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ENOUGH'S ENOUGH
By: WALTER SABO
ENOUGH'S ENOUGH. BY WALTER SABO
Forty-three years ago Alan Freed paid dearly for doing the right thing. He told the truth. He said he was not going to sign a paper declaring he didn't take payola. The ABC legal department (he was on WABC not WINS) was none too happy. Even though dozens of DJ's, had questionable relationships with the music industry, none of them was vilified like Freed. He wasn't going to sign that affidavit and, partly for that reason, ABC was not going to defend him.
Consequently, ABC established a very strict policy regarding the addition of new music to their owned stations. It included strong guidelines about all aspects of a radio executive's relationship with the music industry. For example, a record rep couldn't buy a program director lunch. Songs were added by two major criteria: It had to be top 30 on all three published charts (Billboard, Cashbox and, at the time, Variety), and a committee of station staffers voting in a group meeting. This "onerous" policy was firmly in place during the reign of the most successful CHR's in history: WABC New York, 5 Million cume, and WLS Chicago.
Throughout the sixties, seventies and eighties, there were similar policies at NBC, RKO, Group W, Emmis, and Nationwide. Despite these policies there are no corporate dictates ordering a station to add a song. Monitors, yes? Centralized compilation of data? Yes. Amazingly the popular press and the handful of critics of radio believe that centralized control actually exists and was invented by the Mays Family.
NEXT TIME A NEWSPAPER REPORTER TALKS TO YOU…
Guess which industry is being covered by this article in the Seattle Business Journal?
"Xxxx said it plans to integrate xxx with its California-based xxx to create a single company, resulting in "significant cost-savings."
"The industry, said the company insider, is becoming dominated with well-funded big companies, and low-cost small companies, making it hard for mid-sized companies such as xxx to compete."
That quote is referring to Canadian corporation Hogue Vintners gobbling up all of the independent wineries in Washington State.
You'll find identical articles in trade publications about the consolidation of the Aluminum industry. Banking. Automotive (Ford owns Volvo and Jaguar.) Rental cars. Insurance. Trucking. E-data, Food retailing. Semi conductors. Newspapers. Yes, newspapers.
Newspapers, like radio, must deliver 50% profit margins. Dozens of local community reporters have been fired, their jobs taken over by regional reporting teams. Maybe that's why so many local newspaper columnists are afraid of consolidation in radio!
Internet search the phrase: "consolidation of industry" and you will see hundreds of articles covering the "inevitable"---always inevitable---consolidation of every imaginable business sector.
TELL SOMEONE ELSE TO TELL YOUR TRUTH:
Here's the problem. Without a formidable PR campaign, handled by PR professionals funded by the major radio groups, the mythology of evil corporate empires and the myth of the repression of all creativity is becoming a reality in the mind of the public. That will hurt radio on all levels: Ad dollars, teen listening levels, employee recruitment, and promotions.
Long before consolidation, back when owning fourteen stations was a huge workload, creativity rarely ran wild in halls lit by on-air signs. There were a lot of pizza-fed PDs wondering if a new idea "has been done somewhere else." A few people get new things on the air because, frankly, we just don't care what the crowd at the bar thinks. Determined individuals, not corporate culture, compel the creation of new technologies, formats, selling strategies. Those driven individuals have not given up, their personalities have never been subject to government regulations.
Radio's success among listeners demands a qualified PR push in the popular press. It's strategic to be proactive rather than reactive.
HELLO, DID YOU GET THE MEMO? AMERICANS LOVE RADIO. THEY LOVE IT SO MUCH THEY HATE IT WHEN IT'S INTERRUPTED WITH HORRIBLE COMMERCIALS.
The addition of new music and new ideas to commercial radio stations is an insanely democratic act. Far more so than the addition of network TV shows for the fall season. The results are stunning.
Here's the real report card on radio:
98% of North Americans own more than one radio.
92% use radio every week
65% use it every day.
That's astonishing. No one is forcing Americans to put two radios in their bathrooms, four in their SUV's, one on every piece of equipment in their gym. Strangely, those overwhelming stats rarely appear in sales presentations. They are treated like statistical garbage.
"Hey, that's nice," comments the hardened sales executive, 'But no one makes a buy based on that." Actually, every single buy is based on that. It's that volume of listener acceptance that makes our targeted demo sales strategy work. Even in "narrow demos" radio delivers lots of bodies.
No consolidated company is capable of forcing listeners to use the medium. They use it because the programming radio delivers is coveted.
Q101…2…3 BIGGER THAN CNN:
Cable companies get sweaty when they place two cable boxes in one home. But, gee they still don't have any boxes at all in one third of American homes.
Trouble selling nighttime radio? Really, take a look at the ratings for CNN or Fox news in the morning in just your city. Can't find those ratings? No you can't.
They exist. They are a closely guarded secret because the audience levels are sooooooooooo pathetic.
On most nights, your station has more listeners, in your city, than CNN has viewers in your city. Let's repeat: Most nights, your station has more listeners in your city than CNN has viewers.
