Premium Choice and radio's future

[aunti-terrestrial]

Generic radio is what sent people in search of alternate entertainment in the first place.

That's absolutely not true. People were not in search of alternate entertainment. They bought new devices that didn't have access to radio. Also, music taste became way more fractionalized. People became far less tolerant of songs they didn't like. It's what killed music on MTV.

That's simply not possible. Radio isn't interactive, so it has no way to actually know the personal needs of the individual listening. The phone is a more personal device, and can be programmed to deliver the specific information desired.

No amount of change in terrestrial radio will cause people to give up their cell phones or computers. It isn't a matter of generic programming. The phone and the computer is simply a more useful device.

What world are you living in, where there are no AM/FM tuners in modern gadgets and radio stations can't be heard online?

 

[TheBigA]

What world are you living in, where there are no AM/FM tuners in modern gadgets and radio stations can't be heard online?

Most people don't have smart phones. Sure it's a growing market. But the majority of people use their phones for voice communication and text. My phone doesn't have an AM/FM tuner in it. If a station streams on the internet, and I'm interested in listening to the radio on my phone, I can do that. But the phone is more useful for voice and text. Yet when I leave the house every day, the device I take isn't the radio, but the phone. And I have no reason to believe hiring more staff at the radio station will change that for most people. It's not that radio can't be heard online, but that I'm interacting when I'm online, which makes foreground radio (with lots of talking and "entertainment") distracting to what I'm doing.

 

[TheBigA]

These people are the customer, and when you say "Generic radio is what sent people in search of alternate entertainment in the first place," that's one way of saying we overlooked the customer, or took the customer for granted.

You view the listener as the customer. But the listener doesn't pay anything for the service. The dictionary says the customer is one who buys. That isn't the listener, that's the advertiser. The advertiser wants a specific listener. Certain age group, male or female, education level, etc. Radio creates programming that will attract the sellable demo. Sometimes that ignores some parts of the population. People of college age are hard to reach. High schoolers might spend money, but they don't always buy the kinds of products advertisers want to reach. All this is why radio is more complicated than a relationship between the station and the listener. People have said satellite radio or internet radio is more listener friendly, but they charge subscription fees to listeners. Listener supported media is always more interested in what the listener wants, because they pay for the programming directly. Not the case in commercial radio.

So radio seeks to attract the listeners the advertiser wants. However, the advertiser is faced with more options for their money. Some of those options are interactive, which provide better tracking and response for their ads. So the advertising radio receives is being shared with more outlets, which drives down the price. Radio could individualize its programming to reach certain people, but that would mean a higher CPM (cost per thousand) for radio vs. other media. It's all very complicated. Just adding DJs or providing programming that appeals to younger audiences isn't going to solve the problem of where the money comes from to provide those services.

 

[aunti-terrestrial]

What world are you living in, where there are no AM/FM tuners in modern gadgets and radio stations can't be heard online?

Most people don't have smart phones. Sure it's a growing market. But the majority of people use their phones for voice communication and text. My phone doesn't have an AM/FM tuner in it. If a station streams on the internet, and I'm interested in listening to the radio on my phone, I can do that. But the phone is more useful for voice and text. Yet when I leave the house every day, the device I take isn't the radio, but the phone. And I have no reason to believe hiring more staff at the radio station will change that for most people. It's not that radio can't be heard online, but that I'm interacting when I'm online, which makes foreground radio (with lots of talking and "entertainment") distracting to what I'm doing.

Oh, come on. You'll have your Blackberry as soon as the prices drop. In fact, smart phones will be the norm a mere couple of years---already are in most American industries. They're issued at my husband's corporation; no self-respecting IT business team would dream of showing up to an international meeting with an old cell phone. I read an interesting tidbit over the last holiday season that the #1 most requested gift from people under the age of 20 was the next-generation iPhone. Last night, a starving artist I know whipped out her new phone and found our GPS location, the address we were looking for with street-by-street turning instructions, and took a call from her Dad in California to talk about the Lakers/Rockets at the same time. Don't drop your old cell phone onto the concrete; chances are, when you take it back to the provider's store, they'll tell you your model is obsolete and you'll have no choice but to upgrade, anyway.

