Radio Is Being PUNK’D by Lew Dickey, Jr.

Lew Dickey can fool the radio industry into thinking he can buy Citadel or Lincoln Financial, but apparently he can’t fool The Wall Street Journal.

The faux fund touted by Cumulus CEO Lew Dicky with Crestview, the company that helped it get upside down by acquiring Susquehanna stations, apparently is bankrupt before it gets started.

According to a Wall Street Journal blog:

"The debt financing that is expected to be half of Cumulus Radio Investors’ war chest has not been officially raised yet but Dickey and (Crestview Partner Jeffrey) Marcus said they have gotten strong interest from banks. There is hard and fast timeline for when Cumulus Radio Investors will start buying up stations."

That’s right -- “strong” interest.

No money.

Notice how there has not been one followup public announcement that anyone at all is putting their investment capital at risk with this strange "investment" partnership?

But thank you all the same.

No hard and fast timeline for when the new fund will start terrorizing the radio industry by buying distressed properties.

Let me ask you this.

Would you tell the world you started a new business before you had any financial backing?

Of course you would -- if the venture is more about show than dough as I believe is the case with Dickey.

Again, it’s Tricky Dickey at his best.

Look, he can’t buy Citadel on that money -- even the $1 billion he alludes to in his fantasy announcement.

Can’t buy Lincoln Financial at a distress sale because their radio properties aren’t distressed.

Could he even buy Regent now that they are out of bankruptcy?

The point is moot.

Cumulus can buy a few things here and there from desperate sellers, but when the trade press makes it seem like this big bad wolf is out there stalking Emmis, Citadel, Lincoln Financial and others, they are missing the point.

You’re being punk’d by Lew Dickey, Jr.

He’s not putting any of his money into this venture. Just hoping to make fees as a radio management company (Stop that laughing right this minute!).

And Crestview hasn’t opened its wallet yet.

Don’t hold your breath.

Mr. Dickey, tear down this wall.

I mean, Mr. Dickey, show me the money.

Debt financing is non-existent for solvent companies begging the question why would Cumulus/Crestview get any?

According to a financial observer:

“They are hoping to 'sniff out' money that might be interested in the sector. At some point, they tell them things are so good in radio, going forward, nobody will sell, but maybe they can find room within their own portfolio. I call that, 'syndicating their losses'. That is exactly what Forstmann did to the ABC holders, in the famous 'Morris Trust', where, thinking they had stuck Citadel with aging radio assets, they ended up owning part of his f****d up company (and by extension, he had less)”.

The radio industry is digging out of its doldrums as the economy improves.

Radio stocks -- even Cumulus -- are reflecting it and there’s nothing surprising about that.

My friend, the late Keith Fawcett who worked for Merrill Lynch back in the glory days of consolidation, used to get on my case when I knocked satellite radio as the second coming of terrestrial radio in Inside Radio. I used to tell Keith that I couldn’t imagine how those stocks were propped up so high when the two monopoly satellite companies hadn’t even launched their first satellite yet.

Then, it hit me.

Today, the Dow is over 11,000.

Unemployment is still rampant with hopes that we’ve seen the worst.

But Wall Street is still broken and no one in Washington in either political party seems to know how to rein in those greedy bastards -- I’m talking about vulture capitalists and hedge funds, banks -- you name them.

The real estate market is still for spit.

Banks have money to loan and won’t loan it.

So, tell me again, what has changed since the start of the recession?

Well, a lot has -- but nothing Wall Street or investment banks would care about.

Apple sat out the recession and grew its company as if it were boom times. 
 Apple is poised to become a major player in mobile ad sales through its app revenue generator iAds. In fact sometimes, Apple looks like it wants to be the Internet.

The next generation is graduating, finding jobs, getting married and having children while we are playing around with the thought that once things get better everything will go back to the way it was.

Radio saw declines in listeners, advertisers and interactive businesses started taking money away from traditional media even during the recession.

Keith was right.

Stocks grow based on futures not on performance. That’s why when Apple is predicted to have higher revenue than anticipated, the share price often goes down upon news that it lived up to its promises -- and as an Apple shareholder, I can confirm that.

Wall Street lives on speculation.

Fantasy.

The future.

Which is why I say, be afraid when Lew Dickey acts like he has acquisition money in a stash somewhere.

Nothing has changed that is good for radio. When Jim Cramer does this moronic pitch for an industry he trashed not long ago and never even mentions the threat from new media as a disincentive to buy radio stocks, you know these thieves are back! (Warning: don’t listen to this Cramer rant on a full stomach).

More competitors.

More consumers spending time on mobile devices, iPhones and iPads.

Advertisers already started leaving for new media during the recession.

Since radio is no longer a company you keep (to borrow a phrase from New York Life), you buy it on future speculation fueled by greedy bastards who don’t care about shareholder value.

And we all know what happened when investors and buyers got wrapped up in the last big radio revolution.

The industry collapsed.

Shareholders found their investments worth nothing or pennies on the dollar.

My message as radio stocks begin to recover from record lows is:

When Cumulus does it impression of Clear Channel, they are messing with you.

The radio companies that will actually perform well over the next 12 to 24 months will speak softly and broadcast locally from a big stick.

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Radio's New Contesting Conundrum

The recession must officially be over.

CBS is bringing back contesting to its radio stations in 35 cities nationwide. That's a luxury radio operators could not afford when advertising sales were tanking.

Unfortunately, the contesting that is coming back is national in scope. That is -- listeners in 35 markets are competing for the same prizes. In the CBS example, $250,000 in prizes.

Clear Channel underwhelmed the industry before the recession by engineering national contests and I'm not so sure they weren't a little bit sneaky about the fact that local listeners were competing with listeners in other Clear Channel markets. I'm sure they did everything legal said to do, but perception that the contests remained local must have persisted.

CBS also has it's t's crossed and i's dotted with rules only a lawyer could love. Tom Taylor featured the WUSN, Chicago contest rules yesterday. It's all out there. Take a look here.

Thanks to technology, CBS can call this one big contest different names in different markets. One small step for digital radio, one giant leap for confusion.

Streaming listeners may be at a disadvantage -- if they are contest participators. Just turn to paragraph 3d in the rules and see "Due to delays in the WUSN's streaming broadcast, listeners to the online stream may not be able to participate in any WUSN-FM conducted on-air contests."

And there has been some discussion that once and for all, radio can learn -- thanks to People Meter technology -- whether contesting works or doesn't.

Let me address that now -- before the results come in.

PPM doesn't even answer the question are the listeners listening let alone are they interested in stations that offer contests. So in a PPM world, expect the conclusion to be just about anything radio CEOs want it to be.

One thing is for sure -- big national companies are trying to prime the PPM pump and national contesting is just another way of doing do.

In prehistoric days, almost all PDs would admit -- a very small percentage of listeners actually participate in radio contests. However, more listeners enjoy just hearing them and it is hard to imagine that they make the decision of which station to listen to based on contesting. Usually it's the music, a song at the moment their hand is on seek and search, a personality or service like news or talk.

So, what's up with the rebirth of radio contesting?

1. Radio contests when done right infuse excitement in the station and it's personalities -- excitement and fun -- and that combination may be the real payoff. If so, the big groups may be right in assuming that listeners will not care about their diminished chances of actually winning something. After all, popular lotteries are almost impossible to win -- even though smaller payouts are available.

2. National radio groups forget that the best contests come from local program directors. Sorry for using that word local again but national companies are local only to the extent that they let their stations make local decisions. Or, as I like to say, lots of luck with that.

3. Most radio contests are stupid and ineffective. They have been based on what prizes are available instead of desirability. In the 60's a cash giveaway in an era that preceded legal casinos, lotteries and unprecedented consumer spending could influence a Hooper Rating (telephone recall) almost instantly. Some contests get noticed. Most are worth forgetting.

