Farewell Air America

I haven't seen a good analysis of the reasons Air America disappeared last month after nearly six years of existence.

Air America started in April 2004 with great fanfare, months of coverage by the mainstream media and aggressive support from Al Gore.  Shortly after it ran out of its first $100 million it filed for bankruptcy in 2006 and was bought six months later by the Green brothers of New York city who kept it on life-support until their money from the New York real estate market ran short.

I see the reason for the failure of Air America, it is an important lesson of commerce.

Very few businesses in the history of commerce have been top down and succeeded.  Top down means looking at an existing market and saying 'we can enter that market with enough money'.  Microsoft has tried this a dozen times and barely succeeded a few of those times with $billions invested. The list of failures is hundreds of pages long.  GM tried to get into computing as did Boeing. 

The most common approach of the big bucks guys is to buy an existing successful firm in the field and pour money into it.  This approach has a slight chance because the small firm that is bought sometimes knows the field they are in.

 Air America looked at the field of nationally syndicated talk radio that was 98% conservative and believed there was room for a $100 million investment to start a new syndicate with Lefty radio hosts. 

Top down doesn't work and in this case there are three specific reasons it failed: 

First conservative talk radio was a bottom up growth success.  The reason it grew was organic.  Local radio personalities who attracted a growing audience in one area had the style, topic and personality that was appropriate to the newly emerging audience. That is how commerce works.  You find a market and get more refined as you learn, expand and grow.

Second, commerce is an empiric world.  You only succeed by fine tuning, refinement and experimentation.  Top down doesn't have that potential.  The example that confused Air America's investors was the historically unique success of Rupert Murdoch creating a de novo TV network: Fox.  Murdoch had two advantages that were clearly missed.  (A) He had the advantage of a rapidly growing field of cable not the static field of radio that Air America tried to enter.  (B) Murdoch bought the equivalent of an existing business in the form of Roger Ailes as head of Fox.  Ailes knew the empty market space of conservative TV because he was deeply embedded in the conservative world.

Third, and most importantly: the market for conservative ideas, policies and voices is new and growing. The market for Lefty ideas, policies and voices, the market chosen by Air America, is stagnant and dwindling.

To understand how serious this issue is take a look at this list of the top 25 pro commerce journalists, all of whom have large and growing followings.  The same is true for a few key academics not on the list: John Podhoretz, Max Boot, Bill Kristol, Victor Davis Hansen, Thomas Sowell, and Greg Mankiw.