The Mad Media Meltdown

The trades are all abuzz with news that radio may, in fact, be headed for another challenging year financially. And when the trades admit it, it must be bad because they like to keep their constituents’ spirits up.

Take NBC late night.

Conan and Jay are not just a TMZ gossip story. They are a sad commentary on the meltdown that is taking place across traditional media these days. How could NBC be so stupid?

And how could radio consolidators be so shortsighted to be firing their personalities and injecting voice tracked programming and network shows when the best defense against new media is doing local radio with favorites on-the-air.

Consolidators are in financial trouble not because of the recession (remember radio has survived many recessions in its history) but because stations have stopped innovating.

As one of my readers pointed out:

“I’m so tired of hearing radio CEOs describe a better 2010 using ‘it’s going to be easy to beat last year comps’. I’ll bet the guys at Kodak said the same thing after 9|11 … the economy would get better and people would take vacation pics. The guys at Kodak could never understand the magic in pictures was sharing the experience not the chemical processed film imagery. Cell phone cams didn’t have the picture quality but they sure where (sic) convenient. Sharing become easy and quick as pushing a button. Poof … no more Kodachrome. You know the story for radio”.

In spite of what equity lenders think, it is innovation that sells not bean counters that cut expenses.

After all, NBC Universal parent General Electric mandated deep cost cuts not a bounty of innovation and we see where that has led NBC.

As former NBC President Bob Wright said the other day the only cure for the problems at NBC is a sale to Comcast.

That’s what radio consolidators routinely do now – cut expenses at the risk of diluting their local radio product.

So what do Conan and Jay, advertisers cutting back and the demise of local radio have in common?

The companies that are perpetrating these crimes are guilty of murdering innovation.

Enter Steve Jobs, as he will on January 27th, and innovate once more to the delight of consumers and shareholders as well (I am both).

Apple will likely announce its new tablet device. I am hearing there will be a seven inch and ten inch model – the top of the line unit could cost $1,000. They may be available as early as March.

Of course, only Steve Jobs knows for sure but he certainly has our attention without spending a dime because he has a proven record for innovating.

Look, Harvard has earned its business school reputation by concentrating on case studies. The theory being if you see what has worked and has not worked for other companies, that makes you an outstanding executive.

Cumulus CEO Lew Dickey is a Harvard grad.

Harvard’s got its own problems as many institutions of higher learning do these days. They take their own advice which is why with record endowments, the school has lost its financial shirt in the stock market.

Back to Jobs.

Jobs is a dropout from Reed College in Portland, OR.

As frequently is the case, dropouts learn more than graduates and make their educational time count. According to Jobs' Wiki bio, "Although he dropped out after only one semester, he continued auditing classes at Reed, such as one in calligraphy. Jobs later stated, 'If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts', he said".

Jobs could play top executive in the model of GE's Jim Immelt if he wanted to. Could have a corps of bean counters invade Cupertino, but no – that’s not an innovator's M.O.

Apple has hired its way through the recession not firing people.

It has grown shareholder value for its investors even during the worst economy of our lives (assuming you were not around for 1929).

Mel Karmazin was the media darling of Wall Street for years and all he talked about was building shareholder value.

Sirius XM stock closed at 67 cents yesterday.

Other radio CEOs did the same song and dance and some of them are now in bankruptcy, some are headed for bankruptcy and the rest are clueless as to where the future lies.

Fortunately for me, I have invested my USC pension in Apple – all of it! It has doubled in the past year. Doubled! In a recession. Now that's shareholder value!

So why can Apple do it with a one-semester Reed College dropout and Cumulus can’t do it with a Harvard alum?

I'm wrong.

Lew Dickey has a Bachelors and Masters Degree in English Literature from Stanford University and an MBA from Harvard. Stanford is not chopped liver either.

Smarts only work when you know how to use them.

Back to NBC's mess.

How can NBC fail strategic planning by putting Jay Leno on in prime time while saving money on dramas, screw up their affiliates' late local news lead ins as a result and water down the one part of its schedule that prints money – late night? (And did I mention that they are going to lose Conan, the younger target demo talent to a competitor and pay him to leave?)

Can you say no inno? No innovation.

So it’s going to be a grim year – in fact, a depressing future for anyone who cannot learn to innovate. And that requires raising your consciousness as well as bringing out the talent of others.

That requires new skill sets.

Most folks in the media business have plenty of the old and cannot even identify the tools they need to access the future.

Yet Pixar produces hits.

Apple invents new businesses not just electronics.

