Gaga Proves Free Sells Music

Lady Gaga is the professor and the rest of us are students – at least when it comes to how to sell music for fun and profit.

Recently released is a report from Visible Measures, a video analytics company, that reports Gaga has exceeded the one billion views (rarified air) in terms of music video.

Actually Gaga has three videos in the 100 million range – one for “Poker Face” (374,606,128), one for "Just Dance" (272,941,674) and one for "Bad Romance" (360,020,327).

Twilight Saga is breathing down Gaga’s neck with 980 million and Soulja Boy has 860 million.

Lady Gaga is big on YouTube and VEVO and her viral popularity has spread to Facebook where more than 100,000 people launched a National Lady Gaga Day recently.

And what Gaga is teaching the music industry is that in spite of its insistence that file sharing and free views hurt sales, they actually grow sales.

There is little reason to doubt this. The evidence is mounting.

The music industry is trying to hang on to its manufacturing and promotional model that has served it well for decades with the assistance of terrestrial radio. That explains its desire to put an end to file sharing in whatever way it can even if it means suing their customers.

But don’t confuse file sharing and free views for piracy.

It’s simply today’s generational replacement of radio.

After all, whereas in the past young people only had radio to turn to for hearing music or later, to MTV to see music videos, they can now click away online to get exactly what they want on-demand.

And don’t confuse those little VEVO ads with some videos as a major source of revenue. They are not. Just part of what must become a new package of income streams that could once again represent income growth for the music industry.

The labels would have you think that stealing is bad – and it is except when it is making you money.

Is Gaga making money for her label?

The facts say yes.

Gaga is the only artist of the digital age to break the 5 million sales barrier. “Poker Face” just hit 5 million in sales after her debut single ”Just Dance” hit the same number a year ago.

Not bad for a talented 24-year old singer in over-the-top clothing.

It’s really time to get over the notion that piracy or, as I like to call it -- file sharing, is harmful to the music industry.

The whole point is that we live in a different world. Radio used to have sole responsibility for exposing music. Today, music is freely shared online thus feeding consumers’ craving for music discovery.

Short playlists and hit radio stations did a lot to cripple music discovery way before the Internet came along although it is a fact that ratings are higher when the hits are played over and over ad nauseum on-the-air.

However, in today’s on-demand world, consumers no longer have to wait until Tuesdays for radio stations to add one to three new songs into rotation. Therefore, the new music radio is file sharing.

One of the major market stations I programmed had 19 currents, 50 recurrents and 300 "oldies" and it easily pulled over a million cume listeners. But the only choice the new music public really had was my station and its competitor. And it added just three new songs every Tuesday -- max!

Where the labels will eventually wind up (whether they want to or not) is in a place where they learn to feed the file sharing monster.

Look at Gaga.

She is everywhere.

You see her, read her in People, see her on Perez Hilton, view her videos on demand online and look what has resulted.

An even greater demand.

Breaking records for music sold in the digital age.

Gaga selling more albums than anyone else and giving away more free plays than anyone else. I mean, you at least have to take pause and question traditional record industry propaganda and take note.

The irony that is so far lost on record labels is that the more music changes hands, the more music they will sell.

And that just as radio was the vehicle for exposing and repeating music in the past, online and mobile exposure is fast becoming the vehicle of choice now.

The labels should:

• Promote music file sharing without penalty and without agendas in any and every way possible. Do not inhibit radio airplay by seeking to levy more fees by repeal of the Performance Rights exemption. Take a page out of Lady Gaga's book. And with all due respect, it is her label that is benefiting as a result.

• Pass a Streaming Stimulus package that encourages the growth of free Internet streaming to promote music discovery and rethink the draconian rate structure that saddles and punishes the very exposure that has proven to benefit digital age recording artists.

• Make it easy to buy once consumers try – to do that creative approaches to marketing and merchandising need to be developed. Simply manipulating FaceBook, Twitter or MySpace is not an answer. Label merch efforts are at best -- unremarkable. They can do better.

• Emphasize a different kind of social networking, not just based around established social sites, but constructed around the artist first with Facebook and Twitter by enabling tools. The artist is the social network. (By the way, there are lessons in this for you and me. I’m thinking long and hard on this topic and new media and traditional radio and TV should also mull the wisdom of making the social network the brand).

File sharing and free viewing are your friends.

To quote the file sharing bible: in giving you receive.

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Radio’s Future on the iPad

If you are like most radio CEOs – assuming they are thinking about the revolutionary iPad that will be available at Apple stores this week – you’re looking at a way to channel your existing radio stations into the new portable Apple device.

Game over.

That’s exactly the worst strategy to have, but my readers know better than that because the iPad is about mobile content not becoming a terrestrial radio – nothing personal.

Radio CEOs when they are not thinking about ways to cut costs, firing people or filing for bankruptcy protection are about ready to miss the next revolution.

You already know how dire the situation is. Radio growth even at estimated rates over the next few years would be lucky to average 2% and it would take a decade to get back to 2008’s flat growth rate.

What’s more troubling is that older listeners are also joining the youth generation in enjoying digital products. These baby boomers and older Gen Xers are not just radio, TV and print consumers any longer.

The iPad is significant because it marries the portability of the mobile Internet with cool and improves upon the media it will eventually replace.

Let’s just say it – even a print newspaper lover will have a hard time not being enticed by the beauty, connectivity and intuitive aspects of the iPad.

Apple’s iPad is not going to be just the game changer but the entire game – offering video, audio, mini-computer advantages, print, social networking, mail, pictures and on and on. Sales have been driving Apple stock higher. Pre-order deliveries will ship later due to heavy demand. This product has all the signs of a winner.

If you have a chance, view this video to see how one magazine intends to breathe life into print and then when the video ends ask yourself if you really think consumers will want to go back to one-dimensional media. I ask you to do this because I’m going to get specific about how radio can actually ride the iPad revolution. Click on the video here.

If a digital magazine with a motion cover can be so alluring, imagine what content providers from television, radio and the record industry can do with the iPad platform.

So, let’s imagine:

• News stations can be mini-television stations on-line and mobile 24/7. Instead of hearing the AccuWeather five-day forecast. See it. See the weather. Then read it. Because rule one of iPad is that reading is in again. Next to pictures, video and communication. Someday KYW, 1010 WINS and WTOP will be on-demand gateways right there on your iPad. News segregated by zip code. Mashed up by interest. Communication on site that will rival social networking sites. And wait until outsiders figure out that this is a Renaissance for news radio.

• Sports stations can be local right down to the high school football team with video of games, stats, and interviews with players. Are you getting excited yet? I want to go shake some of our traditional media CEOs and tell them to open their checkbooks. I know. There is a recession, but somehow Clear Channel managed to spend $800,000 plus in the fourth quarter of 2009 – that’s just a three-month period – on lobbying. Three to four million dollars right there to get started. Just sayin’.

• The iPad is a bonanza for music radio stations. They can do videos – and the labels can provide them and make money and stations can get a piece of the action or else stations don't have to run them. More interesting to me is the ability to address the music sub culture in say, Madison, WI – featuring royalty-free performances. Sell music for contributions. Dig deep into music discovery. See it. Hear it. Read about it. Set up social networks about it.

• Speaking of social networks, one of my favorite topics – the radio site becomes the social network. Twitter and Facebook are only two means of communication in that social network.

• And radio stations have nothing to do with iPad content. That's called a radio. But station brands will transfer over so if you own country music in Nashville, you build new and separate iPad mobile media sites (note I said sites) that you can see, read and hear and connect with other fans.

• The ad potential is off the wall. The New York Times has already sold all its iPad inventory for 60 days prior to launch on the iPad edition. Yes, that’s a newspaper (like in the “dying” newspaper business). I’d isolate the 100 best advertising prospects in my market and be on their doorstep on day one. Radio isn’t factoring in the loss of advertising to this platform which will leave stations more vulnerable going forward.

• And there will be a stream of subscription money available for some types of unique and compelling content. Within a year many of you will be reading me on your iPad and connecting with all sorts of people and ideas wherever you are, whenever you want.

And, all of this needs to be locally generated.

Headquarters acts as an enabler – not the source of local ideas.

Corporate funds and rewards innovation and revenue production. It does not feed from headquarters to localities – that, too, is game over.

More to come on the potential for radio in the digital space as iPad takes hold. And the role of radio talent as well.

