How to kill an industry

[TheBigA]

Silk, I think you're missing the original point made by Steve Jobs and Peggy Noonan, which has to do with taking the business away from the people who create the product, and reducing innovation.

"Taking the business away from the people who create the product?" Huh?

Look, if some OTA talent wants to buy a station, that's great, and no one is going to take it away from him. But in the places where I've seen that happen, that person becomes someone like Randy Michaels. It's amazing to see the change in personality that happens, and I've now seen it in multiple businesses. Creators aren't businessmen. That's why musicians hire managers. That's why inventors get lawyers. That's why Van Gogh and Mozart died broke.

 

[SirRoxalot]

At least Van Gogh and Mozart were still in control of their art. And not all artists die broke. Nice to see you acknowledge that radio has an art component. Maybe you could pass that along to the spreadsheet jockeys running the industry.

 

[davideduardo]

Prior to the Communications Act of 1996, Broadcast Companies were limited to the number of stations they controlled in a market. That means, Clear Channel would have owned one AM and one FM in the New York City market, instead of the 9 they currently hold.

Actually, ownership caps had been raised prior to 1996... just not to the wide-open extent they were expanded to in '96.

And nobody owns 9 stations in NY or any other market. Clear has no AMs in NY, and has the maximum of 5 FMs.

That means there could be as many as 7 additional fully staffed stations, employing their own sales, air and production teams. Use the same formula across the country and you can see how many jobs have been eliminated soley due to cross ownership by the mega-companies. Thousands.

It's just not that simple. By the 90's the effects of Docket 80-90, the slow growth of radio revenues and other factors had made fully half of all US stations unprofitable... a condition that had been close to the norm going back to the 50's per FCC financial reports... but getting worse in the 90's. Blaming job loss on consolidation alone is disingenuous.

Anecdotally, I owned a duopoly cluster in the late 60's in a market of about a million. I started with one station, and built out to 9 stations (4 AM and 5 FM) over several years. Some stations were sign ons, meaning new hires, and the others incrementally added staff... each had been bought as a distress sale, so generally the staff was lean and I shortened air shifts, went 24/7 and improved promotion and programming... so consolidation there meant better pay, higher revenue, better programming. My point: not all consolidation is bad and sometimes it benefits listeners.

And more than jobs, the biggest loss is the quality of broadcast radio. It has gotten away from its stated purpose, which was to serve the public good.

No, (expanding on another post) the purpose of radio was to attract listeners so that they could be sold things. When Westinghouse built its first stations, they wanted to promote the sale of radios. The same thing happened with stores, newspapers and even insurance companies.

Example: WHAM, the Stromberg Carlson Station.

In the process of regulating... roughly 7 and 12 years after KDKA began, the government introduced the idea of "serving" but the sustaining force behind broadcasting, after the hobbyists and 50 watt stations went away in the mid to late 20's, has always been revenue from advertising.

This was evidenced by the recent pre-Halloween snowstorm in Connecticut, where only one local station was able to break format in order to provide much needed news and information relating to the storm. The rest were either knocked off the air or running pre-recorded programming, since the storm took place on a Saturday afternoon/evening, when no one is in the building anymore.

In most cases, even when there was someone in the building, there is often nothing they can do. My first few years in the business included the entire Sunday shift (7 AM to 11 PM) on an FM in a major market... no wire service, no news person, and the guy on duty (me) could not have done a newscast to save his own life... and that was the early 60's, the height of the "service requirement" years.

Today, listeners tend to know which stations provide the kind of service you talk about. They go there when needed. And there is no need for all stations to be giving storm reports... they can do what they do best while the news specialist handles the emergency as only they are qualified to do. I don't expect to see a review of chain saws in Vogue and don't expect haute coture features in Popular Mechanics. Why should all radio stations be expected to do the same thing, resulting in not just duplication but, often, incompetent or incomplete coverage of important things?

 

[TheBigA]

Maybe you could pass that along to the spreadsheet jockeys running the industry.

