David Eduardo wrote:
"D Peter Maus" wrote in message
...
A few years later Karmazin was 'out-Karmazin'd' By Sumner Redstone, and
he found that the best way to improve his station was to gt out.
Interesting that, now, he's at subscription radio and the discussion is
about increasing the subscription base, and debate about advertising.

iBiquity may not have mentioned subscription implementation, but its
licensees certainly have.

Nice post, with an interesting insigt from one company's point of view. Mel
is definitely one of the most interesting people we have seen in radio, and
his statements are well worth considering.

Mel, despite his rather edgy manner, did think out of the box as he looked
at future revenue opportunities. I was once offered a job with him for the
NY Spanish station, but was so putt off by either him or the native New
Yorker he represented that I did not take the opportunity. It would have
been an interesting ride, though, until one of us screamed at the other.


LOL! I've heard tell that this happened from time to time at the
corner office at BlackRock. But nothing definitive.

I do know of at least one GM who voluntarily fell on his sword rather
than deal with Mel after a series of bad quarters. And here, in Chicago,
Mel refused to speak with my GM, after a revenue tumble. This went on
for a couple of years.

He's an interesting bird. And I'm not at all sure he's been good for
radio, except in that he put radio revenue on the map, and proved
conclusively that many of the myths by which radio lived were, in fact,
mythical.

I found him real easy to work for, though. He's very clear about his
expectations. You meet them. He doesn't care how, as long as it's ethical.

His expectations are VERY high. But, then, so are his rewards.

That's a dream job, compared to some I've had.



I have never had any discussion either in-house or with members of the
industry committee, about pay channels. I think nearly all of us see that
associating "pay" with terrestrial radio is a mistake. While the discussion
may have come up, I never saw it progress. Most of us believe that splitting
the HD digital FM in two offers great quality (absolutely marvelous, in
fact, compared to iPod and satellite channels) and the ability to market new
free channels.


I actually disagree with you about the mistake of pay terrestrial
radio. And so do others in the biz. Truth is, that subscription radio,
whether it be the baseband channel, or one of the alternates, may be the
only way to create viability for some formats that are not supportable
through traditional advertising.

My GM, for instance, desperately wanted to create a viable blues
format. (Imagine, the Blues not viable in Chicago...but there it is). He
could never get the perceptual data to support it. But subscription
radio would have made that possible. Just as a number of the niche
formats on XM and Sirius, now.

Now, on the other side of that, Karmazin believed the ratings/revenue
relationship to be more myth than reality in the presence of REAL sales
people. He preached it regularly. That the only thing needed to
overcome weak ratings is more sales people, who could then create demand
within an single station. Even driving rates up the card. And the 30+
sales ducks we had on staff were a testament to that. And he believed
that any station that couldn't convert at a minimum of 200% needed an
new Sales Mangler. We routinely converted at 200% and above.

So, though, it's a good bet that subscription terrestrial radio is
bad idea, questionable at best, it's not entirely a settled issue. Out
of the box thinking can make pay radio happen, and clever execution can
make it work. Especially, where there is little advertiser support.

(One of Karmazin's other bone deep beliefs is that every service pay
for itself. No one gets subsidized. And if it can pay for itself, it can
profit. In that aura, pay radio is an eventual certainty.)

As far as quality goes...that's a better marketing point than it is
a broadcast reality. Everyone talks about quality, and everyone has a
standard, but where quality is defined as absolute faithfulness to the
original material, it's failed everytime. If you use the tone control,
on your car radio, you're not that interested in high quality. If you
have an equalizer on your audio system....you get the picture.

HD Quality is, and will be, perceptual and personal. Right now, it's
being presented at its optimum. That will change. Stealing bandwidth
will begin. And look straight into your monitor and tell me you can name
5 engineers who can resist the temptation to 'tweak' their audio. Name
me 5 more who don't believe they can 'improve' it.


The Quality pitch is temporary. Once HD is established, and there is
a significant user base, the whole 'quality' issue will no longer be
mentioned, except to say 'digital quality.' Which is what they say
about Sirius and XM...and some of that is pretty ratty.






Since there are only 100 shares in any market, there will be no expansion of
radio listening, but there may be a slowing of any erosion. At the same
time, selling today is about clusters and combos, not single stations for
the most part... so having more specifically targeted stations will
definitely help. Low spillage and finely honed targets get better rates than
broad, vague targets, as sports AMs demonstrate.


No question. And HD formats will be, as cluster formats are now,
selected strategically, to protect the cash cow, and mop up any
periphery. Likely to be sold in unwired combo packages. With lip service
paid to innovative and alternative programming. At least in the short term.

And at least for the time being, you may indeed see a slowing of
erosion. New, exciting toys, with fresh options for things not commonly
heard. But as XM did recently, gutting a number of the channels I
enjoyed, and replacing the music I preferred to hear with things that
are more 'salable' and adding commercials to some music channels,
eventually terrestrial and HD will fall into the same patterns as
terrestrial radio exhibits, today.

The pith, here, is this statement:

"Since there are only 100 shares in any market,
there will be no expansion of radio listening,
but there may be a slowing of any erosion."

With evermore options for listening, and fractionalization of the
listenership into potentially thousands of niches, eventually,
programming offerings are going to have to be sold in combinations.
Actually quite large clusters of programming issues. That means that
programming offernings, whether on the baseband or the HD's, will have
to fit into certain packageable categories. Since the target demos
essentially do not change, and the maximum share is 100%, The total
numbers are fixed. Competition will have to be within the existing
numbers. Robbing Peter to pay Paul, as it were. Combo programming
packages will have to be selected, or created, with some target demo
participation. To remain salable in that context, some alternatives will
be too far off the target to be salable, in favor or more mainstream,
salable content. Not exactly like anything else, in the package, but not
that different, either. No matter how you slice it, if advertising
support is going to be part of the business framework, nothing's really
going to change, except how the programming offerings slice up the
existing demos.

In the end, the same research that gives you what you have now, will
give you a different slicing of the same listeners for thousands of new
channels.

More channels, less revenue per channel. More channels, less expense
per channel.

Profits fall.

Consolidation of expenses rears its ugly head, once again.

In the end, not much really changes, except how the pie is sliced.
Because there are only 100 shares in any market. And radio has saturated
the market with a mature product.

Now, in reality, Radio can't acknowledge this. Especially, not
today, in a stock price driven radio economy. So HD will forge ahead,
with promises of newer, better, cleaner, stronger.

Most only realized for a short time before economic realities crash
the party. The rest, unrealized at all.


All on technology that admittedly is a best guess at preventing
erosion. Sounds a lot like "do something, even if it's wrong."

But then, a lot of business is like that.

In the process. We, as listeners, get our dial trashed, but spend
more money. And in the end, the overall economy booms.

Which is the point. Because after all, in the US, Radio is ALWAYS
about the money.