MySpace Records

MySpace Records has finally made it to the big time. The Rupert Murdoch/News Corp entity has done deals with the major labels to give them the kind of access to MySpace as the indie labels once had -- alone.

Well, not so fast.

Some indie labels including big ones like Koch Records are quoted as being livid that MySpace would treat their company differently than those of the majors.

Let's get this right.

MySpace has gone Hollywood -- given better deals to the majors while allegedly ignoring the very indies that helped MySpace Records get rolling.

Charles Caldas, CEO of Merlin, an international licensing group representing over 12,000 indie labels has been quoted as saying that MySpace Records "just seems to be a massive disconnect within that organization between the reality of what they are building and what they think they have built."

I saw Caldas quoted on Perez Hilton using some very colorful language: "Koch Records isn't just going to drop our pants and sign here without being treated like everyone else. How do our four competitors in a practical sense control that service?" asked Caldas. "That is some pretty sticky ground, I would think."

So it seems the four majors are rewarded for not having the foresight to help News Corp launch MySpace Records so one could argue that MySpace used the indies to attract their attention.

They got it.

If it remains that the indies somehow get the worst end of this deal, they may not sign the new agreements now that MySpace has relaunched their music service.

This may not be fair but it is sure as hell predictable.

It's a "mine is bigger than yours" attitude on the part of the labels. That always amuses me since the record labels haven't come up very big in any area of music growth since 2000. It's just locker room braggadocio.

Here's another sobering thought.

This and the next two lame ideas big corporations come up with about the digital record label of the future will be just as unsuccessful as I predict MySpace Records will be.

As a portal for indie artists, MySpace is actually doing a service for its social networkers. They are getting something different than offering a home for the same old Coldplay's of the music world -- nothing against Coldplay, but you get what I mean.

Once you add the majors and their acts, it's big business as usual.

You often hear me talk about the importance of generational media at this point in time. Big business in a digital age won't cut it with Gen Y. It hasn't so far and is not likely to in the near term. In fact, young people know that MySpace is owned by a Fortune 500 company. Many have been aware of the move to commercialize MySpace since News Corp bought it.

I'm not blaming News Corp for wanting to get a return on investment. I'm simply questioning why major corporations continue to make bad decisions without any real understanding of the generation to which they are trying to appeal.

Radio does it.

TV is doing it more and more.

Newspapers lost it long before the Internet for this very reason.

Apple?

Apple understands the next generation. While it carries the music of the major labels, it (Apple) dictates the price point that it thinks will sell. I don't see a way for there to be two iTunes or even two iPods for a good while now. Apple nailed it that solid.

iTunes is the legal portal of choice.

Limewire and bit torrent sites are the unofficial record label of the future. Fast, free -- and no one can stop it.

Know your target generation -- that's my message.

Personally, as I have told you previously, my eyes were opened in academia when I lived and worked with the next generation. From my perspective and keeping in mind that I make plenty of mistakes - I have seen few intelligent moves regarding Gen Y and new media.

MySpace Records -- who cares?

Record Labels -- you think Gen Y cares if they survive?

Gen Y can steal music without any pangs of conscience but they would never steal an iPod or a Mac from an Apple store.

Why?

Because the Internet makes it possible for the consumer to break down the retail walls that have prevented easy file sharing.

Not the Good Lord.

The Government.

Or even a higher power --say, the RIAA -- can stop this.

All music will be free.

I will repeat that.

All music will be free.

MySpace and the big four labels -- have fun -- it's the last fun you'll be having until you better understand the generation.

They are your potential consumers for something other than a CD or a 99 cent download.

Are you ready to reinvent the music business?

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Radio's Last Critical Decision

To quote that great American philosopher Rick James -- "It's such a very freaky scene".

Friday, the NAB was outed for behind the scenes jockeying in Congress as the House took up a bill that would simply allow Internet streamers to continue negotiating with the record label's representative, SoundExchange, in an effort to try and resolve the dispute over royalty payments.

The bill introduced late Thursday was necessary because Congress is headed for recess and law requires this enabling legislation while Congress is away from Washington because the parties are seeking a statutory license.

It doesn't guarantee a thing -- just the ability for the two sides to talk to each other. It's not like the labels are negotiating with Mahmoud Ahmadinejad.

I'm sure you get that the bill was simply permission to keep talking.

Here's what the NAB tried to sell everybody:

"NAB has concerns related to Congress attempting to fast-track a bill introduced less than 24 hours ago that could have serious implications for broadcasters, Webcasters, and consumers of music. NAB spent more than a year trying to work out an equitable agreement on webcasting rates, only to be stonewalled by SoundExchange and the record labels. We will continue to work with policymakers on a solution that is fair to all parties."

Of course there was nothing in the enabling bill -- you know, the one that lets both sides try to resolve their differences -- that would prevent traditional broadcasters from reaching their own fair rate agreement if that became necessary. Satellite radio already has an agreement in place with SoundExchange -- a pretty lousy one at that.

The NAB's actions did not sit well with those interested in getting past the labels' insistence that Internet streamers -- the ones with the smallest audiences and fewest resources -- pay the highest fees.

Luckily, the bill passed the House by a narrow margin and went on to the Senate where it was also expected to pass.

In the world of lobbying, the NAB will back down, shut its mouth and work behind the scenes because NAB is supposed to have enough sway with Congress to prevent a repeal of the performance exemption that the labels are seeking separately. It sure didn't look like the NAB had too much influence over the House Friday. It's not good for them to look like a loser in the House.

Allowing, encouraging and enabling Internet streamers to compete on a fair basis with radio is absolutely in the radio industry's best interest. Let me tell you why.

Radio is dying with its older listeners.

The next generation has checked out and become addicted to the Internet and mobile access while radio let them get away. It's too late now to bring them back. It's like scattering the ashes of a departed friend all over the Rocky Mountains and then trying to get the ashes back into the urn later. Impossible.

The NAB is by and large a men's social club.

That worked okay before consolidation because there were so many different people who came together in the interest of broadcasters. But since consolidation, don't think the NAB president doesn't know who he serves -- the handful of consolidators with all the stations, power and money.

It's getting ugly out there -- to borrow a phrase from CNN's Jack Cafferty. The handful of robber barons who are running the radio industry into the ground are afraid of the Internet. That's how ill-informed they are.

Don't believe me?

Name one consolidator -- just one -- that spends more than 5% on Internet broadcasting and mobile content. And as I have said many times even 5% is not enough at this late date.

Radio has called it wrong on a number of critical strategic moves.

1. Consolidation -- a land grab for the few who then wound up proving to everyone that they didn't know how to run a public company even with a near monopoly. NAB was instrumental in getting consolidation tacked on the 1996 Telecommunications Act behind the scenes at the last minute.

2. HD Radio -- a technology that you and I heard at many NAB conventions in experimental stages ages ago. If the arguing stopped over which system and who would eventually prevail, it might have been an option back then. Before consolidation, maybe the owners who could only have 30 or so stations would have seen HD sub channels as an idea to invest in. Turned out to all fluff and PR and the biggest detractors turned out to be the very consolidated groups who to this day fail to invest any more than chump change in programming HD channels. NAB sat on its hands on this issue.

3. More Accurate Audience Measurement -- Missing in action as broadcasters had a food fight with Arbitron because some of them didn't like Arbitron. This embarrassing episode setting radio back to the days of Fred Flintstone has left the industry with the antiquated diary system, politically motivated lawsuits pandering to minority interests and an advertising community that is both spooked and willing to regurgitate every last negative word in future radio negotiations. NAB? MIA.

Let's not be too hard on the NAB. They are what they are -- the voice of the powerful radio interests and as one of my readers put it "The NAB has a history of trying to kill what it doesn't understand".

Understand this.

Terrestrial radio is being replaced by the Internet and mobile devices every day as new listeners come of age. Terrestrial radio is beginning to decline because it has no growth potential -- no next generation.

So you don't fight the Internet. You get into the Internet.

That's what they don't get -- radio companies are going down hard now if $1 share prices are any indicator (and that's their main barometer).

Radio execs can't be faulted for not wanting to hand the competition their revenues and audiences on a silver platter.

The paradox is that Internet radio is not -- I repeat not -- the competition. Just as radio got it all wrong for the past 12 years thinking satellite radio was their competition.

Internet radio is the future -- their future.

