The FM Red Herring

(Editor’s note: today is the last day to get the $300 discount on my January 27th Media Solutions Lab – learn more here). 

For years now radio executives have been screaming for FM chips in cell phones.

Their twisted little minds figured that just about everyone eight years of age or older keep cell phones in their hands and wouldn’t it be nice to put a radio there, too.

Emmis CEO Jeff Smulyan has been leading the FM chip charge but to no avail.

Smulyan argues that radios on mobile devices in Europe increase a station’s total listening. That may be so in Europe, but even there the increase is statistically insignificant.

Mark Ramsey came out with an excellent study this week in which he polled actual consumers who already bought a cell phone and asked them if they specifically looked for a phone that had FM radio.

88% said no.

4% said yes.

So, as we say in Philadelphia, “who don’t know that?”

Why all the fuss about putting FM on cell phones?

It doesn’t take a brain surgeon to tell you that young consumers barely even use their telephones as telephones let alone radios. And as Ramsey points out maybe Apple only has one mobile device that is FM ready (Nano) but there really are a lot of cell phones for sale with FM capability.

FM on cell phones is a red herring -- the definition of which is something intended to be misleading or distracting.

Why is the radio industry being played for fools by virtually every group CEO (that is a good question in and of itself) and by the very group that is supposed to represent their best interests – the National Association of Broadcasters?

And one more thing – are we as dumb as they think we are because I can show you how to look at consumers and read exactly what they want which begs the question what do potential listeners want and what does the radio industry want.

They are not the same thing. 

The back story is almost unbelievable. 

The Internet Is So Over

Almost as soon as it arrives, the Internet is on the decline.

You may find that hard to believe and I understand that. But some big mistakes are about to be made under the assumption that media content needs to be contoured for the Internet.

As recently as last week, we saw hints that the Internet had seen its finer days when a rumor circulated that Apple had banned single radio station apps from its popular app store. As it turned out, there is no apparent reason for immediate concern as Jacobs Media, one of radio’s leading app producers, said that Apple had accepted client requests for single app approval as recently as a few weeks ago.

The rumor was that only apps with 100 or more stations would be approved by Apple as DJB Apps’ Jim Barcus reportedly told Radio Magazine that Apple rejected 10 of his company’s single station radio stream apps on November 10. Barcus claimed that Apple told him single station apps are the same as so-called FART apps and are considered spam by the Apple store.

But there is a bigger question.

Why are radio stations streaming content on the Internet as we enter 2011 when what consumers want – and crave – is short-attention span content that they can access and use at will?

Internet streaming of radio never worked with most stations barely gaining 3% increases in listening to add to its terrestrial ratings. For all the problems with AFTRA and commercial rights, the software problems to allow insertion of non-terrestrial advertising – streaming simply laid an egg.

What worked over the air wasn’t as desirable as a stream – and it makes sense if you look at things from the consumers’ point of view rather than that of radio companies.

Radio has come late to the Internet game and now risks investing time and money to catch up on in an area I am representing to you is over.

We’re going to talk about a better use of time and money than radio pursuing Internet ventures in the next year or so at my January Media Solutions Lab

But let me preview what the future is if it is not the Internet. 

Don’t Touch Lew Dickey’s Junk

I have uncovered something very interesting about Cumulus CEO Lew Dickey that may give you some insight into how this powerful radio consolidator thinks.

When the term family jewels is used – say, to describe the pat downs that TSA is giving travelers these days – it is used to describe a person’s private parts.

In the Dickey family, the family jewel is the media operation that was handed down from father to son and siblings.

That is why it is a bit odd that in a lawsuit that Dickey inflicted upon his former Danbury, CT and Westchester, NY manager Kristin Okesson, Lew Dickey is asking a federal magistrate to in a sense pat his ex-employee down for resigning her job and leaving the company, but hands off of his family jewels.

It is apparent to some that the Dickeys are looking to inflict as much financial harm on this female executive who resigned, went to work for a more respected operator and then filed a discrimination suit against Cumulus.

In essence Dickey wants Okesson to pay him almost a million dollars for the financial hurt she allegedly brought upon his junk.

What he didn’t count on is that Kristin Okesson’s new employer is paying all her legal bills and that for the first time Tricky Dickey may not only lose his lawsuit but regret that he ever filed it.

This is a story of Thanksgiving to anyone who has ever been screwed by an employer who seemingly had all the power and money to get their way.

