Chapter 1: New Market Challenges Facing Radio Today

A new challenge known as digital alternatives rocked the very heart of commercial radio broadcasting at the turn of the 21st century.^[1] Whether streamed through Amazon, Pandora, Spotify, You Tube or some other sources didn’t matter much to radio leaders who were flabbergasted by their breathtaking success. From its modest beginnings, these digital alternatives have offered a wide selection of specific apps and streaming platforms. Through numerous devices provide their subscribers with highly desirable, personalized music and podcasts on a 24/7 basis. Such dramatic developments should not have greatly amazed commercial radio experts. After all, signs of trouble first emerged in the late 1980s when the National Broadcasting Company (NBC) sold its company owned radio outlets including its much prized flagship station WNBC-New York to Westwood One for $55 million.^[2] Other financial shortfalls over the next decade resulted in the Westinghouse Broadcasting Company (WBS) purchasing the Columbia Broadcasting Company (CBS) for $5.4 billion in 1995.^[3] Fourteen years later, the all-new CBS became a vital part of today’s Viacom.^[4]

Disney Productions also expanded its earlier, more narrowly-focused broadcasting objectives in the mid-‘90s when it bought Capital Cities and the American Broadcasting Company (ABC) for a whopping $19 billion.^[5] Those mergers highlighted by compelling new dramas, provocative news-talk shows, outrageous reality offerings; off-beat sitcoms and exciting sports have literally changed the face of 21st century conventional television. Similar merger activities and a noted relaxing of federal restrictions regarding the number of stations an individual broadcaster might own with a targeted area had also radically altered traditional commercial radio broadcasting. From Maine to California, more and more local radio stations have deserted their individual formats for more homogeneous ones. 

Usually owned and operated by large regional or national broadcasting concerns, many of those local outlets have deliberately discouraged competition. Those recent actions do not represent a sinister plot hatched by aliens from another planet; but rather, the logical outcome of highly motivated station owners that have purposely chosen to lower their overall costs by streamlining their operations. Such measures have led many radio broadcasters to bring together some the latest rock and roll music with today’s favorite dance music to create a new format they call the “contemporary urban sound.” Others have adopted affordable, new program alternatives. They include the likes of shock jocks, politically-charged talk shows, sports talk or 24/7 news as well as classical music and contemporary jazz. Yet, in their attempt to update their programming few have addressed the pressing needs and wants of the post-1990 generations. Left to their own devices, those younger people have relied more and more on newer music and video streaming services and specially attuned podcasts. Some services even incorporate live games, sports, e-sports and sports betting. Those extras are not readily available through more traditional broadcasting means. These latest developments have not escaped the attention of shrewd investors that have encouraged the expansion of these new, highly profitable digital alternatives.

Unquestionably, most of today’s leading recording companies fully support these latest approaches. They consider them to be the wave of the future. They particularly like the idea that many streaming services pay royalties on the songs they play daily. That pay-as-you-go arrangement did not exist earlier. Over the last decade or so, unique streaming services, rather than traditional broadcasting outlets, have increasingly governed the musical preferences for millions of their faithful listeners. Exceptionally high returns are out there for those who willingly invest in those latest technological advances. As you might expect, the general acceptance of high-tech digital listening devices has done a great more than simply line the pockets of shrewd investors. In a real true sense, such devices have meaningfully heightened the listening experience for their subscribers. Smart speakers, such as Amazon Echo and Home Pod Minis, help in this process.^[6]

Algorithmic, linear lean-backs to self-driven, on-demand have become the number one choice in our new digital alternative age. Attuned listeners are also keenly aware of the discount plans and listening options currently available to them. They also understand their limitations. For example, the recently hyped Apple Music voice plan that requires its subscribers to ask Siri whenever they want to hear a specific album or song may have done away with the need to thumb through endless playlists or rely on music apps. However, it might severely restrict their song choices and listening range. Apple Music represents only one of a multitude of affordable competing services available to the general public. 

Commercial radio broadcasters must stay on top of the latest technical breakthroughs if they want to remain in the game. But, their obligation to the public extends beyond just staying abreast of the latest developments. Extraordinary business and technical advances, made by digital alternative leaders over the last five years, may well signal the beginning of the end for traditional commercial radio as we know it. If the radio-industry expects to endure this latest attack then it must be primed to gain an upper hand over its many digital rivals. That might include reaching a workable arrangement with its chief competitors that would allow it to pursue certain aspects of new technology without possible piracy from outside sources.

