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A Failed Quest and Why Radio Needs to Embrace Failure

A Message from Radio Ink’s B. Eric Rhoads

 

Historically, change rarely comes from within any industry. We are all too close and set in our ways. Most innovation comes from outside, from those who can see our mistakes more clearly. Therefore we as an industry should embrace outsiders, even though we may think their unusual ideas aren't a fit, or aren't "the way things are done" in radio.

Jeff Hinson came to radio as an outsider, known for his turnarounds and innovation in other industries. A couple of years ago, he was hired by the board of Border Media Partners to save the failing radio company.

Turning Radio Upside Down
Now Border Media Partners' lenders are taking over the company, and CEO Jeff Hinson has chosen not to stay on as the lenders try to divest, though he is leaving on good terms. Since Border is not on everyone's radar, this may seem like a minor story. But I believe the loss of Hinson at Border could have an impact on the future of radio, because he was one of those outsiders who was reinventing radio and turning the business model upside down.

What few people knew (unless they attended our Convergence conference, where Hinson unveiled his plan) is that Border Media Partners was taking the lead in a sea change regarding how radio and digital media intersect. Jeff had invested heavily in the creation of a new digital radio model unlike any in the world.

Looking Cross-Eyed
A traditional, dyed-in-the-wool broadcaster would look cross-eyed at Hinson's moves as risky, which is why Jeff's plans will probably be shut down with the change in control. But Hinson was not some wet-behind-the-ears rookie who didn't understand radio. He was a wise innovator who believed radio could not continue to survive and thrive in its present form.

Hinson came in as an outsider willing to throw tradition under the bus, and he put his entire radio group on the line, reinventing how it did business. How many people do you see willing to do that today? Most people only talk about it, but Hinson did it. Instead of being a radio company that integrated digital offerings into its stations, he flipped it around, and Border was becoming a digital media company using its owned radio stations as a vehicle to reinforce the digital properties.

Rules for Radicals
If what Hinson did sounds radical, it was. Though his recently launched efforts had no time (or environment) to prove themselves, Jeff understands that rules for radicals require burning the ships behind you, no longer relying on past models that aren't working anymore and investing in new ways to do business.

As you know, I spend my life immersed in digital media. I created a conference devoted to digital media for radio, and I try to spend as much time as possible working on models that will reinvent radio and make it thrive again. Jeff was among the two or three people in the entire radio industry who I believe understood what needs to be done, and one of the few who persuaded his board to allow real investment in reinvention.

A Back Full of Arrows

Though pioneers are the ones with arrows in their backs, I think the Border Media experiment had a strong chance of success, had it been given time to succeed (it wasn't even six months old). Though Hinson employed the important radio basics to try to save an already-broken company, he was also willing to take some big chances to move it where all radio stations belong. But the recession and advertising climate, combined with the problems plaguing Hispanic radio, placed too much pressure on the business, which left investors Goldman and Vestar no choice but to take it over.

 

Reinvesting in Reinvention
As we all suffer through this economy, our tendency is to stick to the basics and not reinvest or reinvent. Why risk it? (Plus, who has the money to invest, right?) Yet risks like Jeff's, with the right timing, will capture revenues the radio industry would never otherwise see. Necessity forces innovation, and it's critical not to cling to our history, but to focus on what customers and consumers want. We must make sure we design a digital-centric radio platform that works. If not, someone else will, and it probably won't be a radio company.

 

Yes, There Is Good News
Everyone could use a little good news about now. The good news is that the struggles you're experiencing will not only strengthen your skills and resolve, they will force you to come up with new ways to do the things you've done for decades. The other good news is that your customers are seeking better solutions too, and will be open to almost anything fresh and new. Are you listening to them? Are you innovating to give them what they need? Are you burning the ships behind you?

 

Break the Rules. Please!
Though Jeff Hinson's experiment failed, it was only because of timing and market conditions. Had he been able to ride out the storm, there was a fair chance he would have emerged ahead of the rest of the industry. In radio, we must seek outsiders like Jeff to break the chains of our past. We must demand innovation. We must promote rebels to break the rules.

Though sticking to our knitting is comfortable, "just the basics" won't move us into a new era and allow us to be competitive in this new digital world. Though no one else may encourage you, you have my permission to break the rules. Please.

