What's Left of the Dial?
Virtual Deejays, Pay-to-Play, Celine Dion
By Michael Bertin, Fri., May 22, 1998
Victoria, Texas is not the kind of place where you might expect to find a revolution going on. A quaint town with an approximate population of 60,000, Victoria's biggest claim to fame might be as the birthplace of Popeye (yep, the comic strip started there), or as the hometown of big leaguers Ron Gant and Doug Drabek. But Victoria is also the place where the future of radio can be heard. Only what you actually hear on Victoria radio - on the two Capstar-owned stations, KIXS and KLUB, anyway - comes from downtown Austin. Capstar, a company that didn't even exist a few years ago, is a radio giant, owning more than 400 stations across the country. In Capstar's Austin offices, located at One American Center (out of which KGSR and 101X used to broadcast), deejay Eric Raines pulls his overnight shift for KLUB, a classic rock station, and he does it in the middle of the day.
Raines sits in front of a console and a computer screen. His entire shift - songs, breaks, commercials, public service announcements, everything - is on the screen. With a couple of clicks of the computer mouse, Raines can bring up the last 15 seconds of a song, drop in with something like, "Hey, that was Boston with `More Than a Feeling' and you're listening to Eric Raines on Victoria's home for classic rock, KLUB," then move to the next break and do the same thing. He doesn't even need to sit through an entire song. All he has to do is drop in a voice track where the computer indicates.
When Raines is done, the show goes onto a server, after which, when it's time for the shift to be heard, it's sent across a fiberoptic T1 line to the destination station, then out over the air. Raines, who is currently heard in Victoria as well as nine other markets, estimates he can do an entire six-hour shift in about 45 minutes. With this setup, Capstar's Austin operation runs voice tracking for 88 small and medium market stations around Texas, Louisiana, Oklahoma, Arkansas, and New Mexico - its Gulfstar division.
What's awesome is not that Raines or any other Capstar deejay can quickly put a shift in the can and send it out to one of its stations, but rather that the deejays can do it for a handful of different stations in different markets all in one day and still make each show tailor-made for those specific markets. It's called virtual deejaying and it's as awesome as it is unsettling.
At the microphone, a virtual deejay can do everything a local jock can. Need to plug a local business or inform listeners about an upcoming community event? The Capstar deejays can point the mouse to the menu bar of their monitor and click open a window with copy that's written just for that event. The deejay reads it, drops his voice track into the show, and voila, instant local plug. If you didn't know that it wasn't being done locally, you wouldn't know it wasn't being done locally.
Virtual deejaying is just one of the things that the Telecommunications Act of 1996 has wrought. In fact, because of that legislation, all of radio is undergoing massive transformations, the most obvious of which is the consolidation of ownership into the hands of a few giants like Jacor Communications, CBS Radio, Chancellor Media, Clear Channel Communication, and Capstar. With each of these corporations owning hundreds of radio stations across the country, the full effects of consolidation are just beginning to be seen, or rather, heard.
For starters, massive staff reductions, tightening of playlists, and even legalized pay-to-play are hitting the radio industry. Yet many of the changes you probably can't detect by casual listening, and that's what radio ownership is banking on to maximize the profitability of the airwaves. And that brings us back to Victoria.
On weekdays, KIXS, Capstar's country station in Victoria, currently runs two virtual day shifts and three with actual warm bodies in the studio (KLUB, the classic rock outlet, runs three virtual broadcasts). In other words, two of the shifts going out over the air on KIXS are put together elsewhere by a deejay. This is what Gulfstar is currently doing in the region and other Capstar regional systems will be doing in small markets all across the country. Thanks to Capstar, then, Lloyd Hocut, who you might know as 101X's LA Lloyd, is also LA Lloyd in Corpus, LA Lloyd in Beaumont, and LA Lloyd in Lufkin. (It's worth noting that 101X is not a Capstar station. Hocut's work with Capstar is the equivalent of his taking a second, part-time job.)