Rule one: Put the best terrestrial programming on-the-air (you don’t have that right now. Everyone has made cutbacks that have compromised quality). Don’t lose even one more listener by offering less.

Rule two: Don’t confuse good terrestrial radio for the content you will need to generate as a producer of programs for the iPad and other platforms.

They are very different.

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The Upcoming Radio Renaissance

Steve Jobs, the Apple CEO who seems to hit a home run out of the park just every time he’s at bat (with deference to AppleTV), is his own one-man research company.

If Jobs had commissioned a research project for the Apple iPad, what value would the findings be for people who could not become happily involved with the product or service?

How would Steve Jobs “pre-test” innovation?

He doesn’t.

Now this doesn’t mean he just carelessly spends company funds to invest in iPods, iPads, laptops and brick and mortar Apple stores.

Not at all.

Instead, Jobs studies his target audience and uses his creativity to build products and services he thinks they would like.

That’s not the way it is in most places.

Take the Kindle.

Amazon, to its credit, had a good idea. After all, Amazon knew best what selling books online meant to their bottom line. But the Kindle is really unremarkable when compared to the iPad. Clunky, not cool, not really that intuitive in my opinion.

When I get on a plane I see an increasing number of people with Kindles on their laps. These people generally (and I am generalizing from my experience here) – these people generally have gray hair. They are older.

That’s not bad, but from a marketing standpoint, how do you hit a home run if your early adopters are older than their late 50’s? I don't know one young person who owns a Kindle, perhaps you do.

In radio, before consolidation killed the radio show, it was standard operating procedure to order a research project before, during and often after formats were changed.

Somewhere along the way the radio industry defaulted on its obligation to observe the Hippocratic Oath of the entertainment industry – "first, do no harm to innovative ideas".

When Buzz Bennett developed the “Q” rock format, those who knew him knew that his formatics came from his head – whatever state that was in at the time.

Bill Drake drew a format clock for me on a napkin in a Philadelphia restaurant during a very memorable lunch. He did not at all feel obligated to anyone or anything. He was creating something from his mind. And, certainly the Drake format in all its simplicity, was a figment of his imagination before anyone researched it and you saw how well that worked out.

You can’t lead by following.

Michelangelo did not hire a research company to do his creative thinking before he painted the Sistine Chapel between 1508 and 1512 at the commission of Pope Julius II. His work didn't become one of the most renowned artworks of the High Renaissance without his imagination and creativity.

The Sistine Chapel painting included the large fresco The Last Judgment on the sanctuary wall, wall paintings in collaboration with other well-respected artists of the late 15th century and a few well-placed large tapestries by Raphael, the whole illustrating much of the doctrine of the Catholic Church.

Today, such a project would be bid to the lowest bidder, designed using a software program and measured by how impressive it might be based on other projects just like it. Then sent out for consumer testing.

There is a time when you have to just innovate.

And I’m not saying research is bad or that computer software isn't an upgrade. I believe quite the opposite. I want to learn as much about my business as I can, but I don’t abdicate creativity or innovation to others – people who may not be able to imagine in concept what I am imagining.

Sometimes, it is the audience that cannot imagine how badly they need new products. Steve Jobs seems to have a knack inventing things consumers don't think they need that they eventually cannot live without.

That’s one of the things I learned teaching young people. They don’t let whether an idea is viable or not get in their way. Do you really think Google could have invented YouTube?

Google lawyers would have put the kibosh on that idea before it ever got out of skunk works. That garage where it was invented by a handful of kids would have been shuttered and locked down. No one in their right mind could imagine an online video service that violates the stolen rights of content producers.

Thank God the young folks who invented YouTube were not in their “right mind”.

Oh, and they walked off with $1.65 billion in compensation when Google bought them out.

Now who was it again who was not in their right mind?

I often get emails from radio people wanting to know what I mean when I say radio should be more like Apple. They have a hard time wrapping their arms around making an Apple device a radio.

That's not what I mean.

An iPod or iPad is not a radio, but the way Apple comes up with innovative ideas is what the radio and records industry could profit from learning more about. In a future piece I am going to give you a glimpse of what I hear is the next big thing coming from Apple (beyond the iPad) and how it will impact the traditional broadcasting industry.

Apple – the company I put my entire USC pension into (not listening to traditional investment wisdom) has rewarded me with a 100% return on my investment in the middle of the worst recession of my lifetime. An Apple share is around $230 a share. Analysts predict $300 – some $350.

Thank God I was not in my right mind.

Back to radio.

If you look at the predicted growth rate projected by respected BIA/Kelsey (and I like their numbers), a 1.5 to 2 percent growth rate annually would take ten years to recover from the declines of the past few. And with all due respect, I don’t think enough baby boomers and Gen X radio listeners have the juice to make radio a growth industry again.

Unless, it embraces interactive, mobile Internet and social networking.

And I don’t mean the way some of them are doing it now.

Radio’s problem is that with the less than 3% annual budget they put towards new media, nothing financially significant can result.

Are they kidding?

How can you make mobile Internet, social networking and new media a growth industry when you are spending less (far less in most cases and none in too many) on new media?

That’s just the first problem.

Then, the obsession with making new media an extension of their present on-air brands is fatal. That's right, fatal.

Look, this is no time to do poor terrestrial radio. I’m an advocate for making terrestrial radio richer, with more personality, live and local, community-based, fun and full of promotion – not cutting back. This is no time to cutback quality programming as radio's loyalist listeners are also spending more time with new media.

New media should be an additional revenue stream.

In other words, if you’re a news station – use your people, resources, marketing and sales to create new and separate content from your terrestrial parent.

If you’re sports, do the same.

Talk?

Talk is in trouble and I don’t care if you lean right wing or left wing. Older people tend to listen to talk radio stations. This is nothing new. So, if I’m running these big media companies, I’m developing the replacement for talk radio in the digital world and you can’t do that without getting an “A” in sociology.

In other words, it's not just a new format that will address what to do with talk radio, it is much, much more.

Music radio has problems, too, because iPods, WiFi connections and mobile Internet will siphon off radio’s prime listeners. They are doing it now. Some 40 million Pandora listeners distracted from terrestrial radio are nothing to sneeze at. That’s more than satellite radio.

Insiders tell me that the most popular channel on Sirius XM is --- take a guess.

Go ahead.

It’s Fox News – a television news channel.

So much for radio innovation on hundreds of satellite channels.

Is that the best radio people can do is pipe in TV audio and let it whip your creativity in other areas?

Speaking of satellite radio – how about that blown chance to make a good first impression. Satellite channels (we had two services in the beginning when God created satellite radio) – satellite channels should have been all-new. No radio. Nothing like it.

But they skipped innovation and hired terrestrial radio people on the cheap to do terrestrial radio from a satellite.

Duh.

So, the writing is on the wall even for radio.

Under the best circumstances, it will take ten years just to get back to the flat year that preceded the recession on a comparison basis.

One of my cellphone industry readers underscores the urgency of waking up, innovating and becoming experts on consumer sociology when he writes:

“Everything connected with smartphones is red hot. By next Wednesday we may book our entire iPhone dev (development) capacity for the next six months. We are desperate for development talent (objective C programmers). Our radio station video product grows 20% per month as we approach 2TB/month bandwidth but the radio guys just don't get it. What's wrong with this situation? We're now waiting for the current radio leaders to fall and work with the new guys when the real game changers show up”.

I have been encouraged by folks who attended or wanted to attend my Media Solutions Lab a few months ago who has asked me to do it again. Some attendees are even writing to me with some of the innovative things they are trying. (Mark your calendar for January 27th at the Phoenician in Scottsdale for my next Media Solutions Lab).

Between now and then let’s expand our conversation on migrating to the digital world while we restore excellence to terrestrial properties whose free cash flow could help fund years of new media development.

And, please – take me seriously on one thing. The iPad will rock your world – either in the good sense of the word or the bad if you ignore it or continue running measly interactive budgets.

There may be only one Michelangelo, but in the Renaissance that the radio, TV and music industry must certainly have, who is going to use innovation to find the future?

We know Steve Jobs is today's Michelangelo for the electronics and mobile industry.

Who is radio's Michelangelo?

