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Wednesday, March 28, 2007

CBS Radio: Righting a Sinking Ship

News of Dan Mason being named CEO for CBS Radio came as somewhat of a surprise this week, not so much because I don't think Dan is a good choice - in fact I think he's the best choice. The surprise comes from the wisdom shown by the company's fearless leader Les Moonves. And it's not Les specifically that's so surprising here, it's the fact that it took a TV guy - not a radio guy - to make the first major move at righting a troubled radio industry.

The radio industry has no shortage of brilliant minds. There are plenty on the beach who have suffered the slings and arrows of consolidation. There are many more who have slid into good jobs in related industries such as the Internet and other technology companies. And, yes, there are many still employed by the industry. In fact, the radio industry's 'bench' is so impressive that the consolidators out there have essentially decimated the brain trust that would've led them down the primrose path into a new era, and there are still plenty of good minds in the business.

Why, then, did it take a TV guy to make this kind of decision?

Traditional radio has lost its fighting edge. Consolidation has taken the courage out of the heart of middle and upper management. These are the people who, in the past, would've knocked on their boss's door and been invited in to discuss tough decisions and look to the horizon with senior level management and strike a path that would take their company, their radio station, their industry to a logical next step. There is little of proactive thinking left.

Instead, many middle and senior level radio executives have been emasculated. Their reason for being there has been eliminated or severely reduced in many cases. How do I know this? After more than 25 years programming and managing radio stations in mostly major markets, in recent years I have had the privilege of consulting programmers and general managers who, since 2000 have had their job descriptions changed - not necessarily on paper - but rather in real-world experience. Each week I spend several hours discussing management challenges, personnel issues, strategic and tactical solutions and discussions on 'how to manage up'. Their frustrations come from being highly paid, becoming ineffective managers who used to have autonomy over their stations and who could run their own businesses and deal with the fall-out depending on whether they failed or succeeded. These days every decision is second-guessed and because there is so many stations to manage, their management style has become one of defense. They miss the days when they could plan, plot and be proactive with their teams.

As consolidation's black shadow crept over our industry and settled deep within its joints, more and more top-down management style became the preferred centralized system of controlling so many stations. An arthritic management style became the norm. Clear Channel wrote the book on this subject. During my years with CBS, all of us general managers knew we were a fortunate lot because we actually had senior management who trusted us and gave us the resources we needed to win and run successful businesses. Many thanks to Nancy Widmann, CBS Radio President pre-consolidation, and Dan Mason, CBS Radio President immediately post-consolidation. Dan ran a different ship than Nancy, but his style still focused on fiscal responsibility and earned autonomy at the station level.

After Dan, there was Mel, then Joel and the rest is history.

It took a TV guy, Les Moonves, in one grandiose decision, put CBS radio, if not the entire radio industry back on track. It's because perhaps the TV guy is used to making bold decisions. TV is a different business than radio in many ways often because decisions about programming and people are made with the courage of making a bet on tomorrow, of seeing the positive side of trusting people and of giving good people the chance to prove themselves. Sometimes those decisions end up being wrong, but more often than not, those decisions generate exceptional results.

So, my hat's off to Les. I met him a few years ago at a CBS Radio managers' meeting. He struck me then - as he does now - as a bold decision maker who wasn't intimidated by the job; someone who had the courage to make bold decisions. He also had a supportive Mel Karmazin and then Sumner Redstone to give him room to make those decisions.

Courage. Faith. Confidence. This is why it took a TV guy to right a sinking ship. Many of us are optimistic about our industry for the first time in many years. We look forward to seeing how this plays out.

Wednesday, March 21, 2007

Has the Music Industry Reached the Tipping Point?

In a dramatic acceleration of the seven-year sales decline that has battered the music industry, compact-disc sales for the first three months of this plunged 20% from last year, the latest sign of the seismic shift in the way consumers acquire music.

The music industry is smack-dab in the middle of a tipping point.

Sales of CD's, which still account for more than 85% of music sold, has far eclipsed the growth in sales of digital downloads. Some say that the music industry finds itself almost powerless in the face of this massive consumer shift to digital music consumption. In recent weeks the music industry has posted some of the weakest sales it has ever recorded. One week "American Idol" runner-up Chris Daughtry's new CD sold just 65,000 copies - and it was the number one album that week. In prior years, it wasn't uncommon for a number one record to sell 500,000 copies a week!

