No.

Oh! Not substantial enough an answer for you?

Okay.

Absolutely not.

Alright, I’ll explain.

Terrestrial Radio is, without a doubt, suffering from an identity crisis. iPods, Satellite Radio, Online Radio, Pandora, Last.FM, et.al. are all conspiring to make the original Radio obsolete. Good luck. Won’t happen for a long, long time, and here’s why:

1. It’s in virtually every car on the road today. Sure, there’s the aforementioned Satellite Radio (stock price – about a dime right now), 1/8th inch stereo jacks for iPods, etc. Cassettes and CDs in the dashboard couldn’t kill Radio, so I’m not sure why people think an iPod jack could. Radio in the car is easy, it’s ubiquitious, and it’s well-branded. Until the economy sweeps all the cars from the highways, Radio is the media of choice for the motorist.

2. It’s free. Sure, commercials pay for it, but it doesn’t cost money to consume it. You don’t have to pay to download music, either in the form of currency or the threat of legal action associated with illegal downloads.

3. It’s local. Is that a huge thing today? Some say “yes,” some say “no,” but in difficult times, it will become more and more important, and make no mistake, we’re entering difficult times.

Will Terrestrial Radio continue on exactly as it is today? No, it won’t. Radio operators are working hard to move their brands to other delivery platforms, like podcasts, websites, and streaming. There will be a winnowing of the talent pool as tough economic times force operators to adjust (often downwards) the big paychecks of some talent, while using their shows on multiple platforms and in multiple markets.

There will also, most probably, be a shakeout of operators, returning more locals stations to local ownership. The “Mom and Pop” radio station may well return, and with it a more sane and reasonable business model.

But Terrestrial Radio is alive, and will remain so.

If you have any professional contact with the Radio industry these days, you’re probably hearing about layoffs and rumors of layoffs. Not that someone losing their radio job is something new, but two factors are currently causing many in the business to bite their nails and wonder about their professional future. 2009 is going to be a very difficult and nerve-wracking year for most people who make their living in the broadcast industry.

The Economy

Let’s face it. Times are tough. The government is admitting the U.S. (and rest of the world, mostly) is in recession and has been for a year. In truth, many wise people believe we’re in a second great depression, and that fact has already had a profound impact on the radio business, an industry that lives on advertising revenues. Businesses aren’t buying as much advertising as they did in the past, and even though radio is one of the most efficient and effective mediums available, there’s simply not that much money to go around. Even more ominous and important, is that businesses are generally paying for the advertising they purchased on credit from the radio stations much more slowly, or not at all. Collections are getting more and more difficult, and since most groups require their AEs (Advertising Executives – otherwise known as sales people) to do their own collections, those AEs have to spend more and more time collecting past-due bills, thus having less time to sell. Collect they must, though, because usually, no collection, no pay.

As with any business, when there’s less money coming in, less must go out in the form of expenses and employee compensation. There’s no long-term alternative to that, unless you’re the Government, and even they can only do that for so long before bankruptcy. So, as with many businesses in this current financially troubled climate, firings are inevitable.

The economic problems are putting a squeeze on the radio business more today than ever before because of the second factor:

Expansion

There are more people employed in the radio business than there were 25 years ago. Many, many more. The business has expanded greatly through deregulation that occurred in the 1980 and 90s. There was a time when in many markets, every radio station was profitable, even the lowest ranked stations. That’s because there was a very limited number of stations that had licenses granted by the FCC to operate in a given market.  In the 80s, the FCC approved Docket 80-90 that cut the required mileage between stations and created hundreds of new FM radio stations in the U.S. It also allowed stations in smaller towns to upgrade their power output and “move” to the bigger cities, allowing them access to a greater pool of ad revenues.

This allowed a flood of new owners into the business. It also created a huge amount of wealth for a small group of people who had no interest in running radio stations, but just wanted the quick buck they could extract from the system. One well-known (at the time) group made a killing buying small-town stations, moving them in to the bigger market and then selling to a bigger operator. They were able to start and buy radio stations where the big guys couldn’t, because the “front man” was in a minority class that gave him the inside track on license applications. This gentleman would attract money from non-minority investors, use his status to get the license, extract a percentage of ownership, a “consulting” fee for a set time period and then sell his ownership out, moving on to the next deal. I once worked for a company that competed with a station owned and operated by this man’s family, and as broadcasters they were horrible. They literally couldn’t keep the lights on – at one point, the station was off the air for 3 days because they didn’t pay their electric bill for the power to their transmitter. They made millions using their priviledged minority status, though.

