From the NYT:

Local radio advertising fell a staggering 21 percent in November from the same month a year earlier, according to the Radio Advertising Bureau’s most recent figures. National advertising was down 25 percent.

That’s not even Clear Channel’s big problem! The company, according to the story, is making a ton of money. But the guys who took it private last year basically went in debt to the tune of $19 billion.

The WSJ has a fairly shocking story about two books that just came out on Clear Channel. The first, by Alec Foege, you might remember from the extended interview Hitsville did with him on the book’s release a month or two back. Foege is a longtime reporter on the music industry and the author of several other books.

That exchange is here.

The other was written by Reed Bunzel, a onetime radio trade journalist. But there’s more to the story; let’s let the Journal’s Sarah McBride tell it:

In 2005, radio-giant Clear Channel Communications Inc. learned that a writer named Alec Foege was planning a book about it. The book’s working title, “The Monster That Ate Mass Media,” suggested something less than a puff piece was in the works.

Clear Channel mounted a counteroffensive, lining up its own writer to tell the Clear Channel story its way.

As a result, dueling books about Clear Channel have recently hit the shelves. Mr. Foege’s book—now titled “Right of the Dial: The Rise of Clear Channel and the Fall of Commercial Radio”—chronicles the company’s role in the consolidation of the radio industry.

It competes with “Clear Vision: The Story of Clear Channel Communications,” by Reed Bunzel, former editor of the trade magazine Radio Ink. Mr. Bunzel says Clear Channel paid him to do the book but declines to say how much. Another journalist says he was offered more than $100,000 to take on the project. The book doesn’t disclose Mr. Bunzel’s financial relationship with Clear Channel, but careful readers may notice that the company holds the copyright to the book.

Allow me to make a few observations McBride is too polite to. One, this is strong evidence that Clear Channel remains a thuggish company that utilizes dirty tricks and subterfuge to get what it wants.

And two, Reed Bunzel is …. wait, what do you call someone who provides certain intimate service for money but who doesn’t reveal it to his readers? What’s the term I’m looking for?

a) A journalistic whore?

b) A sellout, lying, corporate toady?

c) A fake author, a cheat, and a sleazebag?

d) all of the above?

Yesterday (“Getting the Stones story wrong”) we saw transcontinental confusion, from London (The Observer) to San Fransisco (Wired News) about rumors that had the Rolling Stones working on a 360 deal with Live Nation.

Today, Reuters has a story saying the Stones are denying the reports. Well, sort of:

“We are not in talks with Live Nation in connection with any record deal,” London-based Rolling Stones spokesman Bernard Doherty said on Monday, reading from a brief statement.

If the denial is to be believed, the Observer was talking through its hat. The story included this assertion: “It is understood that Universal will have a role, with Live Nation licensing new versions of the [Stones’] catalogue to the American label, which would sell them online and as CDs.”

Whether the comment was designed to smooth ruffled feathers at EMI or just to keep attention focused on the band isn’t clear. A touring deal between the Stones and Live Nation will at once be more and less significant than Madonna’s or Jay-Z’s. It certainly won’t be a long-term set-up; Mick Jagger is 65, fifteen years older than Madonna, and sooner or later exhaustion or, sad to say, death is going to catch up with the band.

On the other hand, the Stones’ tour grosses are in a class by themselves; if Live Nation signed the band tomorrow just for touring (not even merchandise) and gave the group an advance equal to the gross of its last tour, that figure ($550 million) would be bigger than that of the Madonna and Jay-Z deals combined.

Meanwhile, Wired corrects itself for a mistake it didn’t make. Originally it repeated the Observer, which said the Stones had been with EMI for 31 years; Wired now says the band had only been with EMI since the conglomerate bought Virgin. But this is true only for U.S. releases; the group did have EMI distribute Rolling Stones Records for the rest of the world since the late 1970s. (My source is Old Gods Almost Dead.)

Wired doesn’t correct its figure for the group’s last tour grosses (”nearly three quarters of a billion dollars”) and displays its unfamiliarity with the concert-ticketing industry as well:

When the company’s contract with TicketMaster runs out next year, it will hopefully bring more competition to the online ticketing market, though we’re not holding our breath.

The company isn’t going to compete with Ticketmaster; it’s going to take the exorbitant and unnecessary fees the company collected for itself!

The Observer reports, and Wired’s Listening Post blog picks up, a story that the the Rolling Stones will soon sign a 360 deal with Clear Channel Live Nation. As is typical in such stories, they are largely promotional, don’t examine the implications of the figures they are reporting, and are contradictory of other recent reportage.

