matching the 19% who use mobile e-mail or surf the wireless Web".

Note the lower use of mobile phones for listening to music. Keep in mind many of these folks listen to MP3s not streaming radio.

"Side-loaded tunes account for much of that activity, it seems. But an increasing number of listeners are tuning in to streaming mobile stations including satellite radio from Sirius and XM as well as terrestrial stations".

This is looking at mobile music through rose-colored glasses.

What's scary is the next great divide forming between proponents of live mobile radio and the next generation.

The next generation -- Gen Y -- has already been born. They are in various stages of growing up. Some are in college and soon to graduate. As a group they represent numbers equal to or greater than the huge baby boom population so without them there is no future.

My personal observations are:

1. Young people increasingly want to time delay their entertainment. They want to stop it, start it, advance it -- control it the way older people use a TiVo for television entertainment. This indicates to me that Gen Y would be a perfect market for podcasting once the music royalty issues are worked out. That's why I often call podcasting the new radio.

2. Radio does not interest the next generation -- at least not the brand that terrestrial operators are offering. They are more likely to enjoy Internet streams from "nobodies" if they are still up and running after the burdensome CRB ruling. The unfortunate overtaxing of Internet streamers at the hands of the CRB has put a crimp in what could be a great growth medium.

3. The next generation wants control of their music. They are, in my opinion, less likely to let content providers dictate the terms of the entertainment. I've mentioned this before and I'll say it again -- mash-ups are growing increasingly popular with this segment. In short, they want to touch, shape, edit, advance and change their listening experience.

None of the above cooperates with where radio and satellite heads are at right now.

Bright people looking for innovative answers must first study the market -- the way Apple's Steve Jobs' does by instinct.

To put it bluntly, the next generation -- the one you need -- doesn't want to save radio.

They want something different, new -- something they have a hand in programming.

This is lesson number one for those taking notes.

The cell phone may be everywhere but consumers don't necessarily want it to do everything.

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Radio & Records -- Playing Not To Lose

As many of you know I love ice hockey.

More specifically, I love the Philadelphia Flyers for their physical play and great passion for winning.

I see a lot of similarities between hockey and life. In fact my son and daughter were raised on Flyers hockey from six months old.

The Flyers never give up, I told them.

Look at the Hound (Bob Kelly) in the corner mucking it up trying to make something happen, I used to say. The lesson is obvious.

Stand up and fight for what's worth fighting for.

When you lose, you don't really lose unless you give up. There's always something to build on.

But recently it has occurred to me from watching the Flyers during the regular season and in the NHL playoffs that sometimes they look like they are playing not to lose -- in other words, they're not playing to win. That's why they get tentative and cough up a goal in the final seconds to lose the game. Last night's game -- an exception.

We sometimes do the same thing in life -- and specifically in two businesses of which I am really fond -- radio and records.

Somehow you get the feeling that these two ex-powerhouses are concerned with trying not to give up another goal (profits, CDs, listeners, advertisers -- you name it). They're not on their game. They are on the defensive.

Instead of blazing the way into the digital future, the record industry has been trying to hold on to CD market share since 2000.

Not figure a way to handle Napster.

Not get an answer to illegal filesharing.

Neither iTunes nor iPod can make the labels go on the offensive -- other than suing people. Occasionally, they buy a small company to show that they can or they do an unremarkable deal. But you get the feeling that if the mighty record labels wanted to score with two minutes left, they could -- if they played to win.

Instead of getting into the mobile and Internet content businesses, the radio industry has also played defense -- in hockey we might call it playing the "trap" -- trying to keep others from "scoring" in new media instead of pulling out the stops and going for it.

The analogy breaks down here: in hockey you'd put the best men on the ice to win, but in radio they've fired, retired or demoted their best players and benched the others.

I have a hard time believing that these two industries wouldn't be doing a lot better in their quest to find a meaningful and profitable role in the world of new media -- but not by complaining to the referees (the courts, by the RIAA), threatening to field a team of minor leaguers (the ones who will work cheaply) or using players from their farm teams to win in the big leagues -- that is if they still have a farm team.

In life, you play to win but sometimes you lose.

In radio and records, they play not to lose and sometimes hope to win.

If these two mediums are not ready to take a few chances and play with the talent they have "on the bench", they soon will be out of competition in their fight for survival.

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37,182 Weekly Radio Mistakes

Radio has had an illustrious history of selling merchandise and services.

That's why Hillary Clinton and Barack Obama can't buy enough of it when they are battling in Democratic primary states. It's cheap (especially for politicians) but it's not all that prohibitive for the rest of the advertising world.

Still, as powerful as radio is with older listeners, there is one thing it cannot sell even to them -- HD radios.

You can hardly find a person who owns an HD radio in the real world. Broadcasters know this because they don't program anything compelling to make consumers even consider buying an HD radio. They are apparently wrestling with that age of hypothetical: What comes first the chicken or the egg -- the content or the radio.

It's getting to be a ritual that when you check the top ten national radio advertisers in any week you always see the HD Radio Alliance on the top of the list.

Take April 14-20.

There's Geico, Home Depot, Wall-Mart, McDonalds, Verizon, Toyota, AutoZone, Ford Lincoln Mercury and AT&T in that order -- with the HD Alliance on top.

One of these things is not like the other one.

The HD Alliance is running free ads contributed by the nation's radio stations. The other advertisers are -- well, paying. That's 37,182 freebies nationwide in just one week to no avail.

Radio must have a lot of unused inventory sitting around, don't you think?

That's bad enough. Propping up this group of pretenders who will in the end fail to impose digital radio on a marketplace that is either happy with analog radio or is unavailable to radio makes the point moot.

Can you imagine what would happen if radio put its power and might behind 37,182 national spots that mattered.

No. Not "Radio Heard Here" -- the costly boondoggle that the major consolidators and NAB are foisting upon the industry.

Is it me or am I missing something. "Radio Heard Here" means nothing. Says nothing. Is nothing. Now you can understand why the leaders of the radio industry can't succeed in a more competitive digital world. They continue to show us -- and their investors -- why they are clueless.

Really.

There was a piece in Inside Radio last week defending the new "Radio Heard Here" concept as cool. They're playing with us, right?

They don't know what to do.

So, I've got a suggestion.

Take the 37,182 spots that were wasted that week and ...

1. Give them away to public service campaigns

2. Sell them to somebody

3. Don't run them and help clean up on-air clutter.

4. Run spots exposing excessive corporate executive pay in radio (sorry, just kidding -- couldn't help myself).

5. Run one spot 37,182 times that clearly tells how radio actually helped a business sell more inventory or service. Call Chuck Blore out in Hollywood who has forgotten more than most radio people know about creating positive imagery for the advertising community. Take plenty of notes. Listen. Don't talk a lot.

There is incompetence all around us.

And you wonder why an industry loaded with dedicated, creative and hard working people is marginalized while some suits now decide to waste radio commercials on radios that will never get sold off the shelves of Best Buy, Wal-Mart and Radio Shack. The shelf will be sold first.

I'm sure you know people -- maybe you are such a person, yourself -- who have a better idea how to use 37,182 wasted spots per week.

We don't make $11 million a year, but I'll bet we could come up with a better way to put radio's best foot forward.

Instead of in its mouth.

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Fighting The Evil Empires

Clear Channel used to be the one and only Evil Empire.

I didn't give them that name.

I believe Eric Boehlert of Salon came up with the greatest description of a ruthless company that doesn't -- in my opinion -- care for its audience or its personnel.

But today there are even more Evil Empires.

Citadel is one of them.

Radio One could be another.

If enough people have been screwed (and I'm including shareholders, now) then fill in the blank for your favorite nominee for Evil Empire.

As some of you know, my dealings with the original Evil Empire resulted from irritating them with news accounts that didn't make them look -- well, competent and honorable. They blamed me. Attacked my credibility. And threatened me for a while.

One day -- just before Thanksgiving as I remember it -- not too long after the turn of the new century, I was served with a $100 million lawsuit.