When the FCC’s blunder, allowing almost unfettered growth in the number of radio stations operating in the U.S., began to seriously endanger the industry’s financial survival, the Commission relaxed the rules on the number of stations a company could own, and a “bubble” came into being, with companies using their access to vast amounts of credit to bid up the prices of radio stations far beyond what they could hope to support with ad sales. Stations that could expect to bill maybe $10 million in a year were being purchased for $70 million. You don’t have to be a financial expert to see that with a debt load that high, the only way the station can remain profitable is to grow their revenues and profits dramatically. Which some were able to do. Most however, couldn’t, and the companies that paid those extravagent price tags then had to hope to “find a greater fool” to take the stations off their hands at a nice profit.

Again, in many cases, they found such “fools.” All was good as long as the American economy continued to grow in leaps and bounds, but when things turned sour, it turned quickly. The big companies left holding the bag have had a difficult time. In recent months, many of those companies have had to fire talent, support personnel and managers. Radio stations are seldom owned in single operations these days, but mostly operated as “clusters” of up to 8 stations in a market. Over the past 5 years, the operators have worked hard to elminate redundant operations and people in the clusters, having Program Directors program one, two or sometimes even 3 or 4 stations at once. Traffic and continuity personnel now work for multiple stations, as do sales managers and AEs. But most of those efficiencies were wrung out of the operations before the economic downturn. Now, the operators are again going through their budgets with a fine-toothed comb, looking for big expense items that don’t earn enough money to pay for themselves. For the most part, that’s high-priced talent, whose elimination is the most visible, both to listeners and the industry.

All of the big companies are cutting on-air personnel, and chances are, more is coming. Reading the discussion boards on Radio-Info.com will keep radio fans and workers informed about the “scuttlebutt” inside the radio stations around the country. With companies like CBS, Entercom and Citadel (among others) already having cut big-name talent, the rumors have been flying this past week about Clear Channel and their rumored cuts. According to various industry sources, the company had corporate manager meetings in Dallas last week, where local managers were reportedly handed their budgets with (again, reportedly) the names of who stays and who goes. It’s hard to say if this is true, but it’s not outside the realm of possibility.

The biggest difficulty many people in the industry have, is truly understanding that radio is a business, and a business has to make money, or cease to exist. There’s plenty of blame to go around, but not nearly as much of it should be shouldered by the operators of the big radio companies than some on the front lines would like to believe. It’s easy to blame and call CEOs and managers out for incompetence, but not always warranted. As the above suggests, it’s a very complicated problem with much blame to go around. The situation radio is in today has roots that extend 25 years in the past.

It’s going to be a difficult time for those left in the radio business. Consumers have so many more choices for music, information and entertainment today. What radio and television had a virtual lock on just a few years ago, isn’t all under their control today. Many different technologies and companies are competing, not only for Radio’s listeners’ ears, but also for their ad revenue.

Expect change in 2009. Lots of it.

The world’s largest broadcaster, Clear Channel, has released an application that turns the iPhone into a radio tuner, allowing the user to listen to a growing number of its stations around the country. The iHeartRadio app is fast, sounds great and is free to download on your iPhone or from the iTunes Music Store. Combined with AOL’s app, which features stations owned by CBS and the previously mentioned Minnesota Public Radio app, the iPhone is quickly becoming an excellent replacement for most portable radios.

The internet has long represented a threat to terrestrial radio, with a seemingly unlimited supply of every kind of audio programming from spoken work to niche formats that have such small available audiences, they simply aren’t sustainable on the local level. But now, as the iPhone moves into pockets, purses and belt-holders all over the world, Radio is wasting no time making it a distribution platform. Clear Channel created the online radio portal iHeartRadio.com to bring the internet streams of the company’s radio stations together on one site. The iHeartRadio app currently streams 20 Clear Channel stations and that number is growing.

