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First Mediaworks

10/21/08: Here Lies Radio
A message about the death of radio, from Radio Ink Publisher Eric Rhoads

A harsh, bitter-cold wind blows across the worn gravestones as the somber men in black lower radio's coffin deep into the frozen ground. She has outlived her friends and family, and there is no one present to mark her passing. There are no flowers, no mourners, and the only people present are the cemetery crew, who pull up the backhoe to shovel the dirt into the grave. No clergy is present to boost the spirits of the living and send the deceased into the afterlife, no friends or family to toss a handful of dirt or a rose on to the coffin. The plain tombstone says simply, "Here Lies Radio: November 2, 1920- November 2, 2009."

Doom and Gloom:
It seems like everyone is mourning radio's death already. Members of the NAB board were reportedly moping around and sharing their stories of doom and gloom at the recent board meeting, which was like a wake for radio. Friends phone me with their stories, their worries, and their whining about the business and the problems they face. Clearly, there is uncertainty about the economy, the election, and our weary advertisers. Here in San Francisco, one giant Toyota dealer whose breakeven requires him to sell 1,700 cars every month sold only 60 cars in September. Reports say one out of five car dealers, our biggest advertiser category, will go out of business. What are we to do?

Will You Bury Radio?
Look, I'm as frightened as the next guy. If radio suffers, I suffer. But the bottom line is that there are things we CANNOT change and there are things we CAN change. We cannot change the economy. We CAN change our personal outlook. Though I'd love to wallow in your misery for a while longer, I refuse. It's time to stop the fear and kick yourself into the reality that you had better do something. You can start with your own head. Change it.

The other day, following the market crash, my first instinct was to react. "Cut back now" is what my intellect told me to do. "Wait, Eric" is what my gut said. I realized that if I reacted immediately, I'd be putting the livelihoods of my employees (and their families) at risk. Though, like you, we have cut every possible excess in our company and then some, I knew my reaction would cause a chain reaction -- and so will yours. Your terminations will impact local businesses, as will their terminations, and so on, and so on. Therefore I decided that I am going to try to hold on to the status quo as long as possible, even though there may be sacrifices. Why? I don't want to put the economy in worse shape and I don't want to lose my most valuable resources. For me, that single attitude adjustment, to not overreact, has helped my state of mind and reduced the gloom. Naive? Perhaps.

Failure Is Not an Option
I cannot speak for you, but I refuse to fail. I refuse to allow radio to fail. Therefore, my personal oath is that failure is not an option. Radio will survive at all costs and will emerge stronger. Like you, I don't need a pep talk right now and a bunch of mumbo-jumbo words about how great things are going to be. Chances are this will be the struggle of our lifetimes. My father always tells me that the blue steel, the strongest steel, is made by exposure to high temperatures and fire. We will go through the fire and emerge a stronger industry. But it must start with your refusal to accept failure.

Hit the Reset Button
Let's be honest. Our advertising has not exactly been strong for the last seven years. Thankfully, our audiences remain strong, but maybe this fire is just what we need to force us to reinvent. I, for one, don't want to be in an industry that settles for the 5 percent-7 percent crumbs, if that. If you're going to do something, why not be the best? Why not be the most successful? Yes, it's easier said than done. But if you were inventing radio today and were getting ready to launch it, what would you do first? YOU'D GO TO THE CUSTOMERS FOR IDEAS.

It's time to CHALLENGE ALL ASSUMPTIONS. Why do we do what we do? Why do we sell the way we sell? Why do we run the commercial units we run? Since we make most of our revenues from ad units, and since that revenue is dwindling, why not decide to make all of our money elsewhere? Why rely on commercials anymore? Chris Anderson of Wired says money made in the future will be made on the concept of 
Free! There is nothing written that says we must make our revenues from commercial units and advertising as we know it. Why not experiment with something new?

Aluminum Siding 
My dad used to own a manufacturer of aluminum siding. One day I sat in on a meeting with his ad agency when he said, "Every one of our competitors shows before-and-after photos in their ads. Your challenge is to sell siding without before-and-after photos. You need to reinvent the way siding is sold." They did. If I were running a giant radio group today, I'd invest to fly in the top 10 minds who are not in radio and ask them to reinvent how radio should generate revenue. I'd bring in people like Ester Dyson, Paul Saffo, Richard Saul Wurman, Mike Hawley, Nicholas Negroponte. We have a dynamic product that reaches everyone every day, yet advertisers are not clamoring. We've been fighting for advertising dollars and we never get what we think we deserve, yet we know how radio can build a local business into a local powerhouse. We've seen the results when it's done properly. But, for whatever reason, we have not convinced others to be attracted by what we offer. So why keep beating our heads against the same wall? Let's change the game. I don't have the answer, BUT creative ideas, like receiving shared revenues from iTunes Tagging, could generate millions of dollars. Let's reinvent and turn things upside down. We have to look for more solutions like these.