Get your lobby group working on that or else you'll miss the last train to Profitsville.

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Radio's Eve of Destruction

You don’t believe
We’re on the eve
Of destruction

Barry McGuire sang those words in his Vietnam War era song that in a scary way also applies to the radio industry these days.

1. Inside Radio is reporting that radio is re-thinking the three month sales guarantee for salespeople.

Radio sales is already a losing proposition. This makes it worse. My friend Barry O'Brien, the former Radio & Records sales giant and the best salesperson I know, says the best sellers want to be on commission. But to start them out -- the way radio does on the cheap -- taking away the already too-short three month draw will help to destroy a hurting industry. Unrealistic sales goals. Lack of proper training. Treating a sales career in radio as a career selling brushes door to door. Inappropriate sales motivation by "managers" who have long ago forgotten that sales is a relationship business (except on Google -- you know, the Google the radio industry ogles because then they wouldn't need any salespeople -- or fewer for sure).

As one of my readers put it:

I "guarantee" you 90% of radio managers have the famous Glengarry Glen Ross Alec Baldwin monologue on their computers..."First place is a new Cadillac, second place is a set of steak knives, and third place you're fired!" When these same managers show that at a sales meeting, as they are wont to do, how do Xers and Y's respond?

Imagine where tomorrow's radio salespeople are going to come from with boneheaded moves like this virtually assuring continued declines in local sales revenue at a time when the economy and digital competitors are cutting into broadcasting.

2. Radio groups are doubling up program director jobs again.

Didn't the radio industry go through this before -- several times before. There is no end in sight. CBS is consolidating two all news-stations -- KFWB and KNX -- under one PD (David Hall). Andy Ludlum got his walking papers and CBS got another level of cost reduction. The only problem is that we all know -- and CBS does, too -- that two complicated all-news stations cannot be operated by one person no matter how able. CBS is not alone nor were they first. This latest trend is destruction of the product. For anyone who now programs radio stations or has ever done so, they know -- the quality of content will decline and the people creating the content are missing an important leader, manager and motivator.

3. Syndicated suicide

KLAC in Los Angeles just got rid of their local evening show. They are repeating the afternoon show until next Monday when a syndicated show will begin. KLAC was the only station to do it but this is yet another destructive trend. You'd think the radio CEOs who continue to mismanage their radio groups would begin to see the danger. If they do, they've swallowed their tongues. If they don't, shame on them. The more live and local programming radio can do, the healthier the station. This does not mean an occasional syndicated program is unwelcome. But now, the occasional local show is getting to be the norm in critical time periods.

4. Wasted Money on Consumer Initiatives.

The NAB and RAB spend considerable time and money -- or should I say waste considerable time and money -- promoting their meaningless concepts of radio's strengths. Take Radio Heard Here -- please! Does that embarrass you as much as it does me? And have you ever once seen a Radio Heard Here sign in a retail store? Rule one: before you promote something, you have to have something exciting or game changing that people will be interested in. How about "Less Radio More of the Time" or "More Radio by Fewer Employees". Oh -- now I know why they came up with Radio Heard Here. Don't even get me started on the money radio groups have wasted and continue to waste propping up HD radio. Am I sacrilegious if I simply point out I have never heard anyone of any age talk about HD radio.

5. Internet Immolation

To the radio robber barons you'd think the Internet was an inconvenience -- something that ruined their profits party. But it's exactly the opposite. The Internet is the party and will be for at least a generation or more. Yet these CEOs have no clue as to what to do with it which is why you can't find a radio group that spends even a paltry 5% of its operating budget on Internet and mobile content. And by the way, 5% assures them of failure because it will take 20% or more yearly and oh -- did I mention that they have to know what they're doing vis-a-vis generational media? Aw, forget it. They have. Radio is radio to the myopic radio CEOs. If it can't be sliced and diced, they don't like it. These desperate mis-managers must think they are selling Ginsu knives.

This whole crazy world is just too frustratin’

And you tell me
Over and over and over again, my friend
Ah, you don’t believe
We’re on the eve
Of destruction.

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Music Memory Cards

The big four record labels have come up with a new way to replace the CD.

You might want to sit down for this one.

Fingernail-sized memory cards that will hold an entire album, notes, cover art and allow for some personal storage by the consumer.

Some 449 million CDs were sold in 2007 -- a 19% percent drop from the previous year and a continuation of an almost constant eight year decline in sales. Fifty million were sold digitally (Nielsen) -- not enough to give the labels any comfort that they have found the modern day replacement for the decreasingly unpopular CD.

Of course the largest number of song downloads remain illegal -- a trend that continues in spite of the flawed strategy of lawsuits by the RIAA targeted against consumers.

So now, this so-called "slotMusic" format is the answer -- or so the labels think.

On the plus side almost everybody owns the player -- no need to buy a device as CDs required consumers to do. All it takes is a computer port so there is no upfront investment.

Another plus is what they tout as near CD quality sound -- that term "near CD quality" worries me, but let's give the labels the benefit of the doubt and agree that these new music memory cards sound better than compressed MP3 files.

Onto the problems:

1. The cards and dongles will be packaged in current CD packaging.

Not good. CDs are old. The memory card idea is being sold as new. Hello? What are you thinking? Next you're going to tell us that these new music memory cards will cost approximately the same as a CD.

2. The new music memory cards will cost approximately the same as a CD.

Told you. Major problem here. The music loving Gen Y public doesn't have to buy digital music. There are plenty of bit torrent sites from which they can feed their habit and load up their hard drives. There are also lots of ways to steal music. Why pay when you can get digital music for free. This concept is flawed because the premise -- that the majority of consumers will pay for digital music -- is incorrect.

3. There's no commitment to a major rollout of albums.

The labels had no problem making this epic announcement about music memory cards but they missed the opportunity to say all their current music will be issued on it and provide a date for when catalog material will be available. Looks like the labels are doing what we Jersey boys used to do at the shore -- cautiously put our foot into the water to avoid hypodermic needles and medical waste. In others words, it doesn't appear that the labels are showing the confidence to jump in. This could be HD radio all over again -- little content and no guarantee that the marketplace even wants memory cards.

4. Best Buy, Wal-Mart and European retailers are included.

Great. The road to recovery -- at least in the minds of label execs -- runs through the aisles of Wal-Mart. That's plain wrong. Music is a loss leader for big box stores -- it's the wrong place to hitch their stars. Russ Crupnick an entertainment industry analyst says the industry desperately needs a new reason for consumers to head back to the brick and mortar music stores. Forgive me here, but with all due respect, Wall Street analysts are the last people to know a trend or a solution to a problem. Remember satellite radio? They drove the price up until the satellites were launched. Sirius XM sells for under a $1 a share today. They loved consolidation. Today you can't sell a radio station for a decent multiple. You get the idea.

Hey, at least the record labels are trying, right?

Here's an idea that is more in tune to the next generation's needs. Make music memory cards available after concerts -- the audio (and maybe video) from that particular night's concert. Attend tomorrow, buy another one. Save the whole collection.

Better yet, make these small memory sticks look like cool things like guitars -- which is actually being done now.

Today's consumer is going to continue to steal music like it or not, but they'll buy what they want and cannot steal -- thus, the concert sticks of that night's show or other content that they would deem as special. A song is not special. They own, share and download lots of them -- no biggie.

What we have here on the part of the labels is a lack of understanding of generational media.

And until they get it, you'll continue to see ideas like the Zune media player, $15 dollar a month subscriptions for all-you-can eat schemes and ideas like music memory cards.

I give it a D.

Meet me back here next year -- same time, same station -- and let's see if they pulled it off.

Don't bet the ranch.

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My Mobile Radio

I've waited a long time to share my thoughts on mobile "radio" -- that would include terrestrial signals and Internet brands.

Now, I'm ready.

Keep in mind this is my personal opinion and yours may differ. But it will be fun to trade views.

My mobile listening is done on an iPhone. I have enjoyed the iPhone -- although I had a lot of trouble initially trying to get the email to "push". Now, the mail works reasonably well. My calendar (on Entourage) is still a pain -- duplicating events such as birthdays many times every time there is a software update. One birthday a year is enough for me -- I don't know about you. It's probably that Microsoft calendar curse with the Mac operating system.

I'm on iPhone EDGE not 3G -- more about that later.