The effort is far from wasted, as the iHeartRadio application quickly became the most downloaded app at Apple’s iTunes Music Store. So now, that person with the white ear buds listening to their iPhone or iPod Touch may well be listening to a radio station.

The Radio industry believes the iPod is a serious competitor. As iPods of every size and shape fly off the shelves of Apple retail stores, Radio sees listeners opting for non-RF choices, and that is worrying. The industry is responding by making its content available on the iPod and iPhone, trying to get a foot in the door of the new technology. And, for the most part, it’s effective.

When Steve Jobs previewed the iPhone’s ability to download applications in January of 2008 at his MacWorld Keynote speech, one of the programs he showed off was one from AOL that streamed CBS owned radio stations. The iPhones geo-location feature is used to find a user’s local CBS stations. That’s a killer feature. Sure, it turns a $299 hi tech device into an $8 transistor radio, but that’s not the point. Having radio content available on an already powerful device is  a wonderful application of the technology.

More and more, stations and networks are creating iPhone apps that allow users to receive their content via the iPhone. Clear Channel is working on this, as well.

One application I absolutely love is Minnesota Public Radio’s iPhone app. It’s free, and gives an iPhone user the ability to tune into one of three streams, News, Classical (music) or Current. It’s wonderful.

Expect this trend to continue.

I’m sure you’ve heard them. Commercials for “the stations between the stations.” If you’re not sure exactly what that means, believe me, you’re not alone!

HD Radio is a new technology that piggybacks a number of digital channels onto the traditional analog signal an AM or FM station produces. Extra channels mean more programming. Generally, the HD-1 channel is a digital version of the station’s analog programming, and right now most (if not all) stations are limited to that and an HD-2 channel. The HD-2 channels, so far commercial free by agreement among the stations that make up the HD Radio Alliance, are generally programmed with niche formats that may or may not be compatible with the station’s HD-1.

Many see HD Radio as terrestrial radio’s answer to multi-channel satellite radio represented today by XM and Sirius, companies that so far have been almost disastrously unprofitable. Others see HD Radio as an answer to the “inferior-sounding” AM and FM bands. Digital HD Radio is without a doubt, better and cleaner sounding than analog AM and FM audio. The problem is, very few (if any) listeners have been complaining about the sound quality of AM, let alone FM!

HD Radio is a losing proposition. It’s unnecessary. Unfortunately, it’s been incredibly costly to a broadcast industry that’s had a tough year revenue-wise. The launch of HD Radio has been fragmenting to an industry that’s under siege by online and to a lesser extent, satellite radio. Terrestrial radio’s answer to these problems has been to do exactly the wrong thing. All you need to do to see this, is look at the history of broadcasting and see why HD Radio is a dead-end branch.

The early days of radio broadcasting were pure AM (Amplitude Modulation). The first major shift in band-expansion was the adding of the FM (Frequency Modulation) band. FM is naturally quieter and cleaner than AM, and less likely to be disrupted by atmospheric conditions. On the other hand, stations on the FM band are limited to “line of sight” range, as the frequencies that make up the FM band don’t bounce off the atmosphere like AM signals do. Many big AM stations can be heard hundreds and even thousands of miles from their transmitter because of this. Their signals are reflected back to earth by the ionosphere, where FM signals pass right through that layer of Earth’s atmosphere and continue out into space.

So, FM stations began cropping up in local communities, playing music. Younger listeners adopted the new band first, since they found their own favorite music on FM. The cleaner sound of FM was a bit of a factor, but by far, the availability of programming that couldn’t be heard anywhere else (rock and roll, mostly) attracted new listeners to FM stations.

Forgetting about Satellite Radio’s influence for a moment, the people who brought you HD Radio went back to the same well for the promotion of the new medium. Music and content you can’t get anywhere else and cleaner sound. Unfortunately, the former is not true and the latter, not that important to listeners. It was a recipe for failure. No one was complaining about FM’s quality. It sounds fine. The reality of the situation, however, is that in areas of imperfect coverage, HD Radio is clearly inferior, since without enough signal to transmit all the necessary data, the station just drops out. When an FM station gets a little far afield, the signal drops in quality a little, but most of the time the quality drop isn’t discernible to the listener. But with HD Radio, he station disappears, then pops back on, disappears again, etc…Very frustrating and…well, unlistenable.