From the Observer:

The Rolling Stones are on the verge of ending their 31-year relationship with EMI, dealing a blow to private equity owner Terra Firma, led by Guy Hands, which acquired the label in a £3.2bn deal last summer.

Sources say the group is close to clinching a deal with Live Nation, the world’s largest concert promotion firm, which would market its back catalogue, depriving EMI of around £3m a year. Live Nation, which last year poached Madonna from Warner, would also take highly profitable merchandising and touring rights for future Stones shows, some of which have grossed as much as £750m.

Note that the “31-year relationship” refers only to sales outside the U.S. Even by the lower standards of UK journalism, this is pretty silly. It’s unclear if the Stones will take its catalog with them; the NYT reported yesterday that “If the Stones left EMI, it would have little impact financially, because the company would still have the rights to the band’s catalog.” One of the two stories is 100 percent wrong. Also, the implication of the next sentence is that Live Nation is also taking the Stones’ touring business away from EMI, which is not true.

The Observer story says the band makes EMI three million pounds a year; Wired reports this as three million dollars a year. Fortunately, the Observer is a British news outlet, and not a Japanese one, so Wired is off only by a factor of two. Its hard to believe, however, even the Observer story is correct. If the Stones earn the company only the equivalent of $6 million (which is roughly what £3 million is) a year, that would mean (assuming, crudely, a $9 wholesale price and $3 per disc to the band) the band sells only perhaps a million CDs a year, total, around the world, which is less than I would have guessed. (I’d be happy to hear if any of those assumptions are significantly off.)

And, finally, Live Nation didn’t poach Madonna from Warner Brothers. Given her declining sales and the fact that no one yet knows if these 360 deals make financial sense, it may be just as accurate to say the company took her off Warner’s hands.

As for the Wired story, it says, “the Rolling Stones are the kings of the touring industry, with some tours grossing nearly three quarters of a billion dollars.” Only the Stones’ most recent tour, by far its biggest, grossed something over $500 million, over some three years.

It also says:

Live Nation,for its part, has already become a major force to be reckoned with. Its focus on all-encompassing, 360 degree deals means it only stands to benefit as touring threatens to unseat recording as the largest sector of the music business.

This breathless reportage is inappropriate. Live Nation, formerly Clear Channel, controls most of the U.S. concert business and has been “a force to be reckoned with” for more than a decade. It already makes a lot of money from acts like Madonna, the Stones and U2. The question, which again will only be answered as the music business continues to shake out, is whether there’s enough extra leverage to be squeezed out of the deals (i.e., some new creative ways to gouge some extra bucks out of sheeplike music fans) to make the high initial outlays worthwhile.

Since those artists make the vast part of their income from touring—and have been doing so for many decades in every case—they are not lambs coming to the benevolent concert industry for a piece of the action. Mick Jagger knows how much any Stones show will generate in ticket and mersh sales, and begins the negotiations assuming it’s all his.

The tensions this chancy strategy has evinced spilled over into the pages of the Wall Street Journal ($) last week:

Having laid out so much cash—an estimated $120 million for Madonna and $150 million for Jay-Z alone—Live Nation Chief Executive Michael Rapino has sought to slow the pace of deal making so he can ascertain that deals already struck are working before entering new ones. But the company’s chairman, concert promoter Michael Cohl, wants to quickly strike deals with as many as 15 more artists.

According to people familiar with the matter, the dispute in recent weeks boiled over into a full-blown feud, with Mr. Cohl threatening to leave Beverly Hills, Calif.-based Live Nation.

All of these characters, by the way, deserve each other. Madonna and the Stones are artistically moribund, and U2 and Jay-Z are merely superior practitioners of the art of not looking that way. If Live Nation succeeds in harvesting even more big live acts for its stable, it truly will remake the industry; the company will be able to plan tours out years in advance, carefully doling out superstar roadshows to maximize box office, reduce scheduling conflicts, and avoid clustering too many big name acts on the road at any one time.

It will be accomplished by the simple expedient of taking actual artistic creation out of the equation altogether.

Alec Foege, the author of “Right of the Dial: The Rise of Clear Channel and the Fall of Commercial Radio,” continues his chat today about his new book. The interview begins here.

HITSVILLE: What’s your sense of the state of the company right now? My impression is that the stock of Clear Channel proper is in the toilet and the attempt to take the company private has been going through seemingly unending difficulties. There’s always been a sense that the company has basically been sucking the industry dry; is there in fact much left, or is that too harsh of an assessment? In five years, what will Clear Channel look like?

