Sunday, December 31, 2006

Satellite Radio - Orbiting Circles Around Tradition?

This is an article I wrote for a local Daytona magazine in early 2005, right about the time satellite radio was really taking off. The pub itself was pretty bootleg, with the website (which still lists me as the assistant editor aha!) simply uploads of the issue's actual pages in PDF format (uh, no chance for archives), so this is me sharing. Word.

What's interesting to note is the leaps forward sat radio has made in the last two years. There's some really great programming available, and re-reading this piques my interest as to some of the newer stats on how the landscape has changed again. Definite props to Jay Clark at Sirius for a last minute interview, his input was crucial, really nice guy.

Oh, and for all you bastards lookin for the cliff note version, go cry about the length elsewhere, this ain't the 4th grade or an email to the boss. Haller.


“Satellite Radio: Orbiting Circles Around Tradition?”

by Bryan Munson
(originally published in Backstage Pass Magazine, Jan 1 - 15, 2005 Issue)

A long, long time ago, in a house not too far from where our Greatest Generation grew up, a large, hulking chunk of furniture entertained a family. Beautifully carved and often the centerpiece of a living room, this machine would bring tales of a “mysterious aide to the forces of law and order,” the CBS news with Lowell Thomas and a rousing game of Professor Quiz. Imaginations were captured, and communication grew in leaps and bounds. It was what many consider to be the golden age of radio.

Fast forward to the present. Somewhere in the office, the click of a computer keyboard plays a soundtrack to your day like cicadas would for a night outside. The lone television in the corner of the waiting room flashes in MSNBC-blues and yellows, blending a scrolling marquee with the talking head on the screen reporting the latest news in Iraq. An Usher song suddenly erupts from the young woman’s purse in front of you in line, and the whole supermarket turns to look as she pulls out her cell phone.

All around you there is evidence of our technological past. It’s the object in the user’s hand; it’s progress in the face of need. Everyone is affected by it, and either we adapt and overcome, or we fall behind.

Just as we are forced to keep up with what tomorrow brings, radio must now, too. But the challenge that terrestrial (ground-based) radio faces is a different one entirely from the one television posed in the 50’s and the one the dotcom boom presented in the early 90’s. This time, the competition has the potential to undercut radio’s financial backbone, the advertiser, right from within its own industry. Satellite radio is the future; and some predict it might just be the killer blow that ultimately leads to terrestrial radio’s demise.

But while some argue this is the case, others adamantly do not believe commercial radio is in dire straights at all. They believe that it will find a way to survive, like it always has, and that perhaps the age of consolidation among the larger broadcast companies is now over. To understand both sides of the argument and how the issue came about in the first place, though, you have to look at the past.

Radio wasn’t always like it is now – national sponsors, formatted programming and restricted content. You can call Janet Jackson a scapegoat for the latter part and Howard Stern a pioneer, but if you are a disgruntled radio-listener, the blame for the first two falls squarely onto the shoulders of a man named Todd Storz. According to the book Media Culture by Richard Campbell, Storz and his program manager noticed that bar patrons and waitresses would often play only their favorite songs from the 40 records available in the jukeboxes of the time. Seeing an opportunity, they began in 1949 to experiment with formatted radio. Storz came up with the idea of rotation – instead of a deejay selecting his favorite songs, only the top songs would get spins. Campbell writes, “the management-control idea had combined with the rock-and-roll explosion and Top 40 was born.”

As the format was modified and honed to rigid perfection, deejays talked less and day parts (the morning show, the mid-day show, the afternoon and drive home, the night show) became the norm. Ads, news, weather and station identification all began to blend into the music. By the mid-1960’s, listeners were only getting about 12 songs per hour.

All that is important because it shows how content began to take a backseat to revenue. Advertisers were clamoring to get spots on the air. And as they say, history repeats itself. Enter Clear Channel Communications.

Widely regarded as having ruined modern radio, Clear Channel is a throwback to the past. Their acquisition strategy and almost monopolistic approach to business draws parallels with the RCA group, a group formed under the watchful eye of the federal government in the 20’s, meant to develop and standardize radio in America. Legislation was eventually passed that curbed RCA’s continued domination, but years later with the Telecommunications Act of 1996, President Clinton’s signature enabled any company to, effectively, own as many stations as they chose. And the company that either leapt over or ate up the rest of the pack was Clear Channel.