Now that the accountant isn't running Citadel, most of the people running the radio industry are programmers like Dan Mason and Bob Pittman.

 

[davideduardo]

At least Van Gogh and Mozart were still in control of their art. And not all artists die broke. Nice to see you acknowledge that radio has an art component. Maybe you could pass that along to the spreadsheet jockeys running the industry.

There is an "art" to any profession.

There is even "art" in the installation of a toilet... the proper thickness and placement of the wax ring, the right tensioning of the floor bolts, the "feel" for the tightness of the water connection to the tank and on the other seals... Only a skilled plumber can do it right, creating a long lasting installation.

But the plumber and the broadcaster have to make money to subsist or even prosper. Artists who don't make money often end up as did Van Gogh, missing an ear and in an asylum. How much control of his art did Vince have when rejection and poverty drove him off the deep end?

Mozart died young and in poverty. Radio stations, being businesses, don't aspire to postmortem honor but to success today and now.

 

[SirRoxalot]

As I said, not all artists die broke. Andy Warhol, for example. He got a lot of mileage out of soup cans.

 

[fybush]

No, (expanding on another post) the purpose of radio was to attract listeners so that they could be sold things. When Westinghouse built its first stations, they wanted to promote the sale of radios. The same thing happened with stores, newspapers and even insurance companies.

Example: WHAM, the Stromberg Carlson Station.

Probably not the best example.

When WHAM was founded in 1922, it was not by Stromberg-Carlson but rather by George Eastman, the Rochester entrepreneur who founded Kodak. But WHAM, which then operated noncommercially, wasn't the "Eastman Kodak Station," any more than the Eastman Theatre from which it operated was the "Kodak Theatre."

Eastman, you see, was part of an exceedingly rare breed: philanthropist first, businessman second. Even 80 years after his death, Rochester still benefits every day from the magnificent gifts he left behind: the University of Rochester and its medical center, the Eastman Dental School, the Rochester Philharmonic Orchestra, Durand-Eastman Park and the mansion that after his death became home of the International Museum of Photography.

He didn't put WHAM on the air to promote Kodak or to sell anything. He put it on the air to serve his community.

(And having said that: by 1927, when Eastman was retiring from public life and succumbing to the depression that would lead him to take his life a few years later, he did indeed sell WHAM to Stromberg-Carlson, which most definitely used it to sell their products!)

 

[TheBigA]

But WHAM, which then operated noncommercially, wasn't the "Eastman Kodak Station," any more than the Eastman Theatre from which it operated was the "Kodak Theatre."

I'm absolutely fascinated by this story.

One of the most prized books in my collection is "Commercial Broadcasting Pioneer: The WEAF Experiment 1922-1926" by William Peck Banning, printed in 1946. It tells in great detail the story of WEAF, the first commercial radio station, owned by AT&T. The concept was simple: Sell time on the air in the way the phone company sold minutes for phone use. It worked.

 

[SirRoxalot]

Steven Jobs never objected to selling his product. In fact, his capabilities as a marketer are probably his biggest contribution to Apple. His objection was to management that became obsessed with only short-term, sales-oriented goals at the expense of the long-term health of the enterprise. Once again, read the original story that prompted this discussion. It's not a question of sales being bad, it's a question of sales domination at the expense of the actual product.

 

[TheBigA]

It's not a question of sales being bad, it's a question of sales domination at the expense of the actual product.

But clearly the product had become tired, old, and lazy. There was no product development being done. There had been an entire revolution in the media world in the last ten years, and radio hadn't changed and was viewed as old. No thought being given to how radio can be integrated into social media or other new approaches. The public has been empowered to create their own media, and radio was still operating as though it's the 1960s. Even worse, people in radio were attacking new media like satellite and iPods as though they were the enemy. Just like the recording industry attacking downloading. Big mistake.