Zappos sells shoes online by mastering the art of innovating great service.

Radio does what these days?

Oh, cut costs and dilute local programming.

Record labels do what?

Cut expenses instead of doing a full court press to find new music and learn from young people who actually know more than they do about the music industry’s future.

Newspapers do what?

Shrink the size of the paper. Try to force readers to buy it while giving away the content online for free (in return for running ads that don’t equal the expenses it took to gather the news).

No inno.

My readers tend to understand that the demise of traditional media was not necessary. It could have been saved.

Yes, radio could have evolved as it always has and found a place in the new world order of mobile devices -- perhaps not as a 24/7 broadcaster as much as a major content provider and marketer.

The music industry could have morphed into the digital world and pioneered the one thing people cannot live without – music. Ok, food and water, but you get the point.

Don’t let what killed them, kill it for you.

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The people who are attending my Media Solutions Lab next week here in Scottsdale are going to get a full dose of innovation – who does it best, how it can change the future and how they can acquire the skills to be more like Apple than NBC.

Want to attend?

Register for my Media Solutions Lab here.

The Paid Internet

If you owned a record store ten years ago and I walked in the front door and asked you to give me some of the merchandise you were currently selling, you'd likely throw me out on my butt.

However, at the serious onset of the Internet in 2000, business establishments, retailers, publishers and entertainment companies knowingly cooperated with the emerging free Internet and began to giveaway content for free.

In some cases, businesses resisted and consumers did a workaround. I'm thinking of the record industry where young people found ways to steal music, share it illegally or quasi-legally through bit torrent sites.

One of the few entertainment industry execs who refused to go along with free then was Mel Karmazin who was presiding over CBS/Infinity at the time. Mel's reasoning was that he was not about to give away content that he owned without being able to monetize it.

And monetization of the Internet worked better for some people than others -- namely Google who came along a little more than ten years ago and started selling search and the ads that surround search.

Google was an interloper.

It wasn't CBS. Wasn't Warner Records.

Google was a poacher, if you will, distributing other people's content -- the content the originators paid to put together. But Google made its billions by offering someone else's proprietary content to everyone in cyberspace. While they were at it, they made money off of that content without incurring the expense.

Few would argue that if Google had to actually run The Wall Street Journal rather than distribute its content for free, Google would be out of business on day one.

Instead the myth of the free Internet took hold.

Soon media companies and others panicked into thinking that if they didn't start offering their content for nothing, that they would miss the Internet revolution.

So they did.

Now some companies are considering withholding content from the public and/or search engines like Google and dare to make the public pay or the distributor pay.

And that's what I'm seeing.

I know this is controversial because I, too, have become spoiled getting The Wall Street Journal and New York Times for free instead of the whopping $900 a year it costs for print subscriptions to both.

Rupert Murdoch is now challenging the free Internet -- Murdoch is the owner of News Corp that publishes The Wall Street Journal and other publications. Competitors have tried to charge money for subscriptions and have failed -- The New York Times being one of them, although the Times is said to be close to approving a paid model (more here)

True, there are online niche publications that charge subscription fees but they are the minority and their content is specialized. And Murdoch himself was thought to be tinkering with making the Journal's paid site (they were an early adopter to paid subscriptions) free theorizing that free meant more eyeballs for advertisers.

Advertising isn't going away.

But the totally free Internet is.

Chris Anderson, author of Free disputes this in his excellent book. Anderson believes paid comes after free in the form of enhanced content. Ask ESPN -- that egg was laid a long time ago. Not much of a business model.

The reason I mention all of this today is I spent the weekend putting the finishing touches on the lesson plans for my upcoming Media Solutions Lab. One thing I am going to address is the prospect of the paid Internet -- what it means to the radio industry, records, new media, publishing and individual entrepreneurs.

We know this -- in the era of "free", Apple has ignored the free Internet.

You want anything from the iTunes store, you pay for it. You want apps, there is only one door to walk through in the virtual world and you'll pay Apple for it.

I am going to explain to the attendees at my Media Solutions Lab how micropayments will change everything. This blog for example will likely be $99 a year before the end of the year. But you can subscribe by the month. It's true that when "free" ends, many, many customers will not or cannot pay for the content but the ones who will are the ones the content will be customized for going forward.

Imagine the music and entertainment streams that can be accessed by people willing to pay a reasonable micropayment for them. The free Internet will always be available -- don't get me wrong. But those who embrace free as a business model must compete in a world of seemingly infinite competitors all looking to sell cheap ads for revenue.