As for the behemoth concert production arm, that was spun off and renamed Live Nation. The jury is still out on the dollars-and-cents reality of its transformation to a so-called 360 artist-friendly outfit—last I looked, its stock was 50 percent off its high, a year ago. On the other hand, it certainly has been getting some good ink for its Madonna, Jay-Z and U2 deals.

And is it just me or has the press developed a sense of amnesia about it once it changed its name? Can you imagine U2 a few years ago making a multi-million-dollar deal with anything with the words “Clear Channel” in the name?

ALEC FOEGE: Indeed, Clear Channel’s stock price is hovering in the high $20s, a far cry from its height of $90-plus a few years back. Of course, radio as a sector and traditional media as an industry are having a terrible time on Wall Street these days. None of that is specific to Clear Channel but more a reflection of the digital (r)evolution ripping through the biz.

I think where Clear Channel’s business approach has left it exposed, perhaps more than others, is in the content department. After years of cutting content and staffing costs to the bone, there’s not much more to cut. They’ve certainly earned their nickname Cheap Channel—though, as I detail in my book, that pejorative label was actually worn as a badge of honor in the early days. The early CC execs considered themselves good businessmen who knew how to make the radio stations they acquired lean and mean—that is, appealing to listeners and profitable. I’m not sure they’ve got much of that spirit left at the company.

I’m not convinced that HD Radio, which CC is promoting heavily, is going to be enough of a success in time to rescue the radio industry. For one, the name is terrible—it sounds like a cheap knock-off of HDTV, and what is high-definition radio, anyway? People don’t think of sound as “high-definition.” The term used to be “high fidelity,” but even that sounds way too retro. So that should give you an idea of how well-conceived the whole initiative is to begin with: Are the masses really crying out for radios with marginally better sound? Audiophiles are an extremely small and unsociable group.

I think you’re going to see Clear Channel sell off more and more of their non-core stations. Just in the past year they’ve sold off a lot in small and mid-sized markets—they were down to 963 from around 1,200 the last time I checked. In other words, it’s the end of an era and the end of a business model. Clear Channel got so big because Lowry Mays decided the bigger the better, from a financial perspective. In its late 1990s-early 2000s heyday, the company was a virtual cash machine.

As far as Live Nation goes, I agree with you that the jury’s still out on the Jay-Z, Madonna and U2 deals. Will they be profitable? In the short run, it doesn’t matter. A quick look at the company’s financials reveal that Live Nation is leveraged to the hilt, with nearly a billion dollars in borrowed cash at their disposal. On the other hand, Live Nation’s 360-degree approach is one of the first meaningful attempts I’ve seen at trying to shape the future of the music industry. It seems clear to me (and has seemed clear to me for about 8 years) that the recording industry is deader than it realizes. The big-money deals Live Nation is signing right now may never pay off in pure dollars, but they may pay off as bait for less established artists who now might consider taking a similar jump.

Some critics of Live Nation’s approach say the live-entertainment company doesn’t know anything about making and marketing CDs (despite the fact that Jay-Z’s deal, for example, reportedly includes three $10 million payments for his next three albums). But so what? CDs are not going to mean much in the new world order of the music biz. At best, they’ll be souvenirs, since anyone under the age of 25 will have downloaded and listened to the whole album for free before they shell out mega-bucks to see their favorite act in concert.

Speaking of emptying your pockets just to see your favorite artists perform, I too am astounded how Live Nation has erased any public memory of its Clear Channel affiliation. Meanwhile, Lowry Mays and Randall Mays still sit on the Live Nation board, as does one of Clear Channel co-founder Red McCombs’s daughters. The word is good on Live Nation’s CEO Michael Rapino, who ran his own concert business before it was bought by Clear Channel. Still, Live Nation still does a lot of the same controversial things that made Clear Channel Entertainment so loathed. I still can’t believe that they renamed Irving Plaza in New York as Fillmore New York at Irving Plaza. To any music fan who has any positive association with the original Fillmore East, run by the legendary Bill Graham in the 60s, the association is a real credibility killer. Anybody else wouldn’t catch the reference anyway. So why do it? Clear Channel Entertainment pioneered a lot of the overpriced concert gambits such as charging an extra $20 bucks or more at its amphitheaters for “VIP parking.” Shouldn’t parking be free if the venue comes with its own lots?

The thing is that, these days, concert fans are aware of more options than ever, thanks to the Internet, so it’s unlikely that Live Nation will be able to retain its dominance if it doesn’t deliver the goods, and at a reasonable price, to attendees at its live events. And that is as it should be.

