Free Wisdom for Broadcasters, from the “Beleaguered” Apple

Today Apple is a darling, a huge success story. A company that has returned from the ashes and reinvented itself more times than The Trixter has. But it wasn’t that long ago that the un-elected computer intelegencia and the everyday end-user was predicting a quick death for the company that has had more lives than the common cat. It wasn’t just the geeks, the alleged bastions of journalistic integrity such as Fortune, Time and Business Week back in ‘95 and ‘96 were writing that Apple was already a dead duck, they just didn’t know it yet.

Hey, I admit it, I’ve been an Apple fanboy for quite a while. Through good times and bad. Having first been introduced to the Mac because of its ease of use as an audio editing workstation. It wasn’t the amazing adds or the slick use of marketing, it was with much resignation and a lot of weeping, wailing and gnashing of teeth, I was dragged kicking and screaming into the Apple cult of computing. But once I did, there was no looking back.

In the ’90s times were tough for Apple, very tough. The stock was in the crapper, The Newton was considered a ‘joke,’ (even though it gave rise to the very successful Palm platform and yes, the iPhone. Not to mention the fact that we’ve yet to see what Apple will finally do with the real holy grail of the Newton, Rosetta) month after month the market share was dwindling for Apple. The eminent death of Apple was expected to happen any day, with rumors of Sony, Adobe and yes even Microsoft picking the last remnants of flesh from the once great upstart company. Enter Steve Jobs…. In 1997 on his first day on the job, with Apple bleeding money to the tune of hundreds of millions of dollars, Jobs launched the project that would become the iMac. Apple had already spent 400 million dollars for the purchase of NeXT, and bled countless millions to develop the Newton under Scully. After freezing their research spending in 1996 to about 5 percent, and cutting its workforce by 30 percent in ‘97, Apple started to spend again on R&D with Jobs back in charge. Apple was funding more money into Research and Development than any of its competitors, including IBM and Dell. R&D spending reached over 7% in the early years of the new millennium, even though Apple experienced a few quarters with losses in 2003. Prompting CFO Fred Anderson to make a very remarkable quote: “We’re not going to mortgage the future for short-term profit maximization.” And according to Anderson, Apple was spending nearly a half a billion dollars a year on R&D.

Sure Apple had a few misses in those early years under Jobs. The Cube failed to take off, but this didn’t stop Jobs from pushing ahead in his belief in form factor, something that would later make the iMac a huge hit and arguably the Cube would later be reincarnated as the Mac Mini. And I have to admit, I originally thought the iPod was a joke. Even though I had one of the first iPods, I couldn’t really see beyond the trees of it being “just another mp3 player.” Only now are we starting to see Mr. Jobs real vision of a digital hub and the evil genius of his viral marketing of OSX through iTunes and the iPhone.

So what does all of this have to do with broadcasters? Plenty. Today we find Radio, TV and of course the Print Media being handed much of the same monikers that Apple had to endure back in the ’90s… “beleaguered” and “antiquated.” Advertising spending on radio is falling just like Apple’s market share did just a few short years ago. So radio tightens its belt, hires more salesman to chase the ever decreasing add dollars and cuts the bottom line from its programing departments across the board. Just a few weeks ago the cuts in programming were happening in markets ranging from NYC and LA to Middletown, Ohio. Our product is shrinking, and lets face it, it’s been happening for quite a while now. It sucks ladies and gentleman, but radio doesn’t hold a death grip on the music biz and audio entertainment anymore. You know it and I know it. It’s been coming down for a long long time.

So what to do chicken little? Let the sky fall? Have a fire sale? Not a chance. Radio is just changing, it’s not dead, dying or on life support, it’s just getting a rectal exam. What we’ve got to do, is do what Apple did. Invest in our “R&D.” Invest in the product. Start ’spending’ money and using our assets to give our users a product to believe in, trust and in turn use more and more. Our customers, the listeners, have to ‘rediscover’ radio again for what it is… a great and compelling product. If your product becomes ‘beleaguered’ you don’t continue to pretend that everything is fine, and just hire a bigger marketing and sales-force and ’sell the hell out of it.’ (Why am I suddenly reminded of the Monty Python “I’m not dead yet skit.“) It’s a lesson the Detroit automobile manufactures learned, or you would think would have learned in the ’70s. I believe in the power of radio. It’s great. It once was absolutely amazing and completely compelling. Damn it, that’s why I got into it. It was not only amazingly powerful and a huge social community that really had a tangible and intangible impact on peoples lives, it was fun as hell to be a part of and to listen to. And it can be again. And it’s not rocket science. It’s time for managers and radio groups to bite the bullet and start investing in our future, or we may not have a very promising future to look forward to. As former Apple CFO Fred Anderson said about his company, We’re not going to mortgage the future for short-term profit maximization. The days of endless double-digit returns every quarter for broadcast investors may be gone and they may never come back. But the long-term forecast is just fine, because we have an amazing product, if we just get back to paying attention to the damn product and nourish and encourage what makes it great… innovative ideas from creative individuals. Radio needs to go back and reinvest in its research bottom line; the product and the talent that is given the environment and encouragement to create and grow a great product.

Oh, and for all the money Apple spent on R&D over the years and all the great products it’s spawned, Apple CEO Steve Jobs, the man behind the iPod, iPhone, iTunes, iMac, AirBook and all the other gadgets you and yes Sony lust after, remembers another important lesson as well: Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it. - Fortune, Nov. 9, 1998.

Get it?!