Radio Daze

Aug 05 2008

So you thought the record business was bad?

Turns out that the record label’s best friend/worst enemy is doing as bad or worse— these are tough times in radio-land. News came out this week that CBS, the number 2 operator in the country, is selling 50 of its mid-market radio stations. This comes on the heels of a mass of lay-offs across the radio industry and news of continuing declines in audience. If you think that this is just a natural shift from the old and stodgy commercial radio format to the more progressive, forward-thinking world of satellite and Internet radio, don’t be so sure– Sirius and XM are desperate to merge, as they’re barely surviving as well.

For record labels, songwriters, artists, producers, and others who rely on broadcasters to get their music out to the public, the decline of the radio industry brings on a strange mix of conflicting emotions: it’s hard not to enjoy seeing Clear Channel and their likes getting their comeuppance; it’s hard not to think that the rampant corruption in the radio biz has at least something to do with its current condition; it’s difficult to imagine how declining revenues and tighter budgets could do anything but squeeze playlists even tighter and make risk-taking more unlikely; and it’s unfortunately still impossible to offer up any solutions for alternative ways to expose new music that has the power to create a superstar overnight in the way that radio does. For the music industry, radio is the ally that you can’t live with or without. As frustrating as it is, nothing sells music more effectively than radio play.

The truth is, radio is not much different than any other declining industry. Whether it’s a Big Three automaker, a major record label, or a radio conglomerate, there are three inescapable observations:

1. Despite any number of outside factors affecting the business, most industries in decline have no one to blame but themselves for the bulk of their problems. Corporate arrogance, malfeasance, blindness to future trends, an unwillingness to give the consumer what he or she wants– not surprisingly, all of these factors usually lead to disaster, whether you’re in the business of making mortgage loans, recording music, or running a Top 40 station in Boise.

2. While acknowledging that most declining businesses are reaping their own just rewards, it’s impossible not to notice that a huge number of good, honest, smart, hard-working and devoted people are being dragged down in the process. In fact, those most likely to lose their job or even their career in an industry downturn are rarely those who are actually responsible for orchestrating the disaster. It seems like the guy who drives the bus off the cliff is rarely aboard when it’s going into a free-fall.

3. The way out of an industry slide is not more conservative corporate thinking, number crunching, and centralization. The only hope for reversing a business gone bad is risk-taking, creativity, and entrepreneurial spirit. Doing more of what got you into the mess in the first place is generally not a sound strategy– although it seems to be a very popular one.

When it comes to the broadcast business, it’s clear that it wasn’t the Internet, or satellite radio, or anything else that killed the radio-star. The wounds have largely been self-inflicted. The destruction of the radio business began more than a decade ago, with the move toward consolidation championed by Clear Channel and others, and signed off on by the US government, which transformed the radio business from one of small local fiefdoms controlled by small to mid-size companies, into a national media business at the mercy of a few massive corporate conglomerates. Like most of these kinds of moves, cheered on by the investment banking community, the plan looked better on paper than it played out.

If you want to understand why it didn’t work, check out Jerry Del Colliano’s blog, “Inside Music Media”, and his Friday, August 1 posting “The CBS Radio Firesale”. In it, he points out bluntly:

“Playing by Wall Street rules has nailed the coffin shut… Too much consolidation and not enough operation has led to a once vigorous industry too bloated to take advantage of opportunities in the new media. Consolidation failed for too many reasons to get into here. But can we agree on that? If it had worked, the industry would either be more vibrant now or it would be aggressively present in the world of new media. Instead, it’s MIA.”

Or if you want a more visceral explanation of what happened, just turn on the dial. If you’re hearing a lot of generic, personality-free programming that sounds like it was dreamed up by a computer in some central office, that’s because it was. Corporate consolidation has exorcised much of the regional, quirky, unpredictable charm right out of radio, and created something only a corporate control-freak could love. Radio programmers that were once crucial creative players in the music industry, willing to use their own personal taste and a knowledge of their local market to take chances on new music, have now been hamstrung by a corporate environment that relies on endless audience testing, centralized decision-making, and rigid playlists.

I was out to dinner last week with several people still alive and thriving in the radio biz, and the conversation was enough to terrify anyone who loves music or radio, or at least recognizes the vital role that radio plays in the music industry. Tales were swapped about how in today’s environment, major Top 40 channels in markets as large as Miami are actually being programmed out of Los Angeles. Lists were compiled of groundbreaking Music Directors now hunting for jobs. A dire inside news scoop was shared that Clear Channel is soon planning to eliminate Music Directors entirely, and program everything based on one national playlist– a decision that would be in direct violation of commitments made at the time that permission for consolidation was granted.

Certainly, it doesn’t take much foresight to see how the scenario of a national playlist passed down to all Clear Channel stations would limit the opportunities for new music, particularly from indie labels. But that’s not that worst part of the picture.

The worst thing is that it won’t work. Just as Guy Hands at EMI is already starting to see that creating and selling music is not the same as marketing household cleaning products, the corporate radio operators will learn (as they already should have) that creating engaging radio entertainment is not done in a rigidly controlled, number-crunching, risk-averse environment. You don’t succeed in a creative business by being un-creative. You succeed by being more creative– as messy and unruly and unpredictable as that process is. Just as with the rest of the music industry, the hope of the future lies with the little guys, not the big ones. Let’s just hope that there’s something left of the industry for those creative entrepreneurs to work with, by the time the big operators get bored enough or broke enough to finally walk away.

    I must say this is a great article i enjoyed reading it keep the good work :)

    i agree with randy, big business ventures are taking the hit due to the removal of “the options” we once had as listeners. yet most radio personalities wont deviate from the usual top 10 when an unlikely request is made. maybe if they did we wont hear such repeatativenss

    That was an amazingly informative article. The news is frightening and I can’t say many of us haven’t seen it coming for some time. Seems to me that a radio conglomerate with the guts to be innovative probably has the best chance to end up on top. The good news here is for local bands and performing artists playing live, busting their tails, creating their own followings, and selling their own CD’s and merchandise independently. There are a few here in Miami making a killing! Go out there and get what’s yours, musicians! Don’t wait for major labels to make you wealthy-the gold mine is right there dangling in front of your nose!

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