4 Bold Media Prediction by Inside Music Media

Jerry Del Colliano of Inside Music Media

Predictions are just teasing unless they turn out to come true.

The Clear Channel demise – predicted.

Consolidation destroying radio – predicted (during their glory days yet).

The rise of digital media and a new generation – yes, that’s one of the reasons you read me.

So, I’ve got four new ones that I’d like you to tuck away in the back of your mind. You may agree or disagree or be startled, but you’ll see why they will have such a great impact on the music and broadcasting industries.

1. ABC Television will be sold

News chief David Westin resigned recently. Some say he was tired of firing people. Others say he is leaving because new owners are coming.

I say, that, too!

Here’s some inside info:

Westin is suspected of leaking the news of his departure to The Washington Post. Then ABC rushes out the PR that says Westin was expected to leave all along. My sources say b.s. to that.

No replacement is waiting – unusual if ABC knew in advance. Westin is staying on to the end of the year, that long goodbye not necessary if ABC knew of Westin’s plans in advance. Disney owns ABC and doesn’t customarily handle things like this.

Disney is cutting the life out of ABC News. Huge newsroom reductions, searching for ways to make news gathering cheaper through cutbacks or alliances with others. ABC News is – to put it frankly – decimated. Bureaus here and abroad – none. No investigative of documentary units – too costly, not necessary in their view.

As an industry insider poignantly put it like this:

“Reality is that Disney has decided to invest in the Marvel comics characters instead of news. At least they skipped the part about anointing Spiderman as World News Tonight anchor.”

Who would want to be president of ABC News now as they are depleting their assets?

Prediction: ABC Television Network gets sold. Disney’s chief shareholder is Steve Jobs.

2. The New York Times will stop printing

Okay, I’m cheating.

Times Publisher Arthur Sulzberger Jr. told a London audience last week that “We will stop printing the New York Times sometime in the future, date TBD.” He was answering someone else’s prediction that the Times will go out of business by 2015.

When The Times publisher comes right out with it, why contradict him?

In fact I believe Sulzberger will be wishing he wasn’t printing the New York Times before then. It’s expensive. Costly unions. Gathering news isn’t cheap.

The best reason is that fewer people read newspapers every day.

I picked mine up off the front step at 2pm yesterday – having read it all before I went to bed the previous night. (Why am I still getting it? There’s a good question. I don’t have a dog).

The Times will introduce a pay model next year that will fail – metering readers use of content and charging for it when they read too much. To put that another way, making your greatest fans pay the most.

Prediction: The New York Times will stop printing and I’ll raise you – they will stop metering readers. This critical misread could cost them the franchise.

3. Advertisers will spend more in new media than traditional when the recession ends.

Is that going to surprise radio, television and print. Traditional media is expecting a big gain when the economy comes back.

Let’s go to the tape – even in this prolonged recession, digital media spending has increased.

Last week Pepsi announced its experimental online campaign that replaced Super Bowl sponsorships last January is back. The Pepsi Fresh Project was considered a social media experiment. Local community causes went to Pepsi online to seek money for their projects and the public voted who should get it.

Pepsi announced it will expand the project to Europe, Latin America and Asia as well as continue in the U.S. and Canada.

What recession?

Media buyers will weep when they see that Pepsi will spend $1.3 million a month for this year’s Refresh project. They have the money to also buy Super Bowl spots but this money is being taken away from traditional media nonetheless.

Pepsi certainly isn’t alone in beefing up its new and social media budgets even in advance of an economic recovery.

Prediction: Traditional media will languish until and unless they get back in the idea business instead of selling spots.

4. Twitter will replace radio and TV for Breaking News

During the Discovery Channel hostage situation, Twitter broke the story beating all traditional news platforms. Social media is a way to get the word out fast.

When USC has a campus emergency, students and faculty receive instant text message updates. Since everyone has a cell phone, there is no need to hope that radio or television will spread the word.

During the San Bruno fires in San Francisco last week, news stations like KGO and KCBS rose to the occasion – after all, free media such as radio can be very beneficial in public emergencies. But all stations should have been responding to this local community disaster.