4. Institutionalized contesting such as "Cash Call" -- where the contest is always on, the jackpot goes up every hour and the pot got bigger during rating periods helped make an already good station better. In Philly, my good friend Dick Carr then VP/GM of Metromedia's WIP owned the "Cash Call" franchise of his adult music, news and personality station. When competitor WPEN hired some of WIP's top personalities away, ran bigger jackpot contests and played music that the same audience would like -- WIP continued to dominate. True WIP had a much better signal. But Carr realized that WIP got top ratings for a number of related things -- Philadelphia Eagles football games being one. I'm saying, contests in and of themselves -- even good ones with big prizes and running forever -- don't make a difference by themselves.

5. My belief is that people want fantasy in their contests. I programmed a station that gave away jobs for three months -- in a recession. But I guarantee you the music was right on target.

6. If radio contests are going to be born again -- please let's not do trips, cash prizes that are unwinable, concerts, tickets, electronics. I mean, if radio is going to go down that road -- what is the purpose? How about an adult leaning station paying off college loans -- one per month (not a national contest, please). Christmas Wish was and is such a great contest because it involves fantasy and making dreams come true. Please tell me you're not going to ruin this local favorite by making it national. How about Lady Antebellum at your graduation party and then you get to go party with the group? Or your own reality show featured on the stations video stream. Bobby Flay at your Fourth of July cookout. Shoe of the month club for you and 50 of your friends would sound good on a female oriented adult station. I tired to give away a six-pack of new cars to one winner along with other outrageous prizes like use of a private jet for one year. I almost got my butt fired when the owner heard a listener win the average American income for a year -- in advance. Listeners loved the excitement.

7. Learn from Jack McCoy. Many of my readers may not know the name. McCoy created the most ripped off contest in radio at KCBQ in San Diego -- "The Last Contest" -- that not only gave away dazzling prizes but did it with long promos and spine tingling production. The promos were better than records. In truth, few of the prizes were actually given away at all -- but what was given away went to local listeners. The expense was not amortized over multiple markets. I'm certainly not saying turn the clock back and do old time radio. I am saying let programmers create the next groundbreaking, creative contest. In fact, encourage them to do so. Listen to the flavor of a creative genius at work with these promos for "The Last Contest" keeping in mind it was decades ago -- listen here.

So here we are.

The homogenized terrestrial radio business is getting ready to do all the right things the wrong way in my opinion.

How can this be?

Easy.

An industry that believes that People Meter really reflects listening instead of being a drive-by technology that picks up devices that "hear" encoded signals is likely to also convince itself that national contesting will drive PPM ratings.

To me, two million PPM cume is not two million actual "listeners" -- not even close.

PPM started out okay but it has become radio's toy.

It cooperates fully with the consolidated mindset and can be everything to everyone.

But here's an alternative to nationalizing radio contests. Get to know your listeners again.

They don't care about contests anymore -- maybe never cared about most of them in the past. They are their own djs in a sense. Hear more new music in places other than a radio than every before.

They are engaged in instant communication with others through texting, social networking and the Internet.

They've grown up and grown past a radio mindset that is hell bent on using old school tricks in a new world marketplace.

To be honest, I'd take the $250,000 and give it to Jacobs, Edison, Harker, Ramsey, Van Dyke and a bunch of other good radio researchers (forgive me for not naming all of them) and say -- "help to teach me about consumers who listen to radio and also want new radio content on digital devices.

Or brainstorm with your staff.

How about a contest that encourages radio's most creative people to come up with solutions that listeners actually want?

Now that's an investment that is guaranteed to pay off with increasing listening.

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Rethinking Illegal File Sharing

About the only media company that cannot be robbed blind by cyberpirates is Apple.

Think about it.

It’s damn hard to pirate anything from the iTunes store -- songs, apps, books, software.

That is because Apple locked down the exit doors of the Internet and made it virtually impossible for people to steal from Steve Jobs.

Not so with record labels whose only security is when they sell songs through iTunes and other protected sites. Meanwhile, everything else is available online for the low, low price of -- free.

In Europe, especially France, we keep hearing of draconian steps being taken to stop the theft of intellectual property. European countries are having various battles to win this control but nothing done to date has put an end to sharing what can be made freely available on the Internet.

Putting ethical issues aside -- and lots of consumers easily do that -- you can understand two things.

One, it is difficult to batten down the hatches to prevent cyber theft.

Two, theft to you may be promotion to someone else as there is mounting evidence that free exposure even through file sharing and/or free plays actually sells music for record labels.

In Spain recently the courts have dealt a blow to companies trying to stop file sharing.

The Barcelona Reporter describes the case that went to the judge:

“Torrentfreak, the ever-vigilant blog focusing on BitTorrent and file-sharing issues, points to a recent lawsuit in Spain that ended quite favorably for both P2P users and link sites and dedicated search engines, and that found both use-cases to be perfectly legal in the country.

The subject of the lawsuit isn't particularly important in the grand scheme of things. A fairly small eDonkey and BitTorrent link site called elrincondejesus.com was sued almost a year ago by a local music industry group, SGAE (Sociedad General de Autores y Editores), for alleged copyright infringement on the site.

The group initially tried to get a court injunction on the site, to take it offline before a full hearing of the case, but the request was denied by the presiding judge, Raul N. García Orejudo, claiming that P2P networks by themselves didn't violate copyright law”.

The judge ruled that as long as there were no financial benefits to sharing music, file sharing was, indeed, legal.

The judge may have also been persuaded by the fact that the defendants did not have advertising in their sights as a direct link to revenue.

The judge also proclaims individual users downloading copyrighted material from peer-to-peer networks without a profit motive are doing so legally in Spain.

The record industry had a chance to nip file sharing in the bud back when Napster came onto the scene.

An interview on NPR not too long ago featured former RIAA President Hilary Rosen admitting to the coolness of file sharing. She tells the story of what happened when record execs met to try Napster and discusses the missed opportunities for record labels that could have embraced file sharing -- or at least had a say in how it developed. (The interesting transcript is linked here).

The gist of the interview which also includes other music industry types is that no one knows what the future will bring -- certainly not the labels.

But I’d like to take a swipe at it, if you will:

Spotify (the European company) or Rhapsody-type services will not make it here if Apple offers a “cloud” option that allows consumers to access their music on mobile devices anywhere and everywhere.

A subscription-based plan by Apple (or should I say, app-based plan) that makes a listener's music libraries available without waiting for downloads on the “cloud” may very well work.

A new form of music discovery also available on the “cloud” with instant access could compete with traditional terrestrial radio if Apple makes a better deal with the labels than stations, streamers and satellite radio now has for royalty payments.

Unlicensed music will thrive five or more years from now.

The record labels were the biggest disincentive for new acts in the past when they controlled the recording studios, pressing plants and access to the radio airplay. Now that these things are no longer necessary, any artist can produce a song and get exposure. Terrestrial stations would be wise to get in on the unlicensed music craze especially with the music industry trying to win Congressional repeal of its performance royalty exemption.

The thing that will save the music industry is not obsessing over file sharing, Apple’s increasing dominance or buying music to feed starving musicians.

That old argument that file sharing hurts sales is -- well, unbelievable and unsubstantiated as new research continues to disprove this emotion-charged argument. Lady Gaga is disproving that misconception with just about everything she gives away.

The only sure way to save the music industry is to make better music and get as much democratic exposure as the Internet and mobile revolution allows.

File sharing is not going anywhere and neither is a record label that doesn’t embrace it.

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The Four Seasons of Media Consolidation

Some of my readers have suggested workarounds to the Ticketmaster/Live Nation monopoly that I wrote about yesterday.

You know, the one that promises higher prices for concert ticket buyers.

The Grateful Dead concept of selling directly to fans.

The growth of entrepreneurial businesses that barter tickets in a fair marketplace like Brown Paper Tickets.

Others suggested Amazon or even iTunes as alternatives to Ticketmaster someday.

There is no shortage of good ideas when those ideas come from people who actually know what they are talking about, but the way our entertainment business model works right now -- the CEOs and their bankers get to play with the monopoly money.