As for the programming now available anywhere else. Well, simply not true. There’s nothing on the air in any of the HD Radio Alliance approved formats that is so unusual it can’t be found elsewhere at much less cost than the price of an HD radio (still $100 at minimum). Online radio (almost always free), iPods, etc. mean that most any programming a person could want is easily found and consumed.

So, neither of the needs that FM radio served in its infancy (quality difference and programming variety) exists today. Yet the industry insisted on developing HD radio anyway, at huge cost in infrastructure expenses, and the lost productivity of programming and management who now find themselves with another station to program and maintain.

In short, so far HD Radio has been huge sink hole of cash and it doesn’t appear it will improve anytime soon.

Twice a year, Apple CEO and head honcho Steve Jobs gets up in front of a large group of people who ardently follow his company’s operation. The events are the MacWorld Show and Exposition in January and the Apple World Wide Developers Conference (WWDC) in June. The group of attendees to these keynote addresses consists of journalists and fans of Apple products and is always a friendly crowd. As a bona fide Mac fan, I’ve been to two of these events, and it’s a blast.

The 2008 WWDC was a much anticipated gathering this year, because most everyone who follows these things believed that Jobs would announce a new 3G iPhone. They (we) were right. He did. The new product is a freshened, thinner, 3G network capable iPhone that costs much less than the first generation device. Everyone seemed happy.

Well, not everyone. There were few gripes about missing features (there always are). They include:

• No cut/paste
• No video (or video chat)
• No extra storage for data
• No Bluetooth built in for music listening
• No FM radio

Since this isn’t a Mac blog, we’ll concentrate on the issue of the last "missing feature."

In short, the iPod doesn’t NEED and FM radio built in. I must admit, the first time I saw Microsoft’s Zune, I was impressed, because it has an FM radio built in! I thought how…1990s! Now, keep in mind, I make most of my income programming a terrestrial radio station. Why would I slag FM terrestrial radio?

Simple. Because the transmission of energy through a big long piece of metal that vibrates isn’t the only way we distribute our content anymore. We stream it, we podcast it, we post it on the web. And as the iPod develops, it can receive all of those forms of data that contains the content we create. Why do we need a 21st century device that’s bigger and more expensive, just so it can receive 20th century data transmissions? We don’t.

Almost all of our terrestrial broadcasts (including HD) are streamed these days, and now that the new iPhone operating system is coming in July, there are developers working on software that will allow iPhones to stream audio just like a PC. With the bandwidth of 3G networks available, there will be nothing to stop radio listeners from listening to their favorite terrestrial broadcasts on their handheld devices.

CBS and AOL have already formed a partnership to make CBS stations available on the iPod (and won a design award for the FREE software that will be released in July). More will follow. No, virtually ALL will follow.

It’s happening more and more these days. You wake up in the morning, expecting to hear your favorite DJ playing some music, talking about the news of the day, cracking jokes, whatever. But he/she’s not there. You figure “oh well, must be on vacation,” but then you pick up the morning paper and find out the voice you wake up to every day has been fired!

Like many businesses, in this challenging economic time, radio is currently going through a spate of layoffs. Revenues are down, for many in 2007 and for just about everyone in 2008. When the money starts drying up, the radio station has to start cutting. And that means sometimes, DJs must go.

10 years ago, all but the most expensive jocks were pretty safe, because the station always had to have somebody there to push the buttons that played the music, and more importantly, the commercials. Not so now. Almost every radio station in 2008 uses computers with big hard drives to play all the audio, even the between-the-songs DJ patter. Except for most morning shows, most DJs are pre-recorded and often from another city entirely, known in the industry as “voice tracking.” So, when budget cuts need to be made, it’s often the DJ who pays the price. In most places, a regular “live” DJ can be replaced by a voice tracker for a quarter of what they paid the local DJ.

As for the big, expensive morning DJs, there a trend away from those, too. It used to be a station would give a new morning show at least 2 or 3 years to begin to get good ratings, paying them very well in the meantime. On the other hand, successful shows that had slid in the ratings often were still given a great deal of money because of their longevity, or the hope that they’ll be able to regain better numbers. Not so much anymore. Any show that’s not dominating it’s target demographic (women, men, 25-54, 18-34 age groups, etc.) can expect a pretty quick pink slip when times get tough, and they’re most certainly starting to get tough now.