I had that same problem when I intended to do my Media Solutions Lab with the traditional model -- sponsors. But sponsors want to book themselves as speakers and prejudice the debate. I decided to go to the fee-only model and it appears to be working out well. I have found a group of entrepreneurs and media business execs who value what they will get on January 28.

With Apple expected to introduce its portable tablet on the eve of the Media Solutions Lab, we will begin to see the future in a new way. Imagine, radio talent can build a brand, distribute it through the iTunes store while consumers can easily access that brand on mobile devices like the tablet. There are all sorts of options ahead.

Radio stations struggling to become part of the digital future could -- with some retraining and open-minded thinking -- develop streams of revenue that could constitute a growth business to make up for the slow decline in terrestrial radio revenue.

So as you see, we have a lot to talk about at the Media Solutions Lab (see the full agenda here).

You read me to hear it straight -- unfiltered by political correctness or influenced by advertiser's agendas -- and I want you to know that if you're expecting to master the paid Internet without being able to acknowledge that it is coming, you're hog tying yourself in the digital future.

On the other hand, if you are willing to track the changes we are beginning to see now and learn how to brainstorm ways to use them to your advantage, you've got a new media growth tiger by the tail.

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Whatever Happened to Odd Metre Swing?

When I got into trying to develop my rhythmic language and technique, almost 20 years ago now, I became really interested in three areas that I saw as being natural extensions of what I was already doing – i.e. things that would and could be organically developed from my grounding in the jazz tradition: subdivision, metric modulation, and odd metre playing. Of these three techniques, some work had been done already in jazz – Tristano had done some fascinating things with regrouping of triplets as far back as the late 40s, and metric modulation had been shown to be a wonderful, if difficult, technique that could be used to create seemingly contradictory statements of where the beat was, sometimes simultaneously. The third element – odd metre playing, was by far the least explored, especially in the swing idiom.

The first guy to extensively use odd metres in jazz was probably Brubeck, he certainly was the first guy to bring it to the attention of the public and players. Brubeck studied composition in Paris with Darius Milhaud, so I’d imagine the odd metre stuff came from there – there’s no real precedent for it in jazz before that as far as I know. Then there was Don Ellis’ work in the 60’s – his big band stuff used lots of odd metres, some really unusual ones. He was a pioneer in that, but I feel, (also with Brubeck), that what was interesting was the fact that they were interested in doing it at all, not so much what they did musically – because I don’t think that much of the actual music that was produced was very interesting as music in itself. But there is an interesting Andrew Hill recording from the 60’s - ‘Judgement’ - with Elvin on it in which they play a piece in 7 called Siete Ocho and Elvin gets a good swinging groove going, although the band gets a bit shaky from time to time. Actually it’s amazing how Elvin attacks the groove, and really makes it swing, especially considering it was quite probably the first time he’d ever had to play in 7, and certainly the first time he recorded it.

But the real breakthrough with odd metres came with the fusion (or Jazz/Rock as it was known then) guys in the early 70’s – Billy Cobham with the Mahavishnu in particular – that’s an interesting one. He was an out-and-out jazz drummer (with Horace Silver among others) and then suddenly became this odd metre virtuoso. Personally I think he got a lot of that stuff from McLaughlin’s knowledge of Indian music – (though Cobham would probably rather die than admit that!), a lot of what he does is very like the way mridangam players from South India play.






After the fusion guys we’re into the 80’s with Steve Coleman and Dave Holland etc. (the Dave Holland Quintet Albums Seeds of Time
and Razor's Edge are both classics in regard to rhythmic exploration), and the real breakthroughs with odd metres – the expanding rhythmic universe, (along with the Downtown scene in the 90s) starts there.

When I got into the whole rhythmic thing in the early 90s I was particularly interested in making what I already did in a jazz context work in the new rhythmic areas I was exploring. Since a lot of the music I was playing at the time was in the swing idiom I felt it to be a natural outgrowth of that to try and play odd metres in the swing idiom. And so along with my brother Conor and Mike Nielsen on guitar I got into trying to find ways to make odd metres swing – or to find ways in which one could swing when playing in an odd metre. We spent about two years on this – it was challenging, the swing feel was developed over 4/4, and that four in the bar feel is hard to achieve when you’re playing in 11! But we made real progress in it and I think we became very convincing when playing things like walking bass lines and the typical jazz cymbal beat in various different metres. The trio at that time played exclusively standards, but re-arranged everything rhythmically and harmonically. In 1993 we did an unreleased recording of standards unofficially titled ‘Fucked Up Classics’ in which every single piece was in an odd metre. It never got issued for various reasons but you can download it for free here

