Sunday, February 22, 2009

My Sunday paper this morning...

So I mosey down the drive and pick up my Sunday edition of THE BIRMINGHAM NEWS this morning. First thing I notice is how light the package is. If you take out inserts, the thing is really no bigger than the Friday paper used to be...before it shrank.
Then a friend of mine forwarded me the following news story:
The New York Times Co. said Thursday it is suspending its quarterly dividend in a move to preserve cash, as ad spending continues to decline. The suspension of the payout comes after the company slashed its dividend to 6 cents from 23 cents in November.
"The decision provides the company with additional financial flexibility given the uncertain business outlook," says Arthur Sulzberger, Jr., chairman.
That's tough news for the Sulzberger clan, which has been living quite well off the Times' dividend for a long time. And it is a sign that the paper's cash crunch hasn't been eased just because it was able to secure a high-interest loan from Carlos Slim last month.
In January, the Times company, which publishes the NYT, Boston Globe, the International Herald Tribune and 16 other daily newspapers, said its fourth-quarter earnings plunged 48% and online sales fell for the first time. The results still beat analyst estimates. As of last fall, the paper was insisting that it wouldn't lay off any of its 1,300 newsroom employees. But things have only declined since then.
And I read in the trades last week that one major radio company is expecting revenues from advertising to decline 50% this quarter over Q1 last year. 50%!
Much of this is recession-related, of course. And the economy will turn around eventually, even as it gives those of us with tentative plans to retire in the next few years a severe case of heartburn. But there is more going on here. The newspaper-in-print business is D-E-A-D. Traditional over-the-air radio is a step away from life-support with more people than ever simply giving up and turning in their licenses to the FCC.
Does that mean newspapers and radio stations are going away as sources of entertainment and outlets for advertisers. NO! I don't think so. At least, not necessarily so. People still want news, commentary, entertainment, companionship. And who better to give those things to people than newspapers (who have staffs of reporters who can write well and ways to gather news, commentators who people want to read, and sources it would take other media years to develop) and radio stations (who can still develop talent people want to listen to, can put listeners on the air with a flick of a switch, who can still create buzz about a new artist or a new collection of songs [remember when we called them "albums?"] by an artist)?
But will they adapt. That IS the question. Here are ten predictions about the future of over-the-air, terrestrial radio from the oft-quoted Mark Ramsey:

1. Radio will recognize that to be more attractive than other sound-alike alternatives - to retain more of its existing audience – it must count on more than habit, convenience, familiarity, ease of use, and the often-proclaimed almost-universal reach of the medium, since all those advantages are transitory.

2. The advantage of "local" will diminish in direct proportion to the disappearance of local content on stations - and here I'm talking about the local content between the songs.

3. The formats which rise will be the ones catering specifically to audiences who are less tech savvy or the old dogs who don’t wish to be taught new tricks. Look for Spanish language radio to be the big winner here along with anything targeting aging Boomers.

4. Ratings will decline in importance as advertisers make decisions based on accountability and results rather than on how many ears a station reaches. As more dollars that would have gone to radio head to destinations outside Arbitron's sphere, stations will cancel their Arbitron deals and never look back.

5. FM stations will move in one of two ways: Either stripped of anything but music (low-cost proposition) or stripped of music and focused all Talk or other non-music entertainment (high-value proposition). Radio will function more like movies: Cheap Indies with low costs and lower profit dollars (but higher margins) and expensive blockbusters with high costs and higher profit dollars (and lower margins).

6. There will be a renaissance in national non-music programming, assuming somebody somewhere in or out of radio bothers to look for it and take a chance on it (Jerry Bruckheimer, where are you?). When these shows are launched, they will launch across dozens of stations at once, not be introduced organically one station at a time. The organic approach to talk show growth is over. Success will depend on mass exposure and mass audiences. Introducing a new show in 100 markets at once multiplies the impact that show has in a world where listeners are no longer bound by their Metro Survey Area. NBC will not be launching the new Jay Leno show one market at a time, and neither should you. Further, Non-Music Radio will not be limited to "Talk" exclusively, let alone Conservative Political Talk.

7. Stations will look to their digital strategies for their bread and butter. Broadcasters who can't keep pace with digital opportunities will be out on the street. The tower will become the marketing tool for the digital strategies, not vice versa. Digital dollars will exceed over-the-air dollars in part because there will no longer be such a thing as dollars which are only "over-the-air."

8. Power will flow to the talent and to the owners of that talent's distribution. No longer will we expect a talent to do three or four hours, five days a week. We’ll see shorter, less frequent content – repeated more often. And we'll see more flavors of content stretched across more distribution channels.

9. Much of the non-music content on TV will be simulcast on radio, thus extending the distribution for TV content at a comparatively low cost and reframing many stations as distribution channels for TV - without pictures. CNN, FOX, MSNBC, E!....It will all be on a radio station near you.

10. Stations will recognize that their primary value is in their audiences - each one with a name, an email address, and specific wants, needs, and behaviors - all of which can be noted and tracked (within the constraints of privacy concerns) such that radio can treat listeners as individuals rather than faceless, nameless "cume." This way, stations will connect the right listeners with the right marketers and provide value that vastly exceeds anything radio has ever provided before and anything Google or Facebook can match on a local level.

While I might take issue with minor points above, I totally agree with the mass of what Mark is saying. Someone could do a similar top ten list for newspapers and a few other traditional media.
Trouble is, I don't think anybody who is in a position to heed all these dire warnings is paying any attention.
My trips down the driveway to pick up the paper will dwindle. I suppose I'll have to get my exercise elsewhere.

Don N4KC

Wednesday, February 11, 2009

Guess what I have, Granny!