I know, you could sit on this thread all day, firing off one manufactured excuse after another why you feel that massive job eliminations are good for America and the radio industry. That's your opinion, one I'm sure you share with many other people who believe that greed is good and that the limited-spectrum airwaves should be owned (and information controlled) by a few wealthy individuals who can afford the lobbyists it takes to get the laws changed in their favor. Fortunately, there are a good many other people who have had the chance to use these boards to compare notes and come to some vastly different conclusions. And hey---most of the nation's population has come to the conclusion that deregulation of the banking, housing, energy, and automotive industries were a huge mistake. I suspect that the next twelve years will see a sweeping trend toward reversing the deregulations of a great many industries. It may come too late for radio, but I do believe it's (again) short-sighted to believe that no change will ever come.

If radio hadn't failed to keep its bargain with its listeners, LastFM.com, Pandora, and other Internet-based music delivery sites would never have been created. The arrogance of "the listeners have to like what we're offering, because there's no other game in town" is a huge part of what has disenfranchised those people who grew up listening to radio and would have seen no reason to change, had they not been told repeatedly that their requests, participation, and opinions didn't matter.

And on another note---if you've ever uttered the words, "They don't give books to kids," then you should know, deep down inside, what happened to the next and future "farm team" talents which might have allowed our industry to perpetuate and continue---and why so many panic-stricken articles are written about the way that the younger generations of listeners don't care a whit about terrestrial. There's always that one 12 year-old kid who drags his parents to remotes, calls the request line for his favorite bands, tries to win all the contests. Radio has let that 12 year-old kid know that he's not important enough to get his request played, even if we did take requests anymore (that is, assuming someone's actually there to answer the phones). Radio has told him that he's not old enough to be the 10th caller and win a prize pack of CDs on the air. He's blown off at remotes because his parents aren't really there to buy a car. And once in a great while, a young person gets on these boards and asks for advice on breaking into the business. Universally, the advice they're given from industry veterans one and all, great and small is, "Don't bother." You can't build future audiences, or future talents, when you're doing everything you can to dissuade them from wanting to be interactive with your product.

I know, Big A, you firmly believe that all of the thousands of people whose jobs have been eliminated from the industry are somehow flawed and to blame for not being employed. That's your opinion, and certainly, you're entitled to it. However, when you espouse such nonsense, don't expect your theories to be warmly embraced by the people you're bent on insulting. We know better.

 

[TheBigA]

I read an interesting tidbit over the last holiday season that the #1 most requested gift from people under the age of 20 was the next-generation iPhone.

But they're not getting these devices in order to listen to AM/FM radio. That's a wrong assumption. They want these devices to interact with each other. Radio isn't part of that equation.

I know, you could sit on this thread all day, firing off one manufactured excuse after another why you feel that massive job eliminations are good for America and the radio industry.

I really DON'T feel that way, and since I work in the industry, it's certainly not something I want either for myself or my fellow workers. It's simply a reality that the marketplace has changed, the money isn't coming in at the same rate it once was, and there is nothing radio can do in terms of hiring people, retaining current staffing, or even redirecting employees that will change that. Less money coming in means less money for staff. That is the simple math of the situation. If you can find a way to change radio's model that will bring in more money, I'm interested. And be sure that you have documentation on your ideas that show cause and effect, because advertisers don't care about programming. They care about their ROI.

I know, Big A, you firmly believe that all of the thousands of people whose jobs have been eliminated from the industry are somehow flawed and to blame for not being employed.

Absolutely not. It's too bad. No one is blaming anyone, or criticizing their abilities. It's a problem that's affecting lots of industries. Coalminers aren't bad people, but they're out of work. It has nothing to do with their abilities. The marketplace has changed. Someone moved their cheese. You can't operate under the same paradigm that worked at one time. These stations continued to operate with the staffing levels and programming for many years after consolidation, and it hasn't changed some very obvious facts regarding income. You can't pay people when you don't have as much money, and when revenues are declining.

 

[kinetic]

These people are the customer, and when you say "Generic radio is what sent people in search of alternate entertainment in the first place," that's one way of saying we overlooked the customer, or took the customer for granted.

You view the listener as the customer. But the listener doesn't pay anything for the service. The dictionary says the customer is one who buys. That isn't the listener, that's the advertiser.