Randy Michaels who was chief sorcerer at the time even hit me with a RICO action which was promptly dismissed. I thought, who was calling whom a racketeer? The intimidation was heavy. A lawsuit was initiated. As I recollect, they were not interested in settling our differences out of court at first so I filed a $125 million counter suit.

Without boring you with the details (which have been written about extensively and are in the public domain) this group played hardball with me and I defended myself. Eventually they bought my company and each party's actions suddenly went away. So did I. I was restricted from working in certain areas of radio for four years which is how I was blessed to get the sabbatical I enjoyed by teaching at USC.

Little did I know that the company that was going down because it couldn't adapt to the future made it possible for me to work with the next generation and know with certainty why today's traditional media business is destined to fail on its present course.

That's my story -- in brief. I see there are two new books out about Clear Channel -- one authorized and one not. Pay for them if you must. You know the story already -- perhaps too well. It isn't a pretty one.

This got me to thinking how the average person -- screwed and tattooed by the growing number of Evil Empires in radio -- could actually fight back.

Litigation is out.

That's what these people do best. I don't recommend that playing field unless they come after you first. Then, perhaps you'd have to do like I did. Sell my house (in New Jersey) and keep the one in sunny Scottsdale (thank you, Clear Channel). After all, the lawyers must get paid.

Arbitration is a waste. Even when the arbitrator rules in your favor -- if you're lucky -- it's like kissing your sister.

Then, where to look?

I have always admired the way PETA -- People For Ethical Treatment of Animals -- do things.

Back when I was writing Inside Radio I covered the controversy surrounding Bubba The Love Sponge (Todd Clemm) as he castrated and then slaughtered a wild pig and held a testicle eating contest on the Clear Channel station in Tampa. He was suspended but what brought the station to its knees was a beautifully orchestrated boycott of advertisers -- 32 in all.

Talk about castration -- their billing was cut right below the waist by this group of activists who would not be denied.

Howard Stern always got away with a lot on the air but he couldn't kid about the death of Mexican singing star Selena right after her death. A boycott was organized and he eventually had to apologize.

That's it -- boycotts, actions. Publicizing the evil for all to see.

When radio employees get screwed, a powerful option is to organize a boycott against the company and the local station.

1. If the news staff is eliminated, take it to the public and warn what will happen the next time a major catastrophe happens. Sooner or later it will.

2. Get with labor unions nationally and locally and countdown the jobs lost between say, the start of consolidation until now. Print it in the paper. Put it online. Have the labor unions help you enlist support in getting advertisers to boycott companies that are killing local radio.

3. The unions are the most powerful route to your legislators who also have a voice. They can make life very hard for radio owners as they may yet do by requiring them to have human beings on site in case of emergencies (imagine that!). This comes from the Clear Channel Minot, ND debacle a number of years ago. Clear Channel wasn't quite guilty of everything that has been alleged, but still public opinion is powerful and now all owners may have to pay the price for that bad publicity.

4. Firing radio people with cancer or illness -- and I have heard too many of these cases over the years -- means taking the stories to the newspapers, bloggers, websites and, yes, local TV stations. What a human interest story. Let these companies feel their own pain.

5. Target the radio stations local and national advertisers with petitions and threats not to buy products or services. Ask PETA how well this works. Keep the list on a website. Send it along to local newspapers. Some of you may argue that hurting the radio business at a time when radio business is hurting is bad business -- that it doesn't help the survivors. Well, survivors of radio Evil Empires is just another word for tomorrow's casualties. The line has to be drawn somewhere.

6. Buy a share of your radio group's stock if you don't already own it (I hear its real cheap these days) and go to the annual meetings en mass. Raise a stink. Put the CEOs on the spot and don't relent. Imagine this, "Mr. Liggins, please name five reasons why you deserve a retroactive raise when Radio One stock has tanked to $1.07." Or, "Tell me, Mr. Suleman, why you make $11 million a year when our value is close to being a penny stock?" And add, "why must Citadel pay your taxes every year?"

This is not for everyone, I know.

So, never mind any of this if bringing these companies to their knees is not a burning issue with you. Maybe just getting away from them is enough. That's fine.

But for those who want a chance to morph radio into new media, either speak up or continue to watch the carnage. The present crop of "leaders" don't get it.

They say that once you've have had a near death experience you don't fear death anymore.

After my near death experience at the hands of Clear Channel, I know no fear except the concern that the good people (and many friends) at suffering radio companies may be next.

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Apple’s $1 Billion Profit

Did someone forget to tell Apple CEO Steve Jobs that we’re in a recession.

Companies are laying off. Food prices are escalating. You know about gas prices. GE missed its numbers. Home sales are down. Times are bad.

But Apple just released its second quarter profits and they’re up again on strong Mac sales (50 percent increase).

That can’t be.

Who buys a Mac when gas is almost $4 a gallon and the economy is starting to hurt?

Well, whoever they are – Jobs found them. I made my donation this quarter when I replaced my laptop with a new MacBook Pro.

Jobs makes a lot of money with stock options and I am sure he deserves every bit of it – as long as he continues to perform for his shareholders. At $162 a share -- he is meeting or exceeding expectations.

In the radio industry, top CEOs get rich as their companies tank each quarter. It makes no sense.

Farid "FaGreed" Suleman empties out the coffers of Citadel to the tune of $11 million in 2007 salary and his taxes are paid by the company. Al Liggins over at Radio One is commanding retroactive pay raises and bonuses and his stock is in the dumpster. I could go on, but you already know.

Citadel closed at 126. No, not $126 a share. They wish. But $1.26 -- that's spelled one dollar and twenty-six cents.

Radio One $1.06 a share.

I know. They're not in the same sector. Not fair to compare Apple with oranges (or should I say, lemons?)

The record labels are also in never-land and their very top officers appear to be insulated from the bad job they are doing adapting to the digital age. It’s almost as if they are arrogantly saying to everyone, “let them eat vinyl”.

There are other differences between a company that performs and one that does not.

Growth companies grow their ranks. They hire people instead of fire them – unlike the radio and records industries. I know some argue that companies like Verizon and AT&T cut payrolls, but they are hardly the example that Apple sets.

While the labels and consolidators are trimming salaries, Apple hires. Ever go into an Apple store and have to wait very long to be approached? Young sales associates descend on you like locusts in Utah. And they're happy. How is this possible? Happy?

Apple also knows what music-related media companies should learn – that meaningful long range planning delivers performance. Not quarter by quarter tap dancing.

Jobs didn’t come up with the Apple Air from panic. It’s part of a well-orchestrated schedule of planning to keep generating revenue as evenly as possible. Unlike radio and records which waits until the red ink is bleeding from their bottom lines, Apple continues to develop products and services according to a plan.

What is radio’s plan?

Cut personnel?

Raise CEO salaries?

Use more national programming to replace local shows?

Promise its investors that things will get better – every three months?

Apple defies the economy but some of the stumble bums running the media business frankly think planning ahead is reserving NetJets for their next trip.

If you’re wondering why the mighty radio industry and the all-powerful record industry can’t seem to get its groove back, look no further than the man at the top.

No vision.

Inadequate long-range planning.

Failure to invest in critical assets – like people.

I’m not saying that Apple is perfect. What is impressive is that the CEO sees things like this and adapts to the marketplace:

1. The eventual decline in iPod sales someday – so Steve Jobs gets into the mobile phone business with cool devices. In fact, the first successful year of the iPhone isn’t enough to sustain growth on the popular model he first introduced which is why you’re likely to see an iPhone with push technology and maybe even a flip down keyboard to compete with the Blackberry. You can’t expect momentum to continue without planning.

2. Computers are beginning to get long in the tooth – so Jobs develops smaller, more powerful or even lighter ones. Remember a lot of Apple’s quarterly growth came from Mac sales. Computers! Someone had to see computers as a growth market when just about every other company did not. Dell hasn't been able to.

3. Personal hand-held devices that are not phones – so word is that Apple is looking at producing a modern day version of its pioneer Newton. Treo doesn’t look like it is setting the world on fire. Certainly not Palm. What does Jobs think he knows that the others don’t?

This brings me back to radio and records – two businesses that never change -- and therefore do not plan ahead.

