The world of business is in turmoil and disruption. Many of the issues economists have built entire philosophies on – tariffs, deficits, economic stability – have been roiled in recent years. We may be enduring a period as tumultuous as the industrial revolution that transformed America (and the world) from its agrarian roots. As millions left the countryside for factory jobs in big cities, the face of American business – and all of society – was rocked to its core.
And it ushered in many of the technologies and advancements that have shaped the U.S. in the last 100 years – cars, air travel, cheap electricity, and electronic mass media – especially TV and radio.
But here we are, moving into the third decade of the 21st century, and we're staring down the barrel of the next revolution, rooted in technology. The fact that Andrew Yang is still alive in the Democratic race, while establishment candidates like Bill de Blasio, Kirstin Gillibrand, Beto O'Rourke, Kamala Harris, and more to follow have dropped by the wayside is a statement about his recognition of this existential change in the way America works, plays, entertains, and informs itself.
And like all sweeping revolutions – especially those powered by technology – the jury is very much out whether the net effect is “good” or “bad.” Of course, those terms are too simplistic, unable to take into account the many layers of change, and the impact they have on millions of lives and thousands of companies.
If you were wise enough to have invest in Apple, Amazon, Google, and Netflix a decade or so ago, you've been riding one of the great financial waves of all time. But if you stuck it out with traditional companies like KMart, Toys R Us, Radio Shack, or Kodak, things didn't work out so well.
As is typically the case, Washington moves much more slowly than the frenetic world of business. Legislation has always come too late to protect those from unfair monopolies, substandard working conditions, and unequal pay.
And so it is today, tech companies have grown at insane rates, as billions and billions of consumers become part of company portfolios and databases the size of which we've never before seen. Privacy issues are now taking center stage – a good thing. But so many other issues connected to technology are still very much in the air – and being hotly debated.
Well more than a decade after social media first exploded, consumers and legislators are grappling with the reality that while these platforms have the ability to connect billions of people, they often serve to divide us as well. The ways in which Facebook and other social media machines were co-opted by outside manipulative forces in 2016 are still being debated. Meantime, the next Presidential election will be here before we know it – and there is still much ambiguity about whether political ads will be screened, monitored, or ignored.
We're getting used to executives like Mark Zuckerberg being grilled by mostly uninformed Congressional committees, as politicians struggle to keep up with the technological changes and their effects on their hometown constituents and vast web communities
And that leads us to a growing sentiment among people concerned about the impact of social media and the near-total lack of anything resembling oversight, much less regulation. The Facebook audience is edging toward 2.5 billion global users. Its influence in all areas of society and culture is unmistakable. Facebook has become a major advertising vehicle, challenging traditional media's impact. Its use of Artificial Intelligence and audience data has become more troublesome over times. And as we know, the platform's ability to affect the vote is an issue that first cropped up in 2016, and will undoubtedly impact the November races.
So, should there be regulation of Facebook and other social media behemoths?
That's the question actor Sacha Baron Cohen took on last month, speaking to the Anti-Defamation League. Here's a guy who's made his reputation on political and social parody, often pranking real people as well as famous politicians and celebrities. And he's deeply concerned about social media and Internet companies running rampant without guard rails.
The 5½ minute video – excerpts of Baron Cohen's speech – focuses on Facebook and other Internet companies, and its lack of regulation:
The transcript of his speech is here.
In his talk, Baron Cohen refers to the mega-Internet companies as “the biggest propaganda machines in history.” And he singles out the heads of these companies – “The Silicon 6” as he calls them – as being “all billionaires, all Americans, who care more about boosting their share price than protecting democracy.”
Noting they are “unaccountable to any government,” Baron Cohen's take is these companies need to root out hate and lies on their sites and on our screens. But their executives often claim that regulation is a form of repression not congruent with American society.
So, segue to my morning at the FCC a couple weeks back. I had the honor of moderating a group of passionate broadcasters in front of the Commission staff. The goal of this session (and a later one dedicated to the state of broadcast television) was to help sensitize the FCC to the current plight of broadcasters in a rapidly changing media cycle.