The Apple apps are my favorite fun toy these days, but not the focus of this piece today. I'll share some views on apps as they have significant implication to traditional media. They do. They really do.

I like accessing terrestrial radio stations as well as Pandora and AccuRadio, but I have a problem accepting my phone as a radio. That's weird, I know -- but still -- that's an issue.

Apple doesn't make it easy. If I have Pandora on and I'm enjoying my personalized channels, I can't do anything else on my iPhone without the iPhone cutting the music off. This confounds me, but a lot of things Apple does confounds me. Why not let me listen while I play mobile air hockey (which I do a lot) or answer my emails?

But if this particular mobile phone did everything that I wish, I'm still not sure I want to listen to radio on my phone.

And the battery problem that prevents me from jumping to the 3G version of iPhone is a real issue if you're going to use the apps, do your mail and listen to "radio". I'm going to wait 3G out a little more, but battery life is a potential deal breaker. I don't want to choose between what I have to do (communicate) and what I'd like to do (play games and listen to music). There's simply not enough battery for both. On other types of phones, you can slip a fresh battery in. You know the drill with Apple and iPhone batteries. No such luck.

In case you're wondering, I don't listen to my vast iTunes catalog much on my mobile phone. Best time to consume iTunes on a mobile device is on an airplane -- usually on longer flights -- not just commuter hops from Phoenix to LA.

That's the nuts and bolts of it.

But here's the rest.

Pandora just started carrying commercial banners on the mobile edition. I don't much care. Can't remember the sponsors. And, by the way, it's not even a dent in the solution of how to monetize a great thing. I suspect I will be right in my prediction that only ancillary forms of revenue beyond the obvious (spots, banners) will be the eventual commerce answer.

Of course Pandora itself is a gem -- the best "radio" station you could ask for that we radio programmers don't put together ourselves.

I like the AOL/CBS radio app for some things. The mobile interface is intuitive, but sometimes I find the station not available. It's happened frequently when listening to sports radio WIP in Philadelphia. I miss the kindness and sportsmanship of the Eagles fans and this is my way of getting my fix.

Some of the additional AOL channels are nice, but I like the quality and variety of AccuRadio stations. But for some reason I can only hear it for a few minutes and then it shuts off. Maybe it has something to do with AT&T's Edge. In any case I find myself not listening although I want to. I access the AccuRadio channels through FlyCast.

I don't care for the sign up procedure on FlyCast. I don't want to marry -- just date.

This gives you an snippet of my radio listening on the iPhone.

Not inclined to listen much during the day unless I'm making a longer flight and then it has to be iTunes -- at least for now.

One thing I like to do is put a different station on before I fall asleep. I dock the phone right by my bed and play it out of the tiny speaker in the phone. I find that a great time to choose formats and genres that I might not choose any other time -- like baroque music or Brazilian sounds.

But as usual, there's lots to learn from experiences like mine.

Free radio has the best access to the listening device -- trouble free (unless it's an HD radio in which case -- good luck getting a signal). But terrestrial radio is good for local access -- not for exploring the universe.

The mobile content business still thinks it is a radio station on a phone. I'd like to develop content that is station quality but built from the ground up for the mobile phone. Not just streamers but podcasts with a beginning, middle and end that I can find waiting for me (if I subscribe) when I want to listen.

The number of people who can listen to any type of "radio" on their cellphone is still rather small -- nowhere near the 235 million who listen to terrestrial radio each week.

It will likely be a long tine before technological quirks that get in the way of enjoying "radio" and a new kind of radio comes along designed for the mobile phone and more importantly, the mobile phone user.

So my best advice to content providers is:

1. Don't be radio.

2. Trade on the talented people who produce radio content and redeploy them to build short (I can't emphasize this enough) segments to be available for download or by subscription.

3. I have a model for this. Producers and talent, working in the present tense, putting together genre-specific podcasts for mobile consumption. Obama and McCain's top five songs. The night after the Emmy awards -- a music compilation relating to that. When the Beatles toured the USA for the first time, a flashback. If it's only music, you'll be leaving a lot on the table. There is subject matter all around us -- write, produce and entertain.

4. Streaming alternatives should be simple music formats -- most are good now, but I've yet to find one that can keep me riveted to their playlists. I'd take a closer look at playlist content for streaming stations.

I'm excited just writing about this because the day has come when listeners do not have to sit by and wait for broadcasters to broadcast to them. Now, those "former" broadcasters can develop content as quickly as it develops and then send it up on a podcast.

Monetizing all this seems like another huge hurdle, but I don't think so. That's another topic.

To sum up:

You can't take the radio out of radio and you can't only put radio into a mobile device unless you understand the mobile consumer and design content from the ground up.

I see podcast centers operating 24/7 developing fresh content. And I can see broadcast CEOs scratching their heads (again).

Mobile devices are the reincarnation of creative music and spoken word content.

And while this is my review, I don't count. The business will be built on the next generation and they will demand that which radio operators fail to provide them.

Real-time, well-done podcasts.

Short.

Monetized in ancillary ways.

Addictive.

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The Best Radio Investment

With bids due any moment on the CBS sell-off of smaller radio markets you've got to wonder why anyone would buy more stations now.

Tom Taylor is reporting Bonneville, Entercom, Cumulus and even the former CBS Radio President Joel Hollander are thought to be among those interested in CBS' leftovers.

There are all the usual hurdles.

Financing can be challenging at this point in time. Servicing more debt is always a problem. Sellers want multiples higher than nine times cash flows and buyers need lower multiples -- if they are going to be responsible to themselves and/or their shareholders.

CBS Radio President Dan Mason is quoted as saying "I haven't seen an AM radio in a hotel for a year...the first time I didn't see it, I didn't think about it much, but then it was 6-7 times."

Mason is worried about the entire disappearance of the AM band and he's right to worry. CBS has some big name, money pumping all news stations that are still on the AM band.

Bonneville seems to have figured out that they at least have to move their talk, news and sports franchises to FM.

You may not like what I am going to say -- but ...

Radio has more to worry about that the disappearance of AM, the sell-off of extraneous properties and the decline in listening.

If radio wants to deal with reality head on, here's a start:

1. All of the next generation (Gen Y) has already been born. They are in various stages of growing up -- some have graduated from college and are becoming consumers. Meanwhile, radio lost them while the industry was busy consolidating.

2. Buying more AM and FM stations is a risky deal because without the next generation radio can never again be a growth industry. And now it is too late -- at least if you define radio as a terrestrial signal.

3. The next generation does not like radio and listens when it doesn't have a better choice. Making it worse is radio's current trend to cutback local programming creativity even to their available listeners in the baby boom and Gen X age brackets.

4. Radio doesn't have one problem -- it has two. Declining attention and investment in content and broadcasting on an antiquated delivery system (terrestrial towers and transmitters).

5. In spite of years of vowing to get into the Internet, radio operators continue to see it as collateral damage to terrestrial radio -- a fatal mistake.

6. Mobile content is equally important as Internet streaming. Simulcasting terrestrial formats online is a terrestrial strategy. It's not new media. New media and mobile content continues to elude radio broadcasters.

7. The "leaders" who could initiate great change in the radio business are busy selling assets, cutting expenses and nationalizing local radio. Nowhere does any major radio group have a viable plan to program and market to the next generation. This is a sin because terrestrial broadcasters have some great content that is in danger of going under with the AM and FM radio band.

8. Denial is killing the radio business. Its CEOs continue to prop up HD radio which the next generation (remember them -- there's no getting away from them) thinks is a joke. More radio is not what Gen Y wants. Less radio or no radio would suit a lot of them just fine. Radio has worn out its welcome with a generation that it let get away.

All of us are emotionally involved with our love for this great business but increasingly radio people are fed up with working for CEOs who have no understanding of what opportunities and challenges are ahead.

I said -- opportunities and challenges.

So, it doesn't surprise me that radio operators see owning more of a dying thing as an opportunity when the challenge is eluding then.

As much as we love it -- and love the people who make radio what is can be -- it is dead -- finished -- over -- if it doesn't get into the digital future.

Radio is over ten years behind in that mission with no signs of doing the homework necessary to understand how the market has changed. They have no real concept of generational media. Meanwhile they continue to make silly decisions that will lead to more trouble.

You don't want to buy more radio. You want to take the money you would have spent to finance the acquisitions and invest it in new media. But first, understand what new media is.