So, let’s look at some big opportunities:

1. Podcasting fits the M.O. of the next generation – so radio CEOs stay away from that business. Instead they think some new youth format will come along to save the day. It won’t. I think they’re even believing their own PR that HD radio technology will be the new radio. What would Jobs do? Invent the genre. Determine what a podcast was going to be, come up with a new way to market it and then hire the people to develop it.

2. Mobile content has been hard to develop by manufacturers of cell phones – so radio sits by while a big market waits for radio’s talent and marketing skills to be used. Just because it doesn’t air on a terrestrial signal is no reason to think terrestrial talent cannot supply content to mobile users – better content than is now offered.

3. Internet streaming is the hottest thing around – so what do the record labels do? Discourage growth by imposing unfair royalties on the entrepreneurs who are revving up the market segment. And what does radio do? Broadcast their existing terrestrial streams online when an opportunity to innovate for the first time in 25 years comes screaming at them.

So, tip your hat to Apple for an amazing accomplishment.

You don’t break records in the midst of a serious economic downturn without having the courage to do the opposite of what the losers are doing.

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"Comes With Music" Is Record Label Piracy

Sony BMG has agreed to allow Nokia to get access to its entire catalog following the lead of the largest label aggregator Universal Music.

The labels' "Comes With Music" program lets users who buy certain cell phone models download any song from the participating record company catalog to their cell phone or computer for the first 12 months.

Universal gets $35 per phone. No word on Sony BMG's take.

The cost to the consumer is likely to be higher -- what else did you expect -- although Nokia says it is eating some of the cost of providing the music as part of the cell phone purchase.

But "Comes With Music" comes with potential added costs to the consumer.

Word is that "Comes With Music" will not have an endless supply of pre-paid music because after the first year consumers will either have to pay for a new subscription or -- get this -- buy a new phone.

If this isn't appealing enough -- to record executives, that is -- they will include digital rights management (DRM) that will make it impossible to burn tracks on a CD unless the consumer pays yet another extra charge.

Even teens with lots of their parent's money don't replace their phones every year.

And no one that age likes to pay for any subscriptions.

Take away the ability to use and share your music at will and you have not just laid a big fat egg for this next generation but you've insulted your music buying public at the same time.

What a loser. In an off way it's the major labels looking to steal from law-abiding consumers while music pirates will no doubt continue to steal.

Only a record executive could like this deal which is why I am predicting that the results will be unremarkable. One of the reasons is that the deal has too much of what the labels want and not enough of what the consumer wants -- a sure formula for failure.

This is symptomatic of how media executives these days misread their consumers.

Of course, Steve Jobs wouldn't do that.

He'd come up with something cool and desirable and then he'd charge as much money as he could get away with. The people in charge can't seem to get a grip on what will ignite the market that they constantly disappoint. Either that, or they won't.

A major reason why "Comes With Music" is a non-starter is because the next generations computers already comes with music -- music they steal.

And it's all DRM-free.

They can share it. Burn it. Use it just like their parents used to do when they bought vinyl.

To have a chance with Gen Y, the labels need to make their all-you-can-eat music plan seamless. They must be sharable and include no fees or renewed subscription rates.

Even at that -- I am not convinced these total library devices will succeed even if all the major labels get on board.

I know it seems hard to believe.

Who wouldn't want everything ever recorded for a low, reasonable price -- with the ability to share it with others included?

The next generation -- that's who.

They already have their workaround for recorded music and paying for subscriptions or one-year fees won't be appealing.

So it's likely that at the one-year mark when those "Comes With Music" renewal fees kick in you won't be hearing much about this very flawed concept.

This time, the labels dastardly nemesis, Steve Jobs, didn't do them in.

The labels with the cooperation of some clueless cell phone manufacturers did it to themselves.

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THE CAPITAL CRISIS IN THE NEWSPAPER INDUSTRY DEEPENS

Recent weeks have not been kind to newspaper company finances, with lost value and unhappy investors plaguing publicly traded firms.

The Journal Register Co. was delisted from New York Stock Exchange because it share price remained below $1, reducing its market capitalization about $12 million, less than one-fifth the capitalization required to be traded on the big board. The Sun-Times Media Group stock also continued trading below $1 and its market capitalization dropped to $61 million, drawing a delisting warming from the New York Stock Exchange.

Although those firms have hardly been notable as the best managed firms in recent years, their problems in inspiring investors are symptomatic of difficulties facing newspaper firms in the market.

Meanwhile, Moody’s Investors Service lowered the New York Times and McClatchy Co. debt ratings and lowered the Gatehouse Media even further in the junk category.

Other firms are also having problems with capital related issues. Rumors are rampant that the Sulzberger family is seeking new protective mechanisms or partners for the New York Times Co. following its continued battles with shareholders and dissident shareholders gaining seats on the company board. A similar ugly proxy battle is underway at Media General.

About a half dozen public firms have now hired advisors to determine their “strategic options,” the business euphemism for seeing if there is any hope of selling properties, restructuring, or getting out of the business.

All this is happening not because the newspaper industry is untenable—public companies return an average of 17 percent last year—but because most are carrying enormous debt and have no believable plans for future growth and development. As a result, investors are demanding cost cutting, debt reduction, strong returns, and high dividends so they can recoup their investments.

The trouble with this scenario is that it continues stripping newspaper companies of the resources they need to develop new initiatives and businesses should their management gain some vision, become entrepreneurial, and have some inspired ideas that might enthuse investors.

What newspaper companies badly need today are not mere managers, but company leaders with the strength, enthusiasm, and vision to rebuild their companies. If they don’t start soon, they will lose too many resources to be able to do it in the future.

Radio’s Future Is Off-the-Air

Sounds funny doesn’t it.

Like a headline in a consumer publication. You know, where the reporter always ends the article with “stay tuned” or mentions the word “static” in the text – an early indicator that they don’t know what they are talking about.

Radio has been raking in tons of new revenue from Internet, mobile, webcasting and pre-roll commercials to the tune of 18% last month alone according to the RAB. Meanwhile traditional on-air national business is down 17% and local is down 8%.

All this non-spot revenue is in sharp contrast to the 8% decline of on-air revenue for the same period.

The recession is going to cause a flat business like radio to post declines at the end of this year and possibly next. The best radio can hope for is to finish flat beyond that because it is a business without a future generation -- that's a big reason. That generation was lost to – new media.

The non-traditional upswing is what I have been begging radio people to focus on.

Spend money on it.

Go out and learn about it. Not just that you can stream your terrestrial signal on the Internet but why the next generation is not going to listen to your terrestrial signal streamed on the Internet.

And radio has to find a way to get in the content business to generate revenue from the next generation or else it dies as its older audience continues to age.

If you think you know the next generation, I can assure you that you don’t. Become experts of generational media as Steve Jobs is. Not just the CEO (that would be a good place to start, by the way), but retrain everyone.

I see some glimmers of hope.

Dan Mason at CBS is going full throttle into new media. He’s building webcasts for AOL distribution, on CBS-owned Last.FM, on his HD channels (lots a luck on that one), and on their own CBS stream. There’s a great new WNEW.com channel. Dan’s got interesting niche projects going on like a psychic radio channel and so on.

Good start.

I am convinced radio can be the provider of content for a new generation while it bolsters its traditional on-air fare for the available audience which, as I have said many times before, does not include the next generation.

You don’t have to believe me – look at your own RAB numbers to see what happens when radio even dabbles a little in non-traditional online and mobile content.

Here’s a preview of the challenges ahead:

1. Content for the next generation cannot sound like radio. It’s okay to make your streams mini-radio stations if the target is older Gen X and Baby Boomers, but this strategy will likely fail to bring you new age listeners.

2. Radio must loosen up control on content. Understand the true importance of mashups and consumer control of content. To proceed by building interesting channels based on topics and music genres will not be enough to win a meaningful market.

3. Social networking is important – and I don’t mean Facebook and MySpace. Social networking is more complex than that.

4. On-air and online do not – and probably should not – be tied together. They are separate businesses. One attracts older listeners and the other is where the next generation lives. Never the twain shall meet.