Says Hocut of the situation with his other employer: "Well, I think it's really good that smaller markets can get a little bit better talent from a larger market for a price that they can afford. And I think it's good for the audience that wants to hear bigger talent in a market outside of what theirs is. I really can't see a downside of it from my standpoint. Obviously some people are going to lose their jobs."
Obviously. Meet Jay Richards, the downside, or rather the downside from a standpoint beside Hocut's. Richards used to be music director and midday talent at KIXS. When KIXS started picking up virtual deejays, Richards' situation at the station was altered rather abruptly.
It doesn't take a radio consultant to figure out that for every shift a KIXS uses a virtual deejay, that's one less deejay needed on staff. With just a few people in Austin doing six or seven shows a day, that translates into a lot of staff Capstar can reduce and salaries it can cut in Victoria, Lufkin, Beaumont, Lubbock, and wherever else it has a station, which is just about everywhere. Richards describes how notification of the changes took place:
"[Management] had gone to a meeting in Austin - this meeting was anticipated - and come back the following Monday, saying, `This is what we're doing. Gulfstar is making changes and people will want to embrace these changes because they are good changes. And some people will lose their jobs.' Well, I didn't understand how I was supposed to embrace this idea. So they told me that I would be released and I would be given a severance pay.
"Well, the next day or two went by and they said, `We're going to have to keep you for a few other reasons - you've been around for a long time and people respond to you,' and this, that, and the other thing. Well, okay. No problem. Then somebody came in and plopped down a computer screen in front of me and said, `This is going to replace you.'
"Wrong. When people start talking about virtual voices and getting out of the local flavor that the community needs, that is against my philosophy of programming. So rather than walk around with a bad attitude, I resigned."
Richards adds that some of the other deejays who got the squeeze first had their salaries taken away and were given hourly rates. When things became virtualized, they were let go.
The Men Behind the Curtain
A group like Capstar can't cut its labor costs by moving operations to a Third World country, so it's doing the next best thing - cutting labor costs by reducing the need for labor. This kind of reduction is particularly ingenious, because you are in theory using better talent and getting it at a lower overall cost. And this kind of reduction is only going to continue.
Consider that KLUB, the classic rock station, currently gets its morning show out of a Capstar station in Fayetteville, Arkansas. The same team is actually doing morning shows in Fayetteville and Fort Smith, Arkansas, as well as in Victoria. It's not one show that gets sent out to three affiliates, the way, say, Howard Stern does one show that gets sent out everywhere; it's three different shows done simultaneously.
Jeff Lyon, the general manager at both Capstar stations in Victoria, explains: "We have a real slow train problem here. It blocks traffic every morning. That's our stress level here in Victoria. Anyway, they are able to talk about that; `Hey, I hear the trains are blocking Mockingbird Lane and Main Street today.' They talk specifically about Victoria."
The songs and the breaks are staggered so that the jocks can do their announcements and attempted witty banter for one market, like Fayetteville, while listeners in Victoria get to rock out to, oh, "Freebird." When that song is over the deejays flip over to Victoria and talk some more about trains while Fayetteville gets Badfinger or something. All of the calls are even forwarded to Fayetteville, and listeners get to talk directly to the talent.
"Response for this particular morning show has been unbelievable," claims Lyon. "We didn't think it would be as good as it is." And if it really works as well as Lyon alleges and this is reflected in the next ratings book, then two-thirds of the morning show jocks in small-market Capstar stations better start updating their résumés.
But is it worth deceiving people or being disingenuous? Deejay Raines admits, "There's a little bit of that don't-show-the-man-behind-the-curtain involved," but also maintains the reaction he's gotten has been largely positive. Lyon's assessment, on the other hand, is straight out of Dilbert: "I feel like we are working a lot smarter."
The elaborate setup isn't just so the people at Capstar can feel smart about fooling a bunch of small towners while cutting back air staffs; it's essential for successful radio. Radio hinges on "local flavor."
Capstar is well aware of this, so they engineer the locality and try to maintain interaction with the community. Remotes? Capstar flies its deejays out to various markets for promotional appearances. Requests? For request shows, listeners' calls from any market are forwarded to Austin where the deejays can turn it around and in almost real time announce and get the song on the air. Tornado? They can break in and tell the people in harm's way to seek shelter.