Hartley Adkins (iHeart), Caroline Beasley (Beasley Media Group), Alfred Liggins (Urban One), Jeff Warshaw (Connoisseur) were all part of a panel making the case that government regulation hurts their ability to compete against these same Internet companies, along with those that specialize in audio, including SiriusXM, Spotify, Pandora, and others.
Telling the stories of their companies, the broadcasters each made a compelling argument for deregulation, in an environment where the competition has never been more intense, whether you own hundreds of stations or you're in charge of a single station – like Karen Slade who manages KJLH in L.A. While they differed on a number of issues, they all came down on the same side of this issue.
Warshaw reminded the FCC staff, “In our local markets when we have scale, we provide better, more diverse programming, more local service, more public affairs programming, more news…We are competing with companies that are a hundred times bigger than us…We're at a huge disadvantage, and they're unregulated.”
Liggins added, “Technology is eating traditional media from a standpoint of making media a loss leader…the FCC's mission has been to steward the public airwaves and have content for the public interest, and under the current landscape, that mission is in danger.”
And Beasley noted, “We talk about media ownership – scale – in small, medium, large-sized markets…That may not increase revenue…but what that does do, it helps broadcasters take advantage of synergies within the market. We are able to spread our operating costs.”
BIA's Mark Fratrik sees radio across the entire spectrum, and made this observation: “Sometimes we forget that while you may reduce the number of staff members (with consolidation), you are actually strengthening the stations you're acquiring. There are a lot of under-performing stations who don't have a sound financial basis…While we strive for diversity of ownership and diversity of opinions, these under-performing stations aren't offering that much, and they're on the precipice of faltering or going down.”
You can watch the entire session here:
Now, deregulation opponents will no doubt cite many reasons why the Telecommunication Act of 1996 failed to spawn innovation, diversity, and investment. And back in the 1990's, some radio broadcasters were clearly more focused on serving their investors rather than their communities.
But that seems like a world ago. In this highly charged media environment, the radio broadcasters on my panel told compelling stories about why less regulation may be radio's best and only shot to stay in the media game, and continue to provide some semblance of local, community service.
Clearly, regulation – or the lack of it – will be at the center of many media conversations and debates in 2020. As both Sacha Baron Cohen and our group of broadcasters agreed, mega-Internet companies are in a remarkably powerful position with little to no governance or rules.
How all of this squares with an audiences in flux, advertisers untethered from traditional media plans, and Internet companies growing more powerful by the day, remains to be seen.
But it does speak to just how unstable and disruptive the world of media has become.
That message is getting across.
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Tony Waitekus says
A quote from the above article: “In our local markets when we have scale, we provide better, more diverse programming, more local service, more public affairs programming, more news…”
What? Compared to when? Ten years ago? Twenty years ago? Really. Is this a joke?
Jeffrey Warshaw says
Before we consolidated some of the stations in our markets.
Are you joking about 20 years ago? The world has gotten a whole lot more competitive.
Fred Jacobs says
Tony, I see Jeff has already responded to you. And you each have your point of view. I can tell you that in New Haven, there may be no better, live & local operation that WPLR. And yes, it’s part of Jeff’s portfolio in that market.
Bob Bellin says
John McEnroe used to sneer at a line judge and say, “you cant be serious!” (Rant warning!!)
First – I think Sacha Baron Cohen makes some salient points and may well be right – but radio and its underlying challenges have nothing to do with that. Radio’s errors are almost purely unforced. Starting with revenue – radio lost 1/3 of it after the crash of 2008 – right after Facebook opened up to non college students, Twitter was in its infancy and the iPhone was a year old. Radio just never recovered – and not because of any of those digital media giants, it did it to itself.
Why? Because it chose to react to a challenging economy and growing audio competition (Spotify, Pandora, Sirius and XM iPods, (back then still a big factor) by cheapening its product with voice tracking, less research and elimination of virtually all marketing. You can’t blame Facebook or Twitter for that. And they decided to react to the economic hurdles by cutting sales staffs, paying them less, imposing onerous work restrictions and reneging on bonuses. Virtually every radio innovation since the consolidation era began has been built around cost cuts and firing people. “In our local markets when we have scale, we provide better, more diverse programming, more local service, more public affairs programming, more news…”. No you don’t – the opposite is true. You provide dumbed down, syndicated/voice tracked/void of local service, generally unresearched versions of what you provided 25 years ago. The programming is worse, less diverse, often with no ability to cover a local emergency. “We are able to spread our operating costs.” Translation – fire people. So doubling down on a failed strategy is radio’s answer to competition?
