STAR 94.1's HD2 Channel Now Playing What May Be Variety Hits - Page 5
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Thread: STAR 94.1's HD2 Channel Now Playing What May Be Variety Hits

  1. #41

    Join Date
    Jan 2006
    The ATL, OTP
    Quote Originally Posted by TheBigA View Post
    Yes that's what I said. Biting off more than you can chew is also known as acquiring crushing debt. Like other radio companies. If even he can't solve his debt problems, why do you hold others to a different standard? Why can't Jerry Lee just increase his spot rates and pay off his debt?

    I just went to my local sub shop. A few years ago, I could get a foot long sub for 5 bucks. Not any more. I used to get 12 ounces of coffee for 5 bucks. Now that same bag only has 10 ounces in it, and it costs the same. My cable bill went up 20% this year. You want to talk about cutting corners? I can give you dozens of examples that you put up with every day.

    People listen to these stations because they give them what they want, and they do it very well. Nobody is sending them a bill for broadcast radio or adding to the spot load. Costs for services at radio stations go up every year. Advertising revenue has held steady for a long time. That's why some companies are getting out of radio. But listening levels are still very good considering the number of media options.
    Elasticity of demand. If you raise your prices, you will lose a certain amount of customers. Period. No product has perfectly inelastic demand; the closest to it is probably cigarettes, but even higher prices will get a certain number of smokers to quit. So the choice for radio stations is as follows:

    1) Increase spot prices, hoping that the dropoff in advertiser demand is less than the incremental revenue increase
    2) Hold spot prices steady, which means you have to accept less profit, take on more debt, and/or cut expenses ("corners"). If you're running a good business that is already making money and has zero or easily serviceable debt, then you can stick with this.
    3) Increase spot load, and hope it doesn't drive off listeners due to "more talk, less rock" and advertisers due to dilution and/or lost ratings

    Right now in the restaurant industry, sales are off. One reason for that is because the price spread between groceries and restaurant food has reached a historically high level. . They are talking about a "restaurant recession" because people don't want to pay so much to eat anymore.

    People have to eat, and businesses generally have to advertise. But they don't have to eat your food, or advertise on your medium. Here's a company that has literally taken billions of advertising dollars away from other media:

    You run your business on a "cost plus" basis, where you decide what your profit margin in excess of your costs is going to be and price your product accordingly, and you have a dead business walking. I would guess that most small businesses fail because of this; I have seen it time and again. They don't care that the market won't pay their asking price, thinking that they know everything about value or "nobody can expect me to not make a profit!!!", until they run out of money and the bank forces their hand. Nobody is guaranteed a profit. Heck, nobody is guaranteed break-even.

    Now, if you're charging an attractive price for your product and still at least break even, congratulations. You're a good businessperson, and you get to open your doors tomorrow.
    "When broadcasting over the radio, there are certain words we must omit.
    Like 'BEEP' and 'BUZZ' and 'GOBBLE-GOBBLE', by gosh we can't even say shhhhhaving cream!"

  2. #42
    Quote Originally Posted by jabba17 View Post
    So the choice for radio stations is as follows:
    You forgot choice #4: Get out of the radio business. That's what CBS did. But once again, not because of the lack of listeners. It's like the music business. They're not selling a lot of CDs, but they're collecting lots of royalty money. Their business model changed, and they've adapted. Same with radio. The business model has changed. Spot rate isn't going up, and you can't increase spot load. You need to find new revenue streams. Here's a hint: It won't be on air. That platform isn't going to be where the growth is. Not because of listeners, but because of advertising.

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