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Staking a Claim - Part 1

Peter Hum in a recent blog juxtaposed the phenomenal video download statistics of Lady Gaga, and the inexorable rise of the manufactured pop star (no talent necessary, only lookers need apply) with the difficulties jazz in which jazz finds itself regarding numbers - Hum mentions that Brad Mehldau’s best selling CD sold only 34000 copies, and I believe Wayne Shorter’s first Quartet CD ‘Footprints’ sold around the same number of units.

This is undoubtedly scary stuff if you believe that jazz is in some kind of competition with music from these other genres, or that jazz even inhabits the same universe. Personally I don’t feel that what I do and what Lady Gaga does has anything in common at all beyond the surface similarity that we are both connected to music in some way. I think a noticeable characteristic of pop music these days is how little the music itself – the actual notes and chords, form and structure – features in terms of its percentage of the whole package. Music plays a tiny part in the success of people such as Gaga or Britney Spears – so much more is concerned with looks, marketing, merchandise tie-ins etc.

Of course popular artists have always needed to cash in on their looks (if any – some people such as Elton John or Rod Stewart wouldn’t have had a chance if they were attempting to break into today’s pop market), and their image was always important. But the importance of the visual image took a quantum leap forward with the appearance of music videos in the 80’s, when the talents of the video directors and camera people could be used to create striking visual images to accompany music that was essentially vapid rubbish. That process has grown exponentially in the intervening years to the point where a Gaga or a Beyoncé is the product of a frighteningly huge machine that ties in visuals with marketing, with merchandising, websites, Facebook, Twitter and all of that. The actual act of music making plays a smaller and smaller part in this behemoth as the multi-nationals drive for ever bigger profits from an ever-widening circle of merchandising opportunities.

Jazz cannot compete in that world

Jazz shouldn’t even try.

There was a time when jazz was of course a popular music, and then when rock and roll took over in the 50s and onwards, jazz was still seen as something that had some relationship to pop music and people like Miles Davis could sell very respectable amounts of recordings and be mentioned in the same breath as pop stars. But I think we have to let that go altogether – popular music – of the huge selling variety – has NOTHING in common with jazz any more. Contemporary pop music has nothing in common with jazz in either the musical or the aesthetic world it inhabits. And I think some kind of over-the-shoulder looking at the behemoth of the pop music industry does us no good at all – not only can we not compete with that world, we’re not even involved in the same industry in my opinion. It’s like being a small boutique winemaker and being concerned about what Coca Cola is doing. The product is different and the market is different.

The market we are in is – I agree – tiny in comparison to that of pop music, but that’s neither here nor there. In fact I would say that the more the two musics diverge in form and approach, the more opportunity there is for jazz to develop and flourish in the marketplace. But we have to accept that our marketplace is both small and specialised. We have to realise that our customer base, though not huge, will be discerning. And like most boutique products, we can grow our customer base by clearly identifying what is different and good about what we do. We have to stop trying to be seen in a market that is just so huge and so different to ours that the quest for recognition is hopeless. We don’t have the tools or the resources to fight such a war – rather than try to snatch territory from such a giant foe, we have to be happy with our own territory, develop it, let it speak for itself, and then inevitably some people who are looking for an alternative place to live other than than the cheap, facile, and crowded musical country they currently inhabit, will want to come to where we are and will want to partake in the quality of musical life that we have to offer.

In taking such an approach we have to accept that the financial rewards of operating in such a relatively small musical country, will be less than the rewards available to those who make it into the upper echelons of the pop music empire. So what can we reasonably expect as jazz musicians operating in our own musical territory? Well I think being able to make a living playing the music isn’t an unreasonable target to aim at – anything beyond that would be a serious bonus. And it IS do-able, despite all the doom and gloom being spread among the online jazz community these days. Despite the outpourings of woe, I personally know literally hundreds of people who make their entire living from jazz – including me. I’m an Irish bassist who started playing in a country with little or no jazz tradition – I still live in Ireland, yet here I am writing this blog in South Africa, where I’m working, and I’ve just been chatting to a bassist from the US, and there’s a guy here from Turkey – all of whom play jazz for a living. So it can be done – we just need to take care of our own business and be as good as we can be and develop what we do. Quality DOES have a market, no matter what the doom-merchants may say. We may see the relative lack of large CD sales for someone like Brad Mehldau as being a barometer of how bad things are, but these days CD sales – even for huge acts in pop music – form a tiny part of the economics of the music business – the real money is in performing. And Brad Mehldau is no different in this regard – Brad’s diary is pretty full, you can be sure that he’s as busy as he’s ever been – CD sales or no CD sales.

So let’s stop worrying about what’s happening in pop music and in the music industry – let’s just make our own music as good as it can be and then find the best way we can to get it out there and get our music to the most amount of people. And how can we best do that? Well that’s a whole other discussion............. TBC

At Cumulus, “Uncle Lew” Wants You

The recession is over.

I know that because BIA/Kelsey is predicting modest growth for radio this year. That’s a 1.5% increase and anywhere from 2-4% annual growth in the immediate years ahead. All that after the lower than expected 18.4% decline in 2009.

Okay, everything is good again, right?

So how about putting personalities back on the air again?

Or cutting back on the massive voice tracking that is now being accepted as the industry norm.

How about doing live local radio again?

And rehiring sales professionals and giving them a fair and honest compensation structure to earn a living.

After all, the worst is over, right?

Wrong.

The trouble is just beginning for consolidators who have gutted the radio industry and ruined the careers of radio professionals at the hands of their mismanagement.

Take Lew Dickey.

The Cumulus CEO is now recruiting!

You read that right – the lean mean Dickey machine is open for business once again hiring.

See, the recession must be over, right?

Of course, Tricky Dickey is hiring after he has already “cleansed” Cumulus of people who are – let’s see if I can put this delicately – costing him and his brothers too much money.

Now he wants cheap replacements.

What the big radio CEOs are about to do is tell the world that things are trending up – at least compared to the worst numbers they’ve ever turned in last year – and that recovery is on the way.

What the casual observer or may miss is that you must not confuse an economic recovery with a return to radio as it works best – live and local.

I’ll have to give my friends at Clear Channel some credit.

Keith Abrams in Cleveland just hired two PDs where one used to work.

WGAR and WMVX now have separate program directors.

Hooray for Clear Channel. Maybe I am getting through to John Hogan that more is more. Tony Matteo is the new PD of Mix 106.5 and Charley Connolly the new PD at WGAR.

Connolly leaves Cumulus Nashville.

Joel Denver’s All Access rightly asked readers if this move to have a program director for each of these two Cleveland stations amounted to a sign of things to come?

Good question.

My answer.

I wish.

I hope.

I doubt.

Most consolidators these days are simply routing programming from vaults of Premium Choice and other network fodder to local transmitters and sticks. It is more likely that they need a programming traffic cop to direct the flow. Some are moving in that direction.

Back to Uncle Lew.

Picture this.

That old Uncle Sam picture where he points out and says “Uncle Sam Wants You” is scarier yet when you photoshop Lew Dickey’s head onto good old Uncle Sam.

Cumulus is in deep doo doo.

It has arguably the worst reputation as an employer in radio and now they need people to work – well, on the cheap. So why not look to the people they are underpaying for leads.

Here’s the stew Uncle Lew finds himself in.

He’s running another sales recruiting contest to get existing employees to recommend future victims of corporate torture – and if they will sacrifice their friends, Tricky Dickey will pay the bounty.

An email went out March 23 to all Cumulus market and sales managers from Colby Buell who calls himself Director of Talent Recruitment/Development.

And, as usual, my disclaimer – I am not making this up.

The subject of Buell's email was On-Air Recruitment and the importance level was deemed “high”. Just so you know. This was not a casual, refer us some leads kind of memo.

Let’s take a look:

“Ladies and Gentlemen, We are in the process of developing three distinct on-air recruitment campaigns, so we are requesting your creative input. One winner for each campaign will be selected and awarded $1,000, so a total of $3,000 may be earned. Ultimately, these recruiting campaigns will effectively assist you in attracting talented individuals in your market”.

See, if Cumulus would just pay fair wages to their employees and treat them with respect they wouldn’t have to pay bounties. Clear Channel doesn’t have to pay for recruitment. And they are the Evil Empire.