Eric Rhoads

A Message from Radio Ink VP/GM Deborah Parenti:

Eric talks about reinvention, and he's charged me with making our Forecast Conference focused on breaking the rules, finding new forms of income, and taking a serious look at survival in this environment. Please join Chair Bill Stakelin at Forecast '10, December 8 at the Harvard Club in New York. This event has become the premier forecasting event in the industry and is attended by a who's who of radio -- and it's followed by the most elegant event in the industry, honoring the 40 Most Powerful People in Radio.

 

Limited to 200 people. To register, call 561-655-8778 or go to www.radioink.com/forecastsummit.

Please don't reply to this e-mail, but respond in comments.

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The Radio Bailout: Devil vs. Angel

I remember a cartoon from my childhood, when Goofy was deciding whether to do something, and there was a little devil whispering in one ear and a little angel whispering in the other. Of course, as a child I didn't realize how real that is -- to continually battle, right against wrong, good against evil.

Is it possible that those little devils are whispering to the consciences of some radio people about taking government bailout money?

Here is what that conversation looks like:

Devil: Go ahead, take bailout money from the government. It would make things easier, take the pressure off, and we could probably make a lot of money on it.

Angel: But if you take it, there will be strings. There are always strings.

Devil: We'll just do it for a little while. Just long enough to get the business solid again. Then we'll pay it back.

Angel: You know you'll never pay it back. What if business doesn't get better for a long time? Will you go back for more money? What about all that taxpayer money going into radio?

Devil: It won't matter. They're going to spend it anyway. Everyone else is taking government money. It might as well go to radio too.

Angel: But what if it harms the radio industry? What if it limits our business practices and the government starts telling us what we can play, what we can say, how we must do business?

Devil: Hey, I'll be long gone. I'll get my money out. It will be someone else's problem.

Recently a group of minority-owned broadcasters met with Treasury Secretary Timothy Geithner to discuss a bailout to keep minority radio on the air. I don't want to give the impression that I think bailout money for minority radio is a bad idea. I think bailout money for any part of radio is a bad idea. It just so happens that the minority broadcasters were first in line. I think there is a strong possibility that many other radio companies could soon be looking for government bailouts.

Wall Street didn't pan out, stock values have fallen, advertisers are disappearing, and the economy isn't improving, so a bailout seems pretty attractive. Plus, a radio bailout would solve all our problems, make the business whole again, allow us to bring back some of the things we've been doing without, and let us preserve jobs. It all sounds great. But we need to carefully listen to the voices in our heads. Because you and I both know what could happen....

A few individuals will get the money and line their pockets with big bonuses, and radio will continue to operate exactly the same way. Balance sheets may end up healthier, but I doubt that will trickle down to more local service, more jobs, or better practices for radio. At best, it may save some jobs.

Radio Government-Style
Has it crossed your mind that if radio became nationalized, like the car companies and banks, our businesses could be more beholden to the direction of the government? Somehow the ideas of "freedom of speech" and "government ownership of news media" don't make good bedfellows. Car companies were told to take certain actions, shed a certain percentage of dealers, and maintain certain previously unheard-of practices. Do you want a new "Radio Czar" in Washington pulling strings and saying, "Let's pull that story or we pull our money," or, "That talk host is a little too negative. We need to keep things positive. I think you should pull that program." One senator recently stated that he would like to see more government control over radio formats because he cannot find a jazz station in his small town. Can you say "BBC"?

A Radio Lightning Rod
Even it were a no-strings-attached financial arrangement, a bailout for radio would have a big difference: Chrysler and GM were not already using the people's airwaves. This issue could create a whole new dialogue and impact us in ways unimagined. I'm not sure we want radio to become a lightning rod for deeper attention by the administration, who may look at our problems and decide to re-regulate radio in new ways.

 

We've recently heard talk in the halls of Congress and at the FCC about reducing licensing renewal terms, creating community boards to determine the direction of local radio, and creating more "balance" among formats. Do we really want to open a new can of worms and risk deeper controls and limitations? Do we want to risk the return of pre-consolidation limits on station ownership, or return to the FCC of the 1970s, when the commission required hourly news, stronger localism, public ascertainment, and government approval of format changes?