No decision will pay off that isn't made with a full understanding of how Gen Y lives, learns, enjoys and spends.

That's the right investment.

Not buying more stations that I promise you have no real future.

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Hey Feds, Bail Out Radio and Records Next

The government, in what may end up as a one trillion dollar bailout of the banking and mortgage industries, is fast discovering what we in the radio and record label business could have told them a long time.

If only we had listened to ourselves.

Sometimes you need regulation.

Isn't it so -- well, swell that both the Democrats and Republicans are working their buns off this week to cooperate with the president to save the American economy. Or, is it to save their own butts politically? Whatever. They're working together -- there's a headline.

So taxpayers will eventually ante up the rescue funds and the debate will be over whether big government should be on our backs to more closely regulate certain things. (Don't write to me to argue politics, I'm not trying to change anyone's political affiliation). Remember when getting government off our backs was the big mantra carried by talk radio? Now, even John McCain sounds like a regulator and Barack Obama sounds like he's on board the legislative bailout love train.

The auto industry is next on the dole -- again. They need to be rescued from their mismanagement. Radio folks are no doubt in favor of that rescue mission because the auto industry is a big part of the radio industry.

Why not radio and records next?

Radio is as mismanaged as any other industry.

I mean, 235 million people listen to free radio in this country every week. NAB Chairman David Rehr just got finished telling the faithful at his lobby group's Austin convention that we need to be less negative so I'd like to take his challenge and propose the following --

A federal bailout of the radio business and their partners -- the record labels.

You see, radio CEOs have worked darn hard to build shareholder value and everything is against them. The economy. The so-called regulators (for not allowing further deregulation). The Wall Street banks -- the ones they must repay their over leveraged debt to. Damn. Being a radio CEO or a record label exec must be a bitch these days. It's never their fault when things go to hell -- that alone should qualify them for a handout.

Westwood One is living up to its name in terms of shareholder value -- one. Actually closer to 50 cents.

Citadel just saw the Grim Reaper last week when a letter arrived from the SEC that put them on notice for delisting unless they are able to get their stock up over the $1 mark in the next six months. CDL closed at 75 cents Friday.

Regent and Radio One have received similar letters. Regent closed at 90 cents and Radio One at $1.29.

Sirius XM finished at exactly $1 -- up five cents Friday. (It seems satellite radio stocks had the most growth before they launched a satellite and actually started operating. Wall Street loves a future).

That's the real bad news. But even the good news on Wall Street for radio stocks is bad.

Emmis and a handful of others are worth less than $2 a share.

Warner Records closed at $8.60.

There's no big performer in the record business and there are only four major labels.

You get the point.

What's so nice about government bailouts is that it kind of rewards the culprits that have been running footloose and fancy free until they got in trouble. That sounds like radio and records to me, too. Now I know that when the government saves the banking industry it is for the common good of the middle class American, right? At least that's what CNN and Fox tell us. So, my proposed bailout wouldn't pass that litmus test.

But, stay with me.

If that next emergency happens on Main Street USA -- say a freight train derails and spills toxic fumes into the air -- and there is no radio station to provide news and safety information to the public, isn't that a bad thing? My proposed radio rescue would take care of all that because there would be someone there to keep an eye on licensees who are not operating in the public interest.

Oh, wait -- isn't that the job of the FCC. Sorry.

Okay, I'll admit it. My bailout is to help my friends who are in over their heads right now trying to run local radio on Wall Street principles. I just want to help my friends.

There, I admitted it.

Because it's embarrassing to see these once proud radio CEOs looking so clueless. Acting so desperate that they have to fire good people at the one time they need them the most.

Oh, one more thing.

The Mayses were bailed out by Lee and Bain -- and just in the nick of time, by the way. See, the government didn't have to rescue the Mayses from the embarrassment of leading the radio industry into the doldrums. Okay, maybe Lee and Bain couldn't do that either, but they sure write a mean profits check.

And our brethren at the record labels are like "See No Evil and Hear No Evil" -- they just keep cashing their checks and working out their lucrative employment contracts while they try to get consumers (and shareholders) to believe that there actually is a future in selling $15 a month subscriptions for recorded music.

You get the message. I kid the folks in the record and radio industries.

But there is a real sobering message here and Goldilocks had it right. Yes, Goldilocks.

You remember Goldilocks where every member of the bear family has their own unique chair, porridge, and bed, which have unique characteristics. The exact adjectives differ from story to story, but generally the father and mother's beds and chairs are "too hard" and "too soft" and their porridge's are "too hot" and "too cold", with the baby bear's porridge, chair, and bed being "just right".

Well, the record industry is too soft --cushy jobs to powerful executives who don't have the slightest clue about the next generation.

The radio industry is too hard -- the not-ready-for-primetime radio CEOs used to be just like the rest of us until they sold their souls to Wall Street. Now, every last one of them is bankrupt of ideas and finding the rigors of managing terrestrial radio at dawn of the digital age too difficult for them.

The answer is "just right".

Just enough oversite to keep the government off our backs while not defaulting on the responsibility to keep them honest for consumers and advertisers.

Just the right amount of regulation to keep greedy people from continuing to screw up two great industries while the digital age passes them by.

Balance could have prevented the mortgage and credit crisis and as a matter of fact would have prevented irresponsible media consolidation that eventually led to the inability to operate radio and record label assets even with a virtual monopoly.

Imagine that -- how could these two industries screw up when they owned every advantage.

Aah. Maybe that's it.

Owning every advantage turned out not to be an advantage after all.

More competition -- local and from the ground up -- might have made all the difference in the world.

Too much power in the hands of too few was and is the problem. The fix is -- close the executive suite and run radio stations and record labels from the street.

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Embarrassing Radio Pep Talks

National Association of Broadcasters CEO David Rehr insulted the hard working people who put up with the indecision makers holding them hostage every day by saying "Radio needs people who believe".

To me this sounds a lot like Jim Jones asking the faithful to step up and drink the very Kool-Aid that will immediately kill them.

Rehr, apparently forgetting that when he points one finger at the program directors, general managers and sales people in today's radio industry, he also has three fingers pointing back squarely at himself.

Rehr added, "I'm talking about the negativity that's pervading the radio business and threatens to paralyze us". Rehr thinks that this negativity is causing stagnation and devaluing the business.

Rehr is happy to point out that radio attracts 235 million listeners a week.

Bla Bla Bla. We know that!

What radio needs to do is find a way to morph into a business that can survive without the next generation because radio consolidators blew the one chance they had to keep these young folks listening to radio content. Either that, or make content for the next generation and send it to their new devices.

It's been a bad week for radio -- not to mention the economy. Radio has huge problems and they are not going to go away with pep talks that are frankly, embarrassing to the people who give them and the poor people who have to put up with listening to them.

Rehr gets up on his radio bully pulpit at the NAB Radio Show in Austin and insinuates that the people who run the nation's radio stations are the problem. Rehr, like his buddies -- the CEOs of radio companies, are looking the other way.

In the same week, John Hogan, the Clear Channel radio boss, reportedly embarrassed himself and some of his employees with a locker room pep talk that was at worst inappropriate and at best a clumsy way of trying to wake up his troops.

Let's start with the NAB.

Here are the talking points Rehr should have used -- in my opinion. I know, I know -- he works for the handful of CEOs I'm always complaining about. I get it. But Rehr deserves a good swift kick in the pants for his act at the NAB. Blaming negativism on radio people is the pot calling the kettle black.

The talking points, Mr. Rehr:

• Radio still reaches 235 million listeners a week, but they are older and getting older by the moment. We have the talent and wherewithal to create separate content for the next generation and deliver it to wherever they live (Internet, mobile devices, podcasting) and can also service the remaining available terrestrial radio listeners.

• I congratulate the rank and file employees of the radio industry who have endured budget cutbacks, technological challenges, new media competitors and lousy management. (Sorry, couldn't help myself on that last one).

• Radio adapted when television was invented and it can adapt again in the digital age if its leaders can think beyond towers and transmitters.

• You can be sure that your NAB will continue to lead the fight against the record industry in their attempt to get Congress to remove the performance tax exemption from radio (NAB has done a fairly good job so far in this area winning over 226 House members to support their position but these political issues are very tenuous and deserve watchful waiting).