All Capstar is trying to do is keep their cash flowing while cutting costs. The former part of that completely unsurprising strategy means keeping listeners. If commercial radio listeners don't feel a station is connected to their community and thus servicing their needs, they go elsewhere. If you have no listeners, you lose advertisers and go broke. Therefore, if you're not going to be local, then the illusion of being local is necessary. The programming is still done locally, the sales staffs are still local, it's just that some of the voices aren't.
Are advertisers gun-shy about putting their money where the mouth isn't - that is, into shows that are done by virtual deejays? Well, that depends on who you ask.
Richards currently does promotions consulting for another Victoria station, KZ105, a brand-new and locally owned country station which now competes with KIXS, and he swears, "When I speak to people [at KZ105], the sales people are knocking down some real good money because clients are going, `Well, I know [KIXS] sounds like it's local, but I know it's not local.'"
Capstar GM Lyon counters: "If the product is good, and [advertisers] know it's good and we deliver the results, then they are satisfied with what we are doing."
The Blandness Index
As long as radio can keep its product good and advertisers satisfied, then all the radio giants, not just Capstar, can start taking advantage of economies of scale that come with their size.
Why, for instance, have 100 program directors at 100 different stations when they're all playing the same things; or rather all Contemporary Hits Radio (CHR) stations are playing the same things, all Adult Alternative stations are playing the same things, all Country stations are playing the same things? Why have that when you can have one or two program directors per format servicing all your stations' needs across the country?
Not surprisingly, then, labor in radio is in an incredibly weak position right now, even in radio groups that don't have the technological know-how to employ virtual deejays. All across Austin, heck, all across the country, talent is feeling the pinch. No local deejay would go on record with the Chronicle for fear of upsetting management and jeopardizing their job, but one jock, who spoke on the condition of anonymity, spelled out the situation succinctly.
"We have no leverage left. With just two or three owners there's no place left to go. The competition is bought up. The only choice you have is to work where you are or leave Austin. And the fact that so many of us love Austin so much and they know that is to their advantage. I can't blame them, but it's kind of rough when you're on this end of it."
The problem is that leaving Austin really isn't a solution either. Say you work at a CHR station here and you are upset with your current contract. What can you do? Are you going to threaten to go work at a CHR station in Tacoma? Chances are your owner here probably owns that station too.
The fact is that in the post-Telecom shopping spree, radio properties have gone through the roof. For evidence look no further than KVET-KASE, which sold out to Capstar for $90 million back in December. Multiply numbers like that (some a little larger, some a little smaller) several hundred times, once for each of the hundreds of stations a Capstar, Clear Channel, or Chancellor has bought, and you have companies with massive debts they have to service. Of course they are going to cut costs wherever they can; that's natural. What some folks forget, however, is that this kind of debt affects what listeners hear - or perhaps don't hear.
A successful radio station provides a consistent revenue stream. As long as cash is flowing - in the form of ad dollars - everything is fine. If that stream starts drying up, though, problems begin. It's tough to keep your creditors at bay when you're going broke. Given the fact that these companies have leveraged themselves to the hilt on other people's money, do you think: a) They're going to be wildly innovative and take risks with all sorts of eclectic formats that could possibly fail; or b) play more Celine Dion?
There is no Blandness Index to quantify the tightening of radio playlists and the general shift to conservative, almost homogeneous playlists, but it doesn't take an industry expert to observe that's what has been happening. Even general manager Bob Woodman, who runs KVIC and KPLV, some of Capstar's competition in Victoria, admits to giving into formula, and as a purveyor of blandness, at least he is honest about it.
"We all kind of decry the cookie-cutter approach to radio," says Woodman, "but we are the ones that are doing it. We are the ones contributing to it because it's safe. I'm not going to get on here and say, `Okay, here's a good Austin act,' and play it because I'm going to piss off more people than I am going to please. There's no reason because the format works."
