There was a great TV quote from NBC programming head Jeff Zucker over on OMI that I thought was worth repeating here. It explains what is happening in media today (and gives you something to flame for the weekend.)

"We want to have great shows. But we’re managing for margin, not for ratings. So it’s the expense of our shows, the consistency of our shows being on the schedule. It’s not determined by the size of the ratings, because the size of the ratings of a show we cannot afford is not going to do us any good anymore. This is not because we do not have the outsized hits that we once did. This is because we are in a different environment where the difference between the first and fourth or second and third is incredibly minimal."

In short, they would prefer a less successful show with lower costs to operate than a highly successful show with high costs and salaries. I saw this at KRTH-LA after RWMorgan passed away. The station was looking hard at Rick Dees. Rick Dees was talking to the station. But his costs (both his salary and the required side-kicks) was so great that there was no way anyone in the building could figure out a way to make it anything but a huge financial drain.

The station decided that a 3 share with a relatively inexpensive morning show was far preferable to a 4.5 share that lost millions for the station.

It's the Los Angeles Clippers philosophy: the team's made more profit than most other NBA teams in the past two decades by purposfully keeping its payroll to near-scale levels.
Most years the team sucks, but the organization is in the black -- unlike the teams that try hard on the court, but the organizations swim in red ink.

I can see where the logic is here. Does a 500K morning team pull better ratings to justify the capitol outlay. Or, does a 150K morning show achieve the same or better profit?

Secondly, a lesser threshold of acceptable talent will likely be less problematic on wear and tear on emotions. It is easier to manage smaller egos.

The perfection mindset of radio is being tossed aside.

The reverse is also true in some situations. Hire the big money morning show, get no ratings to speak of but sell the high profile of the personality.
Sometimes just having a well known personality is validation with buyers.
Oh, and it does require a great sales staff.

How does a resilient, tough-minded and focused sales staff play into a stations profitability. The variables for station success includes: programing, signal, audience awareness of signal, presentation by "on-air talent", and sales acumen. Sales acumen may be the most difficult to measure. Is there any of you stats guys out there who could devise a test to isolate the sales portion of radio station success?

My criteria may not include all factors involved in success. What would be your ingredients?

Wouldn't it be just looking at their billing?
Power ratios provide balance between stations with different ratings. (A station with smaller numbers that gets a higher unit rate than its competitors.)
I agree with Radiohead...everything matters. Sometimes (MANYtimes) you can do everything right and not succeed. The GM has to answer for the margins.

How much profit is enough? I can think of examples of companies that have cut their labor costs to the bone and make money but put a terrible burden on the remaining employees. A miserable work environment, even if profitable, would make for a lousy place to call spend 9 or 10 hours a day. I think there needs to be a balance. In today’s market however, companies are cutting nearly everything, including cakes for employee anniversary parties, to save a buck. But if a company is run well, has happy employees and sells a quality product, you should be considered a success. I guess that would apply more to small firms than multi-national juggernauts. I’m sure there are a few exceptions, but they are exceptions indeed.

Money doesn't care. Money is amoral. The market is completely neutral to things like harmony, high morale and 'balance.'
If you make a good return in a nice shop, fine.
If you make a better return in a sweatshop, the market will choose the later.
Perhaps that's the hidden genius of companies switching from traditional pension plans to 401(k)'s.
Now every employee is also a backhanded owner, and it's easier to sell the 'higher is better regardless of the human cost' philosophy.

This is a FANTASTIC THREAD!! The kind you would like to have a dozen people from Corp exec, sales manager, PD, morning start long time vet, downt to part time weekender, sit around and discuss this subject. the differing points of view, and opinions could go along way to create a solid workplace. Regarding being a backhanded owner thru the 401k stock, All you can do is cast your meager proxy vote AGAINST the slate of directors. Doesn't change anything, but easier and safer to vote NO for the board than express your displeasure with your department manager.

The every man for himself philosophy, can make for better profits, but what we lose as a whole has far greater ramifications further down the road.

If the difference is minimally lower ratings and profitability, or high profile and red ink, the the issue is clear. However, when the profits are there, and the cuts are made to minimally boost the margin, then the appearance of being greed driven may prove more detrimental in the long run.