Mark Fratrik;’s comment may be the most misleading. “…you are actually strengthening the stations you’re acquiring. While we strive for diversity of ownership and diversity of opinions, these under-performing stations aren’t offering that much, and they’re on the precipice of faltering or going down.” You can’t be serious. If you have one or two operators, those bottom of the barrel radio stations will, just as they are now, be loaded up with $5 spots to bring in the better rated ones – no matter how low the cost per point goes.
Radio’s TSL started going down when consolidation happened (1993), not when Facebook, Spotify of XM did. Further consolidation will allow for a one time mass firing and then it will be business as usual and more incentive to test how much cost cutting can be done to bring in another quarter.
I wish I could have been there to ask some questions, but in reality most of potential the damage has been done and allowing one or two operators to control a market will leave everything pretty much the same, minus some salespeople, traffic/business managers, engineers, joks, PDs, productgion directors, sales managers and GMs.
If radio wants to accelerate its path to irrelevance with listeners and advertisers, more consolidation could be an important piece of the puzzle.
And don’t forget, there’s still time in 4th quarter to fire people!!!
Fred Jacobs says
Bob, I was hoping to hear from you on this. And it would’ve been interesting to have had you in that meeting room at the FCC. Broadcasters have made some mistakes over the years – of that, there’s no doubt. Many have been slow to invest or to recognize the media world was changing back in the 90s. And then the perfect storm – the technology explosion, the Great Recession – and here we are. If radio was the only traditional medium to have gotten caught in the techc typhoon, it would’ve been one thing. But so much of what has happened around radio, TV, print was caused by forces bigger than the a lack of live and local programming.
You might make a case that public radio has been smarter and more prescient during this same time, but of course, that would incur the wrath of free marketers everywhere. In truth, public radio has made some very smart moves in tech and with overall quality – and these broadcasters are still fighting the same fight – changing demographics, new platforms, ete.
Thanks for weighing in on this. I know a lot of people agree with you.
dave mason says
Fred, your comment:
“And back in the 1990’s, some radio broadcasters were clearly more focused on serving their investors rather than their communities” struck a nerve.
How is that different in 2019? With less regulation how will that change ?
I sit here and marvel (pardon the pun) at Disney and its continuing success. It’s not because they shrunk “It’s A Small World”. It’s not because they put cardboard spaceships in “Star Wars World”. It’s not because they’re offering up their vast content for $7 a month.
Then there’s Netflix. They haven’t cut corners on new shows. They didn’t automate the process of producing great shows.
I could go on and on, but in 2019 (and forward) it seems that the companies that offer up a great experience to their customers will continue to thrive. It’s been true since Walt opened the gates in 1955 and it’s been true since. Technology and automation could help broadcasters innovate, but they’re more concerned with keeping the investors happy (just like you said they were in the 90s).
Fred, you have a lot to gain by agreeing with broadcasting execs, since they’re the ones who hire the consultants. The up-front warriors who’ve seen their co-workers disappear and their work load grow might disagree.
Fred Jacobs says
Dave, I can’t quibble with the Disney model of excellence, any more than you can with Apple or Amazon. But like radio stations/companies, they’ve “added units” – OK, raised the rates. That may not alter the experience, but it does make it tougher for consumers to engage.
Regarding broadcasters, they DO pay for my services, but I haven’t been afraid to challenge CEOs or ask the tough questions (ask anyone who was at Forecast this year). And while I am disappointed by the “state of the art” at times, I also appreciate how the competitive landscape has changed. Would radio have been more successful without the regulation – including not being able to say the F-bomb like you hear on Sirius or being able to corner their market (OK, like SiriusXM)? I think so. Would broadcasters have created better radio without regulation? We may never know. Thanks for chiming in.