5. Podcasting will be the new broadcasting.

6. Technology is expanding exponentially but our understanding of the sociology of listening is not keeping up.

So, kudos for the few radio execs who are trying to craft businesses that might have a presence in radio's missing next generation.

As Yogi Berra said, “when you come to a fork in the road, take it”.

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Citadel’s Carbon Footprint

I read in Inside Radio last week that Citadel’s more than 200 stations and offices are looking for ways to reduce their carbon footprint. It’s part of the company’s alliance with the EPA’s Green Power Partnership.

This is very commendable.

It got me to wondering what would happen if Citadel could stay positive and proactive and do a couple of other critical green things that might help stem the footprint of talented employees out the door.

After all, green is great for the environment, but Citadel could also use more green for their shareholders and employees.

So, let’s board Farid Suleman’s Love Train and see what else the company could do to positively impact the Citadel stations, the share price and the incomes of its employees.

1. Renew Paul Harvey

Come-on, this guy is almost 90 years old and he’s still a money machine. ABC has been trying to find his replacement for 25 years. There is no other Paul Harvey. Be green. Take out your wallet and pay the guy! Don’t buy him out of the last year and a half of his contract and push him into the retirement he doesn’t want and blame it on Paul’s health.

2. Buy back employees – not stock

When bad things happen to desperate companies, they – buy back stock. I wouldn’t be surprised to see the ultimate bean counter, Farid, initiate a buyback to keep Citadel shares from sinking to below $1. That’s right. $1. If you must do it, don’t buy back stock before you buy back the talent you laid off and the people you are looking to terminate next in the name of fiscal responsibility. And put a few extra bucks aside to give them some tools to do their jobs. You know, a little budget. I’m not suggesting Farid take a pay cut from his $11 million annual salary. He already took a big pay hit from the previous year – from $17 million! You see, Farid feels your pain.

3. Don’t sell off stations

There are also rumors that Citadel may seek the accelerated sale of under-performing assets including not only some of the original Citadel stations but several big ABC stations – perhaps WPLJ, KSFO, The Zone in Chicago and stations in cities as major as Dallas, Boston, Seattle and Atlanta. Rumors, yes. Persistent rumors, you bet. Tell me it ain’t so.

4. No more cutbacks

We’re hearing massive cuts to ABC Radio News in New York and Washington as well as the usual bureau closings that cost-cutters love to target. Maybe even the sale of Satellite Music Network. It always impresses Wall Street to see a cost conscious CEO, but Farid is well into the bone marrow now. Tell me again, why should an investor buy this sliced and diced version of a radio company? I know. It’s a real value at $1.34 a share. No place to go but – oops.

5. Re-sign Sean Hannity

Maybe Hannity is trying to simply increase his market value with options other than ABC. Clear Channel’s Premiere or Fox could steal him away – a fate worse than even lower ratings for their key ABC talkers. Better yet, if I were Sean, I’d contact Randy Michaels at Tribune and put some of his radio recruits to work on something other than newspapers. I’d rather have The Noise You Can’t Ignore working for my syndication .

There you have it.

A great way for a red-faced Citadel CEO to go green.

Spend a little green on someone other than yourself.

By the way, where is the Citadel board of directors in all of this? They are responsible for the continued employment of Farid Suleman. Where is Teddy Forstmann? Shareholders – if I owned Citadel stock (and I don’t own any radio stock), I’d have their heads.

Oh, one more thing.

Seems like Citadel is apparently blocking its employees from reading some commentators (and I won’t mention any names but the one I am thinking about is a Flyers fan) at work.

Horrors!

As President Reagan would say, “Mr. Suleman, tear down this firewall”.

So if you have a friend at Citadel you think might like to read today’s positive piece on five ways to spend some green to build a company that's in the red and might be worth more than – say, $2 a share – then you may need to sneak it to them via email your personal email.

The lesson: Don’t just go green to save the environment.

Spend green -- to save your butts.

That’s how a real radio executive – say a proven winner like Jimmy de Castro or John Gehron – would build a positive future for the company that bought Walt Disney’s radio group.

Except that Farid turns out to be Goofy and everything he seems to be doing points to running a Mickey Mouse operation. What a waste of great talent.

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The In-Car Internet

Radio is losing the local and out of home franchises.

Within a few years, radio's last line of defense will likely be penetrated by the new WiFi and WiMax technologies that will allow the Internet to be accessed on the go in automobiles.

Detroit Radio Advertising Group President and CEO Bill Burton came up with the fabulous motto "An Automobile Is a Radio With Four Wheels" many years ago and it is and has been the most dramatic statement of radio's out of home dominance. We mean no disrespect to Bill or his fine organization as we look ahead to changes that may be on the horizon, but an automobile could one day be the Internet with four wheels.

The Internet is here to stay. Internet streaming is growing but not as the boom business it could be because of licensing issues and the difficulty in carrying the Internet around in your car or your pocket.

My radio friends who own WiFi radios rave about them. They would never think of buying a regular AM/FM appliance and most certainly not an HD radio. Some subscribe to satellite radio for their cars. Unfortunately for them, while the WiFi radios operate off of their wireless Internet connection, they can' t take them in their cars or put them in their pockets.

At least not easily -- not yet.

Interestingly, they like to hear terrestrial radio stations from far away places on their WiFi radios. Some have found Internet streams that are special to them. But, it's still terrestrial radio stations that are not in their local markets that interest them. Or, ex-radio people doing what they've always done well on-the-air on the Internet. Certainly radio people are not typical.

The next generation gets its local fix through social networks and increasingly not through radio stations. These folks can stay connected on their laptops and cell phones but the prospect of being able to access Pandora on the fly or that special stream they discovered that speaks to them is exciting.

I believe radio has not only let the next generation get away while it consolidated from 1996 until recently but it is in danger of losing their important local franchise as well.

This will be bad for them because local works even when it isn't local like in your present zip code. If I want to hear a local oldies station in my favorite city, I can access WCBS-FM in New York online. Unfortunately, carrying it with me in the car is still problematic so I have to subscribe to satellite for a sanitized version of the genre.

If I want to check in on what's happening in Philadelphia where I lived and worked in radio and television, just go to KYW Newsradio online. But I live in Scottsdale, Arizona and Los Angeles, California. Does this mean that local radio is overrated? Shouldn't I be listening to stations in the west?

My friend John Rook navigates the nation's best stations on his WiFi radio and he lives in Coeur d'Alene, Idaho. He's also found some non-terrestrial stations that are his special "finds". I think the old master would know a good station when he hears one.

Let me tell you about the next generation.

They are citizens of the world in a way many baby boomers were not back in their day. Since local radio failed to engage them as they matured, the focus of these young people is now beyond their home town.

This is both troubling and exciting.

For radio, the failed love affair with consolidation is leading to divorce today. But who is going to get custody of the next generation? Corporations paid billions to assemble their radio clusters with a hope that they would be a near monopoly for a long time to come. But instead, the stations are proving not to be the investment that bankers and radio CEOs thought they would be.

Now, anyone can start a station and not go to an investment bank for funding. Just do it online.

Someday, when copyright royalties are applied in a fair way, the demand for Internet streams can also lead to a stream of revenue -- not just for Clear Channel or CBS, but for the entrepreneurs of the future. They used to be called "mom and pop" operators when radio was in its hey day. Today, "mom and pop" operators are an extinct breed -- to the disadvantage of terrestrial radio.

But even if the copyright issue was resolved -- and a stable, long-term agreement put into place that would encourage Internet streaming -- the sky would not be the limit until WiFi and WiMax networks were put into place to allow seamless Internet listening in the car and on the go through mobile handheld devices. Yes, there are ways to get some radio streams on Blackberries and smart phones but this isn't going to amount to a revolution. Just a work around for now.

The day is coming when terrestrial operators and the "mom and pop" entrepreneurs of the future will have equal access to listeners via mobile WiFi and WiMax. Except these entrepreneurs will not be mom and pop but young kids who can speak to their generation.

It will stimulate creativity and innovation. Bring life back into broadcasting and will drive the definitive stake into consolidation -- the worst thing to happen to radio at the worst time in history.