Remember, Radio is a business, and businesses exist to make their owners money. Anything or anyone who doesn’t pull their weight often simply has to go.

Look for more of this in 2008.

Technorati : DJ, Radio

Two of the most often asked questions that come up when someone you’ve just met finds out you’re in radio are:

1. Do you really play my request when I call?

2. Why do you guys play the same songs over and over again?

I’ll take those questions one at a time. First, about requests. Despite what your local DJ (if they even are still local) says, the only way your request will be played is if the song you asked for is coming up anyway. In markets bigger than a wide spot in the road, the music your favorite station plays is on a computer hard disk, and scheduled anywhere from a day to a month out into the future. The day of the DJ pulling records from a shelf in the back of the studio a few minutes before it plays is over. Gone. For the most part, the music comes from a digital system that plays not only the tunes, but the station commercials (called ‘promos’ and ‘imaging’) and advertiser commercials. A computer is used to schedule the music, and then send the data that tells the on-air digital system what to play and when to play it.

There are a number of different systems in use, with NexGen, from a company owned by Clear Channel probably the most successful. Other systems are from Scott Studios (owned by Google, by the way) and RCS. RCS (also owned by Clear Channel) is in the process of merging their Master Control system into NexGen. RCS produces the most popular music scheduling software, called Selector, that is used by programmers to rotate and program the music stations play. Selector, a very powerful and expensive (hundreds of dollars a month for a station to use) is the gold standard for music scheduling, and ironically, still DOS-based! RCS is developing a new program, called G-Selector that is not only Windows based, but a completely new generation of software for managing the music a station plays.

Are there exceptions to this top-down approach to playing music on the radio? Sure. There are request shows, and even some stations that allow DJs some control over the music they play. There’s not much of the latter however, since the stakes are pretty high and lead me into the answer to the second questions about playing the same songs over and over again.

In short, as I said, there’s a lot of money involved in the radio business. Stations live and die by their ratings and can’t afford not to be playing the music that will lead to the highest possible ratings. In fact, many stations spend big money on music research projects, where a group of people who demographically represent the station’s desired audience listen to small snippets of songs and rate them based on how much the listeners like the song, how familiar they are with it and whether they’re tired of hearing it on the radio. Because ratings are determined by both how many people listen and for how long they listen, a station can’t afford to be playing songs that the station’s target audience doesn’t like.

For the most part, a well-researched station will find somewhere between 200 and 400 songs that “test” well enough to play on a regular basis. That’s all. Other songs are either too “burned” (listeners are tired of hearing them) or too unfamiliar to play. For stations without enough money to conduct regular music research tests (which usually cost at least $25 – $30 THOUSAND dollars) there are national resources that aggregate music research and airplay from all over the country and make that information available.

Radio is a business, and the key to making money in Radio is attracting as many listeners as possible. And while it may seem sensible that playing a lot of music that hasn’t been heard on the radio very much would be attractive to a huge number of listeners, that’s not true. For music stations, ratings overwhelmingly favor the stations that play familiar music. Again, there’s just too much money at stake to turn the stations fortunes over to the individual tastes of listeners who call to request songs, or DJs who want to play their favorite songs.

Technorati : Broadcasting, DJ, Music, Radio, Requests

You’ve probably heard them. The commercials touting something called “HD Radio.” You may just be getting used to the little “HD” logo in the corner of your local television station, or perhaps you recently bought an HD TV and ordered the HD package from your cable provider. Sitting in your living room, watching “Planet Earth” in HD is truly amazing. But what’s that got to do with radio?

Media, whether it’s audio, visual or data, can come to us in basically two different ways. Analog and digital. The audio you hear when you play a vinyl record is analog. It’s the product of the transmission of the sound recorded as grooves pressed into the disc. Much like what you hear when you strum a guitar string, what you’re hearing is the disruption of the air between you and the source of the sound.

