Tuesday, December 12, 2006

"Listen to this - every day at precisely five o'clock that man gets up from his desk, puts on his hat and his coat, and goes home...Think of the extraordinary self-discipline that requires!" David Ogilvy

The great Mr. Ogilvy was speaking of the work habits of a copywriter he admired (in some respects), astonished by working habits that differed from his own. The ad legend was fond of lists, here is one from a talk to the staff...

The qualifications I look for in our leaders are these:

  1. High standards of personal ethics.
  2. Big people, without pettiness.
  3. Guts under pressure, resilience in defeat.
  4. Brilliant brains - not safe plodders.
  5. A capacity for hard work and midnight oil.
  6. Charisma - charm and persuasiveness.
  7. A streak of unorthodoxy - creative innovators.
  8. The courage to make tough decisions.
  9. Inspiring enthusiasts - with thrust and gusto.
  10. A sense of humor.
Pops for Champagne is always in season, it may just be the finest champagne bar in the country. Now located in a new home in Chicago's River North neighborhood - 601 N. State at Ohio - Pops is a triple hit - bar, retail shop and live Jazz club. Congrats and cheers to Tom Yerhay on his uber-hip new venue. Like many, I have great memories of times spent at Tom's original Sheffield location, his stand of some twenty something years. Highly recommended.

"Perspective is worth ten IQ points": Last week someone mentioned GM had announced they will factory-install pay radios in about 1.8 million vehicles next year. In making the comment they said to me "this is the beginning of the end for AM and FM." My sense is this is actually the ending of the beginning for pay radio. To put this in context. GM will sell about 8.3 million vehicles, worldwide, in 2006. The number of cars and light trucks sold in the US in 2006 estimated to be 16.5 million. GM enjoys a 24 share of US market, about 3.96 million units sold domestically, a bit under half of their total sales (data: Plunkett). The back of the envelope math would seem to suggest GM is putting pay radios in about 45% of their vehicles. GM is paid for those factory-installs. The ability to purchase a pay radio service does not equal a purchase no more so than having the ability, the utility, to order PPV in your household via your cable provider equals a purchase. Further, having the hardware and an active subscription does not equal listening. Let me suggest, for discussion purposes, the total number of factory-installed pay radios is equal to about twice the GM 2007 installs or 3.6 mil, that would translate into a 22 share of domestic vehicles sold. Now compare these numbers with the number of AM/FM radios installed as standard equipment - let's be conservative and say a 90 share of vehicles = 14.8 mil. After market and portable sets are a factor here but setting hardware issues aside the critical metric remains listening.

I love HBO. During my days as an MSO there was never a shortage of providers offering product but no provider better at delivering great product and value to our subs than HBO. Moreover, they were the best marketing people in the premium pay game. Today they enjoy about 28 mil subs. Being available in a household, even when you are great at what you do does not translate to purchase. As good as HBO is, and in my opinion they are the best, they are successful in reaching and retaining a minority of cable households after decades of offering excellent product and marketing better than all comers. No matter how good pay radio is, even if it is the best radio on radio, the potential subs, those with hardware, will always out number the paids. The paids, even if they listen exclusively to pay radio, will continue to be out numbered by those listening to free local radio.

I'll spot both pay radio services a combined pay base of 28 mil subs the same number of subs it took HBO decades to build. Should that happen pay radio is, at best, the HBO of audio. A modest, small player in the world of today's wireless audio. Not that there would be anything wrong with reaching such a distinction but the odds it will happen ain't good. The road ahead for pay radio is anything but fun, the fun part of the roll out is officially over. Howard making the rounds on the late nights pitching the service might make another dent but that's all it will be, a dent. Welcome to the world of paid content Mel, welcome to a brawl with no rules (my thanks to Tom Peters). It won't be enough to put hardware into vehicles or to get a paid, those will turn out to be easy compared to keeping the paids, getting a competitive share of listening needed to support advertising sales and paying off your debt. Mel might just be in exactly the wrong place at precisely the wrong time. Three possible sign posts up ahead: Reorg under protection of bankruptcy, One or none - merger required to survive, and New business model.

Free local radio remains ubiquitous, over a billion sets in use, over 90% of the US population tunes in each week. The challenge ahead for the first tribe of wireless, as a great many others have already written, is to get back to basics, back to the fundamentals. Time to get pathologically competitive about creating great audio. All that's important is what comes out of the speaker (or for video what's on the screen), everything else is a footnote (including pay radio in 2007). Game on. My thanks to Dr Gary Hamel for the quote about perspective.

The trends are rolling, good luck to all. On the road, forecast is for light posting.