Cweaklie,

I am wondering what personality traits can make a difference in the level of success for a sales team. Dollar amounts have to be measured against dollar amounts registered by others sales team with similar personality traits. My criteria is based on integrated qualities of each member of the sales team. Any questions?

Regarding being a backhanded owner thru the 401k stock, All you can do is cast your meager proxy vote AGAINST the slate of directors.
If you can even do that. At various places I've worked, it was right in the paperwork (in the fine print, but nonetheless there) that any and all voting decisions were made by the retirement fund manager on behalf of the participants.

Radiohead,

Sales personality traits:
- Intelligence
- Knowledge of the market
- Knowledge of product being sold
a. programming
b. client's product
- Sales aptitude

Cweaklie,

How about ethical concerns like:

-Integrity
-Empathy
-Autonomy
-Veracity
-Keeping promises

All great employee handbook content.

This "˘heaper is better" philosophy is rampant today! Broadcasters are using it. Companies that outsource are using it. It drives high volume, low cost manufacturing (and is associated with products made in China). Our whole world is getting ˘heapened.

I just had a thought, driven from the VISTA thread on the politics side.

Radio could use a lesson from Apple.

If good margins are the goal, fine. IMHO, that's actually valid and healthy.

So then, what's the goal on share?

Right now, the goal seems to be to gobble up as much share as possible, hoping economies of scale will work the margin problem out.

IMHO, that's a loser given the aggressive competition.

So, why not do what Apple does? Take a smaller share, but really innovate content wise?

It's a different equation, but still very profitable.

Apple? Smaller share? How do you figure that?

From my POV Apple charges a premium for their innovation.

For radio, there's not really any way for them to charge a premium for premium service... unless you're talking about XM/Sirius.

(it's really long --if this annoys you, you know the drill! Scroll me baby!)

Compared to the masses of PC computers sold, Apple has a small share. It's 5-10 percent, depending on who you talk to.

Lots of people cite that as evidence that Apple is dying, having not successfully competed against all those PC's.

The reality though is that they choose to sell to the most profitable buyers. Not everybody will go for a high-margin machine, but those that will, will do it, and buy extra goodies because they are realizing the value.

The rest either don't exhibit the potential to see the value (simple users), or let cost control their decisions, choosing to see value elsewhere.

Apple runs a very nice profit, is well capitalized, serving it's various niches very well, and regularly.

Getting back to this managing for margins thread, I think it's contradictory to be looking for the largest possible margins, while at the same time trying to grab the most share.

The two are not directly linked!

Grabbing a big share, as in scaling up like we've seen the majors do, turns the business of doing radio into a high volume, low margin one.

So, we see the loss of people, failure to make regular content investments, cookie cutter production --a general lowering of expectations. These things appear to be done to get the scaling to make money, but also reduce the impact and potentially the appeal of the medium in the process.

In this multi-media delivery technology market, there are lots of niche competitors that do very nicely, meaning the scaling might not actually be the most profitable way to make money.

Follow the radio timeline a bit, for a moment. Early radio featured lots of radio operators, some with a few stations, some with only one. Some had other tie-ins, some didn't and just stood alone.

Programming then came from syndicated shows, local talent, music, talk, etc...

For a given market, there could be several distinct flavors of radio, (how it's actually done, live, not live, etc...) along with distinct sets of music, and or quality and other things.

There was some texture then, and there was little in the way of competition then. Radio, TV, Newspaper were the big three.

Go forward some and radio consolidates.

Now for a given market, there is a lot less texture.

The difference here is that fewer niches are really nailed, but there is a case for mass appeal being better overall. Also, more stations in general help keep up the impression that choice is growing, not diminishing.

Now enter the Internet and portable media players, satellite, cable, etc...

Now the big three are more like the big 7! All things being equal, just going for mass appeal will absolutely mean a smaller share. Population growth means maybe that smaller share still presents as growth, but it's growth by absolute numbers, not percentages of totals. That's a net loss in mindshare, but the pool is bigger, put another way.

Now, appealing to the masses is not game set match as it was when the consolidation effort began, and I think that's important because accepting the lower overall margins in return for less ability to differentiate only makes sense in a market where economies of scale will pay off in terms of volume.