• You need management that will believe in you (I know, I'm fantasizing again -- leave me alone -- it sounds real good). Management that will trust you enough to allow you to operate your stations locally and give you the budget, guidance and resources to succeed. You deserve better than to be harassed by micro managers at this critical time. (Rehr doesn't have the balls to say this or he'd be back in the beer business again -- maybe this time at the ball park selling it not as head of the beer industry's lobby group).

• Support the People Meter. It will give your stations credit for the under-reporting the Arbitron diary has caused for decades.

• This one is directed to radio group CEOs -- stop your public food fight with Arbitron no matter how right or sincere you are. It hurts radio's position with media buyers and advertisers at the worst possible time.

Okay, you're right. This isn't going to work. Let's just go back to the b.s. that Rehr is dishing out at the NAB because it goes to show that we as an industry have lost our self-respect. How dare he address radio people who are working under the most trying circumstances the way he did?

Still, I like my talking points. They're honest. He could probably say all that I suggested -- more diplomatically, don't you think?

Now the second pep talk.

When Clear Channel's John Hogan, according to reporting from Tom Taylor, ended his national sales meeting, he left his people with the directive (as Tom calls it) to "Absolutely F-ing Do It" . Tom says that he was told that some managers had that written down for them to communicate the urgency of the message about revenues. (Hogan may have been borrowing a Lee Abrams phrase -- so he may not have been original).

There's nothing wrong with Hogan wanting his market managers to put up or shut up. But, what a sophomoric way to go about it.

I'm fully aware that John Hogan is no Tony Robbins and that his main job is not to be a motivational speaker. Apparently the AFDI directive went over like a lead balloon with some of his managers.

One Clear Channel manager told me that Hogan's locker room talk is so deflating.

It's hard to F-ing do it when it has already been done for you. Ryan Seacrest putting another mid-day jock out of work will really get those competitive fires burning in local radio. Having your superior slap you on the wrist the way Mother Superior might have done in years gone by to parochial school students who get out of line is so childish.

How can you ask your managers to deliver when you've bound them, gagged then, water boarded them (alright, maybe not that) -- and attempted to brainwash them into thinking they actually have control of what they're doing. It's insane.

So, let me help my friend John Hogan with this little problem:

• Absolutely do it because we're going to fire your ass if you don't (sorry, I couldn't resist. Skip down to the next one -- I'll be serious, I promise).

• Clear Channel is going to ask you to do three things for us in your job -- I will be sending you a personal email with those three things so you can tell me whether they are within your capabilities to deliver (see, talk nice -- with respect).

• I will make sure you have three tools to do your job and they will be outlined in the email. (I know -- I'm dreaming again). One of them will be to give you local decision making power. I realize that when I relinquish some control to my managers, I really gain control. I love Jerry Del Colliano for suggesting this (forget that).

There you have it. Great Pep Talks That Radio Never Needed -- now available in a boxed set so you can throw them in the trash all at once.

I kind of like what Emmis is doing.

CEO Jeff Smulyan is taking $1 for salary. I like that even though he still gets other compensation. He's also making his 64 most highly compensated employees swallow the poison with him. Their salaries will be cut to $15,000 but they will be compensated for most of the rest of it every quarter. This allows for Emmis to report less money paid for salary and more to the bottom line (you've gotta love Wall Street radio). Emmis is making the designated 64 whole in the end albeit it with Emmis stock (which is now trading at under $2).

So, I've vented. I've joked. Now I'm going to be dead serious.

The radio business is over if it insists on running itself like it has no competition from new media.

The next generation is gone, lost -- that means -- no potential for growth ahead.

New media is chewing into ad dollars (above and beyond radio's problems with the current economy), and radio companies need to redeploy their troops into new media.

New media does not mean taking repurposed radio shows and using them online or in podcasts New media is the most exciting thing since -- tradtional media. Get in on it.

My tolerance for radio b.s. at this serious point in our history is very low. You may feel the same way. The future is digital.

How about a radio "leader" giving a pep talk to their employees.

One that shows they know what they are doing and where they are going.

Does anyone want to be first?

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Best Buy's Napster Purchase

Best Buy, the big box electronics giant, just forked over a relatively small $127 million in cash (easy for me to say, right?) to buy Napster.

Two things:

1. Napster is over -- way over.

2. Napster isn't coming back.

Nonetheless, give Best Buy some credit for at least thinking out of their big box and understanding a reality that will affect them soon -- the next generation doesn't live in record stores. Often, they don't even live in electronics stores.

It's too early to tell Best Buy's end game here. The Napster they are buying has about 700,000 subscribers. It does about $30 million a quarter and has been operating cash flow positive for five quarters in a row.

Napster has had more comebacks than an actor in Ari Gold's Entourage stable. In its original role, Napster started the revolution that is killing the record industry and gave Apple's Steve Jobs some leverage with record execs when he pitched iTunes to them.

The original Napster had 25 million members (on the free model) around the turn of the century. But record industry lawsuits drove Napster into bankruptcy protection.

Young people have told me that they admired the original Napster -- after all, why not -- it helped them download free music. But when Napster became an also-ran subscription service, it fell out of favor on college campuses across the country.

It's too early to know what, if any, dramatic plans Best Buy has for Napster, but there is another lesson for all of us in the record, radio and even the new media business.

We keep trying to solve generational problems by guessing what the next generation wants.

Let's look:

Radio CEOs are so removed from the generation that got away that they really think putting terrestrial streams online is the answer.

It's not.

Not even close. You, my readers, know that the future lies in creating and marketing content explicitly for mobile, Internet and podcasting.

TV execs fail to get the monumental change that YouTube has wrought. They think making their TV shows available online in return for watching a short pre-roll commercial is the answer.

It's not.

YouTube fans are screaming "we want to be involved in this process and we want it shorter to assuage our shorter attention spans and, we want new content, too".

The record labels think that the original Napster and bit torrent sites that allow sharing music for free are the culprits.

They're not.

Not even close. The operative word for file sharing is free publicity. It's simply today's radio introducing music and bands to the public for next to nothing. The labels don't understand this which is why they are still suing the pants off a handful of people -- "examples" -- to no avail.

Newspapers actually led the way before the Internet and mobile phones were a factor. Their executives stuck their heads up their -- newsprint -- back when TV came along refusing to acknowledge that new technology was making it easier and faster to deliver the news than papers. They failed to get it even then.

My whole thing is generational media. Understanding it -- staying focused on the changes that take place seemingly every few months -- and making decisions based on what we're constantly learning. That's how Steve Jobs does it (and yes, it is intuitive to him). But we can learn to do the same.

HD Radio.

A non-starter with the next generation. Will you give me that the media must attract the next generation to be a growth industry?

Terrestrial radio.

Dying as the present available listeners die. Check the indicators. Monthly radio revenue is in an almost two year free fall. Ratings are declining in key demographics. Radio has lost its local monopoly because it gave it away in the name of cost cutting. Even by the CEOs' holy grail -- stock price -- a handful of good radio stocks trade for under $1 a share (even before the market meltdown of the past few days).

Record labels.

They think they're going to somehow pull a subscription model out of their heads and make up the difference between ever declining CD sales. Next generation isn't buying anything they don't want. They don't have to. They can steal it. Maybe it's time to understand the psyche that drives Gen Y. They're not bad. They just see things differently.

TV.

It's over. I'm going to do a separate piece on this in the coming days but TV execs have learned next to nothing from radio's decline.

You know what TV is to a young person?

A laptop computer.

And that changes everything.

Oh sure, TV conglomerates can buy their way into new technology -- or -- the TV industry could do what I'm recommending for all of us -- get in the trenches and stay in the trenches in an attempt to better understand what drives this elusive next generation.

So when I read about Best Buy stepping up to put Napster shareholders out of their agony by buying the company, I said -- so what? Unless they are capable of reinventing Napster (why?), they, too, have missed it.

I could find a lot of better ways to invest $127 million and earn a return on investment in tomorrow's generational media. Bet you could, too.

I want to reemphasize that I am not being critical of media companies for trying. The big radio consolidators have spent money over the years buying new media companies they really don't understand.

And that's key word -- understand.

I predict there will be plenty more of the same ahead because radio, TV, records and even new media are making decisions based on business principles, not real understanding of generational media.

Going forward, the best buy will actually be investing to better understand the massive next generation.

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Video Killed The Record Star

Remember when the Buggles song "Video Killed the Radio Star" launched MTV -- Music Television back in the 80's?