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Watch WiMax

When cable companies, cellular operators and Google think about going into business together, I listen.

Not that I don't think that they will eventually kill each other, but ...

Comcast, Time Warner and other companies are thinking about financing a new wireless company that would be a joint venture of Sprint and Clearwire to build a nationwide WiMax wireless network.

To build a WiMax network would cost billions. Sprint knows. It has tried to raise the money.

If you're a radio person thinking, "so what", wake up.

WiMax is even better than WiFi -- that very local wireless way computers and phones can connect to the Internet.

WiMax would give consumers high-speed access to the Internet using phones, mobile devices and laptops. Mobile video might benefit the most because WiMax would allow high quality pictures to be transmitted over the air.

Comcast -- according to a March account in the Wall Street Journal -- could be considering investing $1 billion in the WiMax project with Time Warner perhaps willing to add half that much. Intel and Google reportedly are also considering sizeable but less significant funding.

What all of this really is -- is a corporate pissing match.

Cellular operators like AT&T and Verizon have invaded the pay TV business so it seems logical in corporate think for the cable companies to strike back and hit them below the belt by getting into the wireless business.

The eventual construction of a high-speed, wide-area quality wireless link to the Internet has tremendous repercussions for the traditional radio industry that would just like all technology to go away and let it return to transistor radios.

Universal WiMax would make it seamless for consumers to have Internet-based music, information, communication with them everywhere. The advantage that radio transmission now has -- it's everywhere and it's free -- would be reduced to one thing.

It's still free.

But consumers would likely pay a premium to get Internet on-the-go.

That's why Internet streamers could be the next broadcasting revolution when their delivery system is put into place.

All this is not going to happen any time soon. But it will eventually happen. Only a matter of time.

If automakers are including WiFi capability in some new cars, can you imagine what WiMax -- a much wider range signal from transmitter to transmitter -- would mean to terrestrial radio operators?

They're thinking it would be another in a long line of setbacks.

I'm thinking -- and you may be, too -- that terrestrial radio companies might be ready to get into the content business. That's pictures, video, text and audio and become a new age broadcaster.

How exciting is this?

The salvation of Internet streamers is the arrival of a WiMax network. But some broadcasters seem to have a hard time seeing that the salvation of a dying radio industry is also this new form of wireless accessibility.

Not transmitting a terrestrial stream over the Internet. That's so 20th century!

But creating new content for the delivery system of a new age.

Want good news. Read this piece again and think about the possibilities.

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Drinking Radio's Kool-Aid

Just when the radio industry needs straight talk it gets this.

The head of the NAB sounding clueless and blaming radio's problems on being taken for granted.

Really.

It happened yesterday at his organization's annual convention in Las Vegas.

David Rehr dispensed some kind of joy juice at a time when an industry is being left behind by technology and it's own poor management. Many of you emailed me press coverage of his remarks and you were not pleased.

I'm not going to sit silently by while radio audiences decline, good people lose their jobs, the next generation is allowed to get away without a fight -- and now this -- everything is great.

This same kind of happy talk is killing the record industry and is starting to affect local and network television.

Traditional media needs a time out from leaders who pander to their constituents by kiss it and make it better solutions. Do they actually think anyone believes this stuff?

Examples (from quotes in R&R by an excellent reporter, Jeffrey Yorke).

"We also learned from these consumers that being local, in and of itself, is not what defines radio's value" -- David Rehr, NAB CEO (referring to a new survey conducted on the part of the Radio 2020 campaign).

WHAT?

This is outrageous.

If there is anything about radio that is compelling it is that radio is a local medium. It's defined by being a local medium. Even the NAB refers to terrestrial radio as local radio. If you take local out of radio you have -- well, the Internet. The world wide web. That's not radio's strength.

"It's the accessibility and the connection with radio personalities. And it's being everywhere and available to everyone. A radio is not a jukebox. If you're listening to radio, you want to hear a human voice sharing that same moment in time that you are. There is power in that personal bond. A CD doesn't have that connection. An iPod doesn't have that. No, our model is not broken."

Where the hell has this guy been working -- the beer industry?

Of course radio is a jukebox -- it's one of the ways it differentiated itself from television when TV came along in the 50's. But it's not just that. It's news, talk, sports and lots of other formats -- most of which work best as -- let's say it loud and say it proud -- local formats.

And did Rehr run the comment about listeners wanting to hear a human voice past the voice tracking consolidators?

And Personal bond?

You're playing with us now.

Rehr says radio is not broken. Okay, tell that to the stock market. Tell it to the thousands of executives and air talent who have lost their jobs. Tell it to the next generation -- a segment of the population as large as baby boomers -- when they wash their hands of radio. Or to sales managers who can't make their numbers because advertisers are headed to online destinations.

Right. Radio is not broken. The NAB is broken and is insulting in its ignorance about radio's problems in today's media.

Radio consolidators, Congress, the FCC and the NAB decided to advocate and seek approval of consolidation -- the thing that brought listeners voice tracking, more syndication and less local programming and no understanding at all of what an iPod means to the generation that radio let get away.

Rehr says many people "take radio for granted precisely because it's so pervasive. The public's love of radio is still there, they just need to be reminded of it. We need to reignite that passion."

Oh, that's it.

Too much radio everywhere. Like water. It's everywhere. We won't appreciate it until things dry up. If the shameless cheerleader wanted to be honest, he would point out that older listeners still love and listen to radio. Less so for Generation X and even less so for Gen Y. Go ahead, remind them as much as you want and they are not going to embrace a radio again. This generation is online and has handheld devices like iPods and smart phones. They have short attention spans and have grown up without the love of radio.

There are too many talented people in the trenches right now working under intolerable conditions.

Program directors with sliced budgets, mandates to fire talent -- forget promotional budgets.

Sales managers trying to make numbers with increased competition, fewer sales people and fewer trained salespeople.

General managers second guessed and hog-tied to deliver results for owners who would have been fired long ago if they were judged on their ability to build shareholder value.

Nothing lights my fire more than to hear our trade association preach to the industry that knows how to find a future in the digital age -- if they would only get out of the way and keep their mouths shut.

The NAB isn't the only perpetrator.

The HD Alliance. The Radio 2020 Campaign. The Radio Advertising Bureau. Group owners who for political reasons are backing these misguided money wasters for their own personal gain.

Leaders lead.

They get out in front on important issues.

They speak courageously about problems and opportunities.

In our industry they should be saying radio is in trouble.

It has lost the next generation of listeners to digital devices and the Internet and some of it is our own fault.

Consolidation didn't work out.

But radio talent is still the greatest potential provider of content in the digital world. While we find new ways to bolster radio programming and sales for the available baby boom and Gen X market, we need to be open to new ways to deliver podcasts, Internet streams, digital content and text messages to a new concept of social networks.

Tell the truth.

Get out of the way.

Fund it.

And radio people can deliver.

P.S. to Wall Street investors who lost big bucks in radio stocks: force out the leaders of these underperforming radio companies and hire someone with a clue. You can even find one who will work for less then Farid Suleman's $11 million a year.

This is the elixir that we need.

Not NAB's Kool-Aid.

In 12 years radio will be celebrating its centennial and if it is going to be vibrant and relevant, it needs leaders who can talk straight and outline the importance of reassigning some of its talent to become new age content providers for online and mobile media.

Call them out for this and tell them you expect better.

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The 500,000 Song iPod

There's a new chip coming that will allow iPods, mobile phones and other consumer devices to hold as many as 500,000 songs.

The biggest iPod currently holds only 40,000 tunes.

Still, that's about 39,700 more than some radio stations play -- which is exactly part of the problem with the next generation.

IBM is behind this new chip. It will cost less to produce. Require much less power to operate -- maybe for a week at a time on one charge and it may last decades. (The last benefit sounds nice but very few of today's consumers would be caught with even a five-year old MP3 device or cell phone).

They call this "racetrack" memory which uses the spin of an electron to store data. And it has no moving parts -- similar to flash memory, the hot thing for today's devices.