The more aggressive competition is eating away at the volume, meaning the planned returns are not there and so we sit here today, watching the value being taken out of things wherever they think it won't actually significantly impact the operation as a whole.

"cost cutting"

Another artifact is that there is even more pressure to consolidate and dilute things to capture more economies of scale.

I think that's a bad cycle, that really does not have a good end to it. This is mostly because the alternatives are getting stronger, not weaker. This means adding value is the right answer, not continuing to dilute it hoping they will go away.

When this happened with computers, many older school producers of the technology either went upward, focusing on very high dollar projects, government, NASA, adademic, theoretical, movie production, and gave up nearly all their share in return for seriously good opportunities to add value and just nail and own a niche.

For most, that's worked ok, but not as well as they would like. The primary reason being the competition continues to improve, thus literally innovating the niches away.

That's Sun, Sgi, Hp, etc...

Now, Apple, faced with this, did something very different. Instead of being reactive, they were pro-active, realizing that markets can be made, as well as evolve.

A market that evolves comes from a need that is an artifact of daily life. Filling it then, provides value, which if done with solid margins, builds profit. As the needs of people change, and as competition works, continuing to add that value means innovation applied to labor over time.

(or it means litigation to keep competetors at bay, but that kind of sucks for everybody, so let's not talk about that too much right now)

And that's the balance. Some of the profit must be re-invested to see growth and ongoing ability to add value and differentiate. Or... the enterprise must grow and consume other enterprises to achieve the same thing.

Radio has chosen the latter, and I don't fully understand why.

Back to Apple for a moment then. In the face of nearly the entire computing industry consolidating to a hand full of very large vendors, Apple continues to single source their goods, owning niches cold.

If you are in one of those niches, you are very likely very attracted to their value proposition and if you buy, you are profitable.

One rule on innovation is a lot like a poker rule. Never bet huge, or go all in on a draw, unless you will have the nuts when it hits. That's a smart wager, in that the payoff is a sure thing, given the cards do the right thing.

So it is with innovation too. This is what Apple does.

The result is a company that does not have a large share of total goods sold, but whose overall profitability is on par with those big share, razor thin margin companies.

(continued)

There is a clear choice here, where radio is concerned.

The need for good margins and to appeal to everybody is contradictory, given the market has enough competitors to keep overall margins low.

(and it is, you can bet on that)

It's one or the other then, or some split where maybe there are business advantages to operating seriously good niche stations, while letting the others run to capture general share.

IMHO, this is probably the more likely scenario. Undoing all the consolidation and resetting expectations for the industry as a whole is not gonna happen.

However, what can happen is that radio can easily target specific programming niches and just nail 'em cold. This is exactly what Apple does, and again the conditions are similar.

Computing today is everywhere and for the most part a commidity affair, where good enough hardware and software abound, frequently deep discounted too boot.

So is the pool of potential people served by radio. Audio is everywhere and can be had on everything, meaning there is enough competition to just devalue the whole thing, unless you are really big, or...

Unless you serve a very specific niche!

For this to happen, content innovation must happen and that comes with a cost. The struggle to keep margins high, EVERY SINGLE QUARTER, has limited content innovation efforts and will continue to do so until the business of serving the masses is de-coupled from the innovation efforts that are gonna have to happen, if radio is to see any serious growth outside the cycle I've outlined here.

One way to do that, and I thought we might actually see it, was to leverage the extra bandwidth found in the HD technology. The main program stream can be left to run, untouched, margines however thin intact, while the secondary one could then be a forum where content innovation takes place.

Given that early adopters are the ones most likely to invest in new radios, the fit was damn near perfect! They are very likely the same kinds of people, who would be receptive to new kinds of programming.

Haven't really seen much yet, beyond the various satellite light formats and some more promising efforts, like those that feature local artists and such.

There is time for that still, so who knows?

Another way would be to take a larger market and have one station run as a Profit and Loss to the main ownership enterprise. An initial investment could be written off, and be used to get the thing up and running.

As a seperate entity, it can then make strategic investments in new content as it sees fit, without having to worry about diluting the culture and business operations of the greater consolidated whole.

If efforts like this were put forward in specific places where there is some creative activity, and they have any success at all, then new content comes from that, which can move through to the masses slowly, seeing profit along the way.