Here’s what a radio insider from San Francisco wrote:

“I have been part of stations who fielded calls, gave information, suspended music and aired callers and got in our Vans and went to where we could help.

“What I heard, in summation, the 2 top news stations (KGO, KCBS) did a great job even with a smaller staff than they used to have.

“All the FM stations ran tracking as usual or if they had someone live they broke in with ‘Call the Red Cross to help donate money or blood and get the info from our website now here’s Rihanna’.

“I’m frustrated because I know what it could be and should be. There was more on Facebook last night. That has become the new “Town Hall” (CNN does a great job of using FB and connecting it with their site. We need to be all over that kind of outlet).

“Think of when there is an earthquake, where is the first place people used to go? radio ;I felt a rumble’, ‘I felt a roll’ now we are on Facebook in 2 seconds. BUT people still want to hear a human voice. If we link those things people will feel intimately connected”.

Prediction: A human voice can be on mobile Internet devices and that’s the new breaking news.

wriiten by By Jerry Del Colliano of Inside Music Media

Limewire Loses Major Case to the RIAA-But Will that make a Difference in Record Sales?

A couple of articles to peep around the issue of  file sharing…The first talks about the recent court ruling against Limewire where the RIAA is happy as heck as it validates their long held complaints about how file sharing is ruinning the music biz..

  The second story is the exact opposite. It talks about how yet another study been published that shows there is no correlation between illegal downloading and record sales..  This is a hard pill to swallow for many in the industry. The thought of having to find another cause to explain low album sales is daunting for those who are still yearning for the old glory days of the industry where money and album sales was plentiful. Them days will not be returning anytime soon..

There are far too many cats in this biz who have totally forgotten about handling the basics which centers around relationships.  They refuse to go out and create a solid community. Instead of seeing fans as friends and allies, they see them as mindless consumers  who they accuse of morphing into despical theives when they don’t sucumb to the charms of a cheesy marketing plan. Too many executives and artists forget that a good relationship will be rewarding, not punitive.

There’s a very vocal segment of the music industry that reminds me of the proverbial loud mouth artist  who is barely known on his block but will be the first to complain that his lack of success is due to downloading… He’s the first to show  up and say “no’ to technology, but the last to show up and put in the hard work of shaking hands, kissing babies and leaving a lasting impression.

Everytime I hear this type of charcter whine, I feel like holding up a sign that says;

‘Son fallback..Nobody knows or cares  who you are..Ain’t nobody on Limewire looking for your joints..’

Sadly in an industry full of insecurities and egos, my line of thinking will rub some the wrong way.. no matter how true the assessment.

The reality is far too many artist refuse to really put in work and sincerely reflect the realities of the people they want to purchase their music. They wanna stand around and talk big like they’re entitled to the next fat check when they never really put in work. These types of folks need to go the way of the dinosaur.

Fortunately there’s a growing segement that has learned to embrace change. These are the types that consistently take every challenging situation and turn them into a fertile opportunity.

For example, I recall LA Hip Hop pioneer Egyptian Lover talking how his peers were moaning about getting bootlegged. He said he understood early on the bootleggers were there to stay and the best thing he could do was create a situation where it could work to his advantage.  Instead of woofing he said basically saw the bootleggers as a street team. They become promoters. He figured he was gonna need one earlier, might as well let the bootlegger do the work..  Egypt  put on his creative thinking cap and did what so many The record labels execs and artists have forgotten to do because they’ve become too comfortable. He  figure out how to ‘flip the script’.

Something to ponder

-Davey D-

LOS ANGELES — File-sharing software company LimeWire has lost a long-running court battle to the major recording companies.

A judge with the U.S. District Court in New York ruled this week that the company and its chairman, Mark Gorton, were liable for inducing copyright infringement.

The decision in the case, which began in 2006, doesn’t mean the site will shut down right away. The record labels and LimeWire are to meet with Judge Kimba Wood on June 1 to determine the next steps, such as a possible deal to work together going forward and a potential award for damages.

Recording Industry Association of America Chairman Mitch Bainwol said in a statement Wednesday that the ruling was “an extraordinary victory” against one of the largest remaining file-sharing services in the United States.

The RIAA said more than 200 million copies of LimeWire’s file-sharing software have been downloaded so far, including 340,000 in the last week alone.