Who would have thought back then that the singing radio obituary would one day be a death notice for the record business -- and while we're at it -- MTV, itself.

That's where I think we are.

Did you see the MTV Music awards recently? When the main attraction is Britney Spears all cleaned up along with an outraged comedian railing against right wing politics, you pretty much have the stage set for where I'm headed with all this. Look, MTV has always been outrageous -- and certainly their awards shows were. But over the years it seems to me like the music didn't matter.

MTV doesn't matter.

Ask a young person. MTV is so -- Gen X.

Here's my theory.

MTV was created by the very talented Bob Pittman, a good radio guy. He basically invented music radio with pictures. The early videos were rudimentary but the art of making music videos later grew into a cottage industry -- at least for producers. Every artist, it seemed, needed to have a music video. At that point, MTV was beginning to matter.

And radio -- the industry with a terminal inferiority complex -- was looking over its shoulders. Hit radio reacted -- or overreacted -- or didn't react at all. Or all of the above. MTV got into their heads even before it could ever prove itself as a worthy threat.

I believe -- and many of you have told me you agree -- that radio lost its creative edge in the 80's long before consolidation came along.

The music and radio business changed forever once a radio listener could picture in his or her mind Madonna's Like A Virgin (or any other) video while hearing the song. This happened immediately after seeing a video one time. From that point on and for ever more, the music triggered scenes from the video version. In fact, I can still see in my mind's eye the video when I hear a song on the radio. Try this exercise if you have Sirius 8 (Big 80's) where some of the original MTV V-Jays now preside.

But MTV might have been a real threat to radio -- or at least a real boon to the music industry if it had only been able to do one thing.

Play music.

As it became successful, the managers found that a 24/7 music channel didn't bring in the ratings that appointment viewing could. So, VH1 came along to become the music channel and MTV started adding "real" television programming. As far as I'm concerned that might have been great for MTV's bottom line but it eventually led to its decline in popularity with the music loving public.

College kids today don't talk about MTV. It's meaningless in a world with Limewire, YouTube, MySpace and cooler things. The Gen X mantra "I Want My MTV" does not apply to this generation.

Believe it or not, all those expensive-to-produce videos that MTV used to air are really unnecessary in today's media world. A crude video on YouTube will do just fine -- thank you -- and will spread like a virus. It's a very different world.

As the outspoken record industry blogger Bob Lefsetz said in a piece recently -- you had to know something was wrong when the dripping paint on the MTV logo (that was there for a reason) was cleaned up by corporate suits. MTV creative types fought for that dripping paint.

What's more -- that imagery shows what happens when the suits have too much influence over the content (radio, I'm also talking to you, too).

So video killed the radio star -- in a way -- when it got into the heads of the programmers who did a deja vu on taking a backseat to television again. Didn't radio do that in the 50's when black and white TV came along?

And video killed the record business because it was another hurdle that could not be easily overcome for new acts thus crippling the creative factor just at the time when radio stations were continuing to cut their playlists.

And ...

Video killed MTV because MTV was known for playing videos (when they did) on traditional television while today's music loving generation is online looking for more variety, accepting lower production values and loving every minute of being in control. I'm aware that MTV has a web presence. It's not that big a deal with the next generation.

P.S.

The secret to attracting the next generation?

Put them in control.

Hard to do. But it is the lesson we learn from MTV, the record industry and, yes -- radio.

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Radio: A Zell of an Economy

I have a pen pal named "anonymous" who usually writes me every time I say Sam Zell, Randy Michaels and a ton of ex-Jacor employees want back into radio.

Write to me again because I'm still saying it.

The other day I wrote a piece about employee pricing that could help existing local management buy radio stations from cash strapped consolidators who have fallen on hard times.

Basically, there are a lot of radio stations for sale -- publicly and privately. The more visible ones are CBS' smaller markets and Citadel's "make me an offer, any offer" markets.

So what do we know about Sam Zell, the successful real estate mogul who once teamed with radio's programming mogul, Randy Michaels, to build and sell Jacor for lots of money.

1. Zell doesn't like "employee pricing". He wants distress sale pricing. Zell doesn't pay retail. Look at the record.

2. Zell can always find financing. I know it's hard to come by but he's got lots of options -- among them, try to sell his Local TV unit -- perhaps with the newspapers that are dragging him down -- to someone who can. Say, Rupert Murdoch or someone of his ilk. Never count Zell down for getting a deal done, but the price must be sweet.

3. He's comfortable employing people like him -- a little off center, but talented. Michaels was made for Zell.

4. Michaels did not hire his old Jacor buddies away from Clear Channel (and he's hired a lot of them) to have them get their fingers dirty with news print. I love these guys -- and like some of their print ideas -- but even Jesus couldn't turn newspapers around (Forgive me, Sister Mary Francis, I know I am going to go to hell for that one). But they can still run a mean radio group -- if only they had one.

5. A terrestrial radio group by itself is not worth the investment. There is no growth in a business that does not now have nor will in the future have the next generation available. That's why an Internet strategy is so important. Michaels has been hiring good Internet people ostensibly for the newspaper business.

Something big is in the works.

Maybe Mel Karmazin has a plan to roll Sirius XM up with a terrestrial radio group to create one giant media platform. If he does, I hope he's got a major Internet and mobile component or that roll up will shrivel up as soon as investors figure it out.

I think Lee and Bain have all they can handle with Clear Channel. They're not having a lot of luck selling Clear Channel's debt. The master plan may have called for adding more radio to the Clear Channel group, but I'd be surprised to see it with these folks now. I do expect the Mayses will ultimately be shown the door -- kind of like Larry Wilson at Citadel -- and blamed for everything that is wrong with Clear Channel.

And, as I've said, there's Zell and Michaels.

I'm not counting them out and you can't, either.

They are uncharacteristically quiet and that is saying a lot.

Anonymous, write to me. You know who you are -- and I do, too. Tell me I'm wrong about this big bang theory of mine.

And cross your fingers and toes while you're typing.

Radio is falling apart. The owners and operators are seemingly oblivious to all this. You and I are talking about it all the time. They are missing in action.

And you know what they means?

They've got some deals up their sleeves.

It's hard to say with certainty who it will be, but it will be someone.

As we used to say in Philly, "You Heard It First on W-F-I-L".

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Radio: 1-2-3, I Beat Jerry Lee

Everybody wants to take a piece of Jerry Lee, the 70-year old FM radio pioneer who manages radio like he's 25.

The mighty Clear Channel (when they were really mighty) tried to position WSNI, Philadelphia to go after Lee's WBEB (B-101), the longtime market leader (with KYW) and revenue machine.

After a few years of giving it all that they had, Clear Channel changed formats.

The latest attack is from Greater Media which is taking its 97.5 frequency to create a younger version of Lee's soft rock station called "Now 97.5". It wasn't much of a risk because the station had been bombing with the Smooth Jazz franchise that Clear Channel gave up on.

Greater Media is one of my favorite radio companies. I only have a handful these days, but this is one of them. Peter Smyth is an outstanding radio executive and his Philadelphia market manager John Fullam is terrific. I had a couple of personal differences with Fullam when he was working in New York for Clear Channel but I'd hire him in a minute.

Everybody wants to beat Jerry Lee. And why not? He's rich. Rolling in dough that he's made decade after decade. He spends to make it. It doesn't matter that radio is dying. WBEB is super achieving.

No one asked me, but if they did I would have suggested that Greater Media find another format option for 97.5 -- anything other than Jerry Lee's WBEB. (Full disclosure for those who don't already know: Lee's station was the first to hire me when I got into radio so you may want to factor that into what I'm going to say. But don't discount all of it, there are a lot of lessons we can all learn from what is about to happen in Philly).

First, Lee is going to eat 97.5 for lunch.

Second, his WBEB is going to emerge even stronger for the Greater Media competition.

Third, in spite of the fact that radio is indeed a dying business, his station is a growth business (as I hope you'll see).

So, here's 1-2-3 how to beat Jerry Lee. My mentors Marlin Taylor and Phil Stout also go way back with Lee and were a part of his early success. They'll likely agree that this is the plan.

But for everyone in radio who wants to seriously learn what they're doing wrong, do one or two of the following right in your market and you're going to be bigger and better.