To read the interview from the beginning, click here or hit the “read more” button below.

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Alec Foege, the author of “Right of the Dial: The Rise of Clear Channel and the Fall of Commercial Radio,” continues his chat today about his new book. The interview begins here.
HITSVILLE: It is a terrific story. Now let’s get to the meaty stuff. When I look back on what we were talking about the other day—about how Mays & Co. focussed on the bottom line—I was struck again how the federally mandated requirement to operate in the public interest was basically ignored. That’s gotta be high on the list of Clear Channel’s outrages. Is it fair to say that at least part of the company’s (initial) success came from this—that there are probably a lot of businesses in which you can innovate and make a lot of money if you ignore the laws that your competitors are basically trying to operate under?
Then you have the process you elucidate in such detail in the book, essentially the debauching of the country’s radio stations, quality wise. There’s the bureaucratic legerdemain the company used to get around ownership caps; the dirty tricks played by programing chief Randy Michaels; the increased use of “voice-tracking,” wherein DJs in one city would record programs for another city, with local references tossed in, and listeners none the wiser. …

What’s your favorite Clear Channel crime?

ALEC FOEGE: As a reporter, I think I’m partial to their stonewalling of the press. For example, the company is notorious for denying access to reporters and then complaining later that they were misrepresented. Most good public-relations pros know that it’s always better to provide some access to make sure the corporate perspective is represented. Besides, if you’re a public company, you want to appear as transparent as possible, especially if you’re a media company legally required to operate in the public interest. It sometimes seems as if Clear Channel rose from local powerhouse to global giant so quickly that they didn’t understand the rules had changed. If you suddenly buy up a ton of radio stations, billboards and concert promoters, some journalists and public-interest groups are likely going to have a few questions, and it’s usually a good idea to be prepared to answer them promptly and honestly. Indeed, it’s the American thing to do.

But Clear Channel has rarely taken that road. In the process of writing my book, I spoke to many executives who had worked at Clear Channel over the years, but the members of the Mays family who control Clear Channel never even acknowledged my numerous requests for interviews. I communicated as many times as I could that I was taking the objective route and held no grudge against the company or its activities. As far as I was concerned, the controversy surrounding them was just part of the company’s history—something that was out there, which had to be acknowledged in a credible book, but not necessarily the final word on their corporate image.

Indeed, since the controversy has died down, Clear Channel has been one of the more proactive radio groups in terms of developing new ways to distribute and broaden the scope of radio content. With all the negative press Clear Channel has received over the years, one would think they’d at least be eager to talk about these new initiatives. Instead they seem to have a preternatural aversion to the press, or else an extremely naïve understanding of how the press works. Like what they’ve done or not, Clear Channel would probably have a much more positive public image if the company had been more proactive in responding to their critics and showing them that the company was willing to make some changes–if not in the name of public interest, at least in the name of maximizing revenue growth. That’s what most public companies do, and—at least to some degree—it usually works.

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TO read the interview from the beginning, click here or hit the “read more” button below.

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In just a few short years, Clear Channel became a media behemoth, a poster boy for the evils of media consolidation … and then a Wall Street basket case. It’s a great story, one taken up by reporter Alec Foege, who has a new book out on the company. It’s called “Right of the Dial: The Rise of Clear Channel and the Fall of Commercial Radio.” As the subtitle implies, it’s about more than Clear Channel as well.

The company began as a fairly grubby small-time radio operation, grimly running features on local companies to get them to advertise on its stations. As the dreams of its founders grew, however, it was poised to take full advantage once a credulous FCC relaxed media-ownership rules, and in a burst of activity in the late 1990s ended up owning some 1200 stations. Around the same time, its grabbed SFX, which had correspondingly bought up almost the entire rock-concert production industry. (That part of the business has been spun off, and now operates as LiveNation.)

That powerful aggregation, complete with a team of execs that weren’t afraid to use that power, created the Clear Channel we came to know and love. I have been an amateur Clear Channel-ologist since working with reporter Eric Boehlert on what I think is fair to call his groundbreaking investigations of the company in 2001 and 2002 for Salon. When I heard Foege had a book coming out, I emailed him and he graciously agreed to carry on a email discussion about his work. The books is in stores this week and available through Amazon as well.

We’ll be posting the conversation throughout the week.

—————–

Dear Alec:

Thanks for taking the time to chat with me, and congrats on an engrossing book. I thought I would start with one quote you took the time to include in “Right of the Dial,” which underlies its clear-eyed strengths and, coincidentally, brings up an interesting way of looking at how companies like Clear Channel thrive. You’re talking about the future of how folks will consume media online, and you note:

“It more often involves listeners exchanging their musical preferences in real time online. If those preferences happen to be as bland as the offerings of Top 40 radio, so be it.”