Take what happened yesterday when Emmis CEO Jeff Smulyan put together a $90 million buyout to take the company private. Alden Global Capital will buy all the outstanding Emmis shares for what amounts to $2.40 a share and Smulyan gets his company back.

You may remember that Jeff Smulyan was among the first to read the winds of change when he tried unsuccessfully several times to take Emmis private. The shareholders were always the problem. Emmis just never worked as a public venture.

But then again Emmis went public to get in on the Wall Street lending giveaway that enabled the other big consolidators to acquire stations once consolidation was approved. Unfortunately, Emmis never got big enough nor was it willing to be acquired and you saw how that turned out.

Radio is becoming a two-model business.

Consolidator vs. operator.

On one side the Clear Channels, Citadels and Cumulus-type consolidators who run on pure loan money and that must either grow or sell to have a reason for being. They are not interested in being broadcasters. By now everyone knows that what goes on-the-air is the least important component for these types of operators.

We know consolidators fire local personalities no matter how successful or profitable and keep only the "brands" that they can pipe to other stations in different cities to allow for more firings and lower costs.

They reward success by giving surviving managers even more responsibility guaranteeing that they cannot continue to produce excellence. Apple's Steve Jobs would not take the executive in charge of his computer division and say, here take my iPod and iTunes initiatives, too. And then if somehow that person succeeded, could you imagine Jobs giving that same person a third responsibility -- say, to oversee their retail stores.

Radio does this all the time.

Piling on work because the end result doesn't matter.

Program directors are a thing of the past with consolidators. Content manager is the new name that at least admits to the change in job description -- to channel national programs to various local destinations.

Bain Capital, one of the major investors (along with Thomas H. Lee Partners) that overpaid $20 billion for Clear Channel shows us how they are hell bent to operate as recently as this past weekend.

News Blues, a paid subscriber site, reports:

"The Weather Channel was in full balls-to-the-wall storm coverage mode Saturday as the nation's Southeast lit up with severe weather. But Friday night, when nearly a half-dozen tornado watches were in effect, and parts of Mississippi were being ravaged by storms, TWC aired a movie: “The Avengers.”

Sound a bit like consolidated radio? You know, the kind owned by Lee and Bain and other "vulture" capitalists.

As was pointed out in News Blues, "The Weather Channel partners Bain Capital and Blackstone Group will never justify the enormous $3.5 billion price tag they paid for TWC in July 2008 at the height of acquisition market".

They are all about profits.

Mobile apps, inter-connectivity and Internet distribution models.

Profit first.

Forget the tornadoes.

The model is right there -- Clear Channel's co-owner is doing the same thing at The Weather Channel.

Fresh off of $1.3 billion in refinanced debt.

This is getting too easy for us to understand, isn't it?

The only climate The Weather Channel cares about is the business climate.

I mention all of this because the radio and music businesses have always operated in their own worlds. If you've worked in either (or both), you know that reality never meant anything in these businesses.

Radio set its own rules.

Always dictated what the audience would hear, how advertisers would support them. They don't like being shoved around by the Internet, Apple, Facebook or a bunch of kids right out of Pirates of the Caribbean.

And, the music industry still doesn't acknowledge the real world.

Napster was an asterisk in their history.

They can sue fans for stealing.

Lose money.

Watch consumers prefer digital downloads to plastic CDs.

And it remains business as usual.

They, too, are doomed.

That's right -- the CEOs who take their orders from equity owners -- are doomed because they are operating in the make believe financial world that they live in and are not capable of acknowledging the real world where it takes innovation to grow revenue.

So, if you're an innovator or have just a little innovation in you, fired from a media job you did well -- the real financial turnaround is going to happen for your career.

Legal monopolies are not a business model in a world that has changed.

Financing and refinancing while content excellence suffers is a short-term and foolish strategic move -- not an adequate five-year plan.

There are no viable five-year plans in the entertainment business because these industries are already ten to 15 years behind the consumer and their preferred technologies.

So here's my take on the economic recovery that is coming.

Keep in mind Citadel, a company in bankruptcy, is bragging about a 4% increase in revenue over the first quarter of 2009. Also keep in mind -- that is a pretty low standard to meet. Q1 of 2009 was the absolute bottom of the media economy and these geniuses think a 4% hike a year later is a recovery. Hey, it's better than losing money, I grant you.

A growth business -- never.

So here we go:

1. Equity holders must continue to consolidate or liquidate -- collecting fees all along the way -- to remain viable.

2. The longer they hold their assets, the more they run into their loan covenants that will require the purchase of more expensive debt. So watch things shake out in the year ahead.

3. For those of you who want to buy radio properties when the prices come down, remember that even Larry Wilson isn't buying now. And that the properties may still be sound but consolidators kind of ran down the neighborhood if you know what I mean. In other words, they've devalued the very radio stations they overpaid for making it hard on competent owners who want to try their hand at good terrestrial radio.

4. Good operators like Bonneville, Cox, Lincoln Financial and others (usually smaller groups) will turn in excellent results because they have not devalued their properties even though they sell in a climate that has. However, these companies are like building Beverly Hills in downtown DC -- location, location, location.

5. There can be no growth business for the entertainment industry without an interactive digital strategy separate and apart from traditional broadcasting content. And it must be fully funded. No digital. No growth. No kidding.

6. The brain drain will start showing its effect on media companies that have neglected great over-the-air content and have failed to innovate new media platforms. Sorry, but they just can't keep firing assets and then declare they are hiring again for new needed media initiatives. The best people are going to stay away from operators like that.

So the reality is that media is just another microcosm of the new American business model.

Buy big.

Overpay.

Over-commit to debt.

Cut assets and costs.

Refinance again and again and hope the economy makes this model look good enough to -- resell.

At a profit.

Or at least for more fees.

I'm going to put it in writing -- years ahead of general knowledge -- that once everything has been bought, sold, and resold, there will be a need for new ventures.

That's why they call these vultures -- venture capitalists.

Sadly, they need more businesses to buy and ruin for fun and profit.

The necessary growth businesses will never rise up from the companies they bought or funded because that's not what equity owners are about.

For the growth businesses of the future, they will have to turn to the talent that has been shown the door or to the young people who cannot even get in the door.

The four seasons of consolidation are:

Spring -- rebirth and growth by entrepreneurs.

Summer -- the cornucopia of innovation with its abundant supply of revenues and rewards.

Fall -- The final harvest of new business growth.

Winter -- The coldest season of all -- not friendly to the seeds of new ideas and an atmosphere not conducive to growth.

In radio, television, print and music, we've just suffered through the worst media winter ever.

Spring has sprung.

Get planting seeds of innovation. Equity speculators have to eat.

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The Dead Nation/Ticketmaster Merger

You've got to read the article in yesterday's Sunday New York Times Business section on Irving Azoff and his consolidated Live Nation and Ticketmaster concert venue monopoly.

If you want to see once more what is wrong with the music industry, go right ahead. I just got angrier as I worked my way through the article.

I know you find more snakes in the music business than you do the Amazon rain forest, but the arrogance of these two companies is what burns me up.

Their business model is built on greed not innovation and greed will work while you have a monopoly but innovation is required to grow.

I don't know where you stand on government takeovers of things, but I am less concerned about that than I am about monopolies being formally approved by the government for the benefit of the few that end up screwing of consumers.

The 43-year old Live Nation CEO Michael Rapino rolled up his concert venue company (22,000 events a year/127 theaters/50 million concert goers) with the company fans love to hate -- Ticketmaster.

Hello, DOJ!

Well, it's done now and the 5-foot-3 62-year old Azoff lives up to his short man syndrome in the article where his "Irving Wins" t-shirts are a premonition of things to come.

Of course, Irving wins!

And Michael Rapino as well.

This is America where if you can make it to the top, you get government approval to not only screw your customers royally but -- and this is really important -- inadvertently screw the future of your industry.

I'm out ahead of this early but that's my prediction -- Live Nation/Ticketmaster will end up being a turkey.