Soon misguided radio execs will be blaming these new 500,000 song iPods for the demise of their businesses.

As usual, they are only partially right.

Any device that eliminates commercials, mindless dj patter, liners and positioners and actually allows the listener to hear music variety is a threat. Even one that holds only 1,000 songs.

And therein lies the problem -- the radio industry is missing the point. The next generation really means it when they say they want variety. Radio programmer's know best -- or so they still think.

Play the hits.

Well, radio is playing the hits and young listeners are bailing out on terrestrial radio at a record pace.

So, let me push you a little.

Can you imagine a radio station with a 50o,000 song capability?

Of course not.

Not even a 5,000 song capability.

But what if -- while technology is feeding the growth of the next super-iPods -- radio broadcasters increase their playlists on their terrestrial stations and streams.

What if -- instead of receiving only the iTunes Tuesday new music email, WXXX or KXXX sends me all the new music in their genre. I can click and listen. I can buy (it might be so convenient I'd actually pay). I can get lots of info about the band, the singer, the inside story.

What if -- instead of trying to get young people to listen to streaming radio on their cell phones (isn't going to happen), they get in the business of -- dare I say it --

Helping young consumers to load their content on Apple's 500,000 song iPod when it arrives.

There's no time to waste.

Instead of cursing the dark. Light a fire.

The best thing that can happen for the radio industry -- the greatest entertainment content providers in the world -- is to have a new MP3 player on the market that stores a half million songs or 3,500 movies.

See what I mean?

This is an opportunity to form another stream of income. A good one.

Dump the HD radios and get ready to fill up the increasingly large memories of the next generation's iPods.

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Gen Y Consults Radio

From time to time I like to share the insights of the next generation as it pertains to traditional media.

I do this because there is a great disconnect between what media executives think they want and what these quirky, Gen Y'ers say they want.

When I arrived at USC four years ago for my radio sabbatical, I was shocked to find young people so distanced from radio. It didn't take me long to find out why. Other alternatives. More time on the computer, cell phones, social networks like Facebook, but the worst cut of all was the one that could have been prevented.

In my observation (and I emphasize you're reading my observations which may be skewed), young people had a relatively easy time turning away from radio because radio stopped vying for a place in their lives.

Baby boomers running radio stations thought (and some still think) that all they have to do is come up with new formats, new liners and new ad campaigns and they'll be back. I know better.

So, here's what I observed as their advice to radio:

1. Too much repetition, not enough new music. Any programmer knows that if you cut the playlist and play the hits, your ratings will go up. But with this generation it is different. They really do like obscure songs. Many are so anti-repetition that they will just walk away from it. Some can't understand why radio stations insist upon telling them that they play the greatest variety when the playlists are so obviously short. This is a deal breaker with the next generation.

2. Feature knowledgeable djs. Boy, they really hate radio djs. Little do they know that even in 2008 radio jocks are still channeling their inner Cousin Brucie. This generation turns to each other for what's good musically -- not to djs. Social networking is not just a term, but a means to find out about bands, singers, concerts, gossip -- everything. They don't get this on the radio and my sense is that they would like it (without jocks developing a case of diarrhea of the mouth).

3. Fewer commercials. Clear Channel thinks "Less is More" will help attract listeners and do wonders for their advertisers but my experience with the next generation is that they really can only tolerate a handful of commercials. This is pure genius for a radio industry that has never had the guts to cut inventory and pressure prices. Never. I think Gen Y would happily put up with a few commercials an hour if there were a limited to few.

4. Make better commercials. I soon learned that they like "live reads" even though they are not familiar with the term -- and by the way my observations are based on young people not communications students. I don't teach future broadcasters. Actually, fewer students want to be broadcasters, but that's for another day. This group doesn't need production unless it is good. Therefore, every time your production person ads music under copy, you lose with this generation. As far as how long they should be -- the answer is -- it's not about the length. It's about how good they are.

5. Forget HD. I know the die-hards are still willing to spend millions to promote digital technology but the appeal of more radio sub stations on the dial is not there. Radio is old and tired to these folks. Just what they need -- more old and tired stations. And if you think, well, we'll make some exciting new formats, it's too late. You've got to do one well before you can do two. Actually that's a good rule for consolidation, too. You've got to be able to run one station before you get a chance to run two. Imagine if that were the rule instead of six or seven stations per market. Back to HD -- no way. Never.

6. Personalities are the appeal. I mentioned this before but young people really have no reason to listen to radio because there are so few personalities talking to them. Not Don Imus types. Not even Howard Stern. They sometimes ask me "why don't your friends in radio put more personalities on"? Duh! How stupid can these kids be -- don't they understand how consolidators work. Cut the talent, show the investors you're earning your $1.75 share price and the hell with young people. I'm not telling them. You do it.

7. Make content for their portable devices. Many students faithfully listen to podcasts. Podcasting is the next radio -- have I said that lately? The reason I keep saying it is because it is. The next generation wants to time delay its entertainment. They want to control it -- stop, start, go back, advance. They are less likely to tune in to 24/7 programming and more likely to "subscribe" (for free -- I'm just using the term "subscribe" to mean sign up) to what they want. This is mandatory -- get into podcasting. And if you're going to do it with the current air staff, you'll lose. You need an entire new approach from content, production, marketing and sales. Hock your HD transmitter and use the funds to get started.

8. They want to be your program director. In the past year I've observed how much this generation wants to "mash-up" or contribute to the entertainment they listen to. Hell, YouTube is the "mash-up" capital of their world. You can shoot it, add music, collaborate, stage it, fake it, steal it -- and you never need a PD (As a former PD this hurts me to write that line). Any radio strategy that doesn't include listener participation and active input will fail. Back in the 60's when stations first started playing "Instant Gold requests" on-air, listeners burned up the phone lines to call in a request. Radio hasn't gone very far beyond that.

The advice of Gen Y would also make radio a better attraction for older demographics and should be considered.

While consolidators fiddled, Rome burned (and Philly, New York, Chicago, Louisville -- you name the market). The next generation -- the one radio can't survive without -- is not likely to return after all these years of disinterest.

That wouldn't stop me from doing several things.

One, I'd heed the advice they are giving you above -- and learn more about it -- and how you can respond on a terrestrial signal. Make real changes. Make them radical. And please, no liners talking about the changes. They don't believe them anyway (do you?).

Two, learn about podcasting. You're going to see me talking about the new radio a lot in the future. I am jumping in with two feet -- not just with one toe. I advise the same to you. Podcasting is not as easy as you think. Of course, it's easy to do technologically -- that's not what I'm saying. It's the content, the presentation, new ways to market (no commercials) and make a profit. If it sounds like radio on a memory stick, it won't pass the test with Gen Y.

Three, start Internet streaming. No, not just your terrestrial signal. New streams -- new ideas, new people. If you get into streaming audio, you'll get angry at the record labels for imposing unreasonable copyright penalties on streamers. You'll see why Kurt Hanson is leading the fight for fairness. Why streamers like Rich "Brother" Robbin run better online stations than most radio groups. When WiMax arrives and blankets the world with Internet capability radio broadcasters will wake up and call their bankers. In the meantime, get on it -- it's going to happen.

One last thing.

As dismayed as I sometimes get with my friends running many of the radio groups these days, nothing excites me more than the thought of radio talent (on-air, programming and sales) driving a new non-terrestrial business.

In the meanwhile, we could all do a better job on-the-air for the next generation while retooling for the next radio revolution.

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FaGREED Suleman -- Citadel's $1.75 CEO

Look, this is getting ridiculous.

It's insulting.

Citadel CEO Farid Suleman made over $11 million in 2007 -- and that's without his usual bonus. Oh, and his pay is down from almost $18 million the previous year -- if that makes you feel any better.

I don't.

Didn't this guy put a lot of people out of work at Citadel when the last devastating quarterly results came out?

Didn't he save his neck and reap the rewards while vowing publicly to get a grip on expenses -- spoken like the true bean counter he is.

Good people. Fired.

Didn't this guy's stations -- you know in tiny markets like San Francisco and New York -- start taking seedy infomercials (as if there are any other kind) to pay a few bills? Obviously, they had to save up for Farid's annual compensation.