The ruling could pave the way for a deal, similar to the way Napster was sued out of existence in 2000 but was reborn and is now under the ownership of Best Buy Inc. with licensing deals with all the major recording companies.

“This isn’t about getting something shut down, it’s about getting something licensed and legal,” said Steve Marks, general counsel for the RIAA.

LimeWire CEO George Searle said in a statement that while it “strongly opposes” the court’s decision, the company held out hope for a deal. The company sells an “Extended Pro” version of its free software for $34.95 a year, leaving open the possibility that a new business model could emerge in cooperation with the music industry.

“LimeWire remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission,” Searle said.

original source: http://www.huffingtonpost.com/2010/05/12/limewire-loses-riaa-case-_n_574338.html


Another Study Vindicates Filesharing

By Jerry Del Colliano


Steve Meyer, who as I have often said is the smartest observer of the record industry, knocked my eyes out in a recent issue of his publication Disc & DAT (Digital Audio Technology).

Yet another study that exonerates filesharing as the culprit in today’s music industry.

It’s a lack of innovation — not filesharing – that’s the conclusion.

I’m sure that doesn’t come as a surprise to you, but it may be to the record labels who are acting like it is 1999.

Professor Nico van Eijk of the University of Amsterdam conducted the latest study and his conclusion speaks volumes:

“The entertainment industry will have to work actively towards innovation on all fronts. New models worth developing, for example, are those that seek to achieve commercial diversification or that match supply and end-user needs more closely. In such a context, criminalizing large parts of the population makes no sense. Enforcement should focus on large scale and/or commercial upload activities. . . Introducing new protective measures does not seem the right way to go…”

In other words, filesharers are consuming all media especially concerts, films and games – not just copyrighted music.

I’ve linked to the 55-page report here.

Let me comment on a few of the findings my friend Steve Meyer highlighted:

“The study concludes (among other things) there “isn’t a clear relationship” between the decline in sales and file sharing, while also finding that fear of evolution prevented the recording industry from adequately adapting their business models to the broadband age. While the recording industry is having problems, argues van Eijk, it has less to do with file sharing, and more to do with the fact they’ve been “abstaining from innovation” — as the study phrases it”.

Think about it.

The labels could have bought Napster, not annihilated it, thus avoiding creation of the Napster vacuum that was promptly filled by bit torrent sites, etc.

The labels could have innovated along with Steve Jobs when the Apple CEO caught them off guard with his offer to help stop piracy. That offer was the iPod and iTunes store. He played to their fears. They allowed him to become the de facto Big Kahuna of the Record Industry.

They could have laid off streamers and come up with an easy to swallow royalty payment schedule that would have grown music consumption instead of dampened it.

Could have launched its own cloud.

Could have done Pandora itself as an industry consortium – that is, if they could have gotten along together for a minute. Bet Steve Jobs would have loved to own Pandora. Bet he still does.

More from the report:

“Turnover in the recorded music industry is in decline, but only part of this decline can be attributed to file sharing. Conversely, only a small fraction of the content exchanged through file sharing networks comes at the expense of industry turnover. This renders the overall welfare effects of file sharing robustly positive.”

Innovation scares the record industry.

God forbid, they had a new idea other than CDs.

If record labels had to run the space program, they would find themselves doing a soft landing in Camden, New Jersey instead of the moon because they cannot figure out which way is up.

Now, record labels really need to know which way is out.

Because Steve Jobs is running their show.

Setting the rates, making the new age “record players” if you will. For all practical purposes, he’s eliminated the album (although you wouldn’t know that by Lady Gaga).

Apple is about ready to launch cloud-based instant access to iPods, iPads and iPhones – while record labels can brag about instant access to – well, suing people. And, by the way, the labels are opposing Apple’s iTunes “cloud”, too as witnessed by this recent article in The Wall Street Journal.

So expect the RIAA to raise a commotion and argue the latest study that looks at filesharing as the lesser of evils.

The worst being – a lack of music industry innovation.

As Meyer pointed out in his piece, Steve Jobs says “Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”

That’s a great quote — not that Jobs ever admits a mistake (like in the current version of Apple TV).