As many of my young readers will tell you, baby boomer arrogance is nice for aging entertainment executives but they don't know jack about the music industry of tomorrow.

Azoff -- as he explains in the article -- thinks he can turn Ticketmaster into a one-stop merchandising store for artists that Live Nation features.

This brainstorm from a consumer-unfriendly company that heaps the following charges on, say, Lady Gaga tickets -- $2.50 as a "facility charge", $15.45 for a "convenience charge" (whose convenience?) and $2.50 if a concert-fan wants to print their ticket at home.

The promoters get some of this extra added profit refunded to them but most of the money stays with Azoff and partners.

Just exactly who I want to support.

I am a great believer in live music and all the many benefits that result from artists touring and performing in front of their public. But I have bad news for Azoff.

Have fun.

Things are changing.

The next generation is built around their cell phones and mobile devices. There is no doubt they would like to go to live venues to see their favorite artists today but they are also a generation that is all about diversity in musical genres.

If you're an artist and you're touring, guess which monopoly you'll be touring with -- Live Nation/Ticketmaster. That sounds like the road to real diversity to me (sarcasm intended).

The old music industry is in its sunset years.

That's why it lives off of catalog artists.

And fights digital growth.

Fails to see file sharing as the free promotion instead of piracy.

And why it is trying to tax the radio industry -- the people who made their artists, the ones that Azoff and Rapino are still getting rich off of.

The Times article is well done and it is really more like an obituary as I read it. More depressing than the Al Pacino Jack Kevorkian HBO special I watched over the weekend that makes you want to actually call Kevrokian.

The music industry of the future, as Azoff and Rapino know -- is not built around venues alone. You have to fill the venues.

For that you need radio right now and Internet, social networks in the future and, yes -- whether they believe it or not -- music file sharing as a promotional tool.

These clowns are running a closeout sale for the next five years or so -- and in my opinion pillaging the industry with their hammer hold on live events.

Ticketmaster by itself should have been shut down for its monopolistic tactics. Ask anyone at a live event what they think of Ticketmaster.

The future of the music industry, therefore, is music diversity.

That opposes where Azoff is going.

Mobile Internet.

Not to sell merch from an untrusted Ticketmaster franchise, but through social networking sites that feed the passion of fans -- your best asset going forward.

It is not about the arrogance of an industry giant and how many toys you die with (that's right, he said it in the piece) - it's about community, mobile access, fairness and the power of people who sell your products for you.

Apple gets away with charging aggressive prices and young people don't seem to complain after they've purchased their Apple devices. Maybe before they have the money to buy them, you'll hear some complaints (I am an Apple shareholder).

Consumer advocates quoted for the Ticketmaster story say "the sky will be the limit when it comes to fees" -- and that is true for the short haul.

Azoff, Rapino and the old titans of the music industry who have ruined it on its way down are so yesterday.

It sounds odd to hear someone say the biggest live venue monopoly in the world is so yesterday when they are just getting started hitting people up for more fees.

But you know what I'm getting to.

In a world that loves avatars, don't get so cocky that people will continue to overpay for a live performance.

In a world that sees thousands of fans at sporting events on their cell phones during the action, don't get so cocky that live events as they are today will always be around in the future.

Arrogance aside.

Beverly Hills bullshit forgiven.

No consolidated media merger has worked.

None.

And these consolidators can't see the future because they are about the here and now.

Because if you want a growth business, don't sell out to consolidators or they'll turn it into a pile of garbage -- after they've gotten rich many times along the way.

Look at radio consolidation.

To paraphrase Ronald Reagan, are you any better off today than you were before consolidation?

In radio?

In television?

In the music industry?

It seems all of our country is obsessed with consolidating companies that someone else built.

Now, it's time for the builders to come back and innovate new companies and in our space that means new media companies and music initiatives.

Ticketmaster/Live Nation is about the same old thing -- monopolizing music venues and high ticket prices.

That ship sailed with the Nina, Pinta and Santa Maria.

And I know my readers are a step ahead of this -- while music barons get rich in the near term, they will not be able to compete in the next space.

A venue is only a building or structure in which live entertainment is performed.

Filling it?

Better keep your eye on the next generation.

They know something that Irving Azoff doesn't.

Live Nation will one day be Dead Nation.

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Recording with Trilogue

Spent yesterday in the studio with my new improvising chamber trio Trilogue.This is a relatively new group but one that's already real fun to play with and one with great potential. In the trio I'm trying to find a vehicle that can combine compositional rigour with improvising spontaneity - so far so good!



I wrote a little blog about the recording and the band and posted it on my website along with a rough mix of one of the tracks from the recording. You can see it here here

Peter Drucker vs. Radio

My long-time friend, John Parikhal, was interviewed five years ago by Steve Rivers regarding the future of radio.

A number of years prior, I asked Parikhal to interview management guru Peter Drucker when he was a featured speaker at one of my management seminars. John was a long time Drucker fan because of his track record of brilliantly seeing the future.

I share this because in his Steve Rivers interview -- well before the current recession -- John believed what was about to happen to radio was predictable.

And it wasn't the economy that was suspect.

Here's what he said (and keep in mind this was in 2005):

RIVERS: Between now and 2010, what do you see as true "radio killers"?

PARIKHAL: The biggest killer of all will be current management--unless they stop dancing to Wall Street's whip, institute formal training and recruitment, start surrounding themselves with smart people who challenge them, create cultures of FORMAL innovation, and begin to get serious about spot loads. Radio can control this. They can't control Steve Jobs, the Internet or any of the other so-called killers.

RIVERS: What are your thoughts on today's radio, and what are the biggest problems facing radio in the next five years?

PARIKHAL: Radio's biggest long-term problem is simple and has very serious long-term consequences: It's not attracting talented people. It's driving them away. Business genius Peter Drucker has been right for 50 years about what happens to business. In his brilliant (and very practical) book "The Daily Drucker," he says, "the first sign of decline of an industry is loss of appeal to qualified, able and ambitious people". Unfortunately, in radio under its current model, people are a "cost center" instead of an asset--a short-term form of illogic that leads to mediocrity at best and unintentional sabotage at worst.

And why is this so critical now?

The recession is ending.

The economy is beginning to come back.

Radio ad sales are improving for the first time in years. But a lot has happened since 2005 that begs the question -- is the radio industry ready to become a growth business again?

Stations are a mere shadow of their former selves.

Morning talent fired -- some companies are even paying their talent's full salaries not to be on the air so the corporation can have an advantageous way to report their financials. It's insane.

Local radio has been depleted at best and eliminated in too many cases.

No one is home -- to put it bluntly.

Studios empty with one person wandering the hallways in between voice tracking assignments.

Never mind that radio CEOs show little interest in the digital future or finding ways to create content inspired by their radio brands for the Internet and mobile space. No radio company is spending even 3% of its annual operating budget on new media.

Have you seen Apple's stock lately? Through the roof. And not just lately -- during the recession Apple grew profits while other companies failed. The reason is because Apple used the past three years to cement itself as the new media leader in both consumer electronics and content distribution. Yet radio CEOs apparently think they don't need to be part of the new media revolution. (In the interest of full disclosure as I have said many times, I own Apple stock).

It's business as usual for radio CEOs.

And, unfortunately, as Parikhal predicted -- the downfall of the radio industry was never the economy (radio has weathered many recessions before). This time it was all about the industry's disregard for talent and managerial skill.

In essence -- it was not only as Peter Drucker said ("the first sign of decline of an industry is loss of appeal to qualified, able and ambitious people") but the systematic thinning of the ranks of existing talent in the name of cost-cutting.

As far as surrounding themselves with smart people who challenge them -- dream on.

Create cultures of formal innovation -- not in radio since 1996.

And begin to get serious about spot loads -- less is more failed and now that the economy is rebounding but stations cannot really charge advertisers the rates it deserves to charge, I am afraid more commercial clutter is in our future.

So here we are.

Recession easing up.

Advertisers increasing buys.