Or, perhaps that niche gets established and is very profitable, so it's just operated that way to capture the greater margins. Invest some of those and do it again and again.

Instead of being huge operations with all the issues that come from that, the major radio entities become more like holding companies, where their holdings see a fair amount of autonomy, and diversity.

Over time, these smaller profit and loss businesses can build identities and serve their niches well, and the cookie cutter perception of radio would be diminished, among other things.

Where can radio add value?

Well, the subscription podcast is off to a nice start! It's popping up all over the place, with some efforts doing it right, charging for the most recently produced efforts, and older stuff free for sampling.

Lots of potential there, not yet being seen so much. One of the things I wrote about here earlier was to deliver ads in those things. Starting to see some of that, and seeing them on the streams too.

Another one I wrote about was incorporating behind the scenes material into the podcasts. Extras for those willing to pay for them. Been seeing some of that too.

Contests embedded in the things, that blend internet with radio listening represent another avenue worth exploring.

If one is paying for people, then having them produce some extra "premium only" programming is a great idea. This, coupled with stations taking on a more Internet aware identity, could generate subscription revenue, without having to encumber the free broadcast element. That's a win-win, in my book, given some research is done to make that programming worth it.

I'm hearing call letters, frequency and website now on a regular basis. That's good as it establishes the radio effort as a brand that's not always linked directly to radio. It's broadcasting across several mediums. More of this is good because it builds potential for share, with few, if any downsides.

Some stations, in particular those being operated as profit and loss enterprises I described above, could choose to produce content that has appeal elsewhere too. That, tied to the Internet efforts means any innovation that is successful can pay for the effort, while at the same time, that effort potentially helping out a more stripped down operation elsewhere.

Think of that as the radio super station concept where the local studio plays host to lots of programming and stations then either produce, or consume this to fill their air time, depending on where they are, what their identity is, etc...

If radio does adapt to better serve some niches, then helping to enable community surrounding that is powerful and can bring dollars to the table. Lots of if's there, but I could see the following:

Let's say we've got a topic, such as peak oil / sustainable living. That's got national appeal, but there are real hot beds of activity. So, the flag ship station ends up being located there, operated as a profit and loss, produces some programming, hosts forums, call in shows, provides PSA's directly related to the topic, sells air time to people with talent and in need of a venue, does sponsored events to promote this and that and just generally becomes a part of that very specific niche.

Located where the action is, it could work very well.

If that's successful, let's say there is another station, looking to differentiate itself. Here we've got KPAM always looking for something right?

So they pick up on this programming, kick start an identity and maybe produce some programming of their own related to biodiesel, or biking or something else hot here.

Some other smaller station, picks up the programming for both and being part of a larger cluster, just replays it, maybe delayed and captures it's smaller, lower margin share, just like all the other ones, that are not actually innovating do.

That's some elements of content innovation that present some interesting value add opportunities.

I'm sure there are as many others as there are gonna be naysayers.

love this quote from Jerry Del Colliono...

you spend money to make money.

Yahoo cuts budget and loses money.

Google spends and makes.

Dell cuts.

Apple spends.

I'm still trying to absorb the information here. Looking at the big picture, though, is it appropriate to compare media companies, which in this country are mostly supported through advertising, to companies, such as Apple, that make products? I'm not trying to be difficult; instead, this discussion reminded me of an Oregonian interview with a senior manager of the company that owns KBNP. When that article was written, the company that owned KBNP was very small. 1410 was--and still is--the only signal that it owns in the Portland market. The person interviewed stated that the company desired to add another Portland radio station mainly because their experience showed that advertisers would rather deal with companies that have several radio stations serving several different audience segments, than with a company that runs one radio station with a specialized format that reaches narrowly defined, albeit loyal, audience.

IMHO, that's a worthy question.

I really was not going for a direct comparison. I don't think there is one, but there are some parallels, and that was the meat of my posts.

One thing you brought up, that I think is extremely relevant, is the demand for blanket coverage -vs- niche coverage.

Now that we can target and distribute and even insert AD's on a more granular basis, and we can also serve niches with a lot more precision (online sales and distribution), the value inherent in a loyal niche will have or maybe is changing now.

I think it will change significantly over the near term time frame.