At that time I was convinced that what we were doing was the tip of the iceberg as far as rhythm was concerned and that it would only be a matter of time before others followed suit and we were about to witness an explosion in new rhythmic techniques. To some extent that did happen, but I have to say that almost nobody has convincingly dealt with the swing idiom in odd metres. The metric modulation thing has exploded and been heavily explored, but that’s not the case with odd metre swing. When I say swing here I’m not talking about a vague swing feel, but a real dirt under the fingernails, spang-spang-a-lang, walking ride cymbal + walking bass style swing. For sure standards are sometimes played in odd metres – Brad Mehldau has done some interesting work in this area (including a stunning live recording of All the Things) but even when you hear Mehldau’s group playing in an odd metre it doesn’t really swing as much as when they’re playing in 4/4. We really worked on that, to make sure that the swing didn’t diminish due to whatever metre we were in. Hasn’t really been done since in my opinion – not in anything I’ve heard anyway.

Maybe the reason it hasn’t been done is because it’s HARD! You have to not only figure out how to manipulate the rhythms to allow the swing feeling to flow, but you also have to make sure your melodic lines match up with the changes moving at the same rate of the metre you’ve chosen. It’s a voice-leading tightrope – a trial by fire of your rhythmic and harmonic technique. It’s much easier to cop-out by just playing over one chord and picking a straight 8 based rhythm – a cop-out that has resulted in far too much boring and quasi-faked playing over the past 10 years.

It’s not that long ago since jazz musicians couldn’t play in 3/4, and almost never did - how many 3/4 pieces did Bird record? None. But eventually jazz musicians figured out how to do it and to make it really swing. For an example of this evolution listen to Max Roach’s very stiff playing on Rollins’ Valse Hot and Elvin Jones’ loose and flowing playing on any Coltrane tune in 3/4. Within 5 years 3/4 swing had gone from stiff and unnatural to convincingly swinging. But now more than 20 years since the first explosion of interest in non-standard rhythmic techniques, odd metre swing is not that much further down the road.

If anyone reading this knows of any really convincing odd metre swing recordings please let me know, I’d be really interested in hearing it. I really enjoy playing swing in 11, 5, 7, 9 and 15 – it provides a wonderful vehicle for creativity and freshness. But there’s plenty of room for much more of this – it just needs the desire to do it and people who are prepared to put in the work. Any takers?

Radio’s Believe It Or Not

The New Year has hardly begun and my Repeater Reporter network is back in full swing again reporting abuses and out of this world real stories about the consolidators who are running radio.

They are burning up the phones to 1-800-CALL JD.

Just as in Ripley's Believe It Or Not that inspired this series -- these deals, bizarre events and items are so strange and unusual that readers might question the claims.

As incredible as they may seem, sadly, there is no shortage of bizarre stories like these in the radio industry today.

Here are the latest allegations:

Cumulus Writes Up a Sales Rep for Too Much Business

A well-experienced sales pro rats them out:

“When the new management team came in 1st month I was "written up" for too much agency biz. Never mind I was the top biller I was also told I made too much money? I brought in huge amounts of local direct but I also brought in too much agency. I was fired 3 months after the new manager was brought (in) … The manager was 34 and left Cumulus less than 1 year later. The worse radio company I have seen! Lew Dickey came in once and called us by the wrong frequency? He was there to fire our GM and bring in the new manager."

Lew, don’t answer the phone. This person is hiring an attorney.

Over 60’s Working Up to 80 Hours a Week at Clear Channel

Does this mean that John Slogan Hogan likes older employees like himself or is he trying to get them to quit. You be the judge. Let’s go to the tape:

“People over 60 that had been working double shifts and up to 80 hours... that's right 80 hours a week to keep the fire going. They replace them with younger, hourly staff. It really hits home. It is a desperate move. I have heard they are going to centralize both production and traffic reports. That is the next phase”.

Next Media Owes Commissions, Too

Here’s is a person who is owed significant money by one of the recent radio groups to file for Chapter 11 protection. Good luck with that!

“…Due to their size they don't get much negative publicity and they are deserving. As an aside, Cumulus isn’t the only group withholding pay...NextMedia still owes me commission and I know of several people who earned performance bonuses in 2008 and 2009 that were never paid. Next (to last) Media just ignored the fact that they owe folks money”.

No Yom Kippur at Cumulus

“I have another friend who is Jewish and she had counted it as a legal holiday on her days off. (Gary) Pizzatti actually said, ‘do we recognize Yom Kippur’ as a legal holiday? I would have asked him if we recognize Christmas as a legal holiday … How ignorant of him … so she was forced to use it as a personal day”.