And what's left is depleted radio formats, nationally syndicated repeater radio and a non-local focus that makes radio seem like listeners and advertisers can live without it.

What is ominous is that the major operators who have long considered their employee assets as "cost centers" have nothing in the pipeline to reignite radio.

No one to show them the way to the digital future.

One national PD.

A few corporate managers.

In some cases CEOs who would never even be picked out of a lineup as good leaders -- especially in an economic recovery.

Cumulus had its multi-day managers meeting this past week in Atlanta and some attendees wrote to me with their comments.

Cumulus brought motivational speakers in who, I'm told, were enjoyed and appreciated. People like former NFL coach Dan Reeves.

But some observed that the motivational speakers seemed at odds with the message that management was sending -- that their company was going to be tightly controlled from headquarters.

Keep in mind that this is just one consolidator but the others are not much better.

Look at the comments from Cumulus employees:

On the speech by Eric Rhodes:

"Eric suggested we break the rules, not conform and don't worry about getting caught. He says true innovation in our industry has always come from the non conformists and rule breakers. I don't think Lew liked that part, since this whole conference is about conformity to Lews way of doing radio".

Bob McCurdy from Katz was next.

"Great speaker, great message. In summary and oversimplified review, bottom line is our ads suck and we need to invest more time and energy learning and developing strategy and creativity and compelling ads. He shared some great new and old tools that Katz has developed to help sell the story of radio.

Then two guys from the RAB got up, one spent 20 minutes talking about this great new revenue stream - co-op - and suggested radio stations are leaving millions on the table and the RAB was there to help us get it done!"

The assessment of the managers meeting?

"Other than McCurdy's intellectual and passionate presentation behind the scientific reasons our medium is so important and the need for immediate improvement, the day was useless".

After the earlier Dan Reeves talk -- one Cumulus manager in their infinite wisdom -- summed up what was wrong with the company.

"The coach talked about involving young people and getting buy in and participation. This came on the heels of Lew exclaiming that the management philosophy of hiring good people and letting them do their jobs is a failure. Lew says you have to create great systems and structures first then find good people to manage the system".

There it is.

In the words of a manager who received this message loud and clear from his CEO.

The management philosophy of hiring good people and letting them do their jobs is a failure.

You have to create great systems and structures first then find good people to manage the system.

But, I wonder -- who is developing "the system" if the task of managers is simply to carry out what someone else developed without "buy-in" or input.

This defies Peter Drucker.

My friends, as the economy picks up -- our own John Parikhal and Peter Drucker, the management expert who called it right for 50 years -- know more than Lew Dickey, John Hogan, Fagreed Suleman and their clones put together.

If radio wants to be a growth industry, it will have to get back to doing quality live and local radio.

CEOs will also have to deal with the fact that consumers will increasingly want their entertainment in a new form on mobile devices such as smart phones, iPods and iPads.

Radio needs to be a leader in generating new -- non terrestrial radio content -- at the same time it is reinvigorating live local programming.

But none of this can happen until the Wall Street infused radio industry stops looking at people as a "cost center" instead of a "profits center".

Greed is why CEOs miss this point and claim that everyone else just doesn't understand the business.

I think it's the other way around.

They don't understand the business and until they do -- recovery or not -- radio and radio's role in the mobile future --- will not be a growth industry.

It's sabotage -- pure and simple.

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The Radio Royalty Solution

House Speaker Nancy Pelosi has recently come out in favor of repealing radio's performance tax exemption.

No matter what you may personally think of Pelosi, she is very powerful and that delicate standoff in the House that slightly favors radio retaining its exemption is now in jeopardy.

I'll go a little further.

It's only a matter of a short time before radio will be paying more money to artists in addition to the fees it already pays ASCAP, BMI and SESAC without the current free pass.

As I've said many times before, this is unfortunate. The radio industry is single-handedly responsible for many decades of profits made possible by airplay and airplay alone.

Profits radio stations did not share in.

But I'm not going to make that argument again because it's too late.

Radio let the momentum get away when consolidators took over and changed the industry from local radio to repeater radio. In fact, the NAB's valiant but too late effort to stop the additional fees from being imposed uses terms like "local radio" to play to legislators faced with making this no-win decision.

On one hand, imposing more music royalties on local radio stations is a great burden to them.

On the other hand, it's hard to have sympathy for the controlling interests of radio stations who are really not running local stations.

The high ground was lost.

With Citadel being bailed out by a pre-packaged bankruptcy, Lew Dickey taking Cumulus bonuses for failing to make a corporate profit and Clear Channel pawning off "Prime Choice" on listeners across the largest broadcast platform anywhere, who's shedding a tear for radio?

But even Clear Channel, Cumulus and Citadel do not deserve the fate of additional music royalties because after all, they too, are exposing music at no cost to the labels and artists that sell product, concerts, merchandise and arguably makes artists more marketable.

But enough.

The royalty tax is coming to a station near you -- mark my words.

I do not believe with the economy getting better and radio stations beginning to dig themselves out of losing quarters that the argument can be made that radio should be exempt from the fees -- even though they should.

I would love to testify before Congress on this issue -- radio is what made the record industry and it deserves this exemption. An eloquent case can be made.

Nancy Pelosi is a shrewd politician.

She doesn't want to see Congress vote on this issue because the arguments I am making here are true. So you see what she is doing -- giving us a glimpse of where her head is on this issue.

A negotiated compromise where the parties resolve the dispute.

And that's what you'll eventually see.

The NAB President Gordon Smith has already left the door open -- the ex-Senator knows when to hold them and knows when to fold them.

Right now he's bluffing but that's part of the game in Washington.

So here's the solution I would offer.

1. Agree upon a very, very small fee for radio stations and guarantee the rate for the next seven years. Of course, you'll never get the seven years but start low and give an increase -- a small one -- at one or two points along the way.

2. Local, independent operators (mom and pops), the real heart of local radio, should be totally exempt from any fees. I believe this can be negotiated in. Local operators are helping their communities and local and regional economies, they deserve a break. This is the strongest argument for local radio -- where local radio actually exists -- and this is the workaround.

3. Radio groups operating under 30 total stations should get an additional break no matter what market they are in because 30 stations constitutes a small group by today's consolidated radio numbers. The number 30 can be 40, or 50 -- it's negotiable.

4. Large consolidators like Clear Channel, Citadel, Cumulus and others should pay the highest fee -- but even that should be comparably low. Remember, the music industry just wants to get rid of the performance exemption so it can raise these percentages as soon as possible. Their compromise might have to be accepting pennies on the dollar for the first seven years.

5. This is a must and only a fool would knowingly agree to pay additional music royalty taxes for terrestrial radio without it. Radio stations would be exempt from paying these charges for their podcasting or online streaming of programming that is separate and apart from their terrestrial radio signal. The future is mobile Internet and as a result, this is the concession that radio operators need to get a leg up on the new frontier. The radio industry can argue, okay -- you get some music royalties for terrestrial radio under certain circumstances but you give us music in this new space for free while we take the next seven years to build the podcasting and mobile and streaming businesses. It will be worth even more to you when we use our know-how to build these platforms and you can get a royalty on them as well later. You see the argument here.

The future is in this space so negotiating a modest royalty rate for existing terrestrial radio stations with the caveats I've described above may be worth the sacrifice in return for seven years to develop what amounts to currently non-existent business models for podcasting, streaming and mobile.

Of course in seven years, be prepared to pay more, but terrestrial radio is not likely to resemble the business it is today and new media is probably going to represent profits galore so that might be more reasonable.

Again, radio deserves better from the desperate snakes in the grass who want to burden the people who have made them billions in profits with more taxes.

But in light of the fact that a negotiated settlement is preferable and likely, don't negotiate away the digital music future.

Negotiate a way to make them help you help them sell even more music.

I am under no illusions that the solution I describe here will happen, but it could.

If you like it, get to work -- pick up the phone, write, email your NAB. The labels are succeeding at winning the hearts and minds of Congress while the local radio industry becomes national.