There are new developments in the Okesson case which read more like a soap opera than a legal action. Closing arguments were heard in Bridgeport on November 9th.

After hearing what is looming over the Dickey empire, Suing Lew will probably try to negotiate a settlement with the person he picked on probably because she stood up to him every step along the way.

Dickey appears ready to lose and wind up with unintended consequences, but until he settles and a gag order is imposed on how much that settlement will cost, this is a public story of vengeance and bad policy.

No one ever leaves Cumulus and lives to tell the story (let alone get costs and damages) but it could happen to Kristin Okesson.

And wait until you hear how this entire lawsuit may backfire in Dickey’s face. 

Radio in 2011

This is an early warning that 2011 will not be like 2010 or any other previous year since radio or record industry consolidation.

In fact, 2011 will not resemble anything the media industry has ever seen before because several circumstances are driving the owners of big radio and record companies to acts of desperation.

This is important because, if I am correct – and I wouldn’t be saying this if I didn’t believe it – hold on tight, it’s going to be a rough ride.

In spite of some of the scary things I am going to share with you, there are a few good opportunities that will occur that even a year ago would have been unthinkable.

Maybe some respect for good old mom and pop.

A second chance.

Investment banks are doing something so blatantly telling that it can predict what they are up to as owners of radio companies in the next 12 months. I’m surprised so few have noticed.

What Bob Pittman’s hiring foretells about the change in direction ahead.

And four documented examples that will illustrate how 2011 will be a year like no other in the radio industry.

Oh, and somehow even Randy Michaels may figure into all of this.

The Death of Cable News

Rupert Murdoch and Steve Jobs’ secret plan to build a news site expressly for the iPad is a cable news killer.

But it could also be an opportunity for radio.

How so?

Not in that if cable news is crippled, more people will turn to radio again. But in a new way.

Cable viewers skew older, but this new iPad venture between the unlikely duo of Jobs and Murdoch will have to attract younger demographics to have a chance.

However, the plans which I am going to tell you about also offer an early warning to radio operators and ex-radio people who are smart enough to follow the lead of something Jobs and Murdoch call the Daily.

Ignore what is about to happen at your own peril. Here is a blueprint, timeline and specific way radio people or ex-radio people can get a jump on what I think will be a huge growth business.  

Read this story today.
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8 days left to get the “early bird” $300 discount for Jerry’s 2011 Media Solutions Lab in January. Click here.

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Anonymous tipsters copy and paste internal memos or emails here.  

Predictions

I’ve got five bold predictions for you in radio, new media and music that I think you’ll want to know.

• Which radio group will start selling stations – possibly as soon as next year – in spite of the fact that station prices will be very depressed and money is hard to come by. Learn why, how much these stations are likely to get plus what type of person is the ideal buyer. You may be surprised.

• The unintended consequence of the new music royalty tax on radio which, as you know, I believe is a foregone conclusion. Here’s my best thinking of when the tax will be settled and when stations will likely have to start paying.

• What’s up with streaming media, an industry that has already been mugged by the music industry royalty tax? However there is a workaround on the horizon. Details follow.

• Apple’s next move. The usual holiday sales should be brisk, but that’s not what I am talking about. There is a game changer ahead that will impact the music industry and terrestrial radio.

• How big will local new media ad sales get? There is evidence that it is surging in some local radio markets, but I’ve got the percentage of all local business that you can expect to go to new media and a time frame.

Read this story today.
Become an Inside Music Media subscriber for as low as 27 cents a day – about a quarter. Get today’s story, the archives and daily email delivery. Sign up here.

•••

Only 10 days left to get the “early bird” $300 discount for Jerry’s 2011 Media Solutions Lab in January. To learn more or register, click here.

•••

Anonymous tipsters copy and paste internal memos or emails here.  

Clear Channel’s Next Owner

A lot has been made of the recent appointment of former MTV and AOL head Bob Pittman to a high level executive position at Clear Channel – the presumption being that Pittman’s arrival signals a new day for its radio, entertainment and new media prospects.

But there is a developing back-story that could constitute more than an executive personnel change.

Clear Channel could have a new owner in the not too distant future.

The plot thickens because the wheels may already be in motion so Clear Channel owner Lee and Bain can escape from a huge investment gone badly for them.

This real time scenario is unfolding even as the company claims to be searching for a replacement to departing CEO Mark Mays.

But this is what is likely to happen.

If you are a subscriber to Inside Music Media, click through to unlock the rest of the story. To become a subscriber, it’s as low as 39 cents a day. No ads. No outside influence. The straight scoop. Sign up here.  