Investing in the Future
Some smart cookie will find a way to buy up the stock of some of our radio companies and get the bargain of a lifetime. Radio stocks may be grim right now, but radio has a great future, albeit one that may require reinvention. This downturn will result in fresh ideas, new approaches, and new ways of doing business. The starting point is our willingness to seek new ideas, listen to ideas different from our own, and take action. For instance, I have a programmer friend who has reinvented the way live radio is done, providing a stellar product cost-efficiently. Another friend has reinvented the way he sells radio in his local market, and he is taking 60 cents of every radio dollar out of the market. Another believes he has found some significant answers by employing the "lean" process, in which he is expert, to radio. Yet, in all three cases, they cannot get the attention of the people running radio companies, all of whom could benefit from fresh ideas. Most who say they want new ideas don't seem to be exploring them. If we seek answers, and we don't block ideas with "That will never work" or "We can't do that," we will reinvent, with success.

The Best Buy Model
One of the benefits of being invited to the Google conference was the new friendships I made. One such friendship was with Brad Anderson, the CEO of Best Buy. Brad shared how his employees reinvented Best Buy through the use of technology. By employing different interactive-tech solutions, he empowered his 165,000 employees, down to the lowest levels, and offered them a chance to place their reinvention ideas in front of all their fellow employees. Employees posted their ideas, and other employees voted on them by investing in "stock" in the ideas, with employees buying the "stock" based on how strongly they believed in an idea. The system let Brad track acceptance of ideas by store, region, and state to see which ideas the employees believed in.

Having involved the employees, Brad had to respond to the ideas and couldn't play the top-down "Here's a reason that idea won't work." As a result, Best Buy reinvented itself, came up with many great initiatives, and improved its business significantly. In one case, the design of every store in the chain was changed based on the idea of one clerk at a small-town Best Buy. In another case, the entire order-entry system was reinvented because of the input of a salesperson at the store level. The Best Buy model Brad told me about is not to have autocratic decisions made by top executives, but for decisions to be pushed to the local store level with strong employee participation. What if radio were to listen to the ideas of its employees? What if radio got away from "McDonald's-like" franchise systems (which don't seem to be working anyway) and moved back to local managers making local decisions? After all, employees are the rubber that meets the road and are closest to customers and listeners. What if radio had interactive systems that gave employees and advertisers the ability to give us their ideas, while other employees and advertisers voted on them? No idea is a bad idea. Now is the time when we need to try everything. 

Mourning Has Broken
It's time to stop mourning the death of radio. It's not dead. It's not dying, and it won't die unless you give up. Enough is enough. We need to face the music and deal with adversity while being proactive, inventive, and innovative. When AM radio was dead, it was adversity that resulted in its reinvention and the rise of talk radio. This is really no different. Things are always darkest right before the light. This is the dawn of a new era of radio. It's up to you, and it starts with your belief that we will survive, we will thrive, we will find a way to get through this, and we will emerge stronger. It starts by seeking the positives and not sharing the negatives.

When someone gets me on the phone and starts whining about the economy, I either change the subject or try to change their perspective. NO MORE WALLOWING IN MISERY FOR ME. What about you? What leadership are you offering your employees and your co-workers?  So, rather than talking about what you've lost in the market and how gloomy things are going to be, let's talk about what we can gain. Sometimes a fresh start is the best possible opportunity. Fortunes were made during the Great Depression. Market dominance often shifts during recessionary periods because market leaders stop advertising to cut expenses while underdogs get aggressive and build their brands at a lower cost and with less resistance. How can radio take advantage of this opportunity? Let's turn this lemon into.... well, you know.

Eric Rhoads

PS: Your radio station, your personalities, your influence on the local business community can have a HUGE impact on the local and national economy. I know that disaster sells and may be good for ratings, but.... let's all take great caution with the words and message we utter on the air and on the streets. Maybe radio as an industry needs to use the power of its airwaves to change the outlook of America and make them see the positives.  If we believe that 94 percent of Americans listen to us every week, and if we believe that a major part of changing the outcome of the economy is the confidence of America's people, then radio can change the world. It starts with YOU.

PPS: The crew at Radio Ink is working hard to make sure that our magazine is reflecting things that radio can do to reinvent itself. We'll also make sure our conferences, like the upcoming Forecast Conference (Dec. 2, New York), the CONVERGENCE Internet conference (Feb. 9-10, San Jose) and the Hispanic Radio Conference (May 6-7, Los Angeles), are focused on fresh solutions and new ideas for radio. Our Forecast conference is already seeing some unusually early registrations; probably a result of the need for new ideas. Our Co-Chairmen, Jeff Smulyan and Drew Marcus, are working hard to create a conference that is relevant to the current state of radio and solutions we can explore.


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