Thursday, October 28, 2010

The broadcasting feel-good blurb of the year!

Broadcasters have their hind end so far up their ailementary canal these days it's almost hilarious.  It seems difficult but every day they seem to manage to top the previous day's example of trying to convince themselves everything is rosy.  Here's today's bit of self-massage, from INSIDE RADIO's email newsletter:

The radio industry had its best cost per thousand (CPM) rates in five months in October, according to the SQAD-Inside Radio CMP Tracker. Costs to ad buyers were up by as much as 15% compared to one year ago, the latest data shows.

So, kind reader, glance around and tell me what might cause the rates stations charge for advertising to be higher this October than last year.  Higher ratings?  No.  They continue to tail off (look at rating numbers...percentage of all people out there who listen to a particular station...NOT share...percentage of people listening to any radio who are listening to a particular station).

Better results?  Hardly.  I know it is difficult to measure, but does anyone really believe advertising, especially on radio, is producing better results than last year?

So why would rates be higher, according to SQAD? 

POLITICAL!  Millions and millions of dollars are being dumped into media right now.  Even though broadcasters are required by law to sell political ads at their "lowest unit rate," you can be sure that unit rate was established outside the political window and it is not radically different from what other advertisers have been paying.

So that's why rates and revenues  are up.  Don't delude yourselves, broadcasters.  The holiday season will help, but once all the levers are pulled and the chads have been hung on November 2, reality sets in.

Don Keith

Tuesday, October 26, 2010

Simple...but complicated

To most radio listeners and TV viewers out there, the sea change in technology that is radically altering over-the-air broadcasting is little more than a hum.  They still see images flickering on the TV screens...though admittedly now in high def or even 3-D and with a lot more choices...and there are 800 million radios so switching one on and finding some music or people screaming at each other on talk or sports radio is still an option.

It's simple.  Radio and TV are still there, just as they have been since the 1920s for radio and 1940s for TV.  But behind the scenes, it is vastly more complicated, and how broadcasters are handling change is shaping the future of the media for viewers/listeners, advertisers, and station owners in fundamental ways.

Case in point is the ongoing haggle between music licensing entities and radio broadcasters.  Unbeknownst to most listeners, radio stations pay for the privilege of broadcasting music.  That money goes to the people who write and produce the songs we listen to.  The amount each station pays is determined by a formula based on how much revenue the station takes in.

Now the music guys want to change how things work.  With radio stations not only casting out radio signals but also streaming their music programming on the Internet, the music licensing agencies have dollar signs in their eyes.  They want more money for the use of their songs.  This really complicates things.  First, listeners are not aware but the union for voice talent has been lobbying for more royalties for their members because of streaming.  So far, stations have resisted paying that, and that's why, if you listen to your local station's stream, you won't hear the commercials.  They're covered by music, station promos, or other commercials that don't use union talent.  I won't even go into what a hassle that is, or how it effects things like the rates advertisers pay or how it negatively impacts the potential reach and effectiveness of a station's commercials.  Or the fact that stations typically make no money on their streams.  Complicated!

The National Association of Broadcasters has a committee that has been negotiating with music licensing groups, trying to come up with a new formula that would include some payment for Internet music usage.  Broadcasters are in a tough spot.  Audiences are diluted.  Revenue is down.  Wall Street still demands stations' bottom lines increase year-over-year.  Ratings services can't really measure listening on the Internet combined with over-the-air.  Advertisers don't know what they are getting for their money. 

As mentioned, commercials only play over the air, not on the Internet stream.  Stations have not been able to figure a way to make money on the Internet stream, yet they are convinced audiences demand it...whether that is true or not.  So why pay more--for commercial talent and the music you put on the air and the stream--if you are not making more money?  Especially when stations are struggling to make a profit at all.  And don't radio stations help sell music by playing it on the air?  And on the Internet?  There has even been talk of CHARGING record companies and artists to expose their music.  That has not gone very far at all, nor will it.

All this leads up to the announcement yesterday that the NAB committee has proposed a plan in which royalties paid to play music will increase, but not necessarily in response to streaming.  No, it would be tied to penetration of chips in smart phones that would allow the devices to tune broadcast radio.  Not apps.  Chips, inside phones.  The broadcasters have been lobbying for a long time to have the Federal Communications REQUIRE in all phones sold in this country.


First, if broadcasters have not figured out how to make money off streaming existing programming on the web, how do they expect to make money--and pay bigger royalties--based on smart phones being able to get over-the-air broadcasts?  As mentioned, there are 800 million radios already.  Pandora and all those guys who compete for listeners with terrestrial radio don't need chips in phones.  They have 80 million users without it.

Truth is, this chip-in-the-phone thing has been a priority for broadcasters for a while now.  For some reason, they are convinced that having a "radio" built into a cell phone will solve all problems. 

Here's the simple truth: radio is ubiquitous already.  Being able to get a station is not the problem.  There are apps for that already with more on the way.