Well, I can argue that a customer is also one who consumes and that the listener does indeed pay. The listener pays with his/her time and dedication to a particular radio station or radio program. Listener time is the capital radio sells to advertisers. Have we devalued that capital? Your statement represents the sort of seismic shift that some are arguing has made the radio industry what it is today. Lowry Mays notoriously said some years ago that radio is nothing more than a delivery system for advertising. I haven't check the dictionary under radio, but like him, your comment puts the advertiser first. It's a plausible position. It's also a sterile one, which goes back to what Roxalot said about the personal touch radio provides. His retort, perhaps, as well as that of others will be (and I haven't read what's followed yet) that you can't have advertisers without listeners and if you don't have a product that appeals to the listeners, you don't have something you can sell to advertisers. You can ignore the listener and the listener can return the favor. Of course radio must have advertisers. But this is a chicken and egg game. Advertisers and listeners aren't mutually exclusive yet it seems the industry has attempted to make them mutually exclusive. Your adherence to the clinical definition of "customer" personifies where radio has placed its emphasis.

So what is more important to radio: Advertisers or listeners?

 

[kinetic]

These people are the customer, and when you say "Generic radio is what sent people in search of alternate entertainment in the first place," that's one way of saying we overlooked the customer, or took the customer for granted.

Just adding DJs or providing programming that appeals to younger audiences isn't going to solve the problem of where the money comes from to provide those services.

Please --this is not what I said.

 

[kinetic]

I read an interesting tidbit over the last holiday season that the #1 most requested gift from people under the age of 20 was the next-generation iPhone.

But they're not getting these devices in order to listen to AM/FM radio. That's a wrong assumption. They want these devices to interact with each other. Radio isn't part of that equation.

I know, you could sit on this thread all day, firing off one manufactured excuse after another why you feel that massive job eliminations are good for America and the radio industry.

I really DON'T feel that way, and since I work in the industry, it's certainly not something I want either for myself or my fellow workers. It's simply a reality that the marketplace has changed, the money isn't coming in at the same rate it once was, and there is nothing radio can do in terms of hiring people, retaining current staffing, or even redirecting employees that will change that. Less money coming in means less money for staff. That is the simple math of the situation. If you can find a way to change radio's model that will bring in more money, I'm interested. And be sure that you have documentation on your ideas that show cause and effect, because advertisers don't care about programming. They care about their ROI.

They ought to care about programming enough to know that's what's attracting their potential customers.

However, for what it's worth, I don't think you feel that way, either, but focusing on the emboldened text above, and in the spirit of finding a way to change radio's model that will bring in more money, can radio raise its advertising rates to help defer costs, and by how much, if at all? Is that a way to change the model, perhaps a little bit? If you had a radio station that was all that and a bag of chips because --for the sake of argument-- you hired the staff, you spent on the extras and you did all the things some on these threads say is missing in today's radio, and then charged confiscatory rates for it because it was damn well worth it, would that make a difference? The NY Times just increased the price of its paper. Many of the McClatchy papers did the same thing this month. Can radio do the same? They've surely cut costs. Why not increase ad rates and give clients a compelling reason to buy ... Or will it backfire as increased fares did for the airlines? Hey, people don't HAVE to fly on vacations and so forth. Maybe they don't need radio, either. Or maybe radio will just be like one giant tradio commercial. I get supermarket fliers in the mail to see the prices at the local store; maybe if I wanna know which durable good to buy, I'll tune in to the radio: home appliances, 3 o'clock hour; autos, 4-6pm. Sex toys, 3-4. AM, with sultry background music. Now that's an advertising delivery system. Maybe there's a corporate guy right now reading this and saying, "Hey, that's just crazy enough to work."


P-S: We just crossed a communications threshold this past week. The CDC announced that more American households are now cell phone only than landline only.
Their survey found that during the last half of 2008, 20 percent of households were cell phones only compared to 17 percent with landlines only. That was a 3-percentage-point jump from the first half of last year and the largest since such data tracking began in 2003.
In the first six months of 2003, just three percent of households were wireless only, while 43 percent relied on landlines.
Today, one in five of us is now cell phone-only.
Nobody would have guessed that 10-15 years ago. I'm not sure I'd predict anything about technology at the rate it's moving.

http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200905.htm

 

[TheBigA]

They ought to care about programming enough to know that's what's attracting their potential customers.

But programming DOESN'T attract advertisers. Advertisers don't buy shows, they buy CPM. The programming doesn't matter.

can radio raise its advertising rates to help defer costs, and by how much, if at all? Is that a way to change the model, perhaps a little bit?