“Market Managers are responsible for submissions. Submissions by employees other than the Market Manager will be disqualified and not eligible for consideration. Please distribute this information to the appropriate parties in your market for participation.” (By the way this paragraph appeared in bold in Buell’s memo)

Sounds like they’ve already lost that lovin’ feelin’ and now they’re cracking knuckles. Imagine what it would be like to “win” this contest by getting a friend hired.

“Contest Rules:
•This contest begins today and submission deadline is COB on Friday, April 2nd
• You are allowed 3 submissions per campaign, so make them your best
• Submissions must be made by the Market Manager and include copy and .mp3
• You may submit to 1 or all of the campaigns”

This doesn’t sound like fun even though Cumulus calls it a "contest". In fact, I’m getting scared.

“Campaigns: 1) Under-employed /not happily employed sellers- ($1,000)
Copy point suggestions (no career growth, depressed industry, poor leadership, limited company resources)”

What!

Underemployed and not happily employed. Why look outside the company, Cumulus has a whole company full of underemployed and unhappy people already in place.

“2) People considering a re-entry into the work force- ($1,000).
Copy point suggestions (family requires dual income, develop new skill sets, training, high income potential, parents able to work-children are school age or empty nesters)”

They’re kidding, right?

Empty nesters?

Cumulus has done more to put thousands of people out of work and never worried about any of the motivations in #2.

“3) General recruitment- ($1,000)
Copy point suggestions (achievement drive, career development/training, high-income potential, fast-growing company)”

Excuse me, I am choking here.

Did they say “high” income potential?

Fast growing company. Isn't Cumulus on the ropes pushing off debt that they cannot pay bu buying more debt at a higher interest rate?

These are just fabrications. Not backed by fact. They must be talking about Apple.

Fortunately, few unhappy Cumulus workers are going to turn in their friends or associates for a bounty. Just the fact that Cumulus is urgently asking them to do this is telling.

They know all too well what working in a hostile workplace is like.

In fact, I’ve got a better idea.

Cumulus should pay people not to work in their company because in a few short months – if previous experiences mean anything – these new people are going to be out on their asses just like all those qualified Cumulus people who have been turned away. They might as well save that money because apparently this scenario happens all the time at Cumulus.

This just in from a repeater reporter:

“The guy I replaced as GM (market redacted) held the position one year. I was given the hook a year later in April of last year. The guy who replaced me was let go this week. Am I going too fast for you? Try and keep up. Since I left last April, they (Cumulus) fired TWO GM's in (one market), the GM (in a nearby market) was fired and replaced. Ditto (two more southern markets). I'm not saying those are all of them, just the ones I know of in the region. WTF?!”

In the end, the Dickeys will find out that the captives who remain at Cumulus are waiting for things to get better so they can get out.

After all, with the poor employment and management record of the Dickeys, their employees know best that friends don’t let friends work at Cumulus.

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The Karmazin Royalty Solution

You really have to hand it to Mel Karmazin.

He’s outsmarted his radio brethren once again.

He sure knew what he was doing when he jumped in to settle the royalty issue with SoundExchange a few years back. Imagine the notion of paying more than radio did in new royalties when they have a fraction of the listeners and revenue.

Radio pays plenty of rights fees to ASCAP and BMI already.

But Karmazin did what Jerry Jones did when he bought the Dallas Cowboys way back when.

Overpaid.

And now, both of them are looking like geniuses (again).

See, what Mel did was as soon as Sirius XM got stuck with a new line item called music royalties, he turned right around and passed the charge along to his subscribers.

Regulators didn’t care when they looked at the merger of Sirius and XM.

Who can be opposed to apple pie, motherhood and paying royalties to poor starving artists? So the promise to not increase subscriber costs to win government approval for the latest legal monopoly kinda sorta got overlooked.

Mel isn’t known for his compassion on this issue. Just a shrewd businessman. What Karmazin realized is that if he can lock in a royalty expense albeit it higher than he can afford to pay and pass it along to subscribers, it’s a win-win (if you don't give consumers one of those "wins").

Oil companies do this all the time – not that I am insinuating that Mel is as slippery as oil on this issue. If OPEC burps, you know what Exxon Mobil does.

This is a bit unfair because oil companies gouge, but Mel is simply passing along his burdensome business expense to his subscribers.

And so far he is getting away with it.

Sirius XM new subscriptions are up even as auto sales are down. And autos are the prime domain for satellite radio. This either means Mel’s satellite network has superior programming worth paying a premium for or terrestrial radio is that bad.

The Sirius bill says $14.93 on my statement. They don’t even bother to break it down and make me feel like I’m helping to feed musicians that records labels previously screwed.

I mention all of this because royalties are very high for streamers and as a result of satellite radio caving early not as high for satellite radio. Labels want terrestrial radio to feel some of the pain and I believe sooner or later their lobby will beat the NAB on the issue of repealing the performance right exemption for terrestrial radio.

High royalty charges have forced a lot of streamers out of the business of selling music for record labels. There is no doubt charging high rates is a huge disincentive to streamers who are punished for attracting larger audiences.

Then, in the case of streamers, your local starving artists (or is it their record labels), wind up getting an additional percentage of any income you may earn from advertising or subscriptions.

Bummer.

But, on the other hand, in today’s business world operators don’t need office buildings, receptionists, health care benefits or any of the traditional expenses that startups used to be saddled with.

The black hole where they must throw their money is to the labels under the guise that they are helping musicians.

I said it before and I will now say it again – the best way to help starving artists is to expose their music, allow people to sample it before they buy.

Expose new music and new artists.

If Dove has a new soap, I’m sure as hell not going to know unless they can get me to sample it. If I like it, I’m a Dove fan.

This is an old rule of marketing.

Ever sit in a restaurant and the waiter brings out flaming bananas foster? How soon will it be that you will commit gastronomical suicide and put in your order (or want to, at the very least)?

So, the right thing for starving artists and musicians is to get exposure – as much as possible and often as possible.

Eventually, someone will listen to me and seek out artists that are willing to allow you to play their songs royalty-free. After all, if consumers are so taken with music discovery (and I’m saying they are), then one less play of Lady Antebellum’s “Need You Now” can be replaced by one more play of that local country crossover act in your town.

And the labels will sit up and listen when you don’t automatically play “American Honey” because you want to help some other starving musician eat.

Mel Karmazin's approach is to hold your nose and do what you need to do for your business because if you make your businesses’ needs based on what will work for the music industry, you’re screwed.

Bite the bullet. Pay the price. Then build your influence.

Then, you’ll have the power to make or break the next artist. That’s the only language record labels understand.

(Update: SoundExchange Executive Director John Simson replies: "Mel didn't agree to these rates - in fact he offered less than 1%. It was the Copyright Royalty Board that set the rate after listening to months of witnesses, reports from experts, the value of promotion vs. the substitutional effect and David Oxenford writes: "I read your post on your Blog this morning and I think that the premise is wrong - Sirius XM did not settle with SoundExchange on satellite radio royalties - they litigated in front of the Copyright Royalty Board. They actually got a relatively favorable decision from the Board after a fully litigated case. The case went all the way to the Court of Appeals with SoundExchange arguing that the rates should have been higher".)

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The Spectrum Buy Back Plan and Radio

I’ve been trying to nicely but firmly tell my friends in terrestrial radio that they have to change.

Put the best programming ever on the air at this critical point where the public is being bombarded by new media options.

Instead, they cut talent, management, sales and water down live local radio.

Put 25% of their operating budget into the Internet and the mobile Internet. Consumers are demanding products in this space not so much on traditional terrestrial signals.

Instead, there isn’t one radio company that spends as much as 3% on new media each year in spite of the fact that it is the growth business of the future.

Now, the ultimate wake-up call comes from Julius Genachowski’s FCC.

The FCC wants to make way for increased broadband needs prompted by consumer use of mobile Internet by buying back spectrum space from AM, FM and television operators.

This could provide Internet access that is 25 times faster and if you ask most people who use the Internet they would prefer to have a speedy Internet than a traditional radio or antenna TV service. And wireless speedy Internet, too.

Oh, and the FCC plan could raise $20 billion in revenue from broadband-hungry companies.

Let’s put it like this, as the years go on consumers are going to want these Apple products that are already sopping up bandwidth. As some of my readers point out, the real crisis is more than just the advent of on-demand new media, but how to cram it all into the existing spectrum.

The FCC, Congress and President Obama appear to be headed in this direction.

It probably will not surprise you to hear that the NAB is opposing it.