Radio's royalty solution is -- for once look ahead, negotiate no royalties whatsoever for the next seven years in new media and actually win the day.

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Apple’s Media Ambitions

Apple has been making a lot of news lately that will have more of an impact on traditional media perhaps than it will even on the consumer electronics industry.

That is saying a lot about a company that last night reported record quarterly earnings.

But this morning I thought I would share with you some signs that I am seeing that this giant hardware/software/everywhere company is encroaching on some sacred ground -- charging media companies to purvey content to consumers.

Unfortunately even smart media executives don’t seem to be reading the tea leaves right. Many are in denial about any further damage that Apple products and services could cause, say, the record industry.

But there is no doubt in my mind that Apple has eyes for an increased presence in the media business even beyond selling 99 cent songs in its iTunes store.

This does not come as a surprise because Steve Jobs was also one of the masterminds behind Pixar, an animation company that he eventually sold to Disney. And few can argue Steve Jobs’ savvy when it comes to understanding the mindset of media executives and the fickleness of consumers.

When Apple changed its name from Apple Computer to Apple the move apparently meant more than just words.

What is Apple and what are they up to in the media end of their business?

I think Apple is a consumer electronics company and increasingly an entertainment company. This gives Apple a distinct advantage over cable companies, cellular carriers, record labels and even radio stations -- yes, I think Apple will be offering some “radio” competition ahead. Let’s see if I turn out to be right.

The popular line is that Apple makes its money by selling electronics and Jobs never forgets that.

True enough.

But now I want you to keep an eye on Apple’s media ambitions -- that is, they increasingly control mobile devices and they make it clear to me that Apple wants to control the content and revenue as well.

Notice how Google rushed into Apple’s domain when Apple board member and Google CEO Eric Schmidt went Benedict Arnold on Jobs then proceeded to produce Google’s android answer to the iPhone.

Schmidt is no dummy. He sees what’s going on -- maybe had his fill of it as an invited friendly Apple board member.

Google has to have more of a presence in the electronics business because Apple is getting into the content and revenue side.

Now with Apple claiming over four billion iPhone apps sold to date, the company has announced its intention to sell mobile ads in their apps.

Imagine the business Apple would leave on the table if it didn’t.

Let’s run down the ways Apple will make its presence known to media executives who will soon find themselves behind the eightball if for no other reason that Apple owns the electronic devices on which consumers are enjoying content.

iAds

Soon makers of apps -- and there are hundreds of thousands -- will be able to sell advertising that resides within the open application through the Apple store gateway.

It’s good advertising, too, because unlike competitors, mobile consumers will be able to touch to see an ad without leaving the app they're in. This seamless operation may make “click through” rates better.

Oh, and Apple keeps 40% of the revenue while app makers running ads (often advertisers and consumer companies themselves) keep 60%. Apple could argue that it is tantamount to 60% more money for app makers. And it is. But it also represents 40% more money for Apple and they don’t even have to hire a sales force.

I remember my mentor Jerry Lee in Philadelphia once had radios manufactured that only played his radio station. He gave them to advertisers to play at their retail establishments and businesses. It wasn’t really legal. You can’t make a radio that just plays your station, but ...

Apple is kind of doing just that today when in essence they sell the predominant mobile devices to play the content they distribute and from which they will soon profit.

Books, Music and More

The iPad will have a reader that will put the Kindle to shame and Apple gets a piece of each book the publishers sell.

That’s 30%.

You already know about the 30% record labels begrudgingly pay them for selling songs on the iTunes store.

TV shows and movies -- more money from the content providers for making their shows available on Apple devices. Get a calculator, more profit sharing for Apple on content they don’t spend a dime to produce.

But there is more coming.

TV Channels on iPads and iPhones

Apple is reportedly working on a plan that could involve subscriptions to allow owners of their mobile devices to choose which TV channels they want to watch. This would be an improvement over cable TV because the shows could be served up on-demand (I know, so can cable), but instead of having to choose a basic package or premium plans, Apple customers could cherry-pick the “stations” or “subjects” they want.

Cherry-picking should be a trademarked term by Apple because that’s how the company frees consumers from having to buy entire albums to get one or two songs that they really like.

Imagine this in television.

Imagine if all these new channels linked effortlessly to Apple TV, Steve Jobs' "work in progress".

Radio on the Cloud

I would not at all be surprised to see Apple launch a new type of radio that was akin to constant music discovery channels once its Lala-based cloud technology enters the iTunes store. Apple bought Lala not for its name but for its technology.

Streaming content that doesn’t have to ever be downloaded because it's always available on the cloud would be a game changer.

Jobs knows that consumers -- especially early adopters -- want on-demand content. Can you see a driver riding around in a Ford automobile using its fabulous Sync entertainment system to bring their iTunes library, music stations, Pandora and God knows what on demand?

And Pandora?

I think Apple is working on their answer to Pandora's 40 million plus fans using the newly acquired Lala technology.

Of course, Jobs will not be the one creating the content. That’s not really his thing. He can come up with a good operating system or two but Apple is going to generate more revenue from the sweat of others while taking a healthy commission on each sale.

Worried about piracy?

No need.

Apple will continue to use its own Fairplay proprietary system and let the record labels worry about piracy. His devices happily play pirated music, but you'll note only Apple-approved apps work on Apple mobile devices.

Other electronics companies can come out with phones and tablets and the like but unless they own critical mass, Apple remains in the drivers seat distributing and profiting from others content.

How is it that Apple has out distanced Sony, made fools of the record labels (not that they weren’t that already), rearranged the cell phone business, given terrestrial radio their eventual walking papers and at the same time sold lots of electronics?

How?

Jobs is doing what I’ve been imploring media companies to do -- look away from investment banks and look to the consumer revolution that is going on.

It may not be a Tea Party.

It’s an “i” party.

The radio industry flubbed its chance when all it could come up with is HD radio. That flopped and foolish radio people are still trying to bring it back from the dead.

Jerry Lee may have had the right idea when he was making his own illegal radios that only carried his one station.

Not the part about carrying one station.

The part about controlling the radio that his station was heard on.

Now, in its own way and without the burden of FCC regulations, Apple is going to make life tough for media companies that don’t play ball with his products.

If I’m a television, radio, music or publishing company, I am getting in on this even if I have to cough up 30% and pay royalty fees.

After all, media executives are the ones who let Jobs steal their businesses while they were out high-fiving each other over their fleeting success of consolidation.

Now Apple gets to play monopoly in the entertainment business like it or not.

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Radio Executive Compensation Gone Wild

If you've been getting that nagging feeling that the Goldman Sachs fraud controversy hits a little too close to home, then we're on the same page.

Goldman is being accused by the SEC of shorting the middle class by selling products that they allegedly not only knew were bad investments but by betting against the products they sold at the same time.

I understand that there are a lot of political repercussions to the Goldman story but the shorting of our own radio industry has happened by similar investment banks that have done damage to shareholders, employees, listeners and advertisers.

Radio industry CEOs are licking their chops at resuming business as usual which is, as I call it, screwing more people while the few, the shamed, the consolidators make out-of-this-world money.

Take, for example, Lew Dickey's compensation package for running Cumulus into the ground -- that is, his worst performance ever.

Nothing I am about to say cannot be corroborated in Cumulus' own 10-K. As one "repeater reporter" told me "I had to read this particular page in the "Notice of Meeting and Proxy Statement" several times over because I couldn't believe my eyes."

What it speaks to is how wannabees like radio consolidators get overpaid just like CEOs of Goldman Sachs.

Turn to page 15.

Take Lew Dickey's goal of a minimum of $85 million in EBITDA for 2009.

If he hit 95% of that goal, Dickey would earn a "bonus" equal to half of his salary.

Hit 100%, take home 75% of his salary in the form of a bonus.

And exceed 100% of the EBITDA goal by even 5% and get 100% of his salary as a bonus.

The goal was $85 million.

Cumulus turned in a performance of $72.6 million meaning Mr. Dickey, Jr. missed his goal by $12.4 million.

