From the Desk of Dave Van Dyke...

Lessons Learned?

Dear Radio Executive:

There seemed to be a few months here lately during which the radio industry was sailing more smoothly; not much negative press beating it down as it had been receiving from earlier this year and last.

This is because all of the efforts the industry had been putting forth were finally paying dividends - traditional radio was doing a much better job of marketing itself and it had some decent revenue and profit trends this year. It had even responded from a programming perspective.

Now comes the embarrassment of the story regarding the exposing of another payola and plugola scandal from the New York Attorney General's office. The worldwide press' favorite media target gets set back a few paces because of some folks deciding to take the short cut to success.

I can understand the record labels feeling frustrated with the developments of recent months and years where competition from new digital media has not only impacted their bottom lines, but also thrown a wrench into their ability to comprehend the best manner in which to migrate from old school marketing of their product to today's digital challenges. But, I'm not really clear on why programmers have found it necessary to jeopardize their jobs, their stations, their companies and, oh yes, their audiences by playing inferior quality music just so they can get that 32 inch plasma TV!

I'm not being naive here - during my years programming major market stations, there were opportunities presented by record labels that would've impacted the sound of my radio station if I would only add a tune that our programming staff didn't have confidence in. We knew it was wrong and didn't go there, but rather went the other way in that we helped our label reps better understand the potential of the songs they were promoting by offering up our research. Their business was very different in those days as well, but what it did do was offer a dialogue that they could take back to their bosses. While there was great pressure on them in the days pre-Napster, it was not nearly what reps are experiencing today.

I was in a meeting recently with investors who were considering a number of media investment opportunities including the purchase of a group of radio stations. I was there as an advisor to answer their questions. I was discouraged by their tone.

As the butt of their jokes, radio in their eyes can't seem to get it right. In similar meetings only a year ago, the first question almost always was "What's the future of traditional radio now that satellite radio has gained solid footing?" I did my best to explain the realities of the stability of traditional radio. It's been covered here many times.

Now a year later, some of the same people in this meeting of investors have begun to smirk at the mention of traditional radio as an investment-worthy business. As the lastest payola news spreads across the mass media, there doesn't seem to be anyone that isn't talking about it. The people in the room at that meeting were belittling traditional radio and wondering why so many mistakes have been made. Here's a direct quote: "From owners and investors who got too greedy to General Managers and sales managers who prostituted the product, to program and music directors and record labels who apparently didn't think they'd get caught, the radio industry appears to be badly mismanaged."

The lessons here are a) the radio industry needs to do a better job of self-policing; b) From the top down on-going self-inspection needs to take place to determine what, if any, other vulnerabilities exist; and c) thank goodness our industry is resiliant - it can take a licking and keep on ticking.

But in the face of so much turmoil from a marketing perspective, our business must stop shooting itself in the foot.

In my last letter to you I vented about the press and how inaccurate was their perception and reporting about our business. I suspect radio will attempt to put this payola scandal behind it as quickly as possible in order to get back on the track of emphasizing all that is good about our future. We can only hope the press allows us that luxury.

Your feedback is vital to our company's on-going success. Keep up the good work. I look forward to hearing from you regarding this very important issue.


Sincerely,

Dave Van Dyke

President



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