Listen to the Little Voices Carefully
Could a radio bailout happen? Count on it. The bankers and note holders of radio's biggest companies are most concerned about their balance sheets, and they seem barely aware of the issues broadcasters could face from government intervention. Most won't think twice about allowing government strings to control radio companies. Once they get their money, these investors will be long gone -- as will many CEOs. After all, radio isn't completely free in other countries. How much could it hurt if the FCC dictates formats, chooses a balance of programming, decides what content is and isn't acceptable, and enforces sharing of the American airwaves?

To those asking for bailout money now, or those considering it in the near future, I suggest you listen carefully to the little voices in your head. I implore you to consider the ramifications of the strings that could come with a bailout, and encourage you to walk away if those strings stand to threaten the only free broadcast system in the world -- even if it solves your personal business problems, and even if it makes you rich. If more people had considered the little voices in their heads and the impact their decisions would have on the industry as a whole, we might not be facing many of the problems we're living with today.

Best,
Eric Rhoads, Chairman/Publisher
Radio Ink

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24 And Frustrated About Radio

A Message from Eric Rhoads, Radio Ink

"Eric:

Hello. My name is Art Webb and ... well, I really don't know what. Honestly, I think I just need to write. It's such a bizarre time in this industry, with so much uncertainty, and being young makes it that much scarier. The abstract of radio is what draws me to it, the theater of the mind, the absolute power and hold that radio can have in two different ways over two different people. It's a magic that's been all but forgotten, and it saddens me deeply.

My history, very quickly: Started as a board op in San Francisco for Clear Channel, moved to L.A. to work for KLSX and eventually saw myself as the Production Director/Engineer for The Tom Leykis Show before the format flip to AMP earlier this year. I have since moved to Portland, OR, where I am currently biding time as the night talent and working on various other programming endeavors for an active rock station.

Where do I go at this point? There is nowhere to move up in a industry that is shrinking like styrofoam to a flame, and I've become somewhat lost. My only saving a grace is an Internet project I have been working on for the past couple of years with a colleague who's in the same shoes I am. We feel we are doing something very creative that holds mass appeal, yet every attempt we make to get the idea into the hands of a major player, we only find closed doors. Why is that? You would think at a time like this they would be looking for something, anything, to get the train back on the tracks.

I urge you to evaluate what we have been working on at errorfm.com/press. I do think that the programmers of the future are developing their chops in the Wild West of the Internet, where at least we are given a chance to experiment and see what works. The future is so grim that I find myself doing everything I can to justify what I do. The love for it just isn't enough anymore. At this point I feel like it has to die in order for it to be saved. The question is, how long will the corporations stretch out the mass layoffs and stations being run by 2-3 people before they just bow out? This suffering is just so unnecessary. Thanks for letting me vamp, even if it is just a mess of words. And thanks for your blog, I read it all the time.
-- Art Webb"

I have TWO responses. One to Art, the other to the industry:

Dear Industry:

I cringe when I read letters like this because young people who love radio are under the mistaken belief that there is no opportunity. I say "mistaken" because I believe opportunity is out there. However, it's clear why so many young people have that impression. It's because of the behavior of some companies, because of the negative press and the "piling on" to radio (some of it well deserved), and because we don't hear enough about the stations still doing good things (I'll work on that!).

Radio is its own worst enemy. Some of us are short-sighted, with statements like "How can I invest in future generations when I'm trying to survive the present?" Yet invest we must (somehow), even if it's only an investment of time. If we cannot get young people excited about entering radio, we will continue to lack innovation. We will sound stale and repeat the success-factors from the past till they are no longer successful. We will find ourselves without qualified, well trained people to take the reins when the current generation leaves.

Engaging Youth
If we want to engage youth, we need to start by inviting them in and getting them excited. This starts with compelling, youth-oriented programming that appeals to them -- not 1970s or '80s teen radio all over again from stale, out-of-touch programmers who THINK they are appealing to young people. It  continues with an outreach by every radio station to colleges and high schools. Create internships, turn the all-night show over to experimental talent, and find ways to give hope to a new generation that thinks there is no hope. If you have a losing station in the cluster, turn it over to some 25-year-olds and let them reinvent it. (Big companies are in a great position to do this but want to play safe.) Risky? Yes. No one ever succeeded without risk.