His sales people better not miss their goals by even one penny or they don't get their bonuses, incentives or agreed upon compensation.

But when Tricky Dickey gets to hand pick his corporate compensation committee, they come up with language like "Mr. Dickey made significant contributions to the company in 2009 including providing strategic leadership of our operations..."

Captain Lew wasn't exactly making chump change earning over $900,000 a year while his company underperformed, yet he comes away with financial bonuses.

But apparently the compensation committee just felt so compelled to reward Lew for his strategic leadership in alienating workers, homogenizing local radio and nationalizing operations while cutting costs that they awarded him ....

Cha-Ching!

$496,000 in additional bonus money.

That's right -- for underachieving.

After all, it wasn't Lew that underperformed, it was the economy.

I guess this means a new day for Cumulus, right? If his market or sales managers miss their numbers by 15% like Lew did they, too, will get rewarded like Lew was.

Don't hold your breath.

It doesn't work that way.

They'd be lucky to keep their jobs. Or maybe not so lucky since Cumulus is fast gaining a reputation for being a very hostile workplace under the strategic leadership of Lew Dickey.

Cumulus revenue has been declining for years, but its CEO keeps making bonuses.

Of course Lew's flaks report that Dickey had a contractual $40,000 raise coming to him this year and Lew magnanimously didn't take it. Very impressive until you do the math both ways.

Add the $40,000 raise to his current salary or $496,000 bonus to his current salary. Hell, you'd leave your contractual raise behind for that.

As we say in New Jersey, "What are they nuts?".

Cumulus employees have been fired in unprecedented numbers during the four years of Lew's good fortune to be supplying strategic vision to his company.

Cumulus has been hit with a class action suit in California that has him nailed. Mark my words, can you say settlement? And there's new revelations coming out of that class action suit that I will soon share. It may be worse than anyone thought.

So, let's get this straight.

Dickey takes his bonuses. The company deteriorates in employee relations. Local radio is all but out the window. Repeater radio arrives and shareholders have taken a big hit on their original investments. No strategic leadership plan for new media.

See the similarity?

Goldman Sachs is accused of betting against the investments they were selling clients and Cumulus (and other consolidators) were, in my view, betting against the best interests of their shareholders in return for doing what was in their personal best interest.

Look at Citadel.

Fagreed Suleman is pitching a fit over an offshore company named Aurelius (Mark Brodsky) purchasing 16.7 million of Citadel's bankrupt shares. Fagreed ran to bankruptcy court asking emergency action to void the purchase.

See Fagreed can dish it out but can't take it.

The game is dirty. It's for snakes in the grass.

It's not what you and I want it to be -- all about good programming, the best interests of the listener and local community and turning an honest profit for investors who make growth possible.

Some 30 years ago top executives at S&P 500 companies earned an average of 30 times what their workers earned.

Take a guess at what that multiple is today?

How about 300 times what their workers make.

Fagreed Suleman had $10 million years and private jet getaways that would make Robin Leach and Adnan Khashoggi envious. Okay, Les Moonves' salary doubled in 2009 to $43 million probably leaving Lew Dickey green with envy.

For some reason the radio industry doesn't want to link itself to the real world. Maybe that's because radio has always been in a world of its own and if you have been reading the news accounts lately about how the consolidators are revving things up once again, you need no more proof that the scoundrels are back in action.

Let me lay it out for you:

1. Citadel will struggle even when it emerges from bankruptcy to find listeners and advertisers who have passed them by. Improved numbers, no debt but no growth.

2. Cumulus will have to jigger the loans again in about a year to avoid running up against default and the brilliance of Tricky Dickey's platform will be -- an improved, but underperforming company. But he won't have to worry because the Dickeys get paid no matter what the outcome is. Turn to page 15 of their latest 10-K for proof.

3. Clear Channel will shock some people who have fallen asleep in fantasyland thinking Lee and Bain are operators. They are not. They are speculators who will sell or may have to sell. Four years and counting until $18 billion in debt comes due for them -- keep an eye on Clear Channel. I say they are for sale -- even in pieces.

4. There will be more bankruptcies. I know that sounds awful because you are probably reading the same happy talk publications I read each day that assure us everything is coming up roses. Yes, business will get better. No, radio will not go back to 2002 -- there is too much new media competition that radio companies are unwilling to invest in.

5. The big "broadcast" companies will likely be new media companies with one or two (or more) principals from traditional media companies who are crossing over to the other side. Not existing broadcast companies who don't get it.

The rodents are at it again.

The economy is getting better but none of the things that caused the recession have been fixed.

Suspicious?

Not radio CEOs.

Investment bank oversight -- still out of control after all these years.

Housing sector -- in a slump for many more years.

Mortgages -- thanks for asking, try to get a good one.

Hedge funds and their deleterious effect on the economy -- fugetaboutit!

Radio -- lost a generation but resents anyone telling them about it.

Nothing has changed.

Earlier today, despite tight security, corporate paranoia's and CIA agents, a Cumulus minion wrote to me to put it all in perspective. These are his (or her) words, not mine:

"We are all at the Market Manager/Sales Manager meetings in Atlanta as i type this. Matt Kearney is the lunchtime entertainment.

Our "welcome kit" came complete with the April edition of Radio Ink magazine featuring Lew Dickey on the cover with the title 'Lew answers tough questions'. Ha! Oh and we were not told who the special guest was for our noon keynote. - it's Eric Rhodes! (Radio Ink's Publisher who did the Dickey interview). What a shill....

We were also provided with a luxurious Bic Round Stick pen, polo shirt with Cumulus the Power of Radio embroidered. Finally in the kit is an hourglass with the Cumulus logo. Nobody can figure out what it's supposed to mean, our time is limited?

Couple hundred people in Atlanta probably cost nearly as much as Lew Dickeys bonus. Lew's note in the welcome kit says it's been a tough year, have fun while you're here!

The Koolaide fountain is pouring blue, but only the Cintas and John Deere people are drinking. The rest of us know better".

They're baaack!

But nothing has changed except the consumer, the advertiser and technology.

The important things remain the same.

Like executive compensation.

So who's worried, right?

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iTunes "Radio" Is Coming

"Radio" is coming to Apple.

Unfortunately for terrestrial radio it will not necessarily be their existing radio stations.

Apple CEO Steve Jobs is way ahead of the curve on this. It has confounded the broadcast industry that Apple offers just about everything on its mobile devices but a radio tuner.

I know that iPod and iPad users can access radio using third party apps. Apps arguably saved Pandora's franchise. Still there is no direct link to Pandora on these popular devices. Yet Apple seems to consider radio not an essential part of what it is doing.

The Apple Nano has an FM Tuner on board and in spite of the radio industry's campaign to get Steve Jobs to make an iPod radio, the Nano has not really turned an iPod into a radio. The tuner feature is marginally at best helping to sell Nanos.

The "radio" that Apple sees in its future is one that terrestrial radio executives do not have in their sights.

It is a music service -- located on a "cloud" -- available to users of mobile devices either as an instant way to get access to their music libraries or a subscription service offering all the music that fits to hear.

Or both.

The signs are all there.

Apple spent $85 million to purchase Lala, a streaming service that uses such a "cloud". Music can be accessed instantly without waiting for a download from any browser or Internet device.

Apple could offer consumers a subscription plan, but Rhapsody-type programs have not been successful. Apple could make it successful by its sheer heft, but some people believe what Apple has in mind is a major revision in iTunes that will transfer each consumers library of music to this new "cloud" iTunes store and thus make it available virtually everywhere on-demand.

From day one it would be a success with over 100 million iTunes users already in place.

This creates a new form of iTunes "radio".

I use "radio" in this way because much of the next generation uses online or mobile music as a replacement for music they can hear on terrestrial radio.

It gives them more potential variety -- not limited to the short playlists still popular on terrestrial music stations. They can also listen on-demand.