Didn't he hire Don Imus -- the coldest air talent in the business -- for millions?

Well, if you want to know what's really wrong with the radio business, let me direct you to the top (again).

One way or the other, the deck is stacked for Farid and all his buddies who run consolidated radio. No wonder under performing is so, well --- rewarding.

Look at this creative accounting.

Farid's salary is a relatively modest $1.25 million, but by the time you add in over $9 million for "other compensation" (cute, right?) that includes -- according to an analysis by Tom Taylor in Radio-Info, $7.8 million in dividends on restricted stock and about $2 million that the company used to -- get this -- pay Farid's taxes!

Pretty nice deal for the top decision-maker in a company that is only earning its stockholders about $1.75 a share -- down from a still skimpy $10 a year ago.

Warren Buffet he's not.

If you want happy talk about radio's future, you're not going to get it on this topic.

This is lunacy.

It would be one thing if Suleman was growing his company -- gainfully employing his talented people, making money for the investors who are lending him the money to run his radio company.

But $1.75 a share!

Pl-eeese.

This is where the radio industry cannot succeed.

It's bad enough that the next generation of listeners has moved on to portable devices, the Internet and cell phones. They did this while radio was consolidating.

It's bad enough that the next generation represents as many people as the baby boomers.

Radio can't come back and try to find ways to engage this critical, must-have audience if it is cutting key people, firing highly rated talent, syndicating itself into cost savings at the expense of audience.

And Farid Suleman is not alone. There are other greedy CEOs in radio.

Clear Channel has ravaged its talent pool -- in progressive steps over the years -- with the most recent cutbacks at Christmas -- all to get its company fattened up for market.

Even in the fairy tale The Three Little Pigs, you heard the warning "The three little pigs grew so big that their mother said to them, 'You are too big to live here any longer. You must go and build houses for yourselves. But take care that the wolf does not catch you."

But who is going to be the wolf?

CBS cleaned out hundreds of people. I saw the Phoenix ratings the other day for KOOL-FM -- the station that fired its long-time, highly rated morning personality Bill Gardner to save money. How's a 3.5 12+ sound for December through February (down from a 4.1 in November, December and January)? The 3.5 still has Gardner's show factored in meaning it will get worse for KOOL-FM next month.

It's not worth firing your top morning guy and others to save money to be staring at significant ratings declines. You know, the kind account executives can't sell for the price KOOL-FM needs to get.

Even if the radio industry ended excessive executive compensation and instead invested to bolster its content, it would still have an uphill battle without the next generation augmenting their mainstay aging baby boomers.

The way it is now, the big consolidators are not only getting away with murder.

They're committing corporate suicide.

(Sorry for the outrage. I'll start off next week with some positive ideas from the next generation for radio operators who care about programming to them).

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Gen Y’s Media Hierarchy of Needs

Bad news travels fast.

When that teenage girl in Lakeland, FL was beaten by a group of her friends recently, it was recorded and posted on YouTube. By the kids who pummeled her. Even they wanted their 15 minutes of infamy.

The situation is horrifying and disgusting – the beating, that is.

The same could be said for the fact that we are now a generation of addicts to YouTube for better – and for worse. In fact, YouTube arguably is the most important resource the next generation possesses because they can see almost anything they want – and everything they may not have known they want to see.

So here is Professor Del Colliano’s next generation hierarchy of needs. Some young people may argue the order, but few will dispute the importance of what is listed here:

1. The cell phone.

Who can live without a cell phone these days – at least if you’re under 25? And if you want to make fun of my students for being on the phone all the time with voice, email and texting then please remember your fellow older adults are on their Blackberries. Cell phone communication has become an addiction and for all the benefits, it also carries some disadvantages. So, if food is number one on Maslow's hierarchy of needs, then cell phones are the basic building blocks for today's media needs. Radio companies think they can put terrestrial stations on the phone and consumers will listen as they once did to transistor radios. Ask a young person. They would be wrong to make that assumption. The cell phone is not a transistor radio -- it's a lifeline to physical and psychological well-being.

2. The computer.

I know of no young person who can live without a computer – at least at the socioeconomic level of a college student. You often ask me for my observations about the next generation and I can tell you that their laptops and PCs are more than ever the command and entertainment center. You’d be surprised (or maybe not) how many of them watch video on their laptops. No need for HD screens or satellite services. They either insert a DVD or get the program online. When the commercial starts at the beginning, they check their email and don’t watch. You can’t force this generation to hear your commercial message.

3. Facebook.

This is the social network of choice for the next generation. Before they approach a person, they check them out on Facebook. Posting pictures, forming groups, staying in touch, sharing music – Facebook does it all. It is hard to imagine a young person who is not connected to Facebook or to MySpace – although the dew is off the lily for MySpace and the young generation. Too commercial. Remember, you can’t force this generation to hear or see your commercial message.

4. YouTube.

Arguably this online, on-demand video concept is popular. The next generation is used to seeing what it wants on demand. It is also a mash-up generation so if “I Love Obama” becomes a hit – it starts on YouTube. Then others mash-up their versions. I can’t imagine their world (or mine, for that matter) without regular access to YouTube. Google paid $1.6 billion for it. Still hasn’t turned a profit. But it is a major part of the way young people live.

5. iPods.

It’s old hat to them, but it's standard equipment nonetheless. Just as important is the time spent downloading free music online and transferring it to their devices. Where transistor radios would be the portable music device in the past, an iPod is that device today. I related the iPod fatigue I have seen over the past few years, but it’s not enough for this generation to abandon carrying around their music libraries in their pockets – with zero commercials and much more music.

Notable is what doesn’t make the list.

Radio.

Newspapers.

To a lesser extent traditional television.

In Maslow’s hierarchy of needs -- that we studied in psych class -- it begins with the basics at the bottom of a pyramid. For example, physiological needs like breathing, food, water, sex, sleep, etc are basic needs before the others can be possible on top of these.

Let’s see what happens when the next generation’s media needs (as I observe them) are plugged into Maslow’s hierarchy of human needs:

Physiological = Computer (the basis of media life itself)
Safety = Cell Phone (provides security in actuality and in social life)
Love/Belonging = Facebook (friendship, community, sexual playfulness)
Self-Esteem = iPod (respect for music, respect for other’s music)
Self-Actualization = YouTube (creativity, spontaneity)

I have been spending too much time in academia. I know it.

My point is that without the next generation, traditional media can show no meaningful growth and may even be marginalized.

And most people working in traditional media aren’t even familiar with the five media needs of the next generation – and they should be.

So, I invite you to dive in.

1. If you don’t text people, start doing it. If you don’t use all the features of your cell or smart phone, try them. You can bet the next generation does. Text a mile in their shoes.

2. Watch a movie on your laptop. Watch a TV show on your laptop and see if you sit through the pre-roll commercial. They don't.

3. Join Facebook. A link is on my website InsideMusicMedia.com. Friend me if you like, as my students do. Get to know how much fun it can be and perhaps start your own Facebook page. Hell, do you want to experience a place radio lost some of its listeners to.

4. Watch five YouTube videos a day (view the most popular). Really want an initiation, post some home made video clips to YouTube.

5. Many of you have iPods, but how many discover new music and transfer it over. Most older people use their iPods as a portable oldies library. Try putting on lots of new music – you don’t have to steal it as many Gen Y’ers do. You'll see first hand how the next generation uses their iPods.

I can't tell you the number of readers who have tried Facebook since I put a link on my web page and then tell me how much they like it.

If broadcasters are truly interested in understanding the challenges of creating content for the next generation, I have just given you five ways to delve into their world and no doubt help your world at the same time.

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Radio's Einsteins

It’s hard to get excited about the future of radio when you listen to its leaders.

News accounts from the past week alone might leave you wondering what planet radio executives are on as they face unprecedented competition from mobile and Internet media and, oh yes – a recession.

For instance …

iBiquity raising $15 million more in venture capital for HD radio

They’re kidding, right?