In the case of the new digital alternative, working closely with today’s highly flexible consumer market has inspired it to experiment with a wide assortment of audio as well as music apps capabilities. The radio industry takes a much narrower perspective when it comes to that. The many preconditions placed on it by the feds over its more than one-hundred-year history has stymied its ability to grow freely with the market. Keeping that in mind, today’s radio leaders are still hunting for that sweet spot where broadcasting might flourish unmolested from unwanted, outside forces. Many of today’s traditional broadcasting companies consider automated broadcasting that sweet spot. They view it as a practical way in which to lower their overall operating expenses while keeping watchdog agencies such as the Federal Communication Commission (FCC) at a safe distance.

Alternative programming might also be the key to their future success. Such things as personalized, continual community newscasts might represent an affordable, effective way to ensure survival. It might be a bonus especially to insightful listeners that want to know the latest developments as they unfold within their communities. Of course, first hand programming is not something new to radio broadcasters. However, 24/7 broadcasts geared towards the ever-changing urban landscape might be exactly what is needed. It also might end the tiresome programming that has flooded the airwaves recently. Escalating consumer costs, a byproduct of the new alternative digital age might be another way in which to convince former radio listeners to return to the fold. Don’t forget that commercial radio programs are free while apps, smart phones, platforms, podcasts and satellite radio can be very costly. Consumers might want to keep that in mind especially if inflation continues to grow.

This new digital age is not the first time that U.S. commercial radio has faced formable business challenges. The radio-industry has been under fire countless times over its more than one-hundred-year history. In its infancy, many outlets had to regularly match their wits against dominate local newspapers. Those dailies not only successfully covered regional and world events; but also, offered their readership some of the best in personal advice, comics, community features, editorials, horoscopes, sports and weather. Most large U.S. cities into the 1930s supported many newspapers. In order to survive such fierce competition, the majority of radio stations began broadcasting their own locally-edited shows. They varied from cooking lessons, comedies and dramas to news, soap operas and sports. Almost any program was okay as long as it attracted a reasonable following and followed accepted federal guidelines. By the mid-1930s, the rapid increase in the number of NBC, CBS, MBS and WBC affiliates ended many of those local offerings. That trend favoring national broadcasts over local shows continued into the Second World War.

The National Broadcasting Company immediate success as a radio broadcaster encouraged its owner the Radio Corporation of America (RCA) to create two separate networks Red Dot and Blue Dot. Larger radio affiliates generally subscribed to Red Dot while smaller outlets mostly chose Blue Dot. Fearing that NBC was gaining a stranglehold on the national radio market led the Federal Communications Commission (FCC) to order it to rid itself of one of them.^[7] That separation in January 1942 resulted in Red Dot remaining a part of the parent company with Blue Dot breaking off. Four years later, the Blue Dot network became the American Broadcasting Company (ABC).^[8] Had commercial radio remained the primary source of entertainment, news and sports in the Cold War years then those same networks would have enjoyed soaring revenues.^[9] The idea that an upstart such as television might overturn the apple cart seemed very unlikely. However, its many advocates thought differently. Hoping to compete in the big leagues ASAP, experimental television made its debut at the New York World’s Fair in 1939. Its approval among fairgoers led NBC’s President General David Sarnoff (1891-1971) to begin to keep files on New Yorkers who purchased television sets. In fact, NBC sent them a list of its own televised programs. Not to be outdone by the National Broadcasting Company, the Philco Corporation debuted its own Philadelphia-based television station the next year. As we will see later, that particular Philly outlet was to play a critical role in the future of both NBC and WBC. 

The rapid expansion of television in the late ‘40s and early ‘50s encouraged many eager broadcasting companies to exercise their option of purchasing combined radio and television stations as single packages. That generally meant that future deals would pertain to both outlets whether that was actually spelled out or not in discussions. Frequently, local market size and revenue returns determined their individual value. That practice of jointly buying radio and television outlets as one remained popular into the 1960s. Pre-war commercial television experiments came to an abrupt end with the bombing of Pearl Harbor on December 7, 1941. Television technicians for the remainder of the war directed the bulk of their energies and resources towards much needed defense work. Fortunately, many of them continued to experiment with television during their spare moments.

Following the war, many of those technicians returned to their first love which was television. Through the help of jointly owned radio and television networks such as NBC, CBS and Dumont many large U.S. cities including Boston, Chicago, New York and Philadelphia had television stations in operation by 1947. As you might have already concluded, those networks determined pretty much what was or wasn’t shown on the tube. Primarily, they broadcasted homegrown shows, old movies and plenty of news. ABC joined in on the fun after merging with United Paramount Theatres in 1948. Yet, in spite of television’s instant popularity, sparked in large measure by those same enthusiastic networks, few in the radio industry believed that that this new media posed any real threat to traditional broadcasting.^[10] High production costs pretty much eliminated television as a serious competitor.