I’ll tell you I could be a staunch supporter of the NAB’s position to preserve spectrum space for good old radio if good old radio was actually good old radio. That is, this crap Cumulus, Clear Channel, Citadel and other lesser companies are trying to pass off as compelling live local radio is actually going to help the FCC win the day over spectrum buy back.

Radio operators have given up on live local radio so it should not startle anyone to see that the government is looking to radio and TV to give up spectrum space on the dial.

For television stations, they’ve already found a new home in the digital space and with programming beamed to satellite and cable systems one could argue that traditional over-the-air broadcasting signals are passe today.

Consolidators have reduced radio markets to a series of ghost towns where in essence nobody is home to live up to the very local license commitments operators made to get use of the airwaves.

It’s going to be tough for the radio lobby to argue that the predominant programming de jour – voice tracking from somewhere else --- is contributing to a good use of spectrum space.

Anyway, radio owners are hot to get their “stations” on iPods and cell phones so I can hear the argument now – who needs all that spectrum space for terrestrial radio? Or for the time being, who needs as much terrestrial radio as we now have?

I could write this column every day about another local station forced into repeater radio but you wouldn't want to see a grown man cry.

Here’s the cold hard truth.

NAB is going to lose this battle eventually just as it will lose the performance tax exemption in the next few years.

The world has changed, but radio has not.

Consumers covet their cell phones and their Internet. The radio industry thinks listeners can’t live without a radio when what they can't live without is their mobile devices.

On-demand is the growth industry ahead but broadcasters stubbornly stick to their fantasy that 24/7 broadcasting is essential. They talk a good talk but for most of them they don’t believe it enough to even program live and local 24/7.

The cable companies, phone companies and wireless providers are hell bent on expanding to meet the real needs of the American consumer and radio, once untouchable, is now more expendable – at least the spectrum space powering some of the 10,000 plus stations are.

If you’re madder than hell and want to take this out on somebody, look no further than your market leaders – Clear Channel, Citadel and Cumulus. They have already inflicted a lot of damage on live local radio and now what’s coming next is on them.

How can the industry argue that radio is a lifeline in communities around the nation when most owners are turning their operations into repeater radio live from somewhere other than the local community to which they are licensed to operate?

How can the industry testify before Congress on the need for local radio when they aren’t doing local radio? I’d love to see Dickey, Suleman and Hogan try to wiggle around that issue.

In other words, the radio industry that has been self-destructive for almost 15 years now has finally dealt itself a final blow.

It’s all unnecessary but it’s going to happen nonetheless.

Consumers want more mobile and Internet and less traditional broadcasting. Congress gets it and the President wills it so this issue is not going away even if Lew Dickey himself throws a tea party.

I guess that would make Dickey a teabagger but what he and his kind really are is carpetbaggers (a person perceived as an unscrupulous opportunist).

So now, on top of the greed that made them fire their listeners' favorite talent, cut local services, news and weather, reduce marketing ranks by making it impossible for salespeople to make a living and turn their fiduciary license obligations into a joke – they will preside over the biggest land grab in the history of broadcasting.

No, not the stations they stole from the public through consolidation.

The terrestrial signals that cable companies, mobile operators and phone companies will take from them -- the signals they made less precious by turning live local radio into a cheap repeater network.

Now, the government is coming to take them away, ha ha! They’re coming to take them away, ho, ho!

Obviously these broadcasters can't make a compelling case to keep the public's air frequencies (and yes, it does belong to the people, not equity owners disguised as broadcasters). Consumers need more broadband, faster speeds.

Wireless.

Universal.

Fast.

Able to sustain the digital needs that are going to require more spectrum.

Tom Taylor said in a recent article that “Now AM/FM/TV broadcasters know where they stand with the FCC – they’re second-class citizens”.

But it’s not real broadcasters who suddenly made terrestrial broadcasting second0-class citizens. They know better.

It’s the consolidators who had their way with live local radio.

Now, you mark my words, the FCC is about ready to have their way with broadcasters who can no longer make a convincing argument that they need spectrum space for repeater radio.

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EMI’s Deal With the Devil

Bankruptcy brings out the worst in media companies.

Take what Terra Firma Capital Partners is trying to do to avoid handing its failed EMI record label over to Citigroup now that it cannot repay its loans.

Terra Firma operated by Guy Hands would rather license their artists (or as I call it, whore them out) than let the big bad Citigroup wolf take possession of their company.

That’s a far cry from American bankruptcy where the likes of Citadel and Regent can hardly wait for the big bad wolf to huff and puff and blow the house down.

Of course, in the case of Citadel and Regent, its principals get sweetheart deals while their shareholders get screwed.

What's not to like?

But Guy Hands has more ego than even Fagreed Suleman who earned his nickname by paying himself tens of millions of dollars for a job that should have paid him $1 million at best.

A Wall Street Journal article estimates that EMI’s deal to license its artists to rival labels could earn them $150 million a year. The question is, is that enough to get Citigroup off of their backs?

Warner, Universal and Sony could then cease being EMI competitors and become cozy buddies.

Such a deal.

Imagine if Regent and Citadel could license their radio stations to Clear Channel to avoid running into their loan covenants.

I'd better shut up. Don’t want to give them any ideas.

I wonder how long it would be before undue influence would be asserted on the product before it was created? How many cooks in the kitchen would spoil the marketing meal? Before the licensee starts telling EMI's artists what it wants.

Terra Firma has been trying to sell the other three big labels on their rent-an-artist idea for some time now.

This brings me to the question -- why do EMI artists need EMI?

Or a better question -- why do artists need record labels in a digital age that labels have resisted?

Imagine The Beatles in the hands of Sony.

Or Pink Floyd at Warner.

Great for Sony and Warner, but The Beatles interest and Pink Floyd’s interest are best served by what now?

In other words, it's EMI’s last act of desperation. All about them and their financial problems. Not at all about what is good for their fabulous stable of artists.

Ship their artists off to the competitors they probably should have signed with in the first place and don’t worry about the contracts they actually have with these groups and artists.

There is a real question as to whether Terra Firma can pull this hoax off fast enough to pay Citigroup. And whether such a cockamamie deal can clear U.S. antitrust law.

I know. I know.

Just about everything gets through the antitrust approval process. But EMI cannot be sure.

You know when you don’t like the rules, just throw them out.

Not a merger, okay.

Not an acquisition, fine.

And this generation of corporate boob makes fun of young people for wanting what they want when they want it.

Ridiculous.

Oh.

Then there is the small question of whether the lender – you remember, Citigroup – would approve this licensing scheme.

The Journal article said, “Citigroup likely would approve such a deal only if it were seen to be in the long-term interests of EMI shareholders. A person familiar with EMI's stance said it may not need approval”.

That’s another extenuating circumstance.

How do these desperate CEOs come up with this stuff?

Terra Firma has its fingers firmly stuck in the dyke to prevent a flood of artist departures from its company. Pink Floyd was involved in a successful lawsuit against EMI for chopping up and selling off digital tracks from its albums that were intended to stay glued together as, well – you know – artistic expression.

Pink Floyd is also thought to be shopping record labels.

The Stones and Radiohead have already escaped EMI’s control since Terra Firma bought the label.

With all due respect to water analogies – and references to land (terra firma, Latin for “dry land”), there are other artists looking to leave EMI’s sinking ship.

And it’s not like the other big three labels are all that solvent.

Warner is playing fantasy sports with the thought of buying EMI for pennies on the dollar. Just what the music industry needs, two blind mice becoming one.

If the record industry is this lost – and it is – then why do artists need them?

They don’t.

Or soon won’t.

The labels need artists for catalog items. The record industry long since gave up its quest for music discovery.

Together, the labels through their mouthpiece the RIAA have collectively sued their consumers to stop piracy resulting in more piracy.

They can’t see that exposure is the drug that should intoxicate them, not the cutbacks and taxing of the radio industry that arguably made them their profits for decades through free exposure.

These four "brilliant" labels that constitute your record industry have single-handedly done more to stifle the growth of Internet and mobile streaming through unfair charges, taxes and royalties than anyone else.

In effect, hurting their efforts to win exposure of the one thing they have to market – music.

It doesn’t surprise me that companies like EMI turn to the same old tactics that got the record industry into trouble in the first place.

Incompetence and denial.

Terra Firma should be called Terror Quicksand.