Apparently there is a sucker born every minute. Investment banks (you remember their stellar performance in our economy) already fronted iBiquity $115 million in three earlier stages of funding. Of course, some of these geniuses JPMorgan, Grotech Partners, Pequot Private Equity Fund and New Venture Fund reportedly already own a piece of the HD manufacturer so what’s $15 million more. After all, the money may go to a good purpose: helping to fund a 13 week consumer awareness ad campaign. A 13 week campaign to do what?

No one wants HD radio. Stop this right now.

Emmis' Jeff Smulyan says the radio industry is on the way back

Jeff is a good one, but when he told the Kagan conference last week that there are more people listening to radio than at any other time in history he’s an eloquent cheerleader. He’s also backing the Radio 2020 road show to hype the medium. He acknowledges that radio has declined but says it’s just 3% over the last decade and just 6% for teenage boys – always a rough demographic for radio. How can radio’s leaders keep pumping up a business that has lost the next generation and as each year goes on will likely have fewer available radio listeners? I know. I know. What do expect him to say. He’s an owner. By the way, he also said that it will take another five years for HD radio to kick in.

Don't bet your Citadel stock on it.

Your NAB is against almost everything good for radio

Last week it filed a petition with the U.S. Court of Appeals to block new public inspection file rules that require more detailed disclosure from stations. God forbid stations provide more detailed info on the community, local programming and election issues. The NAB’s cute response is that it has no problem with serving the public interest. But this proposal is just burdensome. You know for small stations.

Previously, the NAB swallowed its tongue on the fleeting expletive issues that the Supreme Court will consider. Maybe that’s too burdensome, too. And the NAB is passively fighting for the same freedom of speech rights that print currently enjoys. But they are spending like a drunken sailor to fight satellite radio – why? A broadcasting industry with so many problems ought to send a message to their lobby group in Washington. Act in the interest of all of us.

Friends like the NAB, radio broadcasters don't need.

The Blackberry becomes a radio receiver

Inside Radio reported last week that some satellite channels will soon be available to consumers for $7.99 a month. But almost 3,000 channels of terrestrial radio will also be available through Radio Companion. For some reason, both satellite and terrestrial operators don’t get that PDAs and mobile phones are not used by today’s consumers as transistor radios were. They need to come up with new, short form entertainment that is not a stream if they want to achieve success on a hand-held device.

There were plenty of other reminders in the past week of how the radio industry either doesn’t know what to do or is in denial -- or both.

Clear Channel is still trying to get the banks to go through with financing their bailout – that is, the bailout of the Mays'.

Interep went to the brink until it got some money to fight for its survival as a rep firm.

The radio industry is fiddling while Rome burns.

There is an entire new generation that doesn’t care about radio.

That is sad, because radio is still the best provider of real time content of any provider. Instead of getting into the future and unleashing this obvious advantage, radio’s leaders are acting like bankers and not innovators.

I saw this quote in the Sunday New York Times while I was flying to Los Angeles this week.

It’s from a real genius – Albert Einstein.

“Imagination Is More Important Than Knowledge”.

The radio industry's imagination is running wild alright, but in the wrong way.

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Radio vs. The Internet

The new USC Annenberg Digital Future study is out and it's worth consulting for a snapshot of where traditional vs. new media stands. It provides some insight as to how the audience is changing.

Some in traditional media think that radio can be fixed (just about every consolidator says so) and that even newspapers can be revived (Tribune Company's pitch). But as you'll see, competing in the digital world is far more complicated.

This is from the latest USC Annenberg Digital Future study:

The Digital Future Report found that the Internet is perceived by users to be a more important source of information for them -- this over all other principal media, including television, radio, newspapers, and books. Eighty percent of Internet users age 17 and older consider the Internet to be an important source of information for them -- up from 66 percent in 2006 -- and higher than television (68 percent), radio (63 percent), and newspapers (63 percent).

You've got to believe that the older demographics are boosting the traditional media numbers here and the younger demos prefer the digital options. Even at that, the Internet is the winner and without a groundswell of younger consumers interested in radio, TV and even newspapers, their audiences will continue to dwindle.

The dilemma broadcasters find themselves in is how to respond.

If young people are not listening to radio, does that mean they dislike radio? They seem to like Pandora (the customized radio service that suggests music through its genome formula) and Pandora is in effect online radio.

You see what happens when anyone suggests that radio is dying. Loyalists go nuts. Critics hop on board and the issue often becomes emotional.

Some have argued that the answer is Internet radio. So how does terrestrial radio respond? By streaming their radio feeds online. This is not the future. Developing new content for the Internet -- including new radio content -- could be the answer and yet few radio companies will spend the money or hire the talent to do so.

Can you imagine where a consolidator like Clear Channel would be today if when they closed on its 1,100th radio station they also decided to invest in 1,100 more "stations" -- totally new, totally different -- with podcasting and social networking options -- online.

When Clear Channel removed Randy Michaels they sent him to a low-profile Internet job. How wrong were they?

I'm being unfair to Clear Channel here because few of us knew when they hit 1,100 that social networking would be this important and that podcasting could be the best fit for a mobile device. Back then, we were so primitive many of us thought a cell phone was for making phone calls. And there are monumental royalty issues unresolved. Still, some content development would have placed terrestrial radio in the forefront of creating valuable content.

And while traditional media companies obsess about their world (Wall Street, transmitter and towers, etc) the Annenberg study shows the audience has moved on in a dramatic fashion that is worth noting:

The Digital Future Project found that membership in online communities has more than doubled in only three years. More than half of online community members (54 percent) log into their community at least once a day, and 71 percent of members said their community is very important or extremely important to them. Fifty- six percent of members reported meeting their online counterparts in person. The study found that participation in online community membership has particularly dramatic effects on participation in social causes. Three-quarters of online community members said they use the Internet to participate in communities related to social causes, with 40 percent saying that they use the Internet at least monthly to participate in such communities. Eighty-seven percent of online community members are participating in social causes that are new to them since their involvement in online communities began. What's most noteworthy is that more than half -- 55 percent -- said they feel as strongly about their online communities as they do about their real world communities. And this number is growing.

Radio stations used to be great at ascertaining the needs of their communities. After consolidation, they were not so great. If stations ascertained the needs of their communities today, they would find that for radio to survive it would have to become the hub of social networking.

Here's where opportunities abound.

Radio is best when it is local. Social networks work best when they are specific in nature. MySpace, the NewsCorp-owned mega site is starting to decline. While Facebook, its competitor still grows, young people I work with tell me that they wouldn't count on that for long either.

Two trends I have observed is the need for smaller niche social networks -- i.e., local and specific.

And, the ability to communicate, share and even "mash-up" or have a say in content.

So I get concerned when I see my friends in radio trying to put a finger in the dike and try to keep radio from coming undone.

It has come undone. Arguably, free radio has seen its better days. It is dying with the baby boomers who still love it and will until their last breath.

The Internet is everywhere for every generation. I have an 82 year old mentor who sends me a barrage of email on aging (just what I don't need -- I'm a baby boomer and I will never age, right?). My 20 year old friends and students use email differently. And communicate through texting. They are fast finders of news and information online.

Radio broadcasters are the best providers of content on this earth.

They're just providing it in the wrong place to reach future audiences.

Radio broadcasters can do more than format programming.

The next generation needs prolific podcasts on a myriad of subjects.

The Internet is a delivery system.

Radio is a content business.

I can understand why media companies that have spent billions to own radio properties would instinctively fight for the status quo, but the Annenberg study and wide-ranging studies of all kinds indicate that it is time to cooperative with inevitable.

Become content providers not only radio broadcasters.

One represents yesterday's technology and the limits that technology placed on a generation of broadcasters.

The other is the future which is virtually unlimited, wireless, increasingly omnipresent and ready for commerce.

The next big thought should be between the left and right ears of decision makers.

The USC Annenberg Digital Future report is available for purchase between $750-$2,000. Cheaper than most corporate dinners and far more cost-effective than flying private. You can order here.

Cheapskates, victims of recent radio firings and the rest of us can read an overview for the low, low price of free -- here.

Enjoy and share the links and this piece with others who want to get excited about being part of the digital future.

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