The little engine succeeded. It made it over the hill.
This week’s Slacker announcement that it was once again retooling brought to mind the story of the little engine that could. Not because we think it will succeed. We don’t think it will.
No, the story came to mind because we suspect that the venture capitalists who bankroll Slacker must read the story every night to keep their hopes up.
How else can they explain pouring over $65 million into keeping Slacker afloat, with the service no closer to breaking through than when it was just a concept on a beer-stained napkin in 2004.
First it was an Apple wannabe. It invested millions into creating its own player. With a price tag of $200 for a 2GB player, it was over-priced, under-featured, and hopeless.
Needless to say, up against the iPod the player never caught on. You can still buy one at Amazon for $17.
Slacker blew-out its CEO, and refocused its energy into becoming a Yahoo Launchcast/AOL Radio wannabe. It offered 150 curated “radio stations” on a desktop player and mobile app.
There is no more crowded segment of mobile audio entertainment than the generic radio station segment, so you can imagine how that worked out.
Seeing how well Pandora was doing, Slacker again refocused, this time to become a Pandora wannabe, adding music discovery tools to its player.
How’s that doing? Pandora is approaching 90 million registered users, Slacker 26 million.
According to Triton Digital ratings, Pandora has over 230 million session starts a week to Slacker’s 16 million. On average, over half a million people are listening to Pandora compared to Slacker’s 40,000.
You can guess Slacker’s response. Yes, time to retool. Slacker just announced that it will become a Spotify wannabe.
Now for a monthly fee you have access to 8 million songs that you can play on your mobile device. Of course we already have Rdio, Rhapsody, Grooveshark, and MOG, just for starters, and maybe soon the European superstar, Spotify.
There have been more rumors about Spotify coming to the US than Elvis sightings, but if it ever really happens (Spotify, not Elvis returning), then Americans will have another option, all around 10 bucks a month, all with larger libraries than Slacker.
We can guess how that will work out for Slacker.
Slacker is what we call a dabbler. Rather than choose a strategy and focus all its energies in one area-–like Pandora had done until recently, Slacker lives up to its name by dabbling in hardware, curated radio, music discovery, and now unlimited play.
This fuzzy thinking was recently on display in an interview with the Los Angeles Times.
Declaring that Slacker isn't just going after Pandora, that it is also aiming at traditional radio stations, Jonathan Sasse, senior vice president of marketing at Slacker declared:
If you look at where broadcast radio is going, it looks like they're trying to become what online radio used to be. What we're trying to become is what broadcast radio used to be, which is radio that's expertly programmed and tailored to you.
It used to be that when I came to a new town, I'd find an awesome station with a local DJ that talks about the music in my city, the concerts in my city and play some new music.
Radio done right can be really good. And broadcast radio is really missing out, because they've just turned into generic hit machines.
We suggest you reread Sasse’s comments just in case they made sense to you the first time you read them.
This is the Senior VP of Marketing talking to the Los Angeles Times. If this befuddled gibberish represents the level of strategic thinking within Slacker, the service is hopeless doomed no matter how much money is sunk into it.
First, to belittle a successful industry of over 10,000 radio stations and suggest dismissively that it is vulnerable to a heretofore pathetic me-too service displays a breathtaking level of over-confidence and egotism.
If this is the best the marketing VP can come up with, what’s the chance Slacker can develop a coherent strategy for becoming something other than an also-ran? Nil.
To win, one has to first identify the competition, learn everything about their strengths and weaknesses, then find means to exploit their weaknesses while leveraging your own strengths in an original and creative way.
Slacker seems to just not get any of this. How else can a company burn through $65 million and still be so hopeless?
Like their US counterparts, British new-media pundits wrote-off radio some time ago, yet the latest ratings showed UK radio broadcasting posting records in both reach and hours-tuned.
Radio’s continued strength surprised no one in the radio business, but seemingly everyone outside the radio business. Tim Davie of the BBC declared:
It is quite brilliant to see radio reaching a record number of listeners in the digital age. These results speak to the unique quality of radio in the UK and reflect our work as an industry to keep innovating to attract new listeners.
Some reporters stuck with the new-media narrative of growth driven by a dramatic increase in Internet listening, but a look at the actual numbers proves that streaming remains a small proportion of UK radio listening, much like in the US.
UK broadcasters have the advantage of measuring all sources of radio listening simultaneously, so they can see how the various platforms contribute to total listening. This makes it easier to refute new-media spin.