Quicksand is defined as “loose wet sand that yields easily to pressure and sucks in anything resting on or falling into it”.

You watch – this bonehead move by EMI will suck in anything resting on or falling into it.

Warner, Sony and Universal -- I'm talking about you.

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Paid Radio

When I heard recently that KPIG, the west coast alternative station, was going to give up its advertising platform in favor of paid subscriptions, I said, “you go girl!”

And I didn’t even know the gender of the pig.

From all reports, in the first week the sale of subscriptions exceeded the previous advertising revenue.

This may come as a surprise to some, but probably not to my readers. After all, I am an advocate of the paid Internet.

The Internet of the future.

The one that will allow businesses and entrepreneurs to actually earn a living.

A hoax has been foisted upon the Internet by a generation of cool kids who want what they want for free and by Google, the “Evil Empire” of new media comparable to that of the enemy we know all too well as Clear Channel.

On one hand, very smart business people are making dumb decisions based in part on these two considerations.

For example.

Google has everyone thinking paid search and targeted banner ads are it – the one way to monetize the Internet.

I ask, when have you clicked on a link lately? Click rates for banner ads are notoriously very low.

When have you watched a pre-roll video ad all the way through? Or at all?

Better yet, when did you actually buy something from so-called targeted search or advertising models?

Google gets rich and everyone else sits there saying, “freemium is the way to go”.

My other example is the hoax that has been foisted upon baby boomer CEOs by a very foxy young generation that these media executives cannot begin to understand. This generation wants what they want when they want it.

But who doesn’t?

Gen Y has just institutionalized it.

“Don’t take away my free Internet” --- we hear. And consumers will never pay for something they can get for free. There are studies out there all the time saying consumers will reject having to pay for content.

Hmmmm!

Public Television.

Public Radio.

Free -- and the content is so compelling that they don’t even need pay walls in place to get donors to make contributions. That's a model from which to start.

And don't forget Pandora, the biggest Internet entertainment success with 40 million faithful willing to do the unthinkable to keep the content coming -- pay. There are other examples.

My view is that the Internet will, of course, be the crossroads of lots of free information, ideas and entertainment. And that advertising will certainly monetize these ventures for the owners of the content.

But we’re entering a new age. You know that, but oddly enough, media CEOs don’t seem to get it. The first decade of this century was devoted to the Internet coming of age. The next ten years will see the maturation of the mobile Internet.

That means, content everywhere.

Cell phones, cars, airports, laptops, iPads and God knows what else will come to market in the years ahead.

So pay radio is an option.

Increasingly, terrestrial free radio is often worth exactly what listeners are paying for it – nothing.

Live local radio works best and I believe, assuming these stations grow their rates instead of fold them under pressure, that advertising (local and national) will continue to make local radio a good business.

But local radio the way I define it is not just limited to a terrestrial signal. If radio operators don't have content on podcasting, webcasting, blogging, applications and other mobile platforms then I am not optimistic about radio as a growth business.

Open your eyes and what do you see – an entire world listening to radio.

No … sorry, I got carried away with happy talk.

What do you really see?

Radio is the last thing that increasing numbers of consumers want whether it's 24/7 terrestrial signals or rehashed content online from morning shows.

Jerry Lee wisely pulled the plug on his WBEB (B-101) stream from Philadelphia citing royalty expenses. But what he needs to do is develop new and different content aimed at the B-101 audience base that he already owns. And "content" does not always mean music.

Radio must be multi-platform and multi-platform does not mean cramming a radio signal onto the Internet. In fact, fewer than 3 percent of all listening comes to owners who stream their terrestrial signal.

KPIG could be a whopping success.

Those same young people who tell you it's free or they’ll flee are the ones who are also making Steve Jobs richer by buying apps – the majority of which they don’t even use after they install them.

Record labels, like radio stations, are off in their own world thinking the market will once again come to them instead of them going to the market. You see how that is working out.

Citadel, Clear Channel and Cumulus are in the process of shutting down local radio as we know it works best to own a network of repeater signals with all ad sales eventually coming to them as advertisers bid on this commodity.

Google is smiling. Hey, that’s their idea. Use somebody elses content and make money.

The KPIG model is priced at $5 a month, $25 for six months, $50 for a year.

You’ll notice that KPIG’s system is rightly a true subscription not a metered approach.

It doesn’t punish fans for listening longer by costing more. That’s the concept The New York Times will fall on its face with next year when it switches to metered subscriptions. The more you read, the more you pay.

How idiotic!

KPIG has over 10,000 listeners a month. If 1,000 of them subscribe, they generate $50,000 with no cost of acquisition. Grow the brand through viral social networking and the money increases.

I’ve shared with you that I am turning this space into a paid subscription site this summer. It’s $99 a year or $9.99 a month. We’re blessed to have many readers now and hopefully lots of them will stick around. If they do, I have unique content as a business model.

What is exciting is that there is no longer one way to monetization in radio, television or print.

Free works with advertising (less so with bidding for ads).

Paid works where content is unique and compelling.

The product had better be good if consumers are being asked to pay for it.

Imagine if listeners were supporting radio stations with their subscriptions before consolidators came along. Once their personalities were fired, cheap programming installed and voice tracking implemented, listeners would stop listening and paying).

The arrogant sobs sitting at the head of media companies (see, I couldn’t say that if I had advertisers), are about to miss the Internet playoffs.

They were never in the game in the first place.

Many of my young students who are coming of age and paying for things online could well be the beneficiaries.

They get it.

Of course, the Internet is free.

But it isn’t only just free.

Now there are lots of new opportunities on the horizon.

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Developing New Music

Recently I've been playing some new music with two great French musicians, the saxophonist Stéphane Payen and the drummer Christophe Lavergne. At the moment we're trying to develop the music and then we'll look at doing some performances and maybe recording. It's been a luxury to be able to work on music without the pressure of preparing for a particular performance, this is so unusual these days. I wrote some music for the project and Stéphane wrote some also and we worked on the pieces and looked at different ways to develop them.

In February I went to Paris to play with the guys (they have a very cool little practice room which they rent collectively with some colleagues), and in March they came to Dublin, and we had a lot of fun playing and trying things out. We decided to do an informal performance in front of an invited audience in Dublin at the end of our rehearsal period, and I set the video camera up.


I've out some footage of it up on Youtube, here's a clip below

Latest Radio Management Tactics Exposed

The CEOs of many of radio’s top companies today are getting away with running roughshod over people, advertisers and listeners because, well – they can.

The system is skewed toward the equity owners who cry poor mouth in court at the same time they brag about expanding their industry conquests.

The courts allow it.

The FCC goes along.

Congress is willing to be manipulated and the net result is an industry mercilessly held by equity owners who aren’t held accountable to anyone.

This morning I thought I would share with you just how out of whack this unbridled power is.

Win A Trip With Our Market Manager

Example, from a Cumulus repeater reporter:

“Our market manager has my program director's girlfriend (who hosts our sister stations morning show) spying on what time we arrive and leave. Phony Facebook and MySpace accounts have been created to lure you into friend only to learn they really weren't set up by your friend at all...but the same spy. My voicemail has been hacked...twice. The Carnival Cruise we used to host for our listeners is now being hosted by our General Manger. The promos sound great...'Cruise with a station representative'...what a joke.”

Used to be listeners wanted to go on a cruise with a station dj but apparently the geniuses at Cumulus have figured out that the number one attraction is to listen to a voice tracked programming and go on a cruise with the market manager!

I must have missed that memo.

My, have things changed in consolidated radio.

Bankruptcy, NextMedia Style

Haven’t learned to love bankruptcy yet?

Used to think it was a dirty word?

Not anymore – at least not at NextMedia.

The latest Chapter 11 plan for NextMedia was filed recently. Look at the benefits:

• $127.5 million in what is termed “exit” financing.
• A “Management Incentive Plan” that lets the execs that ran the company into the ground stay on and get rewarded with the potential of owning 14% of all the common stock going forward while NextMedia transfers its debt to its lenders for operational control
• First Lien holders get paid in full ($162.4 million)
• Second Lien debt holders get 95% of the common equity (Class A stock). Strategic Value Partners and Angelo Gordon & Company get two-thirds of the new Class B stock, in exchange for a $55 million investment.

It pays to go bankrupt in radio.