Let's begin:

1. Spend ungodly amounts of money on research. Then, research everything that isn't nailed down -- not just music (but that, too). Have a quality researcher on staff and pay him or her well. Lee was first to hire his own in-house researcher in Jhan Hiber until Hiber became ill. Now the researcher Bill Moyes (of The Research Group fame) is on the job.

2. Spend ungodly amounts of money on TV advertising. Lee buys so much local TV that the TV stations sometimes don't have all the avails he wants them to sell -- no kidding. Unless Greater Media is willing to write a lot of large checks to fund twice a year ad campaigns on television then it can forget any chance of making a dent in B-101's franchise. And assuming they will equal Lee in spending, remember -- Jerry Lee will spend more. He'll see you and raise you. In fact, he'll raise you before he sees you! If you buy TV two of the four seasons a year (Fall and Winter, say) he'll add Spring. So, number two could be named "outspend the competitor but don't waste your money". See #3.

3. The TV ad has to say it all -- researched and produced for a local, women's music station. Put them in the ad -- not actresses and actors.

4. Research all the music constantly. Remember, soft rock is a hard place because you don't want to get too old with the music -- or too young. It's demographic babysitting, if you will. Requires constant attention. Again, open the checkbook.

5. Keep the same management in place. Blaise Howard is among the best managers in radio and Lee has employed Blaise and his team for a long time. None of this cutback stuff. No running it on the cheap. Management stability is another reason why Greater Media has an uphill battle ahead against this competitor.

6. Build close relationships with advertisers -- nationally and locally. WBEB has taken an active interest in actually helping its clients succeed in their campaign goals. Most radio stations simply run spots. WBEB tests the commercials for free -- makes suggestions. They make an advertising investment in B-101 payoff for advertisers. There are a few other stations in the country that do the same -- not many.

7. Understand that radio has no revenue growth potential unless -- unless -- it can siphon money off from television. Radio sales figures are declining but things are going to get ugly in TV -- that's my prediction based on the generational media work I do. Again, Lee's willing to help TV advertisers get better results with all radio - not just B-101 -- so he can continue growth by taking a piece of the TV buy. By the way, building all radio stations up as a business instead of building just your station(s) up is good for everyone's business. Clear Channel, Citadel, Entercom and the others, please take note.

8. Run the station as if consolidation never happened. The bad habits radio picked up during consolidation, Lee didn't. This rich man could have been three times richer if he wanted to take one of the many high priced offers he got for his single FM station, but he chose to keep it. What a statement.

9. Never forget that if your argument is "I don't need to beat them to make money" think again. An also-ran is temporary. Number one gets it all. Those who argue "Now 97.5" will do better cloning B-101 than in its old jazz format is thinking like a loser. You program to win. Do what it takes to get there. There is no way "Now 97.5" beats B-101.

Of course, I could go on and on. Do any of these nine things well and you'll have a chance to outperform your market. And Greater Media could have a better chance of beating Jerry Lee.

Except that Lee saw Greater Media coming. And while they may be working on getting 1 through 9 (above) right, Lee's coming up with the next nine ways to outperform the competition. (Hint: a better morning franchise, mobile delivery of his brand not just his terrestrial stream, etc).

In other words, the only way to beat Jerry Lee is to be Jerry Lee.

So meet me back here when Greater Media morphs "Now 97.5" into the next iteration and so on and so on and scooby dooby doo-bee (as Sly Stone would say). I'll refrain from telling you "I told you so".

In fact, I didn't just tell you so, I shared some of the things this unique radio pioneer does that radio would be wise to emulate.

There is no way terrestrial radio will attract new listeners and more sales revenue without the next generation. But Jerry Lee knows how to program to the maximum number of available listeners and how to bleed ad dollars from a competing industry (television).

I always keep an eye on my old mentor because don't be surprised if he also figures out how to extend his brand to delivery systems that young people use.

In the meantime, forget the geniuses who are running their radio companies into the ground, killing their shareholders with stock prices under a dollar and who have no understanding of how to survive today let alone in the future.

If you want a success story -- a template to make things better now -- study this important battle. Greater Media's 97.5 is licensed to Burlington, NJ and used to be licensed to Trenton where the battle of Trenton was pivotal during the revolutionary war.

And like General Washington's army, General Jerry Lee will not only win the war but take no prisoners.

One more thing.

This is my long-winded way of saying: can you believe in this day and age that radio people can still only come up with the same handful of formats they programmed for the past three decades?

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Employee Pricing for Radio Stations

Have you noticed how many radio stations are on the market right now and how few are selling -- even below value.

I mention this because the other day CBS President Les Moonves said publicly that someday the company might sell its radio division. A lot of folks reacted to this comment. Moonves pointed out that the free cash flow advantage that CBS Radio is contributing to the corporation is not lost on CEO Sumner Redstone.

What is significant and getting a lot less attention, however, is how many companies are trying to sell radio stations with no apparent luck at all.

CBS is one of them -- vowing to sell off its smaller markets and keep the large ones -- for now.

Citadel is another -- they're reportedly looking to relieve themselves of some of their stations in their never ending battle to configure a radio group that actually makes money.

I'm sure Clear Channel's new owners would like to trim and snip here and there.

Privately, other radio operators are looking to sell down assets because this is a far different world than the heady days of consolidation (post-1996). Radio is literally a dying industry. To put it kindly, its available listeners are getting older every day and the new blood that radio needs to be a growth business went missing with the next generation. Gen Y moved on to the Internet, iPods, mobile devices and social networks. Their time is consumed with media -- but not so much with terrestrial radio.

Radio revenues decline every month and have done so for 17 consecutive months. There's no end in sight for this financial dilemma.

The industry frets over satellite radio (no threat at all, really). Conducts a public fight over the People Meter and hangs on to the diary system that has been under reporting listening levels for decades. (By the way, the big PPM stink Hispanic broadcasters are making by pressuring politically ambitious politicians in New York City is another black eye on radio. If I'm an advertiser or agency I'm getting real nervous right now about the reliability of the People Meter).

So radio has peaked and is on its decline. I will say this for those of you who may be new to my pieces -- it is a sad time for me because radio people are the most talented, hardworking and loyal employees who have taken the brunt of consolidators' hubris as well as paying directly for their CEOs mistakes with their careers. They are working for some of the most block headed, clueless owners in any industry. What a pity.

With all the problems the industry is experiencing, it seems as if everything is for sale in radio right now.

And at the high prices sellers are demanding, there are no buyers -- you may have noticed.

A few companies are doing minor acquisitions -- these are the smaller companies who apparently think there is still a future in the terrestrial radio business. Don't get me wrong. I agree with Les Moonves -- radio still has a lot of listeners and pumps a lot of cash flow, but the growth element is gone. No next generation.

It is very possible that the geniuses who put together these radio clusters city by city may soon be eating them -- financially, that is. In other words, they may have little option other than to run the stations, take the cash flow and avoid selling the assets at a devalued price.

Luckily most brokers who made their money the first time around in consolidation are well off and living in Florida, California or the desert. They'll be fine.

Two things:

1. If radio groups are going to have to keep the stations and run them, then they had better learn a lot more about generational media. True, they can't launch any format that will attract lots of Gen Yers, but they risk losing the interest of their older, "available" listeners through poor programming.

2. If owners decide to sell, they'll need what is called "value pricing" hoping that there will be a few more suckers or investment buyout firms (maybe they are the same thing, I don't know) to rollup a few groups into one giant entity. That prospect may be good for investment banks, but remember my warning on mastering generational media -- I'm not just speaking about students. This also applies to Gen X and baby boomers.

So, what to do?

Can radio groups do like the auto industry and offer "employee discounts" and let station people band together to buy a station or two?

Maybe the only way to unload radio stations is to do the unthinkable -- sell them to the people who actually know how to run them. You won't have any trouble finding them. They're probably working for you right now. If you'll just price them fairly and hold the paper to help with the financing -- it's as good as done. Damn, and I won't get any commission for this idea, either. (Speaking of that -- anyone remember the days when the person who introduced the buyer and seller of radio stations to each other were paid an "introduction fee" -- usually in the millions of dollars?)

Now, you know what I'm going to say (again) -- terrestrial radio alone is never going to be a growth industry so who would want to buy a radio station?