In a January post we asserted that to assess the real state of broadcast listening we have to combine terrestrial listening with streaming, a more difficult task in the US.
We reasoned that total listening must be growing because Arbitron PPM trends are flat, measured broadcast streams are growing, and the majority of streams are not even measured.
If terrestrial broadcast listenership is at worst flat (as Arbitron says it is) and listenership to broadcast group streams is growing (as Ando Media says it is), total broadcast listenership has to be growing, even if we don’t have the actual combined numbers.
The January post was met with skepticism because it runs counter to the new-media promoted storyline that radio listenership is collapsing.
Now we have credible methodologically sound numbers from the UK that support our contention that streaming is expanding broadcast radio listening, not hurting it.
So can we finally get beyond this "radio is dying" meme? It is simply not true. Get over it!
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.
Talkers spend all their time complaining. They react to new competition by whining about all the reasons the new competitor is going to succeed.
Radio doesn’t get it!
Radio is moving too slowly!!
Broadcasters just don’t understand!!!
Doers, on the other hand, focus on their side’s strengths and advantages. They weigh them against the competition’s weaknesses and vulnerabilities. They then set about implementing a strategy to win, confident of ultimate victory.
We can see the contrast between the Talkers and the Doers in how radio people are responding to Pandora.
The Talkers are radio pundits who have all but conceded radio’s defeat. They point to Pandora’s extremely high awareness, exponential growth, its apparent unstoppable momentum and declare radio hopelessly outclassed.
For pundits, the matter is closed. No room for debate. Anyone who disagrees is a relic of radio’s past glories, a digitally ignorant luddite racing towards an analog abyss.
Bob Pittman is a Doer. He doesn’t buy the fatalistic pundit talk.
He understands radio’s strengths. He believes Pandora is a one-dimensional product. He offers concrete evidence that broadcast’s resources are far greater than Pandora’s. He is confident that Clear Channel can successfully compete against digital pure-plays.
So what is punditry’s response? Apoplexy.
Maybe instead of choosing the denial route about Pandora, broadcast radio operators ought to go to school about this brand and what it means to consumers.
How much more evidence do broadcasters need that time is short, and opportunities are fleeting? Exactly what are you waiting for?
If terrestrial broadcasters are going to survive, it won't be by dismissing Pandora. So many broadcasters are resolutely incurious as to the reasons for Pandora's success (sic), and it is that lack of curiosity that some broadcasters may not live to regret.
Pandora (is) the customizable radio service (that) radio people and Bob Pittman love to underestimate.
So what is it that Pittman says that so infuriates pundits?
Here’s a few comments from his recent Los Angeles Times interview:
"The perception is that radio is somehow in trouble. The reality is that we have the same percentage of the population listening to radio as we did in 1970."
Pundits jump all over this and claim that the real issue is TSL. They make every effort to perpetuate the myth that radio TSL has evaporated, but there is simply no credible evidence that it has.
Arbitron looked at PPM trends and found no decline in TSL during Pandora’s meteoric rise. None. Harker Research analyzed both PPM and diary trends and found no evidence that broadcast TSL had been impacted.
In truth, broadcast radio consumption is increasing, not decreasing. Terrestrial usage has remained steady while broadcast consumption by way of streams has grown, something we proved some time ago.
"Pandora is not really radio in that it's not curated. It's more like a playlist that you put on shuffle. They don't have local information or local personalities."
For a service that pundits claim is light-years ahead of broadcast, Pandora doesn't look very sticky.
Of course, Pandora has a high proportion of mobile listeners. As we recently explained, mobile listening hurts TSL. However, even when mobile isn’t included, Pandora still only has an hour of session TSL.
Longer broadcast sessions could be a consequence of radio’s curation and local content. Lack of curation could be Pandora's greatest vulnerability, a point that we made in 2009.
"We have roughly 30 million unique visitors each month to our online radio stations. Pandora has 25-plus million."
Pandora portrays itself as an enormous service serving vast numbers of Americans.
We’ve shown that in fact consumption of Pandora isn’t particularly high, especially when you consider that Pandora consumption is spread across 1.4 billion streams, while broadcast consumption is spread across only 10,000 stations.
"The good news is that we have billions of dollars in advertising revenue from our terrestrial radio business. We can afford to invest and grow our online audience. We have the deep pockets to wait it out."
Last year Pandora billed $138 million. Local broadcast radio stations billed $16,000 million. This last quarter Clear Channel alone billed $650 million.