We Sue, You Pay

What kind of legal mind does it take to force their employees to sign a contract and at the same time get these employees to sign off on a clause that could ruin them?

Listen to this person who has seen it first hand:

“…In EVERY Cumulus contract I have seen, their standard language includes the employee being responsible for their own attorney's fees AND THE COMPANY'S attorney's fees on ANY litigation concerning the contract NO MATTER WHO IS IN VIOLATION!

It is insane that anyone would sign a deal like this, but hundreds do. That essentially gives the Dickey's free reign to violate any part of the deal they want because their response is, "go ahead, sue us...YOU will pay OUR attorney's fees!"

Can you imagine Emmis trying this stunt?

Or Bonneville?

Or Cox?

Not on your life. The good operators are people friendly.

More Time Out of Work

This former Cumulus manager writes:

“Apparently some of those in certain markets who were still employed with (Cumulus) and already had N/C (non-competes) with (Cumulus), didn't seriously mind signing a new non-compete.

Oooops! They should have read the fine print! Their old N/C were 6 months, the new expanded ones are for 12 months. . . after severance”.

One Man Radio Station

I know of a market manager who was promoted from General Sales Manager with a pay cut by one radio operator.

He then lost his sales manager and was not allowed to hire another one.

I’m not making this up.

He also handles all the major agency accounts for his cluster, runs promotions, does sales training (or at least what the company tries to pass off as sales training) and produces local commercials with no production department (cut backs, remember).

Did I mention that I am not making this up?

The market manager is still working for the company but I can give you a hint, the company name starts with a “C” and he is having his nineteenth nervous breakdown.

Can’t say his name because they may retaliate by giving him another job – at an additional pay cut.

Hey FCC, Here’s Your Local Radio!

From the lips of a repeater reporter to your ears:

“Living 55 miles north of NYC in Pound Ridge (No. Westchester County) NY, I listen to WINE, 940 am Danbury, Connecticut between 10 am & noon daily for the Colin Cowherd program until it gets picked up by 1050 WEPN, ESPN’s NYC affiliate. For the last six months or so management must be dealing with a grievance against the squirrel that runs the treadmill that powers the transmitter as about once a week there’s no signal.

Zip. Zero. Just a carrier.

This may last as long as an hour or more…

Even when they’re on, it’s a joke.

Every other break features a promo trampling all over a commercial spot or another promo. And it goes on so long that it’s obvious that there’s no one is monitoring the station.

Last week at the end of a stop-set a music vocal that was demonstrably louder than Colin played for a ½ minute or more before it finally ran out.

The idea that WINE might advise So. Western Connecticut listeners of the monumental snow storm that was imminent never seemed to pass management filters”.

It may all come out as right-sizing in the press, but the real story is that radio has been severely compromised by cutbacks that cover up managements inability to run the business.

I get it that some consolidators want to run cheap national programming in lieu of live local radio. They are misguided.

But I don't get why these same radio companies are so mean to the employees who know more about running a radio operations than they do.

Oh, I get it.

That's it!

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The Price of Stealing Music (When Caught) Is Coming Down

I’ve been saying for a long time now that the record labels through its lobby group RIAA should back off of trying to win lawsuits against consumers for stealing music.

I’ve even said that maybe the labels should pay consumers to steal it, spread it virally for them without any further expense to the labels and make them money.

After all, much of the credible research on music piracy shows that filesharing does not have the deleterious effect on selling music that the labels claim.

Actually, the labels are the main reason they are losing money.

Their misguided mergers, denial regarding the digital age and penchant for maintaining the status quo by suing the pants off of everyone they can.

So, we know there are many cases out there in the court systems of this country in which the RIAA is trying to win or uphold large penalties for stealing even a little bit of music.

That will set a good example for filesharers, they argue.

Keep in mind that the music industry has had no reliable way of battening down the Internet to prevent illegal filesharing.

The most recent outrage has occurred in Texas.

And while 22-year old Whitney Harper of San Antonio was ordered to pay $27,750 to five labels for stealing 37 songs, the good news is that the RIAA’s war on teenagers, kids, parents and dead people is actually blowing up in their faces.

In the Harper case, that means each stolen song was only worth $750 per song – a lot for a young lady just graduating from college, but not the mega sums that the labels have been going after.

And each appeal that follows – and they always do – sets the labels up for reducing the penalty for theft even further.

The argument is being made in other cases now before the courts that the real penalty should be the price of the stolen digital file – 99 cents on the iTunes store or less elsewhere.

Whether that happens or not, the labels are caught in their own quicksand.

The RIAA announced it would not file any further lawsuits but that they wanted to clean up the cases that were out there -- again, with the obvious purpose of setting an example.

They just couldn’t pull up stakes, retreat and declare victory like every losing army in the world does when they discover that conflict doesn’t pay.

Because winning lawsuits in music piracy trials apparently doesn’t pay.

The Jammie Thomas-Rasset case and another one in Boston are high profile David vs. Goliath suits that are on appeal.

Whitney Harper, who downloaded the music as a teenager off of Kazaa, isn’t being cut a break because of her youthful indiscretion. The labels want blood. After all, she is their prime target – a young consumer.

So Harper’s lawyers are arguing that the total cost of paying for her mistake could exceed $40,000 and force a young person just starting out to declare bankruptcy out of the box. They even say she can’t get a job because of the publicity.

And that’s where Whitney Harper has so much in common with her enemies – the labels.

They, too, are on the brink of bankruptcy.

Self-inflicted wounds that were not necessary and that will continue to cause bleeding at a time when the labels have yet to figure out a digital strategy.

No, I’m wrong.

The labels have a digital strategy.

Sue file sharers who tend to be young people.

Try to get more royalties from the radio stations that publicize their music for free at no cost to the labels whatsoever.

Holding back the growth of Internet streamers by waging a senseless war to saddle this young industry with royalty rates so high streamers cannot afford to be in business.

In all of this, record labels insist they are trying to teach music pirates who rob starving artists of royalties a lesson.

What’s missed is that the labels are apparently not learning an even more important lesson.

Keep making a federal case out of how much every stolen download is worth and you may discover for legal purposes at least music is worth less than a dollar -- at the most -- the cost of a digital download.

And for everybody else, it's free.

The RIAA royalty lawsuits haven't stopped filesharing. Hasn't even made a dent in piracy. And now adhering to a tactic of retribution is forcing courts to decide what is a stolen song actually worth.

Labels shouldn't go there.

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Radio Is In Play For Gordon Gekko

“The richest one percent of this country owns half our country's wealth, five trillion dollars.

One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation.

It's bullshit.

You got ninety percent of the American public out there with little or no net worth. I create nothing. I own.

We make the rules, pal”. -- Gordon Gekko.

Over the weekend I re-watched Wall Street for a little escapism -- the Oliver Stone 80’s movie starring Michael Douglas and Charlie Sheen.

This diatribe (above) by Douglas playing Gordon Gekko, the corrupt and heartless Wall Street speculator kind of reminded me of the radio industry.

So much for escaping the daily reminders of a radio industry destroyed at the hands of Wall Street greed.

But there it was.

On the screen.

Less than ten years after the movie debuted, radio consolidation began. What many thought was just a figment of Stone’s imagination actually predicted the mess that was to follow for the country and for the media industry.

Twenty-three years later, look what we're left with. Wall Street -- the movie -- saw it all coming.

You don't have to go any further than Gekko’s observations to see what greed has done.

“The richest one percent of this country owns half our country's wealth, five trillion dollars”.

True in the media business although the numbers are different. Lew Dickey, Sr. passed the empire along to his Ivy League sons without a radio pedigree. Lowry Mays handed his family a full-functioning radio company for them to ruin. Neither knew how to run a single radio station let alone the largest group in the world.

“One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation”.

Many of the hard working owners/entrepreneurs cashed out when the money got too crazy to turn down. Then there are the Mays. The Dickeys. The other well-healed investors who could sell their soul to Wall Street for high interest financing.

Let’s go back to “…idiot sons”

I'm just sayin'.

Gekko added,

“We make the rules, pal”.

Have you seen anything in the radio industry that contradicts Gordon Gekko here?

Clear Channel brags about an eight percent loss as compared to higher previous quarterly losses. All due to cost-cutting, career assassinations, repeater radio and selling ads with a smaller staff as if advertising was a simple commodity which, as a matter of it, it has become.

