Karen Slade, the general manager at KJLH-FM (102.3), has seen the Inglewood station's revenue fall dramatically, some months as much as 37 percent. The lighter cash flow has Slade worried that she'll have to lay off some of her 40 employees or cancel shows.
The economy is a factor, but Slade heaps most of the blame on a small electronic device no larger than a pager.
It's the Portable People Meter, and it's radically changing the way radio stations do business in Los Angeles. PPMs, which are carried around by thousands of randomly selected L.A. listeners, record special signals embedded in each radio station's radio waves. That data is then used by Arbitron Inc. to compile monthly radio ratings, which in turn determine station's ad rates.
Before PPMs, Arbitron asked listeners to record what stations they listened to in diaries, a far less precise methodology.
Slade's station has found itself on the losing end of the PPM transition. She readily admits KJLH, owned by musician Stevie Wonder, was never a ratings powerhouse. Under the diary system, the station's share of listeners hovered at around 1.3 percent. But when PPMs came on the market it fell to 0.4 percent. It's a drop that Slade believes doesn't reflect reality.
"We didn't lose 100,000 listeners overnight," she said. "And when you tell me I've lost 70 percent of my market share, you're putting me out of business."
Arbitron has used PPMs to calculate ratings for L.A. radio stations only since October, but the system has already generated static. Executives at minority and niche stations complain PPMs undercount their listeners. And for better or worse, PPMs have changed the ratings of numerous local radio stations.
The financial impact of even a small change in ratings is huge. Under the diary system, a rise or drop of just 0.1 share points translated to a corresponding increase or decrease of $1.2 million in annual revenue, according to the Southern California Broadcasters Association. A similar metric hasn't been calculated for PPMs yet because they've been in Los Angeles for less than a year.
At stations across Los Angeles, executives are scrambling to master the PPM system. Station presidents have hired consultants to help them boost their PPM ratings. Program managers, armed with PPM data that can show the exact minute listeners tune in and tune out, are shuffling DJ and talk show lineups, even suggesting which songs to play and which to avoid.
In extreme cases, radio stations have flipped entire formats. In January, KDLD/KDLE-FM (103.1), better known as Indie 103, changed from an indie rock station to Spanish language. In February, KLSX-FM (97.1) morphed from a talk radio station to Top 40 music. In both instances, station managers were trying to turn stations with relatively small listenerships into ones that captured higher PPM ratings.
Baltimore-based Arbitron distributes more than 3,300 PPMs to a panel of randomly selected people in Los Angeles County. Panelists wear the devices all day and at night attach the PPMs to a device that transmits to Arbitron what stations that person listened to and for how long.
While PPMs have impacted every station differently, they have forced everyone to relearn the business.
"It's like getting dealt a whole new hand of cards and learning to play all over again," said Val Maki, the general manager at KPWR FM (105.9).
The PPM devices are more accurate than diaries, which relied on listeners' memories and could be notoriously inaccurate. Stations recited their call letters over and over again on the air so they'd stick in people's minds, and make their way into ratings logs. Some listeners would fill out diaries for family members or write down their favorite stations even if they didn't listen to them. PPMs, in contrast, track exactly what the listener hears.
But the makeup of the PPM panel in Los Angeles has come under fire. Some station managers complain that the size of the panel is so small that one or two listeners can propel a station to the top or, if the listeners leave the panel, sink it to the bottom. In addition, executives at niche market stations contend that it's unlikely a PPM panel will catch any of its loyal listeners in its net.
Stations that cater to ethnic groups, especially Latinos and Hispanics, also claim the proportions of those groups in the Arbitron-selected panel don't accurately reflect the makeup of their markets. That slants the ratings against them, as station executives had long predicted and protested.
Spanish-language radio stations in Los Angeles have seen their ratings fall an average of 20 percent since PPMs were introduced, said Jeff Liberman, president of the radio division at Entravision Communications Corp., which owns three Spanish-language radio stations in Los Angeles.
Right after Arbitron first introduced PPMs, KLVE-FM (107.5), a Spanish-language pop station owned by Univision Radio Inc. that was the top overall station in Los Angeles, tumbled to sixth place. Another Univision station, Spanish-language KSCA-FM (101.9), fell from third to seventh.
Liberman would like to see Arbitron increase the number of PPMs used to compile the ratings in Los Angeles by 20 percent, and the number of Spanish-speaking participants increased by 17 percent.
"PPM is a far better device in measuring what people listen to, but the problem I have is the way they put together the panel," he said. "They're missing minorities."
Arbitron executives declined to comment for this article. But in a June presentation, the company noted that "listenership among Hispanics is as strong in the diary as it is in the PPM."
Arbitron settled lawsuits filed by attorneys general in Maryland, New York state and New Jersey over under-representation of minority listeners on the PPM panels. As part of the settlements, the ratings company agreed to take steps to make sure its panels are racially diverse.
Liberman declined to comment when asked if similar litigation was in the works for California. The California Attorney General's Office did not return a phone call seeking comment.
Not all stations have suffered under PPMs. KIIS-FM (102.7) soared to the top of L.A. radio ratings when the devices were introduced on a test basis in July, and hasn't relinquished its hold.
But even highly rated stations have made changes to adapt to the new way ratings are compiled. After analyzing PPM data, executives at KRTH-FM (101.1), the third-ranked L.A. station, boosted the size of its music library and encouraged on-air personalities to cut their banter, said Jhani Kaye, KRTH program director.
Kaye said he will show tapes to radio personalities of their programs matched with a PPM software program that gives minute-by-minute data on how many listeners they had. They can see if listeners tuned out when they told a bad joke or a punch line ran too long.
"They get to the point much quicker these days," Kaye said.
Radio executives and analysts say ultimately that the precision of PPMs will lead to better radio, even though many admit they're struggling to master the new system.
"It's like learning a new language," said Mark Shannon O'Neill, a partner at ROI Media Solutions who does consulting work for radio stations around the country. "We've always done business in English, and now we're required to do business in French. And it's a hard language to learn."
Slade of KJLH is finding out how hard. Traditionally, she has seen her station as a forum where L.A.'s African-American community can air its views. Then the ratings blow to her station forced Slade to put on more music which is generally higher rated and cut back on talk.
She was rewarded when KJLH's share increased to 0.6, but feels PPMs are forcing a choice between what she views as a service to her community and the station's financial health.
"If we go with all music, less talk, that means less jocks, which means less people are employed," she said. "But I have to get to the numbers to stay in business."
Personal People Meters upset the radio hierarchy in Los Angeles. Among the stations that saw their ranking change:
Format: Latin pop
Diary Ranking: 1st
Current Ranking: 5th
Format: Spanish language
Diary Ranking: 3rd
Current Ranking: 18th
Format: Alternative rock
Diary Ranking: 7th
Current Ranking: 11th (three-way tie)
Format: Adult contemporary
Diary Ranking: 17th
Current Ranking: 6th
Format: Classic hits
Diary Ranking: 10th (two-way tie)
Current Ranking: 3rd
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