Digital sales have countered this CD slide somewhat rising 54% from last year at this time to 174 million according to Nielsen SoundScan. Yet it's not enough to offset the 20% decline in CD sales.

In sociology, a tipping point is the event of a previously rare phenomenon becoming rapidly and dramatically more common. Much like in physics when a small amount of weight is added to a balanced object it can cause it to suddenly and completely topple. This is what is occurring today in the the music industry.

So, what's the music industry to do? They have been resentful of digital downloads - perhaps rightfully so when it comes to illegal or free downloading and sharing. And the digital protection (DRM) on files the industry does allow to be legally downloaded prohibits mass consumption because that protection is not always capable of playing on all types of digital music players.

Now is the time for the music industry to seriously consider Gerd Leonhard's "Music Like Water" manifesto.

This concept essentially calls for the music industry to realize that the more people who are exposed to music the more will buy. Lower prices, make the music ubiquitous, expand distribution.

  • Drop digital protection and release music files that can be enjoyed on any MP3 player
  • There are 75,000 different devices that play MP3 files and approximately 75 that play protected files.
  • "Music Like Water" = everybody uses and everybody pays (but not at each and every point of use). Tap water is ubiquitous and "feels free" as consumers pay a flat rate or a rate subject to actual use.
  • Ubiquity increases value. Sell access first.
  • Business models that empower the end user will be successful.
The music industry has been ignoring the inevitable as sales of its prime medium (CD's) continue to slide. Will the industry wait until it is literally forced to adopt this model? Or will they begin to move the paradigm toward this solution now to create a smoother transition and ultimately a significant increase in music sales.

Music remains important to the average consumer and we want to be in control. We want to program our own media - we don't want it to program us. The music industry has not accepted this transition of power to the consumer which has not occurred overnight. It's like plugging holes in an expanding dam - eventually the pressure will be too significant.

To the music industry I say: you're losing the war. It's time to face the facts. Your battle with consumers is reminiscent of the movie '300' - you're doing your best to hold back the Persians. Accept the change in the marketplace, develop a model for ubiquitous music access, charge me for use and watch distribution flourish.

This may be the music industry's last chance.

Wednesday, March 14, 2007

Portable Digital Radio - What Will They Think of Next?

As traditional radio faces a potential major issue with new Internet streaming royalty rates, the industry should do its best to fight the good fight because there are new companies launching business models every day, it seems, that will help traditional radio get technologically cool.

I'm referring, of course, to some of the new portable digital radio businesses that allow consumers to use their cell phones for more than just phone calls and email. Audio entertainment is rushing headlong to your hand-held phone devices and traditional radio as well as the consumer is the beneficiary.

Imagine being able to stream a customized radio station you create right to your cell phone and listen on high-quality ear plugs or headphones. I've tried it and you'd be amazed at how good it sounds. Now there is an option for consumers who love their MP3 players while jogging, for example, but want a different blend of music or, based on what you program, a completely new vehicle for music discovery, one of traditional radio's new-found strengths.

Imagine being able to time-shift your favorite air personality! I can't count the number of times I've been driving to an early morning appointment only to arrive at my destination right in the middle of a great talk radio segment or a funny-as-heck bit on the Kevin & Bean show on LA's KROQ! I'd love to sit in the car and listen through, but just can't. So, just like a TIVO device for radio, I can go back to that show later and pick up where I left off! Ain't technology grand? We certainly do live in an amazing time.

And there are more applications being introduced all the time. The key here is that traditional radio, even with all the recent woes that seem to crop up in misguided newspaper articles, is being served a glorious plethora of opportunities that can extend its life - even enhance its reach - and make it cool again. Just what the doctor ordered.

If you're running a radio group or know someone who is, make sure you're aware of all the ala carte opportunities that are being placed before you. Don't hesitate. Get on track to adopt these new technologies and take advantage of the genius that is out there thinking faster and smarter than you are.

After all, you never know what they'll think of next and you want to be out in front of it - whatever it is!