It's Not About PR
One could say radio has a "PR problem," and we do. But hiring a PR firm to eliminate negative spin or to promote some lame pro-radio slogan changes no minds. It's like the man who tells his wife he loves her but continues to beat her. It's simply not believable.

PR starts with true positive action. In this transparent society, there is no hiding anything, no pretending through PR (though some still foolishly try it). If I were you, I'd Twitter the following message: "Our station is seeking 25 people under 25 who want to reinvent radio. Show up at the station on Saturday." Sit them down, listen to them (no matter how obtuse), and find things they can do at the station to learn the business. (Don't make them fill out forms or do mundane work.)

Energize Your Team
Next, go to your own employees (if you have any left) and ask their opinions. What can we do to stop being boring, on and off the air? Appoint someone to make it fun again. Find ways to energize everyone. If people are in good moods and energized, your air sound and sales effort will reflect it. Just because someone at corporate has a plan you don't agree with doesn't mean you can't have fun doing it.

Have some guts. Try some innovation. You've been sitting still with your mouth zipped for too long. Look fear in the face and take some risks because radio won't thrive with a bunch of lifeless drones at the helm. We may not be able to change what is happening in some companies at the corporate level, but you can make your local station thrive. Is it worth risking your job over? Only if you feel like your job sucks now.

Now for those of you who want to see how I responded to Art, here's what I wrote to him.

Dear Art:

When I was 14, I fell in love with radio and followed a path similar to yours, though you're much further ahead than I was at your age. I fell in love with the ability to be creative, to motivate listeners, and to create great-sounding radio. Like you, my frustration soared. Not only did I have a hard time finding anyone to pay attention to my ideas, I was frustrated that the radio industry was so stuck in its ways. What could I know? After all, I was just a kid with no practical experience.

Radio Rebels
At the time, nearly all radio listening was taking place on AM and only a few pioneers were trying something new on FM. These were the rebels, and, much like the rhetoric we hear about the Internet today, radio was clinging to its AM stations with arguments about why it was better, about why no one would listen to FM (there were very few FM radios), and saying FM was a passing fad and only good for elderly people who liked elevator music.

Meanwhile, my buddies and I were trying to shake things up. We were inventing new ways of presenting radio, like pioneering the idea of back-to-back music without talk or any ID between songs (which was unheard of); long sets of music; no jingles (every station had jingles); communicating like real people instead of affected, deep-radio-voiced DJs;  commercial-free blocks; few stop sets; researching music; and playing album cuts. We were laughed at and could barely get anyone to pay attention. That's why FM radio started out "underground." And, as with Internet radio today, broadcasters didn't pay attention to an entire generation as it started to shift its listening loyalties.

"No One Will Ever Buy FM Radios"
Industry pedants and broadcasters argued that since there were so few FMs in the market, no one would buy receivers. (Sound familiar?) There was no such thing as an FM in a car, and most home radios that weren't "hi-fi" and didn't have FM. You could buy an FM converter for your car, mount it under the dash and listen through an AM frequency on mono speakers. It's no wonder broadcasters didn't believe anyone would listen. But my generation did.

In my hometown of Fort Wayne, Indiana, we didn't have an FM rock station. The only one was WNAP in Indianapolis, 120 miles away. My brothers and I mounted a directional antenna on top of the house so we could listen on my dad's hi-fi, which was the only FM radio in the house. Our Audiovox converter was in our family car, and we could rarely receive the signal, but we listened though a lot of multipath because it was cutting-edge. Internet radio is really no different today.

At an early stage of my career, I couldn't get anyone to hire me other than WITB, a college station. It was the only FM rock in town, but it was on carrier current and had only a one-mile signal radius -- hardly marketable. But it was my entry point and a place to learn and develop my skills. Today those entry points barely exist, and Internet radio may be the only option for young people wanting to learn to be on the air. But it may be a better option because you can, in theory, develop and grow a world audience from your bedroom.

Broadcasters only started paying attention to FM when the numbers started to shift in some towns, and, like all good radio people, they copied successes in other towns. It took about 15 years to develop critical mass and beat AM.

So what is my advice to you?