Clear Channel Cuts a Cancer Patient’s Salary – But Only His

When I owned Inside Radio I wrote about stories I uncovered where Clear Channel employees were put at a disadvantage when they were most vulnerable – during illness. You can imagine how sick it made me to get this email with the same old allegations:

“I wanted to tell you how cold Clear Channel really is. There is an on-air personality in Memphis, TN who contracted Cancer, actually leukemia - a very aggressive and fast moving form. While he was out the company acted like they cared and so on and so forth and then once he was 1 day into being home and considered in his first stage of remission (sic) he was told his salary, only his was going to be cut by 10% for 2010.

When he asked if he was the only one he was told yes and he was also told that this would occur during his second round of Chemo-Therapy. Can you believe this group of nuts?

Can you believe how selfish and self-motivated they are that a single dad with a survival rate of less than 5 years is going to lose 10% of his pay? How do they sleep at night?"

The employee in question was receiving his second round of chemotherapy just before Christmas.

Cumulus Allegedly Threatens An Advertiser Who Asks for a Payment Plan

Think the money’s a little thin at Cumulus? Well, this reader reports what he/she thinks is no way to treat a usually good advertiser who got behind on payments.

"I found this interesting as well, when my client's check bounced I got a text from my former gsm saying that the comptroller was going to call the sheriff and press charges and a vm from my market manager saying the same thing. I called my client and told him.

I have never heard them say that they were going to do this in the past. My client spent over $20k and the check that bounced was $4k, he wanted a payment plan when I left and I gave them his contact information...I have just never seen them this mean or desperate”.

Cheap Channel Cuts Back on Light Bulbs

Let’s end on an enlightening note from one of my readers praising the virtues of local owners who care.

“A few years ago I worked with Ed Schultz while he was syndicated by Media America. I visited him in Fargo and couldn't get over how dark and barren the radio station building he was in appeared.

Two years later the new owner of the station cluster, James Ingstad asked me to visit their talk station KFGO in the same building. The Ingstads are a local family with a long history of local station ownership. They hired GM Nancy Odney.

On my second visit, I was stunned how the building was bright, light and vibrant. I mentioned this to Ms. Odney who revealed, "Clear Channel, the prior owner, wouldn't replace the burned out light bulbs." Really.

The Ingstads doubled the local on air staff, eliminated virtually all syndicated shows, rewarded the news department and in the process likely saved lives in last Spring's massive floods. (And won many awards.)

Take a look at the ratings for Fargo. You'll (see) all the Ingstad stations doing very well, growing, including their new Sports station KVOX which they signed on last year.

Local works”.

The good news is that there are still local operators who don't skimp on light bulbs, don't screw their employees when they are sick or down on their luck and don't threaten otherwise good advertisers who happen to be in short pants these days due to the economy.

No management school in the world would teach operating a business the way these consolidators carry on -- believe it or not, they keep inflicting harm to themselves and others even as their actions cause continued financial stress.

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Pissing Away the Audience

There was a real good piece written by Scott Harris for AOL recently that is so scary it ought to make anyone in the media business think seriously about the repercussions of how they are making decisions.

The article reports that television’s version of cheap content – The Jay Leno Show on NBC – is not only a ratings failure but there have been some unforeseen consequences.

Everyone is talking about Conan O’Brien’s hair when People Magazine spent $7,000 on Kate Goselin’s new hairdo – the better to put her face on the cover.

And how Jay Leno lost 45% of his 10 pm (eastern) audience on his 5-day a week show.

Now, my readers are smart – real smart. So let me ask you, what happens to a performer in today’s entertainment business that loses 45% of his audience?

He gets his old job back -- in Jay Leno’s case the 11:35 pm start of The Tonight Show.

Conan gets the boot – even though he is apparently being forced out. I don’t know about you but I kind of liked the way Conan told NBC to go to hell after pulling the plug on the show they signed him to do many years ago.

I am fascinated by the human condition called media mismanagement.

Why are so many smart people – and they certainly are not dumb – making one lousy decision after the other?

Arbitron CEO Michael Skarzynski lies and his company fires him. Media executives lie all the time and they get big contracts. The real deal is that the Arbitron board had it in for the turnaround artist who they chose to lead the company through the People Meter challenges.

The board wanted him out. Plain and simple.

Jeff Zucker, the NBC “genius” who has turned the number one broadcast network into number 4 can relate.