In an article for Rolling Stone, Damien Cave writes: “Forty-nine stations joined Clear Channel in 1996, seventy more in 1997. (They) bought Jacor – owner of the Rush Limbaugh Show – in 1999. Then in 2000, the company paid $24 billion for AMFM’s radio holdings; $4.4 billion for SFX, the nation’s largest live-entertainment company; and $776 million for Ackerley Group, a major billboard company.”

The end result, he goes on to write, was a “behemoth that, at the end of 2003, controlled 1,182 radio stations, 788,000 billboards and 103 venues in the U.S., not to mention an event-promotion business that sold more tickets in the first half of 2003 than its closest forty-nine competitors combined.”

With the economic boom of the late 90’s, Clear Channel was running at full speed. Businesses were doing well, and as a result, advertisers became plentiful. The programming format changed again. But even after all of this, it seems, historically, radio revenue only grows slightly ahead of any economic growth. Despite their success, statistics show that Clear Channel’s share price has fallen by almost two-thirds since 2000, down 17% in the last year alone. Partly due to 9.11 and the stock market’s tumble, and partly because, as Sandra Ward writes in her article “Radio’s Long Term Decline,” “business (got) so good, there was no need to advertise.”

So how does satellite radio growing influence and commercial radio’s waning popularity fit into all this? Simple. As people have begun to migrate over to the commercial free and specific programming choices that satellite companies offer, there is the potential that radio may lose its financial backing. In essence, satellite to terrestrial radio is what HBO is to basic cable. It represents a creative threat and could be a venerable cash cow if a company was to market itself and it’s technology correctly. The problem for the AM/FM format is that if, for example, more people in Florida are flocking to satellite to hear what they want to hear instead of what the South Eastern Programming Director for Clear Channel wants in rotation, that means no one is listening to local advertisements and revenue falls for the radio station and the business. But with businesses doing well at the moment on their own, radio is still then left out of the loop. While most in terrestrial radio are reluctant to admit it, the possibility for huge losses exists.

But as with anything, there are two sides to the coin. The tricky part is that, between heads and tails, the edge of chaos is the only way to find a balance between them.

Sirius Satellite Radio has quickly become a major player in the world of satellite radio. Though having had to work through early technical problems which enabled XM Radio to gain a slight head-start, improved technology and an aggressive marketing campaign has allied Sirius with the likes of Howard Stern, Eminem, a good portion of the automobile industry, and the NFL, just to name a few, and has put them in a very good position with the competition.

Jay Clark, Executive Vice President of Programming at Sirius, has been around radio since he was 16. In terrestrial radio, he’s run the gamut, from news/talk to sports, to once even pitching a 24-hour comedy channel that didn’t fly initially, but has grown into two channels at Sirius, one of which performs consistently in the top 10 of stations being heard.

He believes satellite is a natural progression of several elements, and acknowledges that, as listener choice broadens with iPod and download technology becoming almost ubiquitous, there is evidence that might suggest radio is finally ready to stop fighting the good fight. But contrary to what you might think, he believes that satellite radio is actually healthy for terrestrial radio.

“I’ve been in this business a long time,” he said. “Radio morphs to its competition. Every once in awhile it gets stagnant, but when television came along, there was FM radio to save the day. Radio now has gotten a little heavy in their need for bottom-lining, and they’ve stopped putting money into developing programming. But there are glimmers of hope that innovation is on its way back.”

When asked about whether advertising dollars would be well spent on terrestrial radio when satellite looms larger overhead, his answer was a flat out no.

“There’s always localism,” he said. “Consequently, you always have advertisers who are going to pitch to them. And locals want to hear about their town. In my opinion, audio never really got a fair share of the pie. If you have one country station, and then add a second, the overall volume of country radio listeners grows but revenue doesn’t double. There may be a dip in advertising sales as satellite grows, but I don’t think it will be the end of radio. As long as they have a great product and not just inventory, they should do fine.”

While Clark is optimistic about radio’s future, others don’t share his same sentiment. Sandra Ward suggests that because consumers “are changing how they choose to receive music, news and talk radio,” that “trends like that are causing companies to reassess advertising choices” and could lead to the bottom falling out of terrestrial radio. She sites music downloading, streaming audio from the Internet and satellite options as the reason.

