Here’s expensive proof that I should stick to marketing and steer clear of the stock market: I invested in two radio companies.

The first, Westwood One (WWON.OB), seemed like a stable cash flow deal. Westwood One produces radio programs for syndication, including broadcasts of NFL games. The way I saw it, demand for pro football is insatiable, and since we mere mortals can’t invest in the NFL, this is the next best thing, right? Well, apparently not. As advertisers fled from radio, so did investors. Westwood One is now worth 9 cents a share and was recently delisted from the New York Stock Exchange.

The second, Sirius satellite radio (SIRI; now called Sirius XM — at least for the time being…), is worth even less: 6 cents a share. They’re seeking Chapter 11, and according to Rory Maher of paidContent.org, we Sirius common shareholders are about to get hosed. My investment in Sirius was pure speculation, since I was looking for some wild risk to balance out my boring bank CD’s. (Yay, excitement.) Since my friends who have Sirius love it, I thought it might have a future. Of course, I violated my own personal rule: don’t invest in anything that I don’t personally use. If I wasn’t willing to shell out $13/month for radio, what made me think the rest of America would flock to it?

But Wait, There’s More…

To put an exclamation point on my investment IDIOCY!, I discourage my own clients from advertising on radio. Good marketing, bad for my stocks. Here’s why I do that:

1. Most radio commercials are painful to listen to — and that drives listeners away. No other advertising medium contains more shouting. Apparently, the agencies that create these spots are short on ideas and try to make it up on the volume. Others think repeating a phone number sixteen times will excite listeners. As a result, we listeners reflexively change channels as soon as an ad comes on. Some radio stations might claim great ratings, but as I tell my clients, the commercials often go unheard.

2. Radio ads are difficult to act on. Once upon a time, radio was the primary entertainment medium in American households, with families gathered around a set to listen to a show. Thus, a direct response radio commercial made sense — the listeners were at home where they could make a phone call or scratch down some quick info. Now many consumers listen in their cars, or at the shop where they’re busy working. And unlike television commercials, there’s no YouTube for radio ads, where people can discover and share the great ones.

Yes, some radio commercials do work — I particularly liked Bud Light’s “Real Men of Genius” campaign (one of the few radio campaigns that you can find collected online). But that’s a rare exception. With the infinite advertising options available today, radio isn’t my first choice, second choice, or even fourteenth choice.

And here I was investing in radio companies.
Put down the stock-trading website and back away, Freddy.

Clearly Wrong…

Then there’s Clear Channel, which once owned 1200 radio stations across the U.S. I never invested in them because I detested their politics (the Dixie Chicks deserve an apology!), but one of my relatives worked for Clear Channel, so out of deference to her, I had held back my criticism of the Mordor-like empire. But recently, after nearly a decade of dedicated service to Clear Channel in various capacities, she got unceremoniously laid off along with thousands of others. There’s now a Facebook Group for fired Clear Channel employees that claims, “There IS life after Clear Channel. There ARE places you can work where you will be considered a human being and not a piece of equipment.”

So now Clear Channel is fair game, particularly since this bogus statement is still on their website:

“We believe Clear Channel’s people are our most important asset. Our teams make the critical difference in how we perform and their skills, talents and determination separate us from our competitors. We also believe people can achieve their full potential when they enjoy their work, so it is a priority to provide a workplace where growth, success and fun go hand in hand.” — [Clear Channel co-founder] Lowry Mays

Way to treat your most important asset, Lowry.

I won’t recount all of the various grievances about Clear Channel — Wikipedia has a list of criticisms you can check out and decide for yourself.

I’m writing this post to talk about how Clear Channel contributed to the collapse of its own empire. As notes the Washington Post, “As the company grew, it received unfavorable press for its size and influence on music playlists and artist development. Clear Channel was criticized for homogenizing the sound of FM radio…”

Obviously, as a marketer, the only thing I want homogenized in my life is milk. For everything else, I want variety and character. And I’m not alone.

I remember when FM stations had strong brands, and people would swear allegiance to a particular station just like they would swear allegiance to a particular sports team. The stations would advertise their differences, and try to develop unique personalities to attract larger and more devoted followings.