He hoarded Conan, found a place to keep Leno from leaving for ABC or Fox and now that it didn’t work, he takes absolutely no responsibility for his strategic mistake and causes a bad situation from going from bad to worse.

I didn’t see Zucker apologize to Ed Ansin, owner of Sunbeam's WHDH-TV in Boston when he took on NBC last spring by refusing to carry Leno at 10 although the network later threatened him with disaffiliation if he stuck to his position.

Zucker’s bosses want him in – he is just like them.

And then there is Steve Jobs who answers to no man or woman – does what he wants and gets that power by earning the right. Nothing succeeds like success.

Except failure.

Lost in the debate over Leno and NBC and what Fox will do is that these companies don’t control the future. They are weaker than they were five years ago.

They are all actively or through poor decision making pissing away their audiences.

Cable television seems to be the beneficiary of cheap programming decisions that Zucker made when he stripped Leno across the schedule five days a week to save major production costs.

Now, there is new research that shows NBC’s Jeff Zucker’s poor late night strategy is helping his cable competitors. It’s as if network television viewers just said to themselves, hand me the remote and started exploring niche cable channels.

As some media watchers predicted, 'The Jay Leno Show' has, in fact, turned out to be one of the biggest mistakes in television programming history. Fans of Leno at the 11:30 hour have failed to migrate along with the former Tonight Show host, leading to a shocking 45 percent drop in ratings for NBC at the 10PM time slot over last year in the key 18-49 demographic, according to Media Life Magazine.

Yet, despite this, ABC and CBS have combined to post only a .1 ratings increase during this same time-frame. So if NBC's former viewers aren't watching 'Leno' and they aren't watching CBS or ABC, what exactly are they doing with all that extra free time? Reading a book?

Cable channels are seeing a 1.6 ratings increase over last year in the time period for 18-49 year old viewers. You can check out which cable shows are leading the charge here.

It’s not clear whether NBC or the other networks can someday get these viewers back. They may be lost forever to DVRs and bad programming decisions.

And Zucker will soon be working for a cable company when Comcast takes over NBC Universal. You and I should be so lucky as to have the nine lives this guy has.

Does all this sound a warning for radio? You may never get the audience back that you are voice tracking and cheap-programming to death.

Forgive me for talking programming when the radio industry is all obsessed with cost cutting, avoiding bankruptcy and suing people.

Yes, Lew Dickey is reportedly uttering the “s” word more often these days and His Eminence Fagreed Suleman, fresh from saving his ass from the unemployment line, has filed a lawsuit against Mitch Dolan alleging it was Dolan who drove Sean Hannity from Citadel’s ABC.

Oh, really?

ABC execs say that it was none other than the Ultimate Bean Counter himself who spearheaded the Hannity contract renegotiation's. The ABC execs cringed at the thought. And you saw the results. Hannity bolted to Clear Channel’s Premiere after working out a deal to stay on Citadel’s WABC, New York.

I always say, when you screw up, sue somebody – it’ll make you feel better.

Anyway, the radio industry has a serious case of putting its head where the sun don’t shine because while they fire popular local morning personalities, import network repeater radio shows, cut local news and services and try to trick listeners with vanilla flavored voice tracking, radio listeners are going elsewhere in droves.

I know Nielsen or Radar or somebody will issue a report any minute saying everyone listens to radio – not to worry.

But worry.

You lose these listeners and you’re not going to get them back and erosion has been going on since before consolidation in 1996. Radiio average quarter hour listening as been declining since the early 90's.

I’m going to address this at my Media Solutions Lab in a few weeks. Where are radio listeners turning as they listen less frequently to radio?

We may find them spending more time online – depending on their ages. Or perhaps, listening to music. (I took my car that has no satellite radio in for service and I already miss the 30 gig hard drive that has Jerry Del Colliano’s Philly, Soul and Rock and Roll channel. And no commercials. No liners other than ones I do behind the wheel. Voiced tracked radio has lost me and I love the radio industry).

You may be surprised to find ex-radio listeners (and I mean older ones, too) devoting time to podcasts, webcasts and – are you ready – things that their Apple apps bring them.

Christmas Day the iTunes store sold the most apps ever after the iPod Touch became the big Christmas present of the year (praise be to my Apple stock!).

Apps.

Not radio.

Not TV.

This decade will bring great change to the media business and while we may laugh at the corporate CEOs that have ruined our great industry, for those who want a chance to survive, we have to do a better job understanding both technology and sociology.

Consumers have changed and the next decade will be about knowing these consumers better than we have ever known them before.