Among all people older than 12, she writes, only 14.6% are listening to radio during an average 15-minute period, down from 16% in 1998, in a survey conducted by Arbitron. While niche programming has found a warm spot with advertisers and programmers, “local advertising – the source of 80% of all radio revenue – has only shown a 4% jump instead of the predicted 6%.” The reason being? Advertisers felt their spots were getting washed away in a sea of promotional fluff, and as the market began to recover following 9.11, businesses started to rebound on their own.

Tom Pelchen, general manager of Mercedes-Benz here in Daytona, agreed with Ward’s assessment.

“We offer Sirius in our newer vehicles, and I always wondered what the implications on radio might be,” he said. “First and foremost, as an advertiser, I cater to the local people. But as the percentage of people using satellite grows in the future, it could definitely effect the way we all do business.”

Similar to how radio matured from the vacuum tube monsters that occupied a corner of the living room in the early part of the 20th century into tiny earpieces that you could slip into your palm to catch the middle innings of the Yankees game during 9th period, satellite is already there. Both XM Radio and Sirius are developing wearable satellite receivers, so now, just like the iPod, the listener has a virtually unlimited range, kept only from commercial-free heaven by the life of their battery. Developments like these only solidify the need for radio to adapt if it’s going to survive, because as choices expand, their slice of the advertising and listening pie shrinks.

Here in Daytona, Black Crowe Media owns and operates four stations, and is clearly an established powerhouse in such a small market. According to Arbitron’s 2002 Sales Insight report “Radio’s Biggest Local Spenders Speak Up!”, radio’s biggest competition now comes from local cable and the Internet. And although that data is two years old, one might presume that it still holds true today, especially since the stock boom from the radio consolidation phenomenon has waned and more people are spending money freely.

In the survey, radio was perceived as being the best medium to reach the audience and also the most cost effective. But if the number of people listening tumbles, what then? Print is not immediate, and the Internet is a faster form of print, but they both have the quality of being long term; you can put a newspaper down and pick it back up, and it says the same thing, days later. Television is almost instant, but it has to be seen in order to be effective. Studies show, though, that retention is better with both an audio AND visual medium.

Radio, on the other hand, is immediate but requires repetition, to the point where a search of the dial doesn’t always guarantee you’ll find what you are looking for. The combination of all three mediums, though, directs communication, commerce and entertainment in our society today. So when it comes to advertising dollars and consumer choice, one must look at the big picture facing radio: is it effective to advertise there anymore?

Kingbird, an on-air personality with 93.1 KRO Country here in Daytona, has been around radio for 37 years. He believes radio is still effective as an advertising platform, but like many others in the business, hinted that in the near future, that may change.

“Competition inside radio has always been fierce,” he said. “Clear Channel owns four fifths of the Orlando market. Stations are being forced to individualize. We’ve seen Howard Stern preparing to move to suit his needs. And look at how regular TV has lost revenue in the face of cable. There’s a possibility that could happen to radio.”

He than raised this reporter’s eyebrow as he wryly laughed and said, “I’m just glad I won’t have to deal with it.”

Maybe the answer is for local radio stations to in effect, “buy time” on an orbiting satellite and charge subscribers similarly to satellite, but instead, have a local playlist available anywhere. Have one button for announcements, broken down into files for your needs, so if you want to know what’s happening at the YMCA this weekend, you can do that, all on your own time. Buy one receiver, and get the channels you want locally. Impossible? At this point, the only thing impossible is traveling at light speed through outer space, but even once that’s figured out, there will always be more out there that seems impossible. Improbable is more the appropriate word in this case, but either way, it’s almost certain the technology could be developed if the demand was there.

The truth of the matter is that no one knows now, and they won’t know until the smoke from the rocket that blasted those satellites into space clears. But it’s assured that the industry and its advertisers will be watching to see how many listeners begin making plans for an outer space vacation. Will they enjoy the burn back into Earth’s atmosphere with Eddie Money’s “Take Me Home Tonight” playing via a satellite radio, or will they pick up KKRW 93.7 Classic Rock as they streak over Houston?

History often repeats itself, but it’s never history until it’s history.

Thursday, December 7, 2006

Welcome Me

first post ever. i have no clue what this blog will be about. perhaps my quest to become a part of hiphop and save the culture from itself. quite a lofty and pompous statement. let me retract - re-insert - perhaps my quest to become a part of hiphop and show the culture what it's capable of. that works. in the meantime, holler at the god on the inevitable digital dwelling of - and do yourself a favor - listen.

john said.