Joe Kennedy, CEO of Pandora, recently bragged that virtually all of Pandora’s growth came at the expense of AM/FM listening.
He reasoned that since listening to CDs, iPods, and MP3 players had increased, Pandora listening had to come from broadcast radio.
Pandora has a propensity to twist facts in the company’s favor that verges on the pathological. However in this case, the key twist should be laid at Arbitron’s feet.
Kennedy pointed to an apparent 5% decline in TSL between Arbitron’s Radio Today 2010 and 2011 reports as proof of his claim.
The problem is that it’s a lie.
Arbitron started changing the way radio is measured in 2008, and the roll-out continued through 2010.
During this period, Arbitron was forced to mingle audience data from two very different methodologies that produce very different estimates.
National estimates during this period are essentially statistical gibberish.
Arbitron pretty much admits it, declaring: Different measurement methodologies can and do produce different results.
Arbitron analyses at the time showed that TSL drops as much as 30% in markets that switch to PPM.
The fact that TSL declined only 5% during radio's transition to PPM suggests just the opposite of what Kennedy claims.
His assertion that Pandora's gains came at broadcast radio's expense is just wishful thinking.
If anything, research shows just the opposite. Pandora's growth seems to have little impact on local radio listening. Online listening appears to be additive radio consumption, not a replacement for broadcast radio listening.
Kennedy's claim that time spent with other audio entertainment is increasing is also demonstrably false, but we’ll save that discussion for another time.
We noted in 2009 that the transition to PPM couldn’t come at a worse time because new-media stakeholders would use the apparent losses as “proof” that broadcast radio is in decline.
Since then, our prediction has become all too true.