Terrestrial radio owners looking to cutback the expense of enhanced music presentation (i.e., popular djs) have played into Apple's hands. Given a choice between instant access to your music library by using a simple Internet connection to your iTunes account or turning on a radio, Apple would be betting that the "cloud" model would win the day.

An article in Apple Insider earlier this year added:

"In addition, analyst Maynard J. Um of UBS Investment Research said in early December that he believes iTunes content will become available from a Web browser and other Apple devices. The purchase of Lala could tie in to Apple's $1 billion server farm in North Carolina".

Apple is in the midst of transforming -- not to radio -- but to mobile content and there is no reason to expect that it would not build its iTunes store into the new "radio" by making it on-demand, customized for personal musical tastes and easy to manage.

I believe there will also be a music discovery aspect to the Apple plan when all is said and done. After all, the one thing the next generation is screaming for is more music variety. The record labels have seen fit to ignore this plea and you know what radio consolidators think about music variety when they opt for voice tracking and short playlists.

What is happening here is that the radio and records industry is holding onto models they want to preserve (CD and broadcast radio) while consumers have moved on to on-demand, personal and universal.

To make matters worse, the labels are at their lowest with regard to finding and helping new artists grow. Even worse at pushing out new music genres.

The radio industry has cut on-air personalities in favor of voice tracking or cheap syndicated shows making them even less viable if Apple succeeds with its transition to instant, personalized music "radio".

An entire generation that preferred Internet and mobile to access entertainment will enjoy music anywhere at anytime -- without personalities, of course.

Radio offers a limited playlist -- increasingly without personalities, of course -- for free and all it takes is a radio to take advantage of it.

And that's where we learn yet another lesson about the critical importance of studying sociology along with technology.

The next generation will pay for that which it wants and will reject even what it can access for free if it does not:

a) Give them the specific music they want
b) When they want it
c) Wherever they want it

What the radio industry should be doing is building local programs with local personalities featuring local bands and artists and originating from local stations.

That's what Apple is not going to do.

And that is something that will never go out of style even in the era of iTunes, cloud computing and iPods.

Sadly for the broadcasting industry, Apple "radio" is coming just when terrestrial radio is going.

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How to Monetize Podcasting

Adam Carolla, the funny star of radio and television, got 50 million iTunes downloads the first year he became a podcaster.

And he still isn't making money.

That's 50 million downloads -- and chump change for his efforts.

Do you think we broadcasting types need to go back to school to learn media sociology and technology?

Taking nothing away from Carolla or any other podcaster that can attract a following, making money in new media requires breaking away from an unhealthy dependence on spots.

And getting away from the radio model.

With podcasting, you no longer need to follow radio formatics because your fans choose you every day and invite you into their ear canal. That's damn personal.

Carolla is talking about starting a podcast network and that's kind of scary when he's not making money on his first venture.

Most of my readers are familiar with my view that podcasting is one of the new media tools that shows great promise as a revenue producer. To reiterate, podcasting should not sound like radio and should not be sold like radio.

Podcasters are never going to make a lot of money selling commercials in 30-minutes of content and advertisers will probably jawbone the rates down to nothing if you can get them to buy.

Still, podcasting is a winner because it cooperates with the inevitable which is it can be consumed on-demand.

It can be video or audio or both.

It can include text through companion web or iPad pages.

Plus, social networking.

I've been suggesting to radio groups that they should investigate operating new media platforms separate and apart from their broadcast operations.

They don't like it.

So, if you're an ex-broadcaster or an entrepreneur, here's your opportunity to do what they are resisting because radio broadcasters only want podcasting that is somehow connected to terrestrial content. And that's a mistake in my opinion.

Terrestrial broadcasters are still talking about filling up their HD channels when consumers have voted HD out of their lives (not that it was ever in their lives). The radio broadcasters who are with me on this know that they are tying their hands behind their backs when they limit or link new media revenue to terrestrial content.

So, say you take my advice.

What will happen?

On another day we'll talk formatics, acquisition of audience through social networking and assuring in-demand content, but for now, look at how podcasting can make money.

There are three ways:

1. In-content Commercials

Obviously, not my favorite. But if you go this route, make them live-reads. Un-commercials. Refreshingly frank and real. There are ways to get into commercial content without abruptly doing it. NPR-style sponsorships will also work.

2. Subscription Models

Even my true believers don't believe me on subscriptions. The consumer is telling you they are willing to buy things (downloads, apps by the ton and entertainment-related Internet content). If -- and I emphasize if -- podcasting is compelling and addictive, they may pay for it. The right price is the price that is affordable. Trade content can be priced higher than consumer content, but there is a price and there is a motivation if the content is compelling.

3. Event Marketing

I've saved the best for last.

Build an audience and continue to provide excellent content.

Then, build a series of events -- once a quarter or every month if you can (and radio companies can!) -- where you direct your fans to the event.

If you have an AC station and have developed a following, you offer a podcast separate and apart from on-air content that is compelling and addictive. Then, in January the 2011 version of a bridal fair would work. You market to sponsors. Get a venue. Add entertainment. Drive fans to the event through your podcast (but not by doing promos). Ring the cash register.

There are events possible for sports events, outdoor, travel, employment, back to school, auto and just about every category that has eager companies dying to get into new media.

Not commercials on a podcast.

Sponsorship of events.

The Wango Tango of just about every good category that has willing sponsors ready to spend on local events.

I even have one for Lew Dickey.

When I talked with Lew at the NAB Radio Convention he passionately convinced me that radio should be seeking health care dollars. That's great. Well, then -- a health fair. Health clinic.

Of course, most broadcasters would use their terrestrial stations to drive listeners to these events and most companies don't want the expense of ground crews they would need to organize event selling. They like orders that get phoned in to the last salesperson left standing.

But you ....

Well, thanks for the opportunity.

If you have a podcast for humor, you can do a "Laugh Off" and have fans attend and participate. Sell to sponsors.

If you can do a travel podcast and get a loyal following, think of the help the travel industry will need getting back on its feet.

Podcasting is not broadcasting.

It's not even really narrowcasting.

Podcasting is appointment selling.

You have their interest and now you channel fans -- direct them, if you will -- to events they might like that you just happen to own.

When a psychiatrist or psychologist can attract a podcasting audience through appointment selling, the most interested fans will likely choose to attend forums (that can be sponsored by medical companies) or fairs.

Start with one.

Then do another.

Then eventually do one every month of the year if possible.

I use this concept with my media labs.

I talk to my readers every day (in this blog) then attract the people most likely to want to attend one of my conferences (which reminds me, the next Media Solutions Lab is January 27, 2011 at the Phoenician in Phoenix -- save the date).

Then I can do other events on varying topics such as "iPad for Radio" and the best prospects (my readers) opt in.

It's no different than running ads in trade papers but it is also very different.

We are having a "conversation" here and podcasting is also a conversation between interested parties.

I get hundreds of emails a day on specific topics I write about and I answer every one that is directed to me. I have come to know many of you personally through this site and have made friends from the 200,000 plus visitors we get every month.

So, think outside the radio.

Radio talent, content providers, marketers and managers are future podcasting entrepreneurs.

If I ran a major group, I'd hire back the people that were fired and give them entrepreneurial deals where they keep a fair percentage of the earnings and the company owns the podcast.

The WPA of Radio but instead of building dams to harness electrical power, do deals with the talented people you let go to give you juice in new media.

If they can grow the event part of it, they get additional money.

You see, it doesn't have to cost a tightfisted radio company a penny.

The only investment is in time and learning about the exciting and profitable world of new media.

A radio brand is most valuable when it can give birth to content that can be marketed in the digital mobile space.

That's why companies should do the best terrestrial radio they can -- local and live and full of local personalities.

The way it is right now with radio groups spending next to nothing on new media, they are squandering their opportunity to use their local brands to spin-off independent and profitable new media ventures.

(Here's a great Fast Company piece on the king of podcasting downloads -- Adam Carolla).

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Thanks for forwarding my pieces to your friends and linking to your websites and boards.