Do we really need to debate who has deeper pockets and what deep pockets mean in a competitive battle?
"Later this summer, we'll be adding a feature that will let our users build custom radio stations just like they do with Pandora."
This is the point where the pundits’ true colors show. Critics first complain that radio isn’t moving fast enough, but then belittle Pittman for announcing that Clear Channel are building their own Pandora.
As we noted last year in the post Thanks Pandora, We’ll Take it From Here:
Nothing that Pandora does is proprietary. Every aspect of Pandora can be replicated, and ultimately improved upon.
What’s wrong building your own Pandora? Every broadcast group should have their own music genome project. As we pointed out recently, now there’s even an app for that.
It's a long tradition in broadcast radio to watch the competition, copy key elements of what they are doing better, then improve upon it. It has served radio well. Isn’t that what Pittman is doing?
But to give Pittman credit would be an admission that maybe radio isn't brain-dead. That would screw-up punditry's narrative of broadcast's self-inflicted imminent demise.
Pundits want to appear visionary, so they create false straw-man arguments they can easily win. Only they understand the true threat that Pandora presents to radio. That’s why they are much smarter than we resolutely incurious radio people.
What’s surprising is that we at Harker Research don’t run into these clueless radio neanderthals that the critics see everywhere. We work with radio people who are vitally interested in preparing for radio’s digital future.
It’s just that real broadcasters have to keep an eye on the bottom line while doing it.
What too many pundits fail to understand is that the goal of radio’s digital transition is not to find a way to beat one service that bills 1% of radio’s revenue.
The goal is to find a strategy that first protects radio’s piece of the advertising pie, and ultimately helps grow radio’s share.
On this subject, the talkers are strangely silent.
Talkers versus Doers. Time will tell who’s right. We’re betting on Pittman. In this debate, he's the only one with skin in the game.
The overwhelming push-back after the NAB tried to force through a mobile phone FM chip requirement suggests that the proverbial snowball in hell has a better chance of success.
Amateurishly handled, the effort not only failed at its goal, it created a backlash in the form of the Congressional Creativity and Innovation Resolution.
Now with the NAB having to play defense, it unleashes Radio Rocks my Phone, a campaign just as terribly misguided as every other NAB effort on behalf of radio beginning with the unforgettable Radio 2020 effort.
The purpose of Radio Rocks my Phone is to get listeners to demand an FM chip in mobile phones. The NAB wants people to write their representatives.
The notion that listeners will write their Congressional representatives on behalf of radio to force a legislated FM chip solution is the height of radio egocentrism. If people are going to write their Congressmen, it isn’t going to be to demand an FM chip.
As the NAB’s own website illustrates, there are already 34 FM equipped mobile phones.
If radio really wants to get an FM chip on every new phone, it is going to have to find a market-based solution.
Cell phone manufacturers are extremely competitive. If they believe a feature is going to give them a marketing advantage over their competitors, they will jump at the chance.
Microsoft has had a couple of false starts with mobile phones. However, their latest operating system, Windows Phone 7, is getting good reviews.
At the system’s roll-out Engadget noted:
Part of what makes Windows Phone 7 a departure for Microsoft is that the company is taking a much bigger role in dictating what hardware is allowed to run the OS. Microsoft has a very clear picture of what they want these units to be built like.
One of Microsoft’s requirements is an FM chip.
If radio wants an FM chip in every mobile phone, the solution is to make Windows Phone 7 a huge hit. AT&T, Verizon, T-Mobile, and Sprint all sell Windows 7 phones.
Make Windows Phone 7 broadcast radio’s official phone. Use radio's power to help make Windows Phone 7 the new standard mobile feature package.
If the NAB partnered with Microsoft, there would be no need for RIAA back-room deals and contentious legislation.
The truth is Microsoft has a history of supporting broadcast while radio squandered the opportunity.
The company’s Zune was the only audio player to make HD Radio standard. Microsoft got no support from radio, no endorsement, and now the Zune is no more.
Radio has a mobile OS company that makes FM standard on its phones, and radio ought to step up to the plate and help make Windows Phone 7 a success.
The TuneIn software streams Internet radio from more than 50,000 AM and FM radio stations over Wi-Fi or a mobile broadband connection. The Windows Phone 7 version integrates with the handset’s internal FM radio to save battery life or listen to local radio programs.
We have the phone. We have the app. Now all we need is to get radio's persuasive powers behind it.