In an interview with one of the trades, Bob Pittman explained that the changes he's making are not cost-cutting moves, but rather improvements in the product. Pittman isn't a sales or accounting guy. He's a radio programmer with a huge track record of success. He knows the product has to change, and the change has to begin on the air. It's not going to be easy, because those on the air have an established audience. But the audience isn't growing, and radio needs to get in the game with other media, become better integrated, and become something listeners WANT to use, because now they have a lot more choices. I read a couple of interviews with Mike McVay at Cumulus and I take him at his word that he too wants to improve the product. He's not a banker or an accountant. He's a programmer. He's not working for GMs any more. He's working for the owner, and that gives him the freedom to do strategic programming. I think the next few years will be very interesting. Radio's not dead yet.

 

[davideduardo]

Probably not the best example.

When WHAM was founded in 1922, it was not by Stromberg-Carlson but rather by George Eastman, the Rochester entrepreneur who founded Kodak. But WHAM, which then operated noncommercially, wasn't the "Eastman Kodak Station," any more than the Eastman Theatre from which it operated was the "Kodak Theatre."

Interesting background, which I was not aware of.

But... as soon as radio was more regulated to put order in the band, we saw a rapid reduction in the number of altruistic stations. Most of the publications of the time refer to "hobbyist stations" and refer mostly to the 50 and 100 watt operations. As you point out, there were also some stations with greater resources that existed to "bring radio to (insert city here)" and were community driven.

But (redux)... those community stations arose before the official policy of the regulatory entity required such. And, for whatever reason, in the period between '27 and '33 most of them went away or became part of a newspaper, radio manufacturer or business or businessman of some kind.

It's interesting that service became very subjugated to revenue in the US, and there was little in the way of fully dedicated broadcasting in the community interest. Yet in the free English speaking countries of significance, we had the BBC, the ABC and the CBC (and, later, AIR in independent India). Even in places of lesser population like the Bahamas, Jamaica and even British Guayana, the Falklands ("Malvinas" to most of my acquaintances) and British Honduras had their own public radio that reached positions of dominance even if they were not exclusive like the Bebe was for so long. Places like France, Italy and other European nations also had and many still have effective National broadcasters.

It makes one think how regulation of free broadcasting in the US created "crassly commercial" radio while elsewhere radio was seized by the government and generally attempted to aim above the lowest common denominator.

 

[davideduardo]

Steven Jobs never objected to selling his product. In fact, his capabilities as a marketer are probably his biggest contribution to Apple.

No, you trivialize the contributions of Steve Jobs. Job's biggest contribution was vision.

He understood what sort of things that people would want if they were available at the right price. Think "Field of Dreams."

A person who comes up with the idea for the iPod and realizes he has to create a supply chain for the device's fuel, iTunes, is not simply a marketer.

P.T. Barnum was a marketer.

Jobs was a visionary. And a visionary willing to bet the farm on his dreams, over and over.

 

[Tom Wells]

Mr Jobs did not likely spend any idle time wistfully dreaming of piles of money.
More likely he thought about creating something people needed, wanted, and wanted to use.
This is the public service factor idea at work.
When the focus is service to others, and can be indulged in as a labor of love, there is enough prosperity for all.
In fact, there can be growth beyond anyone's wildest dreams.

When the focus is upon money, or the situation changes in that it becomes mostly about the money,
everything created within that "realm" begins to collapse upon itself.

A corporation can not "know" what a labor of love is.
In fact, corporations are legally required to behave in ways that offend all except the corporation itself.
It is willing embodiment of death economics that says "less for you is more for me".
Those who do their work from a positon of love and expect more important rewards than money know that cooperative
living and thinking means more for everone, all the time.

But go check on the stock market if it makes you feel any better.

 

[Goat Rodeo Cowboy]

I think we will be psycho analyzing Mr. Jobs for years to come.

He had a "vision" of how serving the public and funding the "project" had to be connected, balanced and disciplined. You can say he wasn't concerned about piles of money.... but look at the "policy" he put in place to make sure that the piles of money did not go dry. He saw to it that Apple devices work basically only with Apple accessories and add-ons.