Digital data, however, is a recreation of the original, made up of bits of data that are either “on” or “off.” Think of one of those pictures that when seen from a distance are easily identified, but on closer inspection are just made up of individual black dots. The music on a CD is a series of bits (again, either “on” or “off”) that when combined into larger groups of bits (bytes) are then organized by a software algorithm (formula) to describe different sounds. When the recreation of the music comes out of your speakers or headphones though, they are turned into analog so our ears can supply something (disruptions in the air between the speaker and you) the brain can understand.

The important thing here, is that when data is transferred digitally, there can be no damage or “distortion” introduced. When you’re listening to a traditional AM or FM radio station, anything from weather to buildings to sunspots can degrade the quality of what you’re hearing. With digital radio, you either hear a perfect reproduction of the station’s programming, or you hear nothing. The HD Radio perfectly plays the string of bits the station’s digital transmitter sends, or in the absence of enough data, plays nothing at all. Digitally, anyway. Most radios revert to the analog signal if a station’s digital stream is missing too much data.

Because each dial position or “channel” on traditional AM and FM radio has more bandwidth available than the stations use, there’s room for a number of HD “side channels.” Right now, HD stations for the most part are using part of that bandwidth for the digital presentation of their primary analog programming, and a separately programmed “HD-2″ channel. Sometimes the HD-2 channel is complimentary to their analog programming, and sometimes is dramatically different.

In the UK, this form of broadcasting has been around for a number of years, but they call it what it truly is: “Digital Radio,” which is much easier to grasp. But, we Americans apparently feel the need for bigger, better and more futuristic, and iBiquity, the HD Radio standard bearer decided to needlessly muddy the waters by using a television term to describe the new radio process. It was stupid, but we’re stuck with it now.

The big American broadcasters like Clear Channel, CBS, Entercomm, Emmis and others have banded together to promote and manage the adoption (hopefully) of HD Radio by Americans. They’ve provided a huge amount of free advertising on AM and FM stations to manufacturers and retailers of HD Radio equipment to try and get the American Public to adopt the technology. Unfortunately, the commercials produced have been some of the worst the industry has seen. Over the past 18 months or so, listeners have been bombarded by confusing ads that amazingly, completely denigrate and disrespect the very stations the commercials play on, offering programming that the ads promise is much better than the old AM and FM stations. The stupidity of this approach is staggering.

The whole thing is stupid for two reasons:

First, why trash yourself for something new and unproven?

Second, the companies gave the HD Radio Alliance enough free airtime to make the Alliance the biggest national advertiser in 2007. And how many radios did that sell? It showed that bad advertising simply doesn’t work.

Right now, the HD Radio Alliance companies agree not to monetize the HD radio channels. They’re basically saying “look, here’s a bunch of better radio programming that’s commercial-free for you to listen to. You only have to buy this special kind of radio.”

Of course in the next couple years, ads will begin to show up on HD-2 channels, but you’ve already bought your radio by then. Many people call that a “bait and switch,” but that’s another story.

Should you buy an HD Radio? Well, if the broadcasters in your area are broadcasting a channel you like, sure! Right now, it’s a great deal. You get a very specialized format without commercials or annoying disc jockeys. On the other hand, if your town doesn’t have a broadcaster offering the format you want, you’ll be buying an overpriced radio that offers you nothing worth the money you’re spending.

Technorati Tags: Digital Radio, HD Radio, Radio

A "Data Processing" error affects the PPM numbers in Houston for a time when supposedly, some of the data didn’t make it to the right place to be tabulated. This is a very, very, bad sign. Sure, all eyes are on Houston, Philadelphia (and soon New York, Chicago and a market near you) and these things are big news. In typical Arbitron style, they’ve said two things (paraphrasing):

1. We found the data and put it where it belongs.

2. Weighting the data we had means the numbers won’t change from our earlier estimates.

So, Arbitron continues to justify further lowering the sample size and selling radio more and more watered down data. Sample sizes for the PPM surveys are dramatically lower than with the paper diaries, and here, they’re making the case that even samples lower than that are statistically valid.

Radio must not let this company and it’s poor record of service to our industry continue to be the authority in how our listeners are counted. But I feel that’s exactly what will happen, to radio’s detriment and Arbitron’s enrichment.

Very sad.

But it’s nothing new.

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