It’s not a huge thing, but I does point out the uneasy disconnect between a company like the bottom-line focused Clear Channel and the listeners who, essentially make it easy for them. So before we go into the Clear Channel bashing, can I ask: Do folks get the media they deserve?

ALEC FOEGE: Excellent first question. It is a bit provocative, but it is also one that I spent some hard time thinking about when I first planned out my book. I decided early on that it’s nearly impossible (and somewhat snobbish) to argue what constitutes bad radio purely on aesthetic criteria. So I built my argument against the quality of today’s music radio based on short playlists and repetitive content. But clearly umpteen millions must disagree with me.

As a relatively current example, an Arbitron study from October 2007 determined that the most popular channels on satellite radio mirror the most popular formats on free radio. One could certainly debate the accuracy of Arbitron’s ratings methods, but it still is pretty jarring notion that people may be paying real money for what they already get for nothing (although the cable TV business was built on a similar premise). Then again, this might simply mean that the only people listening to radio of any sort these days are those who actually enjoy it. The answer is probably somewhere in between. A lot of people still listen to the radio because it’s there, typically preinstalled in their car. Likewise, a lot of people listen to satellite radio because their new cars come equipped with satellite radio units and 1-year complimentary subscriptions. Tellingly, the churn rate, the number of subscribers who don’t renew their subscriptions, continues to rise. In other words, the number of listeners willing to pay for radio programming of any kind is likely relatively small and finite. This is why the two satellite radio companies, XM and Sirus, are such trouble financially and why they want to merge.

People do get the media they deserve, but it depends on what the options are. In 1999/2000, when Clear Channel was at the height of its powers, the Internet had not yet caught on as source of music for the masses. Now it has, and that is one of among many reasons why Clear Channel has had trouble. It is also the main reason a broadcast radio company will never again be able to consolidate power, as Clear Channel did. Now radio is beginning to exhibit the Long Tail phenomenon, where listeners with broadband access can hear any radio station they want from their computers. I predict that, within five years, many new cars will have wireless Internet access, allowing drivers to access whatever Internet radio streamcast they desire. This development will kill off satellite radio with a few swift blows.

So how will today’s commercial radio behemoths fare in the online atmosphere? For now they will do fine, thanks to starkly anticompetitive royalty rules devised by the Copyright Royalty Board last year, which impose high fees on Internet-only stations. Internet-based extensions of existing terrestrial stations pay the same fees, but their parent corporations can usually afford them, whereas mom and pop Internet-only stations can’t. But I will suspect these rules will be changed as wireless Internet access becomes more prevalent.

This is all a long-winded way of saying that bland radio will always exist—because a lot of people like it. But fresh, vibrant programming is entering a renaissance and, with greater access, may take away a substantial amount of crummy commercial radio’s listenership over time.

Another report from the It Couldn’t Happen to a Nicer Group of People Desk:

Four years ago, Clear Channel opened up a new ad strategy, “Less Is More.” With stations clogged with ads and listenership decreasing, the company decided to try to stress shorter ads, and run fewer of them per hour. According to the Wall Street Journal ($), the company is now abandoning the strategy.

The story runs the numbers in various ways. Whether the strategy worked at all is open to dispute; the company’s radio division (like the industry as a whole) has been stagnant for years, but it’s possible that without the plan sales would have dropped farther. Still, for Clear Channel haters (like Hitsville), this is good news. The company contributed mightily to the ruination of radio in the late 1990s by buying up stations, running up the number of commercials per hours, ramping up the use of voice-tracking*, and de-localizing the industry generally. Meanwhile, behind the scenes, the company’s execs acted like thugs and flouted federal ownership rules, as my colleague Eric Boehlert detailed with a great deal of brio in Salon in the early 2000s.

The rise of the iPod, internet radio and satellite has been a challenge for the terrestrial radio industry over the past half decade, but Clear Channel was losing listeners at the rate of several percent a year dating back to the mid-1990s. Anyway, the company’s stock price is off by a third since the “Less Is More” strategy started. Now it’s forced back into its traditional “screw the listener, let’s load up the joint with crappy ads” gambit. And that, you gotta think, will, in the long run, inevitably lead to even fewer listeners, poorer Arbitrons, less revenue, and a bigger stock decline.

*  Voicetracking is where a supposedly local radio station has its crappy DJ patter taped in bulk and in advance by someone in a different city, and then digitally stripped in between the songs.