Another development is person to person marketing. I'm not talking Amway, that's disgusting or at the least not cool. However, getting people, who think your product or service is cool, to talk about that is a major area of focus.

And that's reinforced by the increasingly online dynamic we live in today.

And radio does produce a product. It's not exactly a physical one, but it's still a product.

One such product is mind share -->eyeballs, ears, attention, shared interest, etc.

Another one is the entertainment, not just in the form of music, but news, information, personalities, and such.

A third could be related to community, and that product is mind share too, but also as a venue, not unlike a theater or public square where things can happen, people gather, ideas exchanged, news exchanged.

Products are produced by labor applied to materials. In the case of radio, those materials are the creative works of others, or people employed. Automation is common to both, in that ordinary physical products can be automated for cost and scaling factors. They can be outsourced too.

In radio, the creative works can be recorded or aggragated such that similar economies can be realized.

One difference, I see as key, is that creating physical products can be highly automated without diminishing the product itself. The value can be impacted by the number of products, or the type of automation.

I don't think we can automate creative works! That's a pure labor over time proposition and that means the fewer people creating works, the less there is to aggregate and or expose to people to consume.

In that case then, radio is denied the MATERIALS it needs to produce it's products detailed above.

In this time where there are lots of ways for people to get access to those creative works and combnations of them, the value of them as a whole is diminished.

I believe this is why nobody wants to pay $20 for a CD these days. Why, when it's so easy to get access to a majority of those works, and very similar works are being created regularly.

(That last bit is a stretch, but I believe there is a case for too much corporate cookie cutter music as much as there is a case for corporate cookie cutter radio.)

If the product is mind share, then there has got to be an attraction and that's simply programming of interest, whatever that may be.

As people, one of the most interesting things we have to pull from is other people!

(talk / communication remains the number one use of the Internet for this exact reason)

With recorded music being devalued, there is a lot less draw to your average radio music station, with that lower draw comes a poor quality product, namely, listeners!

Talk radio is a different beast, for post length reasons, I'll just ignore for now.

I see parallels between this and the conditions Apple is operating under. A PC has been devalued just like music has.

Building value perception then could easily involve new content efforts, aimed at bringing something new to the market which is not so easily devalued. Or, it could be that value is to be had by really applying a strong focus to a niche, either with or without new efforts, but I think it's gotta be with.

Maybe that helps put the long posts above into some context.

Yes...the context of not being read.

Harsh but true. If you have to scroll through a post, it's too long. Edit. Get to the point. Shorter=sharper=stronger, the words of Mervin Block, Cronkite's newswriter.

Quick, what is radio's product?

Mindshare

(short enough for you?)

I respectfully disagree about post length.

You can find the sound-bite, dumbed down culture on your local Radio / TV station. Here, on the net, we've got cold hard text, time to consume it, and time to respond to it. It's also not a serial access thing, meaning people can scan and sample to see if something is interesting or not.

Additionally, if the point is complex, then well it's complex! Why dumb things down then?

Frankly, that's a HUGE problem with a lot of our discourse, online and off-line. Either we have some time to talk about things, or we don't. If we don't then perhaps the talking just isn't worth it.

Edit: Gave this some thought. One of the primary reasons why I'll entertain a long post is to have some elements of the discussion in parallel.

If they are done, one.... little.... bit... at... a... time... then the risk of thread wander hits, and can prevent a full exchange from even happening. Also, there is the general idea as opposed to minor details. When mixed, both parties can consider both, and reach points of agreement, while also at the same time, reaching those points of value where there are unknowns or disagreement.

Again, it's not a serial medium.

Think of it like older style exchanges were done. Say, something like the federalist papers, or letters between powerful people in times when latency was high and the cost of distribution was high also.

You didn't just exchange short bits! Waste of time. Instead, you exchanged a robust set of ideas that took the conversation in nice chunks to think about, mull over and actually get somewhere.

You don't get to the good stuff, with simple exchanges that could happen at a bar.

As one who, in part, writes for a living, I suggest that it's a fundamental misunderstanding of the writing process to equate editing with dumbing-down. Rather, editing clarifies thinking.

Good writing communicates clear thoughts clearly.

For anyone who is interested in the broadcast applications of this principle, I recommend a look at Mervin Block's web site. The guy's still kicking, and what he kicks deserves it.

http://www.mervinblock.com/

I understand that perfectly. There is also conversational writing -vs- formal writing.