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How the Music Industry Is About To Change

The bad news is in -- as it has been almost every year since 2000.

Album sales in the U.S. are down year to year 13% and that includes digital revenue according to Nielsen SoundScan.

That’s a decline for eight of the last nine years for record sales.

It’s an ugly scene.

Sales down and that’s with 40% of music purchases coming from online sales – notably iTunes.

It never occurred to the label executives that you can’t make a customer buy what they don’t want to buy. And consumers don’t want to buy what they can get for free.

And they especially don’t want to buy albums – whatever these days.

Downloads sold 1.16 billion songs individually (or cherry-picked, as I like to say) – that’s up 8.3%.

But before you get too excited, that 8.3% increase must be compared with a 27% increase posted last year compared to 2007. So when is a lot not good enough – when analyzing downloaded music sales.

SoundScan does some pretty creative “research” by combining album sales with what it calls "track equivalent albums” -- 10 separate song downloads as the equivalent of a single album purchase. Even with that monkeying around, sales fell by 8.5%.

In my opinion, 2009 was another year without the next Beatles or a new genre the equivalent of rap or hip-hop. No killer music trend is predictable because record labels are into cutting costs and not going out and finding new artists, new music and new genres.

But the lesson is never learned.

It’s not nice to screw with the consumer – especially today, when consumers have so many choices.

Obviously, consumers spend lots of money on albums and downloads and Apple apps and monthly cell phone fees and on and on. But the record industry wants to rebound from its nine-year slide the old fashioned way -- dictating what they think consumers should buy.

The labels are old school but now Apple is the new record industry.

And in a few weeks, there will be another way to push music to consumers on Apple's cool new tablet device (announcement expected January 27). When Steve Jobs conned the labels into thinking he was going to help stamp out illegal downloading of music back in the Napster days, they never dreamed that they were creating a monster.

That “monster” sold lots of what he wanted to sell – iPods, then iPhones and soon tablets. In the record industry today, music is no longer the star. It is the fuel that drives the sale of devices – iPods, iPhones, iTablets, smart phones, etc. And the new gatekeeper is this mysterious genius named Steve Jobs.

You could never have created a music maven like Jobs – only the record labels could in their shortsightedness, their unwillingness to buy Napster and be a player in the digital world or their inability to see what the consumer wants.

They are not alone.

Netflix did a deal with the devil – I mean, Warner Brothers – to allow Netflix to have access to a wider variety of movies online. Currently, if you rent a Netflix DVD you have about 100,000 titles to choose from. Rent a movie online and you have only about 17,000 choices.

Now, with the new deal that presumably the other studios will emulate, Netflix will have a ton of content, but wait …

Because that’s what a renter will have to do -- wait!

They will now have to wait 28 days to access new movies so as to reduce the appeal of Netflix when compared to buying a DVD. That's how Warner Brothers wants it and damn the consumer.

Like holding back their releases to Netflix is going to sell more DVDs.

In other words, Netflix gets a lot of new titles for online distribution --- after all 70% Netflix customers rent older titles and that is a big part of it's deal with Warner Brothers. But to put a time delay for Netflix customers so Warner Brothers can think it will sell more DVDs is compromising Netflix.

And they are driving Netflix customers to competitor Blockbuster to rent the DVD if that's what it takes.

What a lousy deal.

More content at the expense of new titles – at least for 28 days.

Of course consumers are independent and they may decide to watch fewer movies using these outlets. After all, Apple may have something to say about all this in the next few weeks. The Apple tablet could have a nice ten-inch screen very suitable for watching movies direct from the iTunes store. That’s why ignoring the consumer is a loser of an idea.

If Apple makes a tablet that allows a consumer to read books, periodicals, scan the Internet, listen to music and view videos, watch TV shows, movies and/or offer streaming music using monthly subscription plans then both Netflix and Blockbuster are headed out of business.

And that brings me back to where I started – the record industry.

You need look no further than a desperate, outdated industry trying to force its will on consumers to see how it is all going to turn out.

Even these powerful people couldn’t muscle consumers into buying whatever it is they are selling.

And then Apple comes along again and puts everything consumers want into their hands at a reasonable price to enjoy on a very cool portable device.

And that’s how the music industry is going to change as well.

Apple will be the enabler. And artists can go directly to an ever-increasing audience of tablet owners but in the end the magic is no longer in the music (as the Lovin' Spoonful used to tell us).

The magic is the tablet.

The music is what fills the tablet.