The simple answer is no. Radio is competing against lots of cheaper content options that reach as many, if not more people. So raising the rates is not an option. Ad rates haven't gone up in years. Other content options don't have live & local DJs or large news staffs. As I said, advertisers don't care about the context or the programming. They just buy the numbers. So in order to compete for ad dollars, radio has to cut its costs.

And I understand programming people blame it on the sales staff. If they did a better job of presenting the product, they might be able to get more money. That's the assumption. No one wants to spend more money. The advertisers have loads of options, and radio isn't the "new hot thing" any more. And the bigger problem is that commercials are a turn-off. So even if the sales staff increases the number of spots to bring in more money, more spots mean listeners tune out. So that doesn't work.

 

[kinetic]

They ought to care about programming enough to know that's what's attracting their potential customers.

But programming DOESN'T attract advertisers. Advertisers don't buy shows, they buy CPM. The programming doesn't matter.

So why do we even need programming? What happens if we get rid of it?

 

[aunti-terrestrial]

Hmmm. How much advertising would it take to refinance a $21 billion dollar debt load?

How much advertising does it take to pay an executive $11 million tax-free dollars, or an $8 million retention bonus, or a $5 million dollar salary increase?

Less money coming in means less money for staff, sure.

 

[kinetic]

can radio raise its advertising rates to help defer costs, and by how much, if at all? Is that a way to change the model, perhaps a little bit?

The simple answer is no. Radio is competing against lots of cheaper content options that reach as many, if not more people. So raising the rates is not an option. Ad rates haven't gone up in years. Other content options don't have live & local DJs or large news staffs. As I said, advertisers don't care about the context or the programming. They just buy the numbers. So in order to compete for ad dollars, radio has to cut its costs.

And I understand programming people blame it on the sales staff. If they did a better job of presenting the product, they might be able to get more money. That's the assumption. No one wants to spend more money. The advertisers have loads of options, and radio isn't the "new hot thing" any more. And the bigger problem is that commercials are a turn-off. So even if the sales staff increases the number of spots to bring in more money, more spots mean listeners tune out. So that doesn't work.

This says to me, "I give up."

Radio is competing against lots of cheaper content options that reach as many, if not more people? What must radio do to get more people listening? Can it offer a better product? Will it cost more to put the better product on? Will advertisers be willing to pay more for the product because it's getting more people to consume radio tha cheaper content options? Does radio have anything that the cheaper content options don't have? What is it? Why hasn't that been exploited? Radio seems to be moving in the opposite direction: A war of attrition because rather than make the product more attractive to the listener (which might require a capital expense), we'll cut costs and dilute the product, which results in listeners going elsewhere, like the cheaper content options.

My question wasn't really so much should we raise the rates; my question was more along the lines of, what product can radio create that would justify raising rates and convince the advertiser this is well worth his investment.


"And I understand programming people blame it on the sales staff. If they did a better job of presenting the product, they might be able to get more money. That's the assumption."

Do sales people also say, "Well, if I had a PRODUCT to sell!" I have no interest in blaming radio sales, the managers of whom are also struggling as their better people leave for sales jobs in more lucrative fields. Need any drugs?

 

[SirRoxalot]

Let me see if I can understand the gist of TheBigA's arguement:

1. Radio station revenues are dropping, and they won't be returning to previous levels.

2. Advertisers don't buy programming, they buy CPM.

3. Radio can't compete with lower cost advertising from "new media".

In other words, radio stations are not worth what they were a few short years ago.

Isn't this exactly the reason that so many of the consolidators are in serious trouble? They owe millions, or billions on properties that are worth less than their debt - let alone the debt plus interest. Reducing staff to a skeleton won't save enough to forestall the inevitable. Many of the programming cuts that have already been made are showing up as significant ratings losses, which is reducing revenue even faster. "Premium Choice" is just more of the same losing strategy that's already killing these companies.

If all this is true, there's only one option. Stop screwing around, stop paying millions and millions of dollars to the people whose lack or foresight put radio into this position, and declare bankruptcy.

If the debt is significantly reduced, the cost of operation is significantly reduced, and radio will have a better chance to compete with other media. How the new owners decide to compete, how they decide to invest the revenue that used to go to debt service, will vary from operator to operator. I'm betting that the ones who put money into programming will see a greater return on revenue than the programming itself costs.

 

[Board Editor]

MOVED: TIO: Premium Choice and radio's future

Some posts in this thread have been moved to Take It Outside.

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