Cable, TV, magazines, newspapers, and Internet salesmen START their sales presentations with "distribution of the medium" numbers. Radio's distribution numbers beat them all, and we hide them. Let's just change that.
Arbitron's People Meter is a blessing. It will show same person, same second usage of all media. It will show that your morning show has more listeners than CNN has viewers in your city at 8 in the morning.
RADIO PROGRAMMING: DEMOCRACY IN ACTION.
BLAME RESEARCH FOR INCREASING THE VALUE OF YOUR BUSINESS:
MUSIC RESEARCH is not evil; it's done more to increase the intrinsic value of a radio stick than anything--including consolidation. *(No, Sabo media doesn't sell music research.)
WHERE ARE THE BAD STATIONS?
There used to be bad radio stations. No, not bad like some stations are today. Today 99% of all stations are competent, not great, but always competent. These were incompetent. There were many in every city. These stations broadcast lots of dead air, bad audio quality, and dozens and dozens of songs that were chosen on a hunch by the DJ.
The result was that only a handful of stations were viable. Two or three stations had dominant market shares and the rest struggled just to pay the electric bill. Music research increased the value of every station that applied it. For just a few thousand dollars, any station could tap into the musical passion of a vast audience. Prior to music research, listener passion was only tapped by a tiny number of programmers and DJ's who had golden guts. There weren't many of them and therefore there weren't many successful stations in a market.
A company that doesn't invest in audience research is suppressing the upside value of their stations. They are failing in their obligation to their investors.
THE NOBLE DJ, "SURE, I'LL PLAY THAT FOR YOUR FRIENDS."
It's very funny to read our critics rant about how the nobility of the DJ has been squashed by corporate giants. No jock who picked his own songs sweated over the artistic impact of every selection. They were often more practical, selecting songs that appealed to the hot voiced honey on the request line, the urgent appeal of Vinnie who stuffed a few bucks inside the album, or the need to spend some special time in the bathroom. God bless Dylan's LIKE A ROLLING STONE.
Music research took the selection of songs from the hangover hunch of a PD and put it in the hands of the public and, voila, every station grew a ratings story. Instead of two or three stations dominating the ratings, as was the situation before music research, the ratings leveled so each station has a "ratings" story in their target demographic. The result is that almost every American has a station they can call, "their favorite."
This is a good thing. It secures investment risk in the business of radio. It makes ratings predictive and stable and buyers know that the audience levels will be consistent. A much better deal than TV.
To sum up: Consolidation has not changed the method of music selection. The first major change took place after the first payola scandals in 1960. The second came in the late seventies with the advent of passive music research. Consolidation has not changed the way music is selected; it hasn't changed in about twenty-five years.
WE ARE NOT ABOUT THE MUSIC. WE ARE ABOUT THE AUDIENCE THAT LOVES THE MUSIC.
No radio company is on a mission to repress musicians. No company keeps "all the music" off the air. The appetite for obscure, noble garage bands is no greater today than it was pre-consolidation.
Yes, male teens are hungry for new music and they download it from the Internet. What do they download? Here's the top seller list from the cool, oh-so-hip Apple iTunes store for the week of May 24, 2003. In order:
Clocks Coldplay
One I Love. Coldplay
Miss Independent. Kelly Clarkson
Get the Party Started. Pink
Unwell (Live Acoustic) Matchbox Twenty
Hole in the World. The Eagles
Lose Yourself (Soundtrack Version)
Eminem. 8 Mile
Soak Up the Sun. Sheryl Crow
C'Mon C'Mon Rock Calling All Angels (Radio Version)
Looks like the cool kids are paying to hear the play list on Z-100, the Clear Channel CHR in New York City or KIIS in LA. (By the way, number 22 on the iTunes top download list is Unchained Melody by the Righteous Brothers.)
JOB DESCRIPTION.
It has never been radio's job, as some suggest, to serve the music industry or musicians. Nor is it their job to serve radio. Honestly, most musicians only think they are being served if all tracks from all of their albums are played all the time. Music companies are not there to serve musicians, they are there to make money. The more new "product" they can get on the radio, the more money they can make. Therefore music companies only think they are being served if radio plays only new music and only from their label.
As one of the executives who drove the masses from AM to FM in the seventies, there were two things that captured listeners---neither of them was "new music."
It was a new style of presentation of familiar, popular music and fewer commercials. Yes, FM played the "long version" of hits, but they were still hits. More FM radios were sold by the long version of The Doors' Light My Fire in 1967 than by obscure cuts.
The research was clear and overwhelming, the majority of FM's growth was the result of a hipper presentation style and fewer commercials. Hits with fewer commercials did the trick. AM/FM didn't hit parity listening levels until 1979 when AC became the hot format and Barry Manilow and Kenny Rogers came out of both speakers.
A lower commercial load was the other driver of audience from AM to FM. It wasn't planned. Few advertisers bought FM and the big gun sales talent wanted to work at the big gun AM stations where they could make big bucks. As the audience shifted to FM, so did the dollars. At first, programmers were successfully vigilant at maintaining low loads and, more importantly, at maintaining commercial production values. The commercial had to be produced "right" for the target audience.