Artists, arrangers, writers and producers will soon be able to bypass the labels like never before getting direct access to that mass audience.

And the music will exist to service the electronics industry -- not the other way around.

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Why Failed Radio CEOs Get Contract Renewals

How does a CEO drive a company into bankruptcy and wind up getting rewarded for it?

It happened again late last week.

Let me set the scene.

It becomes public that Regent, the small market radio group, failed to make a loan payment by their December 31st deadline.

But wait – there’s more.

CEO Bill Stakelin blows off the lenders because they have a bigger concern – that they will have to take his money-losing company back. That -- in and of itself -- shows you what money people think of the radio industry.

Keep my investment.

I don’t want to take you to bankruptcy court.

Unless …

Unless ... I get to dictate the terms.

That’s what has happened in the Citadel prepackaged bankruptcy and the impending NextMedia implosions. The clueless lenders and their losing management teams get to negotiate the terms of a prepackaged deal that they can take to a bankruptcy judge and, well – start all over.

Now here’s where it gets sticky.

Stakelin and Regent CFO Tony Vasconcellos suddenly get the board to extend their contracts and give them a raise -- and I do mean suddenly.

That’s Bill Stakelin, the guy who made all the operating decisions that didn’t work and Tony Vasconcellos, the guy who made all the money decisions that, -- well, you get the idea.

Look at the timing – only a snake in the grass could appreciate the art of this deal.

December 31 – Regent doesn’t make its loan payments. Period.

December 31 – The Regent board finds it fit to rehire their two top guns. Period.

Coincidence?

Nah.

It’s how the game is played.

So while employees are getting let go and taking pay cuts – adding more duties, these two screw ups get a new deal.

Stakelin renews for a base salary of $366,057 a year, with an annual escalator hitched to the Consumer Price Index. A bonus clause: eligible for a Senior Management Plan Bonus of up to 80% of the base salary ($292,846) contingent on hitting financial targets.

And there’s still more.

Stakelin can buy a lot of cigars with the 2010 Special Bonus Plan he is also eligible for.

Plus the usual perks – four weeks of paid vacation (with no forced furloughs, I'll bet), insurance, company car (presumably not a Kia) and one other tiny weeny perk --

The company pays their taxes.

Folks, I’m not making this up.

In effect, Stakelin and Vasconcellos get to have the honeymoon before the wedding – and remember, the wedding is a happy event for them called prepackaged bankruptcy.

Now you may read in the happy talk press that this is just business, but it’s monkey business to me.

So why?

1. Stakelin has no choice but to file for bankruptcy so you’d think he has to roll over and play dead to his lenders. No way. Stakelin can make it miserable for the lenders. He can drag a bankruptcy proceeding out. So by stealing a midnight deal, the lenders get the company the way they want it for a small price – the managers who took the company down.

2. At the heart of it all, the lenders don’t want the equity back. They don’t want to be in the radio business and certainly don’t want to operate the assets. And yes, they plan to sell the pieces when the time is right for whatever they can – presumably a profit. Not bad since they are also writing down the loans that never got repaid. Mel Karmazin had it right. You notice he never sold anything when he ran Infinity because he always told the Street that it was worth much more than it probably was and he didn’t want to be proven wrong. The Regent guys are going to be proven wrong.

3. If you haven’t already noticed, the country is in a big banking crisis. Nothing has been done to fix it. No real oversight. Loose controls. The entire economic foundation of business is in trouble and owning anything is going to be a challenge if I am correct.

One money person told me, “Jerry, the very thing you don’t like about all these radio cutbacks, lenders love”. He said they love it when guys like Lew Dickey come down hard because that’s what they want.

Jason Zweig wrote a fascinating piece in The Wall Street Journal recently about why replacing failed CEOs isn’t always the solution either.

He quoted economist Antoinette Schoar of MIT’s Sloan School of Management who has studied the effects of hundreds of management changes. The question: “If you took the CEOs with the best track records and brought them in to run the businesses with the worst performance, how often would those companies become more profitable?”

Roughly 60% of the time.

Better than not doing anything but not a slam dunk.

Zweig says, “The real force in corporate performance isn’t the boss, but regression to the mean: Periods of good returns followed by poor results and vice versa. High returns attract fierce new competition, driving down future profits; low returns leave the survivors with fewer rivals, leading to better results down the road.”

So, it’s not about what you and I want it to be about – competence, fairness, rewards for a job well done, or excellent work environments.

It’s a game that the bank gets to play -- where failure is rewarded with more money and new contracts as long as the bank eventually comes away with what it wants – which is – the real estate.

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