I was too young to notice, but they tell me the invention of the transistor radio was quite earthshaking. For the first time, radios were un-tethered from power mains and auto dashboards. Pocket-sized devices could pull in signals just as good as the big upright chunk of furniture in your grandma's parlor. You could take the darn thing anywhere -- the park, the beach, anywhere you went. OK, the tinny, little speaker was not the best and if you spent the whole day at the beach, you had to take a supply of batteries. But you had freedom and you could hear Elvis on the radio, no matter where you were!

Imagine if you could tell your granny what you have now.

"Gram, I have this thing on my hip (or in my purse) that allows me to talk to people anywhere in the world instantly. I can send pictures, too. Heck, I can even take pictures with it. And make movies. And tie in to my computer. It even gets radio stations, like your old transistor radio, plus tons of other 'stations' that aren't even on the air. I can send text messages to my friends and reply to email. I can surf the web. And a lot more, too."

Of course, you could also tell Granny that more than 64,000,000 people in the US now subscribe to so-called Smartphones. That was the total in June 2008, an increase of 80% over June 2007, according to an article on the Emarketer web site.

As that growth continues, the Smartphone will soon reach the ubiquity of the broadcast radio receiver. It already has in some parts of the world (Asia). Your granny probably does not care, but anyone in advertising or broadcasting certainly should.

The way that advertisers interact with their customers is changing at breathtaking speed. Those who do not adjust and adapt may well be left on the front porch, rocking, watching the world pass them by.

Don Keith N4KC

Thursday, February 5, 2009

A billion dollars here, a billion dollars there...

...and pretty soon, you are talking about a lot of money. I paraphrase (and update for inflation) the famous quote from Senator Everett Dirksen in the 1950s. I typically avoid politics on this blog, partly because that was not the real subject area for which I started it, and partly because I need to keep my blood pressure under control.

However, the current "stimulus" legislation has me free-basing Accupril.

Look, I know we probably need some stimulation for an ailing economy. And I know we need some kind of symbolic gesture that convinces the American public that something positive is being done so they will get off their wallets and spend some money again. But the current measure has become a true monster--one that would not pass the rabbi's kosher inspection because there is definitely some pork in there.

Look at the comments of a very shrewd observer, the actor and political commentator Ben Stein:

Eight hours of debate in the House of Representatives to pass a bill spending $820 billion -- or roughly $102 billion per hour of debate. Only 10 percent of the 'stimulus' [is] to be spent on 2009. Close to half goes to entities that sponsor or employ (or both) members of the Service Employees International Union, federal, state, and municipal employee unions or other Democrat-controlled unions. This bill is sent to Congress after President Obama has been in office for seven days. It is 680 pages long. According to my calculations, not one member of Congress read the entire bill before this vote. Obviously, it would have been impossible, given his schedule, for the president to have read the whole thing. For the amount spent, we could have given every unemployed person in the United States roughly $75,000. We could give every person who had lost a job and is now passing through long-term unemployment of six months or longer roughly $300,000. There has been pork-barrel politics since there has been politics, but the scale of this pork is beyond what had ever been imagined before -- and no one can be sure it will actually do much stimulation. ... This is more than pork-barrel -- this is a coup for the constituencies of the party in power and against the idea of a responsible government itself. A bleak day. Unfortunately, it is only the latest in a long series of such days stretching across decades of rule by both parties, to the point where truly responsible government is only a distant echo of our forgotten ancestors.

I wish I could remember who it was that said (200 years ago!): "The downfall of any democracy comes when the people realize they can vote themselves money from the public treasury."

Don Keith N4KC

Wednesday, February 4, 2009

Big Bro

For those of you who read these pithy posts and are not in the media, the following observations may mean little. But they should. We are talking about radio ratings, measuring how many people are listening to a particular station at a particular time. Right now, the only viable source of that information is Arbitron. I don't say this because I used to work for them, but the company does a wonderful job of this, and have invested millions in new technology to do an even better job.
That new technology (PPM) is about as close to perfect as we are going to get anytime soon. I did NOT say "perfect." I said "close to perfect." But for those of us who need accurate estimates of viewership, listenership, readership...all those "ships" deciding where to place our ads, it is light years ahead of previous methodologies. Actually ahead of EXISTING technologies--read: Nielsen and their goofy set-top boxes and diaries (that still attempt to measure TV viewing).
But when measurement becomes more accurate, somebody's ox is going to get gored. I'm sure when scales became better able to measure the weight of meat, butchers everywhere screamed they were getting cheated.
Recent article in a media trade newsletter:

While Arbitron has put its legal battles behind it, it still has one looming hurdle. In a meeting with acting FCC chair Michael Copps, a coalition of groups representing minority broadcasters has renewed their call for a formal inquiry into Arbitron’s PPM methodology. Arbitron insists the FCC has no authority to regulate its ratings service.

The legal battles involved the attorney general of New York state, who felt it was more in the interests of the citizens of that fine state that he worry about sample size, meter placement, and panel integrity than drug smugglers and terrorist cells.
Now this particular group is asking a federal agency that is charged with regulating broadcasting, telephones, satellites and the like to regulate a publisher/syndicator of ratings estimates.. Next, college football coaches will ask the Federal Trade Commission to clamp down on USA TODAY because their schools did not get rated as highly in the paper's weekly poll as they feel they should be.
NOTE TO MINORITY BROADCASTERS: Be careful what you wish for! Ratings that are more accurate and believable will make you and your stations much more viable places for advertisers to spend their money. Concentrate on the content of your programming, the marketing of your brand, and how well your serve your listeners-not on trying to discredit better technology-and the money will follow.
NOTE TO THOSE NOT IN THE MEDIA: If the FCC can regulate Arbitron, they can regulate everything you watch, read, listen to, or click on. Do you really want that?

Don Keith N4KC
(A web site devoted to articles for those interested in
the hobby of amateur radio)