Higher spot loads today, demand rigorous rules for maintaining commercial production values. Want to add more spots, add more quality production people and copywriters.
WHERE ARE THOSE OTHER POINTS OF VIEW?
Frequently, organizations call us to ask us how to get other points of view on to talk radio. Where is the liberal Rush?
Point one: There are more stations airing different points of view today than at any time in history. In 1983 there were 59 full time talk stations in America. Today there are over 1,300 and more going on every day.
Point two: You know what those stations need? Callers. They need calls. It's really hard to get calls on most talk shows. Try it yourself; call your local talk station at any time of day, bet you don't get a busy signal.
Until the 80's most cities NEVER had a telephone talk station. Listeners often didn't understand how talk radio worked. When WHBQ, Memphis started as a talk station, the research showed that many listeners didn't understand that they could actually call-in, they thought the callers were radio actors. Really.
Different point of view? Yes, please, we want it badly. So, call-in today.
The proliferation of talk radio, the fastest growth format in the history of electronic media, means that there have never been more points of view available to the audience.
VOICE TRACKING would be evil if the argument against it was true. Here's the argument against voice tracking: Local DJ's serve a vital local function to build community and relate locally. In the memo collection of every PD is the one urging jocks to be "local." Most PD's issue that memo every quarter.
The memo encourages jocks to be aware of street fairs, church and school events, major road closings, new stores, situations in city hall, anything affecting their target listener. The reason the memo is written and distributed often is that most jocks don't follow the guidelines. Instead they talk on the phone during songs and parrot DJ phrases. Sadly, most local jocks rarely present local content. Ugly, I know, but somebody's got to say it.
If jock content were always, truly local, if they worked hard to make local references in every single break, if they took every opportunity to become part of the community on and off air, the value of locally employed jocks would not be up for debate.
WHAT JUST AIN'T RIGHT.
More commercial inventory has not resulted in more revenue share. Radio ad revenues have paced with total ad revenue increases for thirty years. We have not captured a larger piece of the pie. We should have. Here's why:
For all the hoopla about "non-traditional" revenue, it distracts from the fact that we could do a better job of selling what we have. Nights and weekends for example. Often, the second most listened to daypart in all of radio is Saturday 10-3. Not Mon-Fri PM Drive. Many stations have more listeners Saturday middays than they do 6-10 AM Mon-Friday. Check. That daypart should not be "bonused up", it should be marked up.
Human nature "goes for" the easy kill. A consolidated sales department can't help but sell the easier radio station. In some clusters, a whole radio station has been turned into "nights." Everything is bonused up on one station to bring in the pricing on the others. It requires extraordinary local management to prevent that very human phenomenon from taking place in a consolidated sales department.
While deregulation has made the medium more appealing to investors and financial speculators, operationally, radio has not improved its status as an advertising medium at all.
Here's the math.
In 1970 there were 3,000 viable radio stations.
Radio captured 8% of all advertising revenues
In 2003 there are 10,000 viable radio stations.
Radio captures 8% of all advertising revenues.
Consider the vast increase in inventory. Contemplate the thousands of additional salesman on the street. Review all the inventory increases that you have been "handed" without discussion.
Controlling more inventory has not given consolidated companies more leverage with advertisers to command appropriate rates, it's just provided more spots to "bonus up." Therefore the advertiser has benefited from consolidation. While consolidated companies mandate managers to generate 10 or 15% more revenues annually, rates have not increased at those levels. How are those revenue goals achieved? More spots.
The result has merely been to lower the average unit rate, increase inventory supply, erasing our ability to leverage and sell the product for what it's worth.
MONETIZE REALITY.
Consolidated ownership is terrific. (After all, what's the magic number? When only 14 stations could be owned by a single company, it was the biggest corporations---not humble mom and pops that owned the max, i.e.: ABC, NBC, RKO, Nationwide Insurance, CBS, Westinghouse---big companies.)
There remains one constant, unchanging fact: Listeners use one station, one moment at a time.
Super-serving radio's relationship with the audience by giving each listener the best possible experience and each advertiser the best possible environment is the proven way to build the equity value of a radio station. It is reasonable to believe that the best organization for super-serving our clientele is one manager, one sales manager and one program director per signal.
A few of the earliest consolidators, such as Steve Dodge of American Radio Systems, initially centralized management of his major market properties. Quickly he realized that the results were better with one General manager, one program director, and one sales manager per station. He decentralized, his stock soared upward.
Radio airtime is worth a lot.
It's worth so much that our entertainment, our shows, are used by more Americans, more often, and in more places than any other medium. When can we price appropriately? When we become proactive in all levels of public relations to sell the stunning story of the listeners' love of radio. The PR campaign could refer to our audience acceptance number and be titled, "Radio, the 98% solution."
Walter Sabo
Chairman
SABO media
551 Fifth Avenue
New York City, NY 10176
212 681 8181
www.sabomedia.com
Email: Walter@sabomedia.com
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