Lew Dickey’s Thanksgiving Turkey

Cumulus Media just can’t figure out how to sell.

Harvard and Stanford grad and Cumulus CEO Lew “Tricky” Dickey has been beating up his employees for years about their underperforming sales ways.

He’s thinned out their ranks. Told me face-to-face in Philadelphia that maybe it’s not a bad thing to get some fresh blood into the company.

Dickey, who never enjoyed a career as a radio salesman, had a lot of blame to throw around for Cumulus account execs who actually know how to sell.

Sales meetings conducted from the Cumulus headquarters in Atlanta beamed to local stations via Skype. Local sales staffs hate this because it keeps them off the streets and away from clients who do spend money with them. Dickey likes it because he can badger them to sell to new categories like health care.

As the Dickey Empire totally remade local sales, it took key accounts away from the salespeople who attracted and maintained them and dished them off to so-called Key Account Managers who got paid a lower commission for managing the business.

Increasingly more local sales were made through Atlanta to prevent the higher local sales commissions from being paid – a big incentive for a sales profile. Of course, I am being sarcastic here. Nothing throws a wet towel on selling like messing with the seller’s commission.

Lew Dickey held his most recent conference call with analysts where he was snagged for the company’s underperformance in local business by blaming the economy. Truth to be told, many radio groups are doing poorly in local, but Dickey is comfortable simply blaming the recession.

CBS is up over 3% in local for the same period and interestingly enough, President Dan Mason uses a traditional sales approach with account execs deployed in local markets. Could that be something that would interest Lew Dickey?

Of course not.

The smartest radio guy in the industry (at least in his own mind) has yet another play date with local sales that is more like a senior project than a sales strategy.

It’s called Value Alert Notification.

And you won’t believe what it forces sales people to do and how it actually works to kill local sales.

If you are a subscriber to Inside Music Media, click through to unlock the rest of the story. To become a subscriber, it’s as low as 39 cents a day. Sign up here.

Facebook’s New Messages

Facebook is getting ready to offer consumers a new communications system called Messages.

Mark Zuckerberg did a presentation a few days ago about this new way to handle email and text messaging that is worthy of your attention.

Email s becoming slow and outdated -- young people use it sparingly.

Facebook’s move is about how changing consumer habits have forced the largest player in social networking to change before they lose critical mass.

See any similarities between Facebook and how radio, the music industry and new media do things?

Neither do I.

But it’s never too late to learn. 

Bob Pittman Is the New John Hogan

Nice move.

Hire the man who brought MTV and AOL to prominence and call it a step in the right direction for an outdated radio company to embrace new media.

And why would Clear Channel have to recycle the well-traveled Pittman?

Let me count the ways.

One, Clear Channel owes $19 billion in debt due in two years and has no earthly way to pay it back. That means the company will either be chopped up or sent to bankruptcy – neither of which sounds that bad to me when you look at how other radio companies did when they emerged from bankruptcy.

They did fine. Everyone else got screwed.

Two, go back and read one.

Clear Channel is lucky to generate a few billion a year in profit with its radio and outdoor operations. Not likely that it could repay $19 billion in debt at that pace.

So you do the next best thing.

Turn to unearthly ways to get into digital media and for investment bankers that means hiring one of their own to work with a “management team” so owners Lee and Bain can sell this as a great reason to help refinance that $19 billion in debt.

Or as one of my readers wrote upon hearing of Pittman’s appointment:

“Exactly the kind of call someone who knows nothing about radio would make. The smoothest move since Ted Forstmann tapped Farid Suleman to run Citadel”.

So while others are reading about this game changing appointment of Bob Pittman as chairman of its media and entertainment divisions, you’re likely seeing through the move as one that has more to do with window dressing than substance.

If not, and with all due respect to Pittman, I could have named a hundred executives who could lead the digital way but no – the Clear Channel investment bank owners has to have Pittman who ironically also has experience running the real estate company Century 21 which means it really is all about the real estate.

Now you know that a smart organization doesn’t make a major appointment like this without having replaced CEO Mark Mays who leaves within the next few months. But that doesn’t stop Lee and Bain because whoever that puppet is, the investment bank owners are going to name Pittman as head of media and entertainment anyway.

Who needs to have the new CEO sign off on it?

After all, they are all puppets and Lee and Bain pull the strings.

But beware.

Think John Hogan.

Something big is up.