1. Follow your passion.
If radio is what you love, don't give up. Keep doing it. You will find an outlet. Only do what you love. This industry is still worth the investment of your time, and many of the conditions you consider unfavorable will change. Everything has a cycle.

2. Continue to push the envelope.
If you try new things and they work online, they will eventually migrate to "mainstream." Or, probably more likely, you'll invent something so compelling that you won't need mainstream anymore. We received criticism for all the new ideas we had, and got resistance until we finally just did them on the air, and they worked. Sadly, most of the things we came up with in the 1970s are STILL being used today. So don't be discouraged. We NEED your new ideas.

3. Give it time and believe in yourself.
One day it seemed like I couldn't get any attention or a job. I tried every angle, turned over every rock. Everyone told me to stop wasting my time. But then, it seemed like the next day, I had someone willing to let me try my ideas. Those ideas made my station number one overnight, and the next thing you know I was consulting 25 stations. Never, ever give up. If you believe in something, push it till you succeed. No excuses. Innovation occurs when innovators persist.

4. Don't get discouraged.
It may seem like there is no place to grow, but that's not true. You may not move into your ideal gig right away, but there are plenty of creative thinkers in radio willing to take a chance on an innovator. Clue: With a few exceptions, most innovation takes place at independent radio companies and in smaller markets.

Things are bad, and if they get worse you will see more companies open to new ideas. People want to cling to proven success models, which seems practical but is not always best. You will find someone open to ideas. I'm finding radio groups more open to digital initiatives than ever. For some, it's lip service, but for others, like CBS Radio, it's innovation and action.

5. You don't need a major player.
You don't need to start at the top, with a top station or market. You just need to beat one. The best way to get a major player to pay attention is to go up against them and win. If you find an independent operator willing to let you compete against a big company's station, you will be embraced quickly.

When I was a young programmer, I went up against Bill Drake, who was winning everything at the time. Someone told me if I could beat him in his own market, where he owned a station, my career would soar. I went up against his KYNO in Fresno with a tiny FM signal owned by a small mom-and-pop operator. I'd gone from making a lot of money in Miami to making $200 a week, but it wasn't  about the money. It was about winning. We became the number one station in Fresno in one book, received lots of publicity, and suddenly I had more job offers than I could take (so I took them all, with a programming consultancy). You can do the same thing. Find out who you have to beat.

Suffering Is Necessary
Art, you say, "This suffering is just so unnecessary." I felt the same way, but suffering is what leads to action. If you suffer enough, it makes you mad, it makes you take action, it increases your determination. Stay strong. You'll wake up one day as a top programmer or running your own radio company, or perhaps your online station will have more listeners than all of them combined. The only thing in the way is your state of mind and your level of determination.

It's Time for a Generational Shift
Your letter reminds me of my own frustrations when it was time for a new generation to change things dramatically. The old generation was clinging to its AM towers. Today they're clinging to their FMs and don't believe that online radio can actually compete with them.

That's a reminder that we all need to embrace young people and new ideas, and try to create an industry in which young, talented people like you can thrive. As far as I'm concerned, it's 1970 all over again, and you'll be setting the standards for our industry. Your generation will be in charge before you know it. I too was impatient, but you will prevail.

Nothing stays the same. Not even radio. I'm actually starting to see the light at the end of the tunnel. Even the most set-in-their-ways will change. New generations and fresh ideas always win. The old guard never wants to lose control, but they always, eventually, come to the realization that they cannot grow without the next generation.

Radio will be just fine. Yes, it may have to bottom out before it straightens out, and it must adopt an active digital integration strategy and be in the process of continual reinvention. We continue to ring the chime of change. Eventually, they will listen (as things worsen), and you'll be there to reap the rewards and transform radio with new life and new ideas. Never give up. We need you. Most just aren't ready to admit it yet.

Best,
Eric Rhoads, Chairman/Publisher
Radio Ink

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A Note from Radio Ink General Manager Deborah Parenti:
Mark your calendar December 8, 2009. Radio Ink holds its annual Forecast Summit at the Harvard Club in New York. Keynotes include Mike Huckabee and CBS Radio's Dan Mason. Seating limited to 200. Register at 561-655-8778 or www.radioink.com/forecastsummit.