No, putting something on their air (and Internet stream) that will entice people to listen to them instead of robotic sources like Pandora or satellite niche formats like Sirius/XM is what needs to happen.  Monetize those outlets by learning who listeners are and providing advertisers multiple ways to target and reach those listeners with a compelling message.  Build a loyal tribe of listeners (and viewers, too..."radio" MUST become a visual medium!) who respond to what the station and its sponsors say.  Then work with the people who own the music and who voice commercials for real-world licensing so stations can do what they need to do. 

Oh, and convince music providers that their wagon is hitched to radio's star.  If radio goes away, the plight of record companies and music publishers will be worse.  Make them partners, not enemies.  Tie royalties to broadcaster success, not to government-mandated gizmos in cell phones.

Determining license fees based on penetration of mandated "radio" chips in cell phones is a waste of time and effort.

It is, at best,a solution in search of a problem.

Don Keith N4KC

Friday, October 22, 2010

Yi-Tan...wish I had known!

When I started this blog about rapid technological change, I wish I had known that "yi tan" was Mandarin Chinese for "change."  That would have been so cool!  However, somebody much more linquistically aware than I has jumped on the web with an interesting discussion forum on change and they grabbed that moniker.

They came to my attention through a podcast they hosted that discusses online radio, including who is doing it, who has failed at it, what is going to happen with it, and more.  It's an interesting 45 minutes of so.

When everyone can access the Internet from a device in the dash of their car (sound like a "radio?"), and whether it works by wi-fi, smart-phone technology, satellite or tin-can-and-a-string, it will revolutionize media in a way I think none of us can predict.  Imagine streaming Shrek to the kids in the backseat while mom and dad use Bluetooth earpieces to listen to each person's favorite music or a talk show.  Or maybe one of them is chatting--hands-free, of course--with a friend.  All this while a GPS-like device displays where they are, how far they are from their exit, and what the weather is like along the route.

You know what?  All this is coming, and it is just around the corner.

Don Keith N4KC

Wednesday, October 13, 2010

"National Public Radio" no longer exists

It's true.  "National Public Radio" has gone away.  It is no longer in existence.  Note the quotes, though, as you read this from the Washington Post:

NPR says it’s abbreviating the name it has used since its debut in 1971 because it’s more than radio these days. Its news, music and informational programming is heard over a variety of digital devices that aren’t radios.

In case you haven't noticed, rapid technological change has brought us myriad new ways for us to get entertainment, news, commentary, and just plain junk.  "Radio" as we know and love it is no longer a tower on a hill and a 100KW transmitter blowing RF all over the countryside.  "Radio" is not even just audio anymore.

We have a local morning show here in my hometown (Rick and Bubba...look for their new book early next year, partially written by yours truly...and Bubba is actually Bill Bussey KJ4JJ) that plays video clips on a "radio" show.  And simultaneously broadcasts on about fifty over-the-air stations around the country even as they can be found on Sirius-XM from the satellite, on the worldwide web, and on UStream, which carries a video version of the program.

Aren't you noticing how many TV network shows are urging you to be online as you watch so you can see additional material, vote on stuff, or just see more.  NASCAR races offer an abundance of online stuff to go with the TV or radio play-by-play.  Add in blogs, Facebook and Twitter updates, individual web sites, and more and you can see the future of media is here.  Now.

And it is MULTI-media!

Don Keith N4KC

Thursday, October 7, 2010

So many topics, so little time!

Between the day job (in budget meetings all day every day this week), the book projects (working on a wonderful story about one of the most unique characters of World War II, a great story about three old vets returning to Washington to visit the WWII memorial, and a sequel to FINAL BEARING), and some upcoming minor eye surgery, I am having trouble finding time to post here.  And never mind getting on the air on the ham radio!  My poor amp has not even been turned on since Saturday.  She's feeling neglected.

I did want to mention a wonderful editorial in the current issue of CQ Magazine.  Rich Moseson W2VU covers a subject near and dear to my heart: attracting young people to our hobby.  Near and dear because I, like so many of my generation, fell in love with the magic of radio at an early age, got our licenses, and many of us used that interest as a springboard to careers in related fields.  If you ever feel depressed about the upcoming generation--and it seems it is a requirement for us curmudgeons to decry "these damn kids today!"--READ THIS EDITORIAL. CQ has been so kind as to post it on the Web so you can read it without subscribing to the magazine or standing in your local bookstore.

And for my broadcasting buds out there, I have been trying to work this quote into a post and expand upon it.  However, since they are now calling me to yet another all-day budget meeting, I am going to throw it out there.  Feel free to comment until I get the opportunity.  The quote:

“Digital is not about replacing traditional [media], it’s about empowering it." 

It comes from an author and commentator named Rick Mathieson, whose latest book is THE ON-DEMAND BRAND.  Interesting thoughts, and they come at a time when those in traditional media--especially radio--take two stances: head-in-the-sand or "the world is coming to an end!"  Neither is appropriate or the way to survive the rapid technological change we are experiencing in media.

Okay, okay!  I'm coming!  Get the Power Points and the spreadsheets warmed up.  And I'll try to talk about Rick's propositions later.  Meanwhile, comment away!

Don Keith N4KC