However, the lightning speed in which telecasters improved their broadcasting capabilities while lowering production costs soon changed everything. By the mid-1950s, most major U.S. cities had at least two television outlets. Surprisingly, the extraordinary growth of this new medium did not seem to bother most radio broadcasters who shrugged it off. Television’s limited broadcasting range; fuzzy picture, poor sound quality and scant offerings all but guaranteed radio’s dominance at least for the foreseeable future. Once television’s early technical glitches were resolved than television networks began broadcasting all kinds of comedies, dramas and news along with entertaining quiz shows, sports and local variety specials. Recognizing that the future of broadcasting might well belong to television led many successful radio programs to migrate there.^[11] As you might well imagine, radio’s harshest critics pointed out that those recent staggering financial losses could have been pretty much avoided with some insight. They strongly recommended that the radio industry develop some electrifying new program format quickly if it intended to avert future disaster.

The extraordinary success of television did much more than undermine radio’s dominance within the broadcasting field. It also challenged many long held business practices. Unquestionably, television was a byproduct of a much larger, very persuasive national grassroots movement that was gaining tremendous traction throughout the late ‘40s and early ‘50s. That nationwide effort called for the abandonment of some of our nation’s most cherished cultural and social traditions for what many consider to be very questionable new initiatives. Cloaked in rebellious overtones, it was related to the U.S.’s emerging economic and political importance worldwide and the emanate threat posed by the Soviet Union once the Iron Curtain was established. What it failed to address at all was the positive benefits equated with America’s post-war prosperity.

Not directly affected by the devastation and agonizing slow recovery that had beleaguered much of Central and Western Europe in the decade following the Second World War, the U.S. had achieved unprecedented new heights of prosperity and wealth during that same period of time. Starting with the Servicemen’s Readjustment Act of 1944, the feds provided returning servicemen and their families excellent new educational and job training options. That federal response resulted in better jobs and higher wages for millions of Americans.^[12] Spending that extra cash posed no problem whatsoever once civilian production kicked into high gear again. By 1947, the national economy was producing a groundswell of highly desirable goods. Autos, cooking ranges, refrigerators and washers/dryers were musts for everyone along with high quality radios and television sets.^[13] Most people were equally fascinated with the new broadcasting medium called television. It was not like nothing else they had seen before in that it brought quality programs into their living rooms each and every day.

If radio hoped to survive the advent of television then it would have to reinvent itself very quickly. Of course, the radio industry was aided in this process by some musical icons of the era. Those that helped included Tommy and Jimmy Dorsey, Count Basie, Duke Ellington and Les and Larry Elgart, to name but a few. Also, leading crooners of the day like Bing Crosby, Rosemary Clooney, Frank Sinatra and Jo Stafford enabled commercial AM radio to weather this latest business storm. Other singing sensations such as Nat King Cole, Perry Como, Frankie Laine, Peggy Lee, Patti Page and Johnny Ray helped commercial radio by updating their musical scores. In spite of this groundswell of support, larger and larger numbers of record buyers began turning away from standard musical choices preferring to embrace more off-beat, often newer sounds instead. Those more adventurous recordings ran the gamut from jazz to Latin sounds and from boogie woogie to country music.^[14] Classical music along with opera, Gospel music and R&B also rekindled the public’s imagination. Some radio stations welcomed them as worthwhile alternatives to the humdrum television shows of that time. Fortunately, ground-breaking programming was not limited only to big city radio outlets. Brilliance seemed to be popping up everywhere.

Big and small radio outlets fought long and hard to gain as many new listeners as possible. Regrettable, with limited available resources their daring efforts often resulted in similar sounding broadcasts. What that meant was that any revenue gains those ground-breaking programmers might have achieved over their rivals initially was quickly lost. Also, the growing number of teen listeners posed a Catch-22 especially for traditional radio managers many of which were still cautious when it came to playing large amounts of rock and roll music. Teen’s relatively small allowances did not greatly improve their chances of hearing more rock and roll music on those stations at least for the near future. Bottom line, most radio broadcasters still relied on outmoded teen information when determining their playlist. Let’s explore this idea of this slowly emerging teen market a bit further. Prior to the Second World War, the number of U.S. teenagers earning a decent week’s pay remained small. In fact, pre-war studies of adolescents suggested that teen exposure to popular music was limited to either local playlists or the few records they might have purchased. Unfortunately, lack of cash and tight parental controls influenced both. All that changed during the Cold War as larger and larger numbers of teens ventured beyond their immediate neighborhoods. What they soon discovered was that surviving in that “brave new world” was not easy.^[15]