Then Clear Channel came and issued corporate-approved lists of songs that their radio stations had to follow. The days when “disc jockeys” could pick and play songs of their choice were over. (With a system called Prophet, Clear Channel even eliminated local DJ’s in some smaller markets.) At one point, my relative was managing a Clear Channel classic rock station, so I suggested that she play tracks from the vastly underrated Aerosmith album, “Rock In A Hard Place.” She liked the songs, but could not play them until they had been approved by focus groups.

Ooh, the f-word.

I hate focus groups. Why should a statistically insignificant number of people, who are afraid of making mistakes under scrutiny, be allowed to limit what the rest of the world can enjoy? If everyone listened to focus groups, there would have been no “Seinfeld” show, no Red Bull, no telephone answering machines, and no minivans.

OK, maybe the world would have been better off without minivans.

Clear Channel based their playlists on what focus groups had approved. One problem: if someone in a risk-averse focus group loves a song, that song is probably a common hit that many people already own — particularly now that you can buy your favorite songs for less than the price of a latte. So people who buy a lot of music (who the record companies love) don’t need to listen to a Clear Channel radio station and all those shouting commercials to possibly hear their favorites. They just turn on their iPod.

In the good ol’ days before evil marketers focus-grouped music, listening to radio was about being enlightened by your favorite DJ, who would play some of your favorites, then introduce you to some of her personal faves. There’s still one radio station in Los Angeles that continues to do this, and it receives critical acclaim and a devoted following: KCRW. Of course, it’s a public radio station, immune to the influence of homogenizing hegemonies. Long live public radio!

And it wasn’t just the tiny underfunded public radio stations that provided a Clear alternative.

No Monopoly For You!

What Clear Channel chose to ignore was the fact that, even though they were building a near monopoly in radio stations, the competition for portable music was increasing — particularly a little invention by Apple called the iPod. Ironically, as if they were in cahoots with Steve Jobs, Clear Channel helped drive music lovers to their iPods, where they could listen to hundreds of their favorite songs anywhere anytime without interruption. As for music discovery, listeners learned that they had a better shot at discovering something new and cool on TV shows, YouTube, the wildly eclectic Internet-only radio stations, and even Apple’s own commercials — who needed radio?

After Clear Channel sold out to private equity firms in 2006, some of their stations returned to being experimental, with creative new formats and more freedom to play esoteric songs. But it was too late. Many of the people who are now left listening to commercial music stations are those who can’t or won’t spend money on an iPod or the requisite hundreds of songs — and those aren’t exactly the consumers that advertisers or record companies want. (Add that as #3 to my list above.)

Today, Clear Channel tapped the remaining $1.6 billion in its credit line, and some are wondering if the beast will survive.  Should Clear Channel go belly-up, I’m guessing the few remaining radio lovers won’t be singing “the day the music died”; more likely, we’ll all break out into choruses of “nah nah nah, nah nah nah, hey heyyyy, good-bye…”

But what do I know? After all, I invested in Sirius.

***

Update 2/12/9: According to today’s NY Times, not even Google could sell radio ads for Clear Channel.

Update 3/24/9: In recessionary times, the goal of marketing is to steal market share, as opposed to seeking organic growth. Consequently, the L.A. Times ran a full-page ad for itself yesterday, arguing that an ad in the Times was more effective than ads on all of the top radio stations in L.A. Obviously, the marketers at the Times can smell blood in the water. I’ll be curious to see radio’s response in this clash of the dying.

Update 4/14/9: According to a report in TechCrunch, a startup called Goom is bringing the model of commercial radio to the Web. And the question on everyone’s mind is… why? Writes MG Siegler of TechCrunch, “I don’t know about you, but I had two core reasons that I stopped listening to traditional radio long ago: Crap music, and DJs. Goom, apparently, sees those as strong suits.” Well, apparently, institutional investors like this bland, failing, traditional-media model enough to sink $16 million into it. Looks like I’m not the only one who’s a sucker for radio investments. Goom? Bah.