The dumbing down comment was warranted. Guilty as charged!

However, there are times when one thinks out loud and that is what was happening. A balance must be struck between getting something out there and losing it trying to go for increased brevity.

It's totally conversational here. If you go back through the archives, you will see good posts, really great posts, ok posts and the other stuff.

This probably was in the other stuff category. Oh well. The beauty of it is I can go back, read it, and try it again someday. That would not have happened had I not chosen to just put it down when it happened.

Such is the nature of the beast. I knew it, posted up a warning, and that's that. Either it's read or it isn't. I've no worries and you all can scroll.

Here is the above, whittled down to the nubs:



(I get to do this because I bothered to get it down in the first place)


Choice used to be limited and distribution used to be expensive. Music was on physical media, and delivery technology options were limited to basically the core broadcast means typical of pre-Internet times.

Expectations, for the average Joe were low. Recorded music had a lot of value and Joe's perception of choice was well within that required to make radio competitive in what it could offer.

Today, choice is off the scale and distribution is practically zero. Lots of media delivery options and the low distribution costs has devalued recorded music to a level where some would almost say it's a value add now, not the core value. (I'm not totally there, but it's cheap, no discussion there.) The Internet has raised choice expectations to very high levels.

While this has occurred, radio consolidated and has become bland, generally speaking.

I compared this to where Apple is right now, and if you want the details on that, well... that's something to read up thread.

Given the above, I don't think just playing music, no matter how good the combination, holds much value. It's just too easy to do that these days. People do that, on the Internet, just for fun, and can achieve results on par with the best of broadcast today.

On a side note, overall audio quality is no longer a driving factor. I'm just gonna state that and leave it to the archives here and common sense. Would love that discussion, if anybody thinks differently.

So, where is the value then?

To answer that, one must get to what the product is. For radio, this is mind share, attention, ears, etc... Delivering programming, via the venue of radio, gets peoples attention. That attention can be sold or traded. So our radio industry sells ads, makes endorsements, can act as a new content promotion device, etc...

If there isn't much mind share, then the radio does not have much value.

To get peoples attention, there is either shock value, as in having something new first, delivering programming that has some emotional content or implications, or gimmicks, etc...

There is also that combined with a greater narrative that has daily relevance. The hook, so to speak, that once set, brings people back.

When we produce products, we derive them from lower level materials. In the case of physical products, these are elements, and basic things, wood, metal, etc...

In the case of mind share being the product, we derive that from creative works. Creative works come from people for all but a very small set that are machine generated, directed or invoked by people.

Creative works can be diluted. Consume them too often and they lose value. Deliver them everywhere and they don't have shock value, etc...

This can vary, but I'm limiting that right now.

On margins. Radio is going for the large scale and high margins at the same time, yet the competitive environment it's in does not match that goal.

Delivering a marginal product in this market, means high volume (IMHO, the highest dilution of the creative works of people), resulting in the lowest margins.

Given the high level of competition, those margins are going to be dubious.

The Apple approach to this dilemma was to focus on niches and nail them, expanding one at a time to grow their higher margin business.

In this day, if you want higher margins, you've got to add a lot of value.

(that should make sense given the product and value proposition I just stated)

That all points to content innovation, in pure product terms, better materials to build value from. Think of it like the people working with wood, competing with those making metal. Each has it's strengths and can carve out a niche where it's share is secure.

This must happen with radio, or it will remain high volume, lower and lower margins until it's just a delivery system for creative works being diluted to the max.

The works of people are the materials from which radio builds value.

Talkers do this directly, and can be distributed over many stations with few worries. Home run. Talk isn't going anywhere anytime soon.

In that context, an example of content innovation would be to take a station, located where there is a hot bed of activity, produce content there to be distributed there, and elsewhere it makes sense.

Like KPOJ does here with Thom Hartmann, for example.

Stations then become creators of content, if they are located where there are good materials, or they are purveyors of these things, delivering them as their audience demands.

Right now, there are too many trying to deliver and not enough producing.

One final thing. Niches can either be found and exploited, or they can be created. Radio can and should do both, but that takes some investment in people to make it happen. (their works are the materials from which the product is produced)