My wife received a NANO iPod for her birthday from one of our children. You can't even set the thing up until you download iTunes and install it. To which you might say: But iTunes is FREE. What's the big deal? iTunes on your computer is like agreeing to house an Apple sales rep in your guest bedroom!

Steve Jobs may have been enamored with the gurus of Buddhism, but his life was not patterned after the monks of the Catholic orders who live under vows of poverty and spend their days in works of charity.

I guess I will be learning more about Mr. Jobs. My wife just bought the biography. She prefers reading over audio. The NANO is not likely to die from overuse.

 

[landtuna]

In an era when the majority of best-selling devices are open-source you would not have expected any CEO to submit to the limitations of closed-source products ala Apple.

While it is true Apple is very successful using this model imagine how much more successful they might have been had they competed openly.

I, personally, don't see Jobs as a great visionary. Rather, he operated Apple in similar form to the great financial and railroad despots of a century ago.

And while he made considerable money for himself, his employees and his investors he didn't live a day longer because of it. Think of what he might have accomplished had he funded cancer research instead of toys.

 

[SirRoxalot]

You forgot one important thing. Without the "toys", there would have been NO money for cancer research.

It's all about balance, my friend.

 

[landtuna]

You forgot one important thing. Without the "toys", there would have been NO money for cancer research.

It's all about balance, my friend.

I understand what you are saying but consider the dozens of iPOD models - each one only slightly different than the last. Great marketing but poor philanthropy. Like $150 jeans. Only the label is definitive.

 

[SaltyDog]

While it is true Apple is very successful using this model imagine how much more successful they might have been had they competed openly.

I, personally, don't see Jobs as a great visionary. Rather, he operated Apple in similar form to the great financial and railroad despots of a century ago.

I have always preferred open source so I have used relatively few Apple products. But I don't think he would have been more successful if he used open source as a model, though he might have made more money.

I think he was a control freak. By controlling both hardware and software, he could insure the quality of the experience. Apple values simplicity over features. I prefer features, but Apple has fervent fans who repeat the mantra: It Just Works.

I absolutely see him as a visionary. If he wasn't, he could not have eschewed research and relied on his own innate ability to figure out what people wanted, even before they knew what they wanted.

 

[landtuna]

I have always preferred open source so I have used relatively few Apple products. But I don't think he would have been more successful if he used open source as a model, though he might have made more money.

I agree with you. Two things have held Apple back from being a market monopoly: high prices and limited functionality (especially add-ons).

I think he was a control freak. By controlling both hardware and software, he could insure the quality of the experience. Apple values simplicity over features. I prefer features, but Apple has fervent fans who repeat the mantra: It Just Works.

Two different philosophies. Apple delivered a finished product which was difficult if not impossible to alter. X86 architecture was a collection of building blocks which enabled the more technically qualified customers/manufactures to custom build for specific purposes. Each have their advantages but the largest market for both end-customers and providers of third party hardware and software is X86 and that is why it dwarfs Apple in the computer industry.

And even though the term "iPOD" has become the "Kleenex" of the tissue world most devices sold today are not iPODS.

I absolutely see him as a visionary. If he wasn't, he could not have eschewed research and relied on his own innate ability to figure out what people wanted, even before they knew what they wanted.

Well, who knows who the individual was that proposed the solid state version of the Sony Walkman? Jobs probably green-lighted the project but I doubt it was he alone that came up with the idea. It has been a huge success to be sure but it was simply a techie improvement to an existing idea.

 

[SaltyDog]

Well, who knows who the individual was that proposed the solid state version of the Sony Walkman? Jobs probably green-lighted the project but I doubt it was he alone that came up with the idea. It has been a huge success to be sure but it was simply a techie improvement to an existing idea.

Of course he didn't do it alone any more than Henry Ford did it alone or Thomas Edison did it alone. Doing it alone is not the criteria for being a visionary. By the way, I was thinking iPhone not iPod. No he didn't design and build it himself but it took a visionary to see its potential and bet so much money on it.