Frequently alone, many of them became very defensive and ill-mannered. Those growing fires of discontent aimed at the unfair world lurking around the corner fueled a heightened cynicism among many. It terrified them that this heartless world might well determine their fate. Increasingly, teenagers found themselves caught between a rock and a hard place. Parental compassion, if it existed at all, only aggravated it even more. Was that youth rebellion a warning of worse times yet ahead? Who knew? But, one thing became apparent to commercial radio broadcasters by mid-century. They would have to revise their thinking regarding the value of teenage audiences. The post-war surge in the number of teens and young adults required a new approach towards broadcasting. As everyone knew, AM radio stations lived and died by the ratings. Yet, many program initiators seemed confounded when it came to tapping into that growing market while maintain high ratings. The explosion in the number of good paying after school jobs for teenagers by the mid-1950s, held the key to radio’s future success. New part-time jobs gave them lots of disposable cash which they quickly spent on a variety of fun things such as casual food, fashionable clothes, grooming aids, magazines and records.

Skyrocketing record sales in the late 1940s and early 1950s impressed jukebox operators, record store owners and jocks alike.^[16] You don’t have to be a rocket scientist to figure out that the U.S. radio-industry was caught in the middle of a serious bind. It had to come up with an effective new way in which to take advantage of this fast-changing market or face the grim prospects of irreparable financial harm. That realization prompted many conservative broadcasters to begin to play an assortment of records. Those recordings spanned the spectrum from black inspired music and folk music to jazz and R&B. In spite of increasing evidence to the contrary, many conservative business leaders zealously opposed this new form of broadcasting. They thought those radio stations were out of step with the times. Rebellious teenagers more and more protested against what they considered to be very old fashion thinking. The younger generation loved this new kind of music and wanted to hear more of it on the AM dial. Recognized by its repetitive, sharp beat, the “cool” music of the early ‘50s comprised a host of dissimilar black and white musical genres that were blended together to create a new and powerful sound experience they called rock and roll. A term first coined by a Cleveland DJ named Alan Freed at the Moondog Coronation Ball on March 21, 1952, rock and roll music quickly made a name for itself.^[17]

Interesting side note here, Alan Freed’s close friend Leo Mintz first introduced him to this dramatically different kind of popular music in 1950. Mintz owned a favorite downtown record shop in Cleveland called “Record Rendezvous.” Soaring sales in R&B or “Race Music” convinced WJW’s Alan Freed to play it. The Cleveland audience immediately loved it. Rock and roll music got another very positive boost in February 1955 when WERE radio personality Bill Randle arranged for Elvis Presley to sing at Brooklyn High School in Brooklyn, OH. That was Presley’s first concert outside the South.  Some experts in the music field have suggested that Rock and Roll referred to “rockin” and “rollin” a part of earlier race songs. Many modern-day critics often minimize the importance of the exceptional sound traceable to the earliest forms of rock and roll. Those early songs did much more than just set the stage for the upcoming, more sophisticated British rock invasion, Motown, the Philadelphia sound, hard rock, punk rock or disco. Early rock and roll music delivered a well-defined sound that was symbolized by its very fast, hard-driving beat. In fact, it’s rhyming verses and loud repetitive drum beat definitely separated it from other popular musical forms of that same era.

Most importantly, the lyrics of rock and roll songs dealt with both the joys and tragedies of being a post-war teenager. Its unbridled passion for love and hate, as seen through the eyes of teens, was second to none. Early rock and roll music also concentrated on love gained and lost from the distinctive perspective of the individual performer. Most importantly, it reflected the emotions and fears experienced by teens as they made the tough adjustment from childhood to adulthood. Rock and roll music undoubtedly furnished them a safe haven where their pent-up anxieties and daily frustrations could come out without fear of reprisal from others. Wanting to do the right thing for the growing number of teen listeners convinced many smart broadcasters to add rock and roll music to their daily lineups. Often featured on special “Hi-Fi” shows, they proudly showcased the latest 45s to their many excited listeners. Some programmers went so far as to integrate rock and roll music directly into their playlists. Those newly expanded playlists also featured “cool” sounding jazz, popular crooners, and of course, the very latest in instrumentals. But, few early ‘50s broadcaster mothballed traditional formats. That was too risky. If rock and roll music really set out to become a permanent fixture in U.S. radio then its dedicated promoters had to develop some effective new marketing device to ensure its success. It took the genius of Gordon McLendon (1921-1986) of Dallas, TX and Todd Storz (1924-1964) of Omaha, NB to come up with the perfect solution.^[18]