Partnering with Microsoft and supporting Windows Mobile 7 is far more likely to achieve the goal of putting FM chips in mobile phones than the NAB’s recent quixotic efforts.
It’s not often that we get a chance to see the impact of mobile listening up close. The latest Triton Digital numbers offers us one of those rare opportunities.
For the first few months, only Slacker’s computer-based listeners were counted.
Then sometime around November, Ando began including mobile listeners in the service’s count.
The graph above shows what happened.
The orange line shows the session TSL trend. When only computers were counted, average sessions lasted about 1:45. Now with mobile added, average session length has plummeted to less than 45 minutes.
The green line shows Session Starts in millions. After several months hovering in the mid four million range, Slacker “took off” in November, settling over the 20 million mark.
While some portrayed the 4.5 million to 20 million Session Start gain as growth, it's likely there was very little real growth.
The “spurt” beginning in November simply shows that mobile listening makes up a great deal of Slacker listening. Before November Ando didn’t count it. Beginning sometime in November Ando started.
The warning for those who believe that mobile will be the real breakthrough for streaming is the precipitous decline in Slacker’s TSL once mobile listening was counted.
You can see it in Slacker total consumption measured in hours-tuned.
While Slacker’s Session Starts increased more than four-fold (+355%), total hours-tuned grew less than two-fold (+84%).
What it tells us is that Slacker’s 15+ million mobile users are spending virtually no time with the service. Slacker’s TSL is coming from the service’s computer-based users.
Most agree that streaming growth is going to come from a wave of new mobile users. If that is the case, we will see more Slacker-type growth, lots of new sessions spending little more than a few minutes of drive-by listening.
For subscription-based services, that’s no big deal. A paying subscriber is a paying subscriber no matter how little she listens.
For advertising-based services, it’s a much bigger deal. Very short listening spans are problematic when you’re trying to sell advertisers.
Advertisers want to have some confidence that users are going to see or hear their commercials. The most common way to do this online is to have a pre-roll position, one or more commercials that users have to sit through to hear the service.
The problem is that with short listening spans, all the user will hear is the pre-roll--not a good way to build an audience, or a business.
Vivian Schiller, former CEO of NPR, just won’t give up. An incurable new-media zealot, she just can’t stop talking about the death of radio:
Your continued existence is not guaranteed. The monopoly advantage of the radio tower will begin to fail.
New digital-only startups will enter the marketplace in audio, and you will find yourselves longing for the days when the competition was that public radio station that overlapped with your broadcast signal.
It was a stern lecture directed at public radio stations to get over their reservations about NPR streaming shows and essentially competing against its own member stations.
She has repeatedly predicted the demise of broadcast, going so far as to give a timetable. As we discussed last year in a post, she flatly declared that in five to ten years, Internet radio would replace broadcast radio.
Schiller’s fervor for new-media and her conviction that broadcast would soon disappear led to a feverish push to make NPR available on every platform. Only Pandora has been more aggressive than NPR in making itself platform agnostic, to use her phrase.
There’s an app for every cell phone. Most shows are available via podcasts. As we explained in a 2010 post:
NPR is following the game-plan of those who declare that radio must move faster, lest it miss the digital revolution all together. Today, NPR listeners can find the same quality programming on pretty much every digital device they own.
But apparently she believes that even public radio stations are not moving fast enough:
If you don't aggressively reach out to new audiences on new platforms, someone else will. There is no such thing as lasting media loyalty. Public radio needs to "let go of the nostalgia" of the craft.
Perhaps Schiller has been so busy trying to save her job these last few months that she hasn’t kept up with NPR research.
It turns out that despite NPR’s tremendous effort to make its products available everywhere, only 2-5% of NPR’s listening is on some platform other than that quaint old obsolete radio tower she rails against.
Despite computers, iPhones, Blackberries, Androids, and iPads, more than 95% of NPR’s listening continues to be done through the broadcast signals of public radio stations.
Nostalgia of the craft, whatever she means, is not the reason.
The contrast between Schiller’s dismissively strident contempt for broadcast radio and the continued use of local broadcast stations on the part of nearly all her listeners should be a warning to both public and commercial operators alike.
Don’t listen to the siren song of new-media zealots. Listen to your listeners. They will tell you when it is time to tear down your broadcast towers.
Radio people (a group of which Shiller is not a member), may have nostalgia for the craft, but it is nostalgia recognizing the power of radio