Someone who knows that:

1. Radio works best locally.

2. Radio people who care and who can make local decisions will run the best radio operations.

3. Terrestrial radio alone has no future, but franchises started on AM or FM may. For exam[;e, all-news is a brand. WINS 1010 or KYW 1060 are brands that don't need to have terrestrial radio as their main delivery system. Same is true of thousands of station brands in all kinds of markets. There know that there may be intelligent life beyond the transmitter and tower for radio.

4. Mobile content, Internet streaming and podcasting are the tools of growth from which radio can emerge as a new media business with real growth potential.

5. Local radio in small to medium markets have the best chance of paying returns on investment.

The dictionary says there is no such word as "un-consolidation" or "de-consolidation" and maybe the idea of selling radio stations -- the ones big companies are wishing they could sell -- to employees is a stupid idea. It wouldn't be my first and I'm sure will not be my last.

But, it's not a terrible concept, either.

So be warned that one guaranteed way to give terrestrial radio a future in the digital age is to put stations back in the hands of local employees who by instinct alone know the way to the future.

If this helps big corporations make a future financial burden all the way, all the better.

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People Meter Formatics

I read that my friend, the programmer Jack Taddeo, said recently “We’ll see some stations slowly program more toward longer TSL by reducing tune-out factors such as the glut of over-production and station imaging we have heard historically.”

That got me to thinking of all the great programming opportunities stations will have once they can stop ramming station call letters down their listeners throats every time a jock opens his or her mouth.

It seems like all we do -- even if it is for a good reason. And believe it or not, I have anecdotal evidence that young people go nuts by the constant selling of call letters. True, they are no longer "available" to radio stations as future listeners, but still -- it's an irritant.

Some radio programmers remember back when a genius programmer named Buzz Bennett instructed his djs to say the call letters twice every time they previously mentioned them once. Double your pleasure.

It worked so well – lots of other stations did what we do all too frequently in radio – copied it.

You could understand Buzzie’s strategy. The main ratings company – Arbitron – used a diary system and it made sense to make sure listeners could write the correct call letters down in their diaries. (You remember diaries, don’t you? They’re the things respondents hurry up and fill out on the last day of the reporting period before they were due).

Oh, now we get it.

Write it down. So that's a main reason for turning our stations into call letter machines.

In the past, stations like WABC had jocks accent the letter “A” when saying the call letters W-A-BC. PDs at WNBC had jocks stress the letter “N” to avoid confusion with a station that had three of the same call letters in the same market.

Where was the People Meter when we needed it?

But with the People Meter, all listening is picked up and credited within the range of a device that listeners wear. It makes sense to adapt to the new rules of the ratings game as PPM is rolled out market by market.

There are some who would say just keep hammering out the same high velocity call letter mentions --- it can never hurt to say the station’s name or brand too much.

Maybe yes, maybe no.

Without having to say the call letters as much, what would radio djs actually say?

Precisely.

Maybe it would mean more entertainment.

The People Meter gives radio programmers a chance to develop better ways to increase time spent listening using entertainment instead of mere formatics. Remember, no need to mention the station if the meter is automatically picking up and crediting the listening.

From early PPM markets we see how under reported radio is compared to the former diary system. Create music sweeps that are compelling, addictive and you’ll get more time spent listening.

If you’re the Christmas music station, it’s the music and not the endless hammering of the fact that you are indeed the Christmas music station that will win the day. Keep in mind I am not saying that branding or station identification is unnecessary. Simply, that without the diary system, radio programmers will be free to use their creativity to actually entertain and perhaps get listeners to listen longer.

Contests may actually be worth testing again. Contests were once used to create excitement on the air or attract attention.

But not all contests are exciting. WNBC gave away $50,000 not once but twice during a diary rating period in the 70’s using their laid back “here’s a contest for listeners who like contests” approach. The ratings did not go up.

Make listeners stick around for something they may want to hear, own or just enjoy – and you're on the way to mastering the People Meter.

How many commercials and how often is a bigger issue.

Try a six spot cluster with the People Meter and a competitor may clean your clock playing one or two spot commercial clusters and then return to programming.

We often talk about the People Meter and the issues surrounding a radio industry that seem hell bent to postpone its adoption --- even in spite of the fact that advertisers want it.

But it will soon be time to turn to the discussion of how to program radio stations to maximize time spent listening in reality not just in terms of the psyche of the dairy keeper. Give me a group of PDs at an Arbitron event and I’ll bet you their brainstorming will be nothing short of brilliant.

It's not to early to begin. Let's hope the radio industry won't just do what the PDs in New York and LA decide to do. Now's the time for innovation -- that's something we're still very good at.

Opportunity is knocking for getting radio listeners to listen longer – not just through the manipulation we all know was characterized by audience diary keeping.

And listening longer is the only workable option going forward as radio will not likely be able to attract more listeners from the generation they let slip away.

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Record Labels' Death Wish for Radio

The relationship between radio and the record labels for a long time was a pretty damn good deal – for both.

The stations got free programming, lots of prizes to give away and payola if they were into it (and some were over the decades of modern pop music).

The labels got gazillions of dollars of free promotion, publicity and exposure and didn’t have to share a dime with the radio stations that made, broke and sustained their acts. In fact, if they had to pay for the air time, the labels would never have been able to crank out the hits so reliably and ring the cash register so frequently.

Same could be said of radio stations – where would they get all that musical content for just the price of an ASCAP and BMI license?

Believe me, both sides know this. They’re not stupid. In spite of what we hear about the labels trying to get radio’s performance tax exemption lifted, these two industries know how attached they are to each other.

But the times – they are a-changin’.

One of my readers got my attention with his theory that the labels actually want to run radio stations out of business. The theory seems plausible because taxing your free promotion machine seems like a death wish.

Could the labels have a plan to go it alone and cut out the middlemen – all middlemen?

You know how record execs get upset when the name Steve Jobs is mentioned. After all, Jobs snookered them into the iTunes deal from hell that they can’t get themselves out from under. We know the labels are losing sleep trying to find ways to get back at Jobs even if they risk screwing themselves in the process.

My reader posits:

Record labels want to control everything: the hardware (electronic devices) and content (their music). Secretly, I believe, they’ve always wanted to be radio station owners, but FCC rules prohibit that. So, with New Media and the Internet, they now can. They’re making it so expensive to play music that most companies won’t make a go of it – Pandora is a great example. They want Pandora gone! They want to do it themselves. UMG even set up their own video channel worldwide – which hasn’t gotten picked up by US cable companies yet, but eventually will be. They intend to control On-Demand videos in cell phones, cable and the Internet.

Sony continued in the music business while BMG got out – Sony being the device making end of that association.

I don’t know what to think?

Are the labels this devious – this desperate?

This smart.

I’ve been saying for quite a while now that a savvy record label should distribute its own music via podcasts. How fast do you think they could make that happen?

If they’re dumb enough to imitate radio – which is despised by many young people – then they’ll go down with that idea. But if they can find ways to utilize the Internet to work on their behalf – who needs radio?

But first, they would have to ---

• Allow music to be traded on the Internet for free – never in your lifetime, right?

• Find ancillary ways to make money from free music such as sponsorships, merch done the right way and social networking events that make money – hell, they would never buy the fact that they don’t do merch right.

• Adopt podcasting as a vehicle of distribution that cooperates with the inevitable. Like electronic music? Subscribe to label X’s overnight feed and you’ll have everything released in the past 24 hours on your mobile device ready for play in the morning. Someday soon, bluetooth it in your car, listen on the bus through your iPod. Direct from your favorite record label to you.

All this will require the labels to accept the free model in order to make money.

Insane?

What do you think they are doing now by allowing radio stations to play their music for free on the air?

Free music makes money.

Repeat.

Free music makes money. But you have to have something else to sell.

Don’t stay awake at night worrying about this if you are in radio.

Instead, you should be doing deals with independent labels and artists without copyright protection. It’s not as bad as your tight 30 song playlist might think.

The next generation has moved on – to feed their addiction to new music and radio could (if it had the guts) be the purveyor of all that good, rights-free music, instead of sticking to the old model of working the labels' acts for them.

Having said all of this I must say that I love record people. I don't agree with them on anything. But I love them. They are characters -- not just the old timers, but the young kids the labels employ.

I'd like to bring together just one label and one radio group so that they can work together in new media -- Internet, podcasting, mobile content.

One thing is for sure, embracing the demand for new music and delivering it in ways young consumers can appreciate is the antidote for a death wish.

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