Called Top 40 Radio, it ruled the commercial airwaves from the mid-‘50s to the late-‘70s. Fast paced and frequently irreverent, Top 40 carefully followed the accepted business principles of that day to their logical conclusion. Of course, selling large amounts of advertising time remained tops on their to-do list. Many writers in trying to engender nostalgia for “good old” Top 40 radio often over-emphasize the role played by big city jocks in its initial stages. In particular, they detail the rise and fall of well-known Top 40 celebrities and how their stations made them or broke them based on their novel approach towards broadcasting. Although those writings are lots of fun to read, those highly personalized accounts rarely do justice to early Top 40 radio. They often forget that it was something that millions of teenagers everywhere enjoyed simply by turning on their portable radios. Unquestionably, its availability accounted for its initial success, yet few modern-day writers acknowledge it. Instead, they claim that the sudden explosion in Top 40 broadcasters nationwide resulted from the ceaseless efforts of big city stations and their desire to mollify the growing demand placed on them by teens for their own outlets. That might have some validity in big city markets; however, Top 40 radio as a social phenomenon was more broad-based than that. It affected nearly everyone it touched regardless of location. If in fact that was true then over emphasizing Top 40’s impact in big city markets, at the exclusion of other smaller areas, may offer a somewhat distorted view as to what actually unfolded. In reality, both mid-sized and smaller markets played large roles in shaping Top 40 broadcasting as we knew it then.

Many of those same authors similarly assume that the Top 40 format of the ‘50s and ‘60s was an inevitable part of the future of AM radio. That they were interchangeable. Let me tell you right here and now that is not correct. Many broadcasters well into the ‘50s remained skeptical about the future of rock and roll let alone its highly controversial new format. The fact that many stations still relied on middle-of-the-road programming well into the ‘60s says a great deal about what was really happening throughout the country. It took mushrooming advertising costs and fierce new competition generated by the ever expanding teen and young adult market before the scales finally tilted in favor of Top 40 programming over others.

From the start, McLendon and Storz never lost faith in their Top 40 formula. They firmly believed that it would provide large numbers of teens and young adults hours of fun. More than anything else, their keen salesmanship persuaded their listeners to remain faithful to their new Top 40 stations. Without question, that new found success proved to be contagious. Listener surveys in the mid-1950s showed that large numbers of teens wanted to listen to plenty of rock and roll music played by their favorite DJs. Gordon McLendon and Todd Storz began marketed their new product but only after they had proven to cynics that it did indeed work. Soaring revenues at KLIF-Dallas and KOWH-Omaha brought that home very quickly.^[19] McLendon soon owned many stations including WNUS-Chicago, KNUS-Dallas, KOST-Los Angeles, WAKY-Louisville, KXOX-St. Louis and KABL-FM San Francisco. Storz controlled important outlets such as WHB-Kansas City, WQAM-Miami, WDGY-Minneapolis, WTIX-New Orleans and KXOK-St. Louis.

Clearly identified by its fast-talking jocks and its forty record playlist, Top 40’s lifeline depended on frequent personal appearances, catchy station jingles, abundant promotions and numerous publicity stunts.^[20] It also featured news, sports coverage, traffic checks and weather forecasts. Jukebox sales, record sales and playlists most often furnished through leading trade publications such as Billboard, The Amusement Industry’s Leading Newsweekly determined which records received airtime and which ones never saw the light of day. Not to be outdone by their growing number of competitors, many record labels went a step further by offering local radio celebrities all kinds of incentives in the forms of gifts and money if they agreed to plug certain recordings over others. In the early 1950s, few industry leaders considered such “courtesies” wrong. As we will see later, the feds only curbed those practices when they learned that some unscrupulous DJs had illegitimately profited from them.

The rapid increase in low-cost transistor radios set the stage for much of Top 40’s success. Although it became the preferred rock and roll format, no two stations sounded alike. Although NBC and CBS remained lukewarm to the idea, ABC instantly incorporated it. Let’s not forget that WABC in New York and WLS in Chicago remained pacesetters in Top 40 radio into the ‘70s. Local market conditions and listening habits mostly determined the formats for Westinghouse stations. In the case of KYW-Cleveland, it found itself caught in the middle of this controversy. Initially a middle-of-the-road music station noted for its quality programs, news, sports and weather, it’s managers gradually phased out that format to embrace Top 40. How and why, they did that will be discussed later. Also, we will see how that future radio legend successfully handled the challenges confronting it. Finally, we will discover how many of the common-sense business approaches used by KYW officials during those most troubled years may still be valid in today’s equally unsettling radio climate.