Still wisdom of the quote is right on.

And Steve Meyer wrote this in 2003 when he launched his newsletter:

“Any software programmer will tell you the hard core (ugly) truth is this: anything that can be encoded digitally can be decoded and replicated with a little work. It’s time the labels recognize this fact, accept it, and now spend time brainstorming on how new revenue streams can be created within the framework of all the technology at hand.”

Okay, so don’t admit to past mistakes. We understand.

But, wake up and look around.

My USC students used to be split about whether filesharing was stealing. They had many excuses – some good (“I use it to preview what to buy”) and some bad (“the money never gets to the artists anyway”). I’ve often wondered about these rationalizations.

But there is no denying that one could also look at filesharing as today’s radio.

A source of music discovery.

And now we have yet another carefully considered report that explains the phenomenon if not the unfortunate response of the record industry.


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An Important Article About the Problem of Radio Consolidation

The Four Seasons of Media Consolidation

By Jerry Del Colliano


Some of my readers have suggested workarounds to the Ticketmaster/Live Nation monopoly that I wrote about yesterday.

You know, the one that promises higher prices for concert ticket buyers.

The Grateful Dead concept of selling directly to fans.

The growth of entrepreneurial businesses that barter tickets in a fair marketplace like Brown Paper Tickets.

Others suggested Amazon or even iTunes as alternatives to Ticketmaster someday.

There is no shortage of good ideas when those ideas come from people who actually know what they are talking about, but the way our entertainment business model works right now — the CEOs and their bankers get to play with the monopoly money.

Take what happened yesterday when Emmis CEO Jeff Smulyan put together a $90 million buyout to take the company private. Alden Global Capital will buy all the outstanding Emmis shares for what amounts to $2.40 a share and Smulyan gets his company back.

You may remember that Jeff Smulyan was among the first to read the winds of change when he tried unsuccessfully several times to take Emmis private. The shareholders were always the problem. Emmis just never worked as a public venture.

But then again Emmis went public to get in on the Wall Street lending giveaway that enabled the other big consolidators to acquire stations once consolidation was approved. Unfortunately, Emmis never got big enough nor was it willing to be acquired and you saw how that turned out.

Radio is becoming a two-model business.

Consolidator vs. operator.

On one side the Clear Channels, Citadels and Cumulus-type consolidators who run on pure loan money and that must either grow or sell to have a reason for being. They are not interested in being broadcasters. By now everyone knows that what goes on-the-air is the least important component for these types of operators.

We know consolidators fire local personalities no matter how successful or profitable and keep only the “brands” that they can pipe to other stations in different cities to allow for more firings and lower costs.

They reward success by giving surviving managers even more responsibility guaranteeing that they cannot continue to produce excellence. Apple’s Steve Jobs would not take the executive in charge of his computer division and say, here take my iPod and iTunes initiatives, too. And then if somehow that person succeeded, could you imagine Jobs giving that same person a third responsibility — say, to oversee their retail stores.

Radio does this all the time.

Piling on work because the end result doesn’t matter.

Program directors are a thing of the past with consolidators. Content manager is the new name that at least admits to the change in job description — to channel national programs to various local destinations.

Bain Capital, one of the major investors (along with Thomas H. Lee Partners) that overpaid $20 billion for Clear Channel shows us how they are hell bent to operate as recently as this past weekend.

News Blues, a paid subscriber site, reports:

“The Weather Channel was in full balls-to-the-wall storm coverage mode Saturday as the nation’s Southeast lit up with severe weather. But Friday night, when nearly a half-dozen tornado watches were in effect, and parts of Mississippi were being ravaged by storms, TWC aired a movie: “The Avengers.”

Sound a bit like consolidated radio? You know, the kind owned by Lee and Bain and other “vulture” capitalists.

As was pointed out in News Blues, “The Weather Channel partners Bain Capital and Blackstone Group will never justify the enormous $3.5 billion price tag they paid for TWC in July 2008 at the height of acquisition market”.

They are all about profits.

Mobile apps, inter-connectivity and Internet distribution models.

Profit first.

Forget the tornadoes.

The model is right there — Clear Channel’s co-owner is doing the same thing at The Weather Channel.

Fresh off of $1.3 billion in refinanced debt.

This is getting too easy for us to understand, isn’t it?

The only climate The Weather Channel cares about is the business climate.

I mention all of this because the radio and music businesses have always operated in their own worlds. If you’ve worked in either (or both), you know that reality never meant anything in these businesses.

Radio set its own rules.

Always dictated what the audience would hear, how advertisers would support them. They don’t like being shoved around by the Internet, Apple, Facebook or a bunch of kids right out of Pirates of the Caribbean.

And, the music industry still doesn’t acknowledge the real world.

Napster was an asterisk in their history.

They can sue fans for stealing.

Lose money.

Watch consumers prefer digital downloads to plastic CDs.

And it remains business as usual.

They, too, are doomed.

That’s right — the CEOs who take their orders from equity owners — are doomed because they are operating in the make believe financial world that they live in and are not capable of acknowledging the real world where it takes innovation to grow revenue.

So, if you’re an innovator or have just a little innovation in you, fired from a media job you did well — the real financial turnaround is going to happen for your career.

Legal monopolies are not a business model in a world that has changed.

Financing and refinancing while content excellence suffers is a short-term and foolish strategic move — not an adequate five-year plan.

There are no viable five-year plans in the entertainment business because these industries are already ten to 15 years behind the consumer and their preferred technologies.

So here’s my take on the economic recovery that is coming.

Keep in mind Citadel, a company in bankruptcy, is bragging about a 4% increase in revenue over the first quarter of 2009. Also keep in mind — that is a pretty low standard to meet. Q1 of 2009 was the absolute bottom of the media economy and these geniuses think a 4% hike a year later is a recovery. Hey, it’s better than losing money, I grant you.

A growth business — never.

So here we go:

1. Equity holders must continue to consolidate or liquidate — collecting fees all along the way — to remain viable.

2. The longer they hold their assets, the more they run into their loan covenants that will require the purchase of more expensive debt. So watch things shake out in the year ahead.

3. For those of you who want to buy radio properties when the prices come down, remember that even Larry Wilson isn’t buying now. And that the properties may still be sound but consolidators kind of ran down the neighborhood if you know what I mean. In other words, they’ve devalued the very radio stations they overpaid for making it hard on competent owners who want to try their hand at good terrestrial radio.

4. Good operators like Bonneville, Cox, Lincoln Financial and others (usually smaller groups) will turn in excellent results because they have not devalued their properties even though they sell in a climate that has. However, these companies are like building Beverly Hills in downtown DC — location, location, location.

5. There can be no growth business for the entertainment industry without an interactive digital strategy separate and apart from traditional broadcasting content. And it must be fully funded. No digital. No growth. No kidding.

6. The brain drain will start showing its effect on media companies that have neglected great over-the-air content and have failed to innovate new media platforms. Sorry, but they just can’t keep firing assets and then declare they are hiring again for new needed media initiatives. The best people are going to stay away from operators like that.

So the reality is that media is just another microcosm of the new American business model.

Buy big.


Over-commit to debt.

Cut assets and costs.

Refinance again and again and hope the economy makes this model look good enough to — resell.

At a profit.

Or at least for more fees.

I’m going to put it in writing — years ahead of general knowledge — that once everything has been bought, sold, and resold, there will be a need for new ventures.

That’s why they call these vultures — venture capitalists.

Sadly, they need more businesses to buy and ruin for fun and profit.

The necessary growth businesses will never rise up from the companies they bought or funded because that’s not what equity owners are about.

For the growth businesses of the future, they will have to turn to the talent that has been shown the door or to the young people who cannot even get in the door.

The four seasons of consolidation are:

Spring — rebirth and growth by entrepreneurs.

Summer — the cornucopia of innovation with its abundant supply of revenues and rewards.

Fall — The final harvest of new business growth.

Winter — The coldest season of all — not friendly to the seeds of new ideas and an atmosphere not conducive to growth.

In radio, television, print and music, we’ve just suffered through the worst media winter ever.

Spring has sprung.

Get planting seeds of innovation. Equity speculators have to eat.

original article: http://insidemusicmedia.blogspot.com/2010/04/four-seasons-of-media-consolidation.html

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