“…We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it”.

My God, Gekko is right!

Haven’t you wondered many times over how a robust industry like radio could be hijacked by a bunch of takeover artists who care not one iota for the employees, the listeners, the advertisers – anyone.

How did they do it?

Gekko talking to his protégée Bud Fox (Charlie Sheen) offers up how they did it:

“Now you're not naive enough to think we're living in a democracy, are you buddy? It's the free market. And you're a part of it. You've got that killer instinct. Stick around pal, I've still got a lot to teach you”.

And that’s why you see mini-Gekkos slithering about the industry trying to be the Wall Street bad guy of their dreams. Radio has not only gone off the track, so has capitalism. The economy is in bad shape when you realize that not even the federal government can (or will) reign in the banks and Gekkos who put greed ahead of everything else.

But here is the essence of what’s wrong with the radio industry according to Gordon Gekko:

“It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another”.

And it all begins to make sense.

1. Acquiring radio listeners is now irrelevant – People Meter metrics representing ears that hear a coded radio signal is enough because being number one is no longer a function of ratings (or of billing, for that matter). It is being the biggest, baddest equity owner in the sector.

2. Firing people is standard operating procedure even when these talented people win ratings that can be turned into revenue (see number one). As in the movie, Wall Street, where Gekko moved to buy Fox’s father’s airline and ruin it to get cost cuts. Sound familiar?

3. Bankruptcy is only a dirty word to the uninitiated. To equity holders it is sop. The beginning, not the end. Good can come from bankruptcy for greedy owners because it is the “nevermind” of financing. It locks in the same management (pre-packaged bankruptcy) and allows equity holders to rehire the culprits that are made in their image who have wrecked the business.

4. The commodity market is an invention of Wall Street so don’t be so surprised that turning radio commercials into pork bellies with Home Depot deciding what it will pay for these commodities isn’t exactly their game plan.

In a plea to the shareholders of a fictional corporation (Teldar Paper), Gekko, the takeover artist he is, inadvertently describes the radio industry precisely:

“I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good.

Greed is right, greed works.

Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.

Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.

And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much”.

It hits all too close to home.

Wall Street II (the sequel) is due to be released by Stone with Douglas again in the starring role of Gordon Gekko in a post-Bernie Madoff world, but I’m not that anxious to see it.

I already know the ending.

Just look at radio.

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Why!?

I read this (admiring) description by Kyle Gann of a piece of contemporary music recently - a string quartet written in 1984 by Ben Johnston, which has never been played due to the almost insurmountable difficulties of performing it - here's a description of it:

If you know much about Ben's Third Quartet, you know it works its way measure by measure through a 53-note microtonal scale. The finale of the Seventh is built on a similar plan, but the structural tone row consists of 176 pitches - all different, 176 pitches within one octave, heard in the viola on each successive downbeat. Many other notes are heard in the other instruments whose harmonies link each note to the next, and Tim tells me that altogether there are more than 1200 discrete pitches in the movement - more than one per cent, five times as many as most people can perceive.

Mr. Gann goes on to describe how one Timothy Ernest Johnson of Roosevelt U. (the Tim referred to in the previous quote), had written his doctoral thesis on this quartet and delivered a paper on the subject to a Microtonal Conference. Here's a description of part of the paper:

Tim demonstrated how the players are supposed to proceed from the opening C to the subsequent D7bv-, a pitch ratio of 896/891. The violist is tasked to move upward from this C and come back down on a pitch 9.7 cents higher - just under one tenth of a half-step - than she started on. At the downbeat of the next measure, the violist lands on Dbb--, pitch ratio 2048/2025 - another ten cents higher. And so on for another 175 measures until the viola ends up traversing the octave and ends at C again. A good half of Tim's paper was spent talking us through the performance challenges of the first two measures.

So, a piece that can't be played, and even if it could be played most people couldn't perceive the pitches. Sounds like a great night out doesn't it? Yet despite the fact that it can't be played and most people can't hear it, guys do doctoral theses on it and deliver papers to others similarly interested. What is the point of this music? It certainly isn't written for the same reason most music is written - to be performed and listened to, by people who don't have a PhD..................

Contemporary composed music has long been accused of this kind of thing - composers writing music for each other and in order to fulfill some kind self-perpetuating composing/academic paper delivering world - for a long time. I'm very wary of this kind of accusation until I've heard the music, but in this case since it's not possible to hear the music I have to ask - WHY!? These guys really are writing for each other and nobody else

Pink Floyd Hits The Wall Over Downloads

Did you notice the hypocrisy in the recent Pink Floyd court victory over their record label EMI preventing the company from selling single downloads on the Internet for their concept albums?

Interesting because most acts produce music cuts that are easy to sell as singles.

Pink Floyd, known for their different approach to creating record albums, seems to have won a victory of dubious value.

There was a judgment in the case which was heard in British court but news reports say that part of the judgment was kept secret. Apparently negotiations are ongoing between the group and the label.

It’s all more bad news for EMI, the struggling label that is either on its way to bankruptcy or a merger with Warner, two lousy options. EMI is running up against its loan covenants with an ice cold hand in the music business.

And now this.

Pink Floyd has been with EMI for over 40 years and its catalog is second only to The Beatles in sales.

Everyone seems to want to get off this sinking EMI ship.

Queen and Pink Floyd are reportedly negotiating with other labels. The Stones and Radiohead are already gone.

The dark side of Pink Floyd’s move, if I may put it that way, is that the argument that they want to “preserve the artistic integrity of the albums” is a bit suspect.

Of course, they want to.

But suing the label at this late date?

EMI wanted to unbundle the artistic work and sell off the individual tracks.

The judge in the case looked to a clause in the EMI/Pink Floyd contract, drawn up more than a decade ago to “preserve the artistic integrity of the albums” as the foundation upon which to arrive at the judgment.

According to an account in The New York Times, “Pink Floyd alleged that EMI had allowed online downloads from the albums and parts of tracks to be used as ringtones for mobile phones”.

The judge ordered EMI to pay Pink Floyd’s costs in the case, estimated at $90,000, and refused to hear an appeal.

Allowing that artists want to preserve their creative works and not have them chopped up into cuts to be sold on iTunes, there is more to this story.

Legal downloading has been around for a long time now.

Why is this group suddenly looking to make an issue of it? On the other hand, EMI has also known that digital sales are increasingly important so why does the matter have to wind up in court?

I can guarantee you Pink Floyd’s next label will require a digital music clause in their contract. They have to or they are signing a dinosaur if they expect to get a return on their investment with CD sales alone.

The dysfunctional families we have come to know as the record industry may have been able to get away with all this push and shove in the past, but not now in the age of digital music.

Maybe the labels are right to look to cloud services for their future.

Apple surely will modernize iTunes to offer all the music you ever wanted for a monthly rental fee. They may be able to carry it off. And then again, they may not.

Both artists and labels (or virtual label aggregators like Apple) will have to deal with realities of today’s music industry that can’t be ignored.

For example:

1. Access will be the key attraction, not ownership so much as availability. That is, cloud services (such as Lala recently purchased by Apple) may make it possible for you to hear Pink Floyd or Queen anytime, anywhere for one monthly price without waiting for all your songs to download. No worries about how long the cuts are or concerns about artist issues.

2. Cloud services could finally put an end to the argument about illegal filesharing because for those who are willing to pay a monthly music fee, all the music made is out there in theory for them to sample.

3. Don’t bet on any of this. Consumers have long been wooed by plans that offer all the music you can eat for a monthly price. They have voted with their dollars – no.

4. Consumers seem to want what they want when they want it. In other words, if you allow for the free exchange and transmission of music without labeling the people doing it as pirates, you may yet have the best model going forward. In fact, it works now. You hear something on the radio, or that has been shared by one person with others and that’s how you create sales. Stifling the viral nature of the Internet is what is actually killing digital sales.

5. Consumers buy what they want to own as they always have and possibly always will.

6. Once they own it, consumers may be interested in immediate downloading capability. Enter -- the cloud.

So beware of the cloud as an all you can eat monthly service. It may be an easy solution for labels and artists but with the mobile Internet coming of age, the best approach may actually be to think of filesharing the way labels used to think of radio – previewing and exposing music and artists to potential consumers.

Except with radio on the decline, the new music radio may yet be – “illegal” filesharing.

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