What is Radio Selling?

I’ve been thinking about music and radio a lot lately, especially given all buzz recently on Satellite radio. (Recall we visited this topic over the summer).

Here’s a simple question that many people get wrong: What does (terrestrial) radio sell?


Think about it for a moment before answering.

If you are like most media consumers, your answer will be “advertising.” Since Radio is media, and most media rely on advertising, it’s a reasonable conclusion.

That answer, however, is wrong.


What Radio sells is you. You are the product. At least, you, as a member of a larger aggregated package. Sure, it’s demographically dissected, cross marketed and discounted — but its still what Radio sells. You may think of yourself as a consumer when you listen to radio, trading your time in exchange for music, news, weather, talk, etc. But that’s a false, if common, misunderstanding. You are what is consumed. Advertisers are the actually consumers.


If you understand that simple perspective shift, than the decline of entities like Clearchannel Radio (previously discussed) becomes apparent and inevitable. The stock is off some 33% since April of this year – while the S&P500 is appreciably higher.


After the 1996 telecommunications reform act, which gave the green light to Clearchannel’s massive acquisition spree, the industry started shifting, in a way that alienated their audience dramatically. That the largest player in radio failed to understand this simple concept is rather telling. The consolidation led to the gradual shift in lifestyle — listeners of music no longer relied on radio. The audience found ready substitutes — it was easy, especially since the internet was gaining broad penetration.

I suspect that this decline — this lifestyle shift — will be irreversible.

Why? The Hamburger Helper Effect.

Consider the modus operandi of all consolidators: Purchase assets, eliminate redundant administrative functions, achieve economies of scale. Clearchannel did this – and more — by firing local program managers, DJs, eliminating formats, and tightening playlists – all of which ultimately reduced the amount of varied music on the radio.

In effect, they lowered the overall quality and breadth of what they were playing. Equate this to a hamburger chain introducing meat extender. It will certainly lower costs, and increase profits – but only short term. Over time, the patrons of the restaurant simply will stop coming. Revenue slides, repeat customers go away, so the business tanks.

That’s FM radio today.

What’s fascinating is how quickly the audience’s “Screw you guys, I’m going home” attitude has manifested itself. As noted above, what radio sells to advertisers is their audience. That audience, tired of Hamburger Helper, has shifted away, easily finding the all beef burger: iPods, internet streaming, P2P, and satellite radio.

The audience didn’t even change stations; Rather; they shifted media entirely.

Grandpa, you used to listen to music on the radio? What was that like?

Category: Finance, Music

Artists Perspective on File Sharing

Category: Finance, Music

Season’s Subtotal


Here’s yet another online-only WSJ column:  Season’s Subtotal. The WSJ will take a "regular look at how the holiday season is progressing at retailers, rounding up the latest takes from Wall Street, market-research firms and news reports."

I’ll point to it when I catch the updates; Here’s an excerpt:

And, they’re off! Retail-tracking firm ShopperTrak estimated that retail sales for Black Friday, so called because it marks a shift to profitability for many retailers, rose 11% from last year to about $8 billion. Saturday, however, "was weak and disappointing, so together it was only a modest two-day performance,” said Michael P. Niemira, chief economist at International Council of Shopping Centers.

Mall cornerstones J.C. Penney and Sears Roebuck reported solid sales, but a lack of deep discounts at Wal-Mart meant fewer rings of the retail giant’s cash registers. Analysts say discounters are likely to have a hard time this holiday season because lower-income customers have been hardest hit by soaring gasoline prices. Still, Mr. Niemira expects chain-store sales will grow 3% to 4% this holiday season from last year.

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Category: Economy

How Did Terrestrial Radio Lose its Audience ?

Category: Finance, Music

Rationalizations from the Dismal Set

Category: Economy

Nonfarm Payrolls: +112,000 Jobs

Category: Economy

Three Peaks and the Domed House redux

Way back in October 2003, we looked at master technical analyst George Lindsay’s repetitive chart pattern, Three Peaks and the Domed House. That version showed a fairly prescient call by Ned Davis, before the January ’04 top. That was then, this is now. Its time to revisit the pattern, this time via Jeff Hirsch of…Read More

Category: Markets

Oil & Weather: A Guest Persepective

Back on the anniversary of the crash, I ran a guest post from Rob Fraim: 1987 Crash Revisited. That was well received; I thought Rob’s latest missive was worth reproducing here:

In the midst of the recent big drop in oil – which is likely at least partly due to forced/margin selling – there is an interesting point to be considered.

Writing on the financial website Street Insights, Richard Ritholtz [Editor: no relation — as far as I know] made the following comments today:

· It’s too early to write off the winter even though the weather has been quite mild in the Northeast and Midwest to date.

· Heating oil inventory is still at a low absolute level, although it is clearly in a building mode over the next weeks.

· The market experienced significant long liquidation yesterday as several large funds locked in their profit for the year; December 1st clearly signaled that year end is not far away.

· Based on information from several private forecasters, I believe that the overall winter temperatures from Dec. 21- Mar. 21 will be average to below normal even, though the November through early December temperatures have been milder.

As to the weather (ok…cue the “Let’s Make Fun of Rob Fraim” theme music here) here is something of interest (or fun if nothing else):

The Old Farmer’s Almanac has a noteworthy record for medium-to-longer range weather forecasts.

Oh, I know you’re laughing at me now. You’d rather pay attention to Skippy the Weatherman on your local Accu-Weather at 6:00 who can’t, for Pete’s sake figure out whether it’s going to rain tomorrow. (And who each year predicts 4 huge snowstorms that never materialize and misses on the blizzard that blindsides you.)

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Category: Markets

even more Accelerated Depreciation of Capital Spending

Category: Economy

Chart of the Week: S&P 500 Breakout

Category: Markets