The Scarlet Letter: P
There is one thing that could shake up playlists a bit and it's the old scarlet word in radio, payola, only now it's completely legal. Believe it or not, record companies are now able to pay radio stations to play a particular song as long as the payments go (and this is the great part) not to the deejays (as when it was an under-the-table scam), but to the station itself as long as it's made clear on the air that the song was paid for by the record company.
When Interscope Records paid a Portland station $5,000 in March to play the Limp Bizkit song "Counterfeit" 50 times over five weeks, it was front-page news in The New York Times. Since then, most labels and stations have been hesitant to jump into the bribe new world of pay-to-play and have taken a kind of a wait-and-see approach to the issue, but like The X-Files, it's still out there.
Scott Gilmore, general manager of LBJ-S, the local partnership that runs stations KLBJ AM and FM, KROX, KGSR, and KAJZ, claims that he's "pretty wary" of pay-to-play, because their stations' "credibility is at stake." Telling listeners that what they hear is purely the result of a cash transaction could potentially alienate the audience.
Radio can't alienate the public too much or the audience will tune out altogether, but the general concerns over the issue won't stop it. CBS has already worked out a pay-to-name deal for $500,000 with Capitol Nashville. It's a setup where Capitol pays CBS radio stations to run spots before and after a certain song (initially Steve Wariner's "Holes in the Floor of Heaven") to simply announce the name of the song. Obviously there isn't total reluctance on the part of either the record companies or radio ownership to start exchanging money for non-advertising airtime. In fact, one rumor recently floating around the Internet claimed one of the radio giants was in the process of working out a pay-to-play deal to the tune of $25 million.
Even if that rumor were pure fiction - and the Internet is the easiest place in the world to spread rumors with great efficacy - it's hard to imagine pay-to-play not happening to some degree. Think of it this way: Most of these radio giants are publicly traded entities. You can buy stock in CBS, Clear Channel, and Jacor (Capstar is having its initial public offering sometime in May). They have to answer to shareholders, and if shareholders see that there's a huge source of potential revenue in pay-to-play dollars won't they demand that these corporations tap into it? Want to increase your per-share earnings? Want Wall Street analysts to give your stock a "buy" rating? It's going to be awfully tough for radio groups to resist taking that money in the face of those kinds of pressures.
Ultimately, it's this type of scenario that will most likely shape radio from here to eternity; can these enormous companies deal with the tension between what looks good to the shareholder and what sounds good to the listener? This, to some degree, is at the heart of all these issues - virtual deejays, conservative formats with tight playlists, pay-to-play.
All Celine Dion, All of the Time
Radio cannot just go slashing costs willy-nilly for the sake of the shareholders without potential long-term adverse effects. Running the small market deejay completely off the air would be counterproductive. That would be like baseball deciding it didn't need the minor leagues. Small markets are where radio develops new talent, and as an entertainment medium, it's a field with a high burnout rate. When all of your good deejays leave the industry, where are you going to get new talent if you laid waste to the proving grounds? Moreover, running off too many programmers and tightening playlists to a 24-hour Celine Dion frequency could really turn listeners off, or more accurately make listeners want to turn you off.
Or will it? So some deejay in some small town loses his job, or the local jock in Lufkin isn't actually in Lufkin. And what if some station got paid to play the songs getting played on the radio? Who cares? Well about nine out of every 10 folks won't. Hell, most people don't care that the president may have committed an impeachable offense. Why would they care if their local afternoon drive guy actually did the show at a console in Austin at 10am? They don't.
Don't take my word for it, take Raines': "I've been to some remotes and some of the people that do know, don't care. They're into the music and they're into your personality and that's the main thing."
Yep, all that matters to most people is that when they hop into their car in the morning they hear that nice little Celine Dion song on FM radio. And you thought radio was already bad. Just wait.
The real irony is that the airwaves are supposed to belong to everybody. That's why the FCC was created - to ensure that radio exists for the public "interest, convenience, and necessity." That's the language from the original Federal Communications Act of 1934. But after the Telecommunications Act of 1996 about the only way that the average person is ever going to own a piece of the airwaves now is if they buy shares in it.