Radio’s continued strength will increasingly depend on creating useful applications and making sure the apps end up on the screens of connected devices, like smartphones and digital dashboards.
Getting a user to download an app is easy. Apple users have downloaded over 10 billion apps alone.
Estimates place the average number of apps a user has downloaded somewhere between two dozen for some devices to over 60 for iPod/iPhone users.
The vast number of apps are downloaded, launched once, and then never used again.
So the key metric of success is not how many people have downloaded your app. It is how often it is used. Radio stations need an app that listeners go back to time and time again.
By that measure, we believe radio is headed in the wrong direction with apps.
The entire approach has to be rethought, and a good place to start is the 1970s.
Back then car radios had a limited number of pre-sets, often just two or three for each band. The push buttons were valuable and stations fought over who got a button.
Programmers knew that if they could get on one of the presets, people would come back over and over again. Listeners just found it easier to switch between a few buttons rather than use the dial.
That’s when liners like Make us your first button and Set your dial and rip the knob off entered radio’s lexicon.
The push button was radio’s first killer app.
Fast forward 40 years, and radio finds itself with a similar challenge and similar opportunity.
Except instead of the push button, today’s challenge is to become the screen’s killer app, the first app that listeners turn to.
With an Internet connection, one can potentially listen to thousands of radio stations from anywhere in the world. Yes, listeners can, but most won’t.
People haven’t changed much from the 1970s. While the number of options has exploded, most listeners still settle on a handful of stations and just switch between this small set of stations.
It means real estate on the screen is just as valuable as the push buttons were years ago. Get on the screen and you have a big advantage. Create an easy to use useful app, and you’ve got it made.
That’s why Pandora has worked so aggressively to create an easy to navigate app and then to get it on as many screens as possible.
Pandora has cut deals with Ford, BMW, Toyota, and others so that their app appears on the dashboards of the auto makers’ cars.
Pandora has a significant advantage over broadcast apps because Pandora’s single app gives a user direct and convenient access to as many as 100 personalized streams.
A user need not navigate through hundreds or thousands of stations to find something of interest. Having created every station on the app, a user wastes no time having to sift through a bunch of stations she will never listen to.
As we recently pointed out, Clear Channel also has a deal with Toyota so that iHeartRadio will share the screen with Pandora, which is a good start.
Harker Research believes, however, the corporate approach of bundling a group's stations into a single app will need to evolve if radio is to overcome pure-play’s app advantage.
There are two problems with the corporate radio group approach. First, only the company’s stations are available. (We should note that the Radio.com app includes AOL Radio.) Secondly, there are hundreds of stations on each app, most of which a person will never listen to.
With a corporate app, a listener has to use some other app or browser if she wants to listen to a station outside the company’s own.
There are other apps like TuneIn Radio. It offers access to 50,000 AM and FM streams, but the sheer number of stations can be overwhelming. It takes five taps just to reach a market's listings.
Does a corporate gateway help or hurt broadcast groups maximize TSL? We think it ultimately hurts.
Most people listen to three or four favorite stations owned by two or three companies. Groups offering access to only their own radio stations force listeners to use multiple apps, which discourages listening.
So we are back to the 1970s, when stations fought over a limited number of buttons, except in this case radio has the additional problem of pure-plays.
We believe most listeners won’t go through the effort of navigating multiple apps to listen to the radio. It is far easier to navigate within one app like Pandora's that offers enough choice.
One solution is for a broadcast group to welcome stations outside the company (for a fee) to be part of their app. Call it Radio USA.
This inclusiveness eliminates the need to navigate between apps, but the number of stations in the US alone creates navigational challenges within the app.
A better solution would be for entrepreneurial aggregators to create market apps, combining stations in a single market regardless of ownership.
Most people spend the majority of their time listening to local stations. Enabling users to install an app that offers all the local stations will increase over-all broadcast listening by making it more convenient.
The aggregator could pay stations to be included, or app advertising revenue could be shared among stations on the app.
This approach is an improvement, but Harker Research believes that to maximize broadcast TSL and marginalize pure-plays an entirely different approach is necessary.
We believe to successfully compete against pure-plays the ultimate solution will be an app that combines local stations with a Sirius-like lineup of format channels along with personalized channels. It will transform the broadcast app into a supermarket of audio options.
The app will have several local morning show channels offering different mixes of local services and information.
The app will also include a wide range of national generic music stations and syndicated talk programming. Customizable personal stations will round out the offerings. All on the same app.
It will be a package that offers a mix of stations to keep listeners on the app most of the time.
Over time we expect that all broadcast groups will create similar packages. Ironically, radio will end up pretty much where it was in 1970, but with groups rather than stations fighting over a couple of push buttons.
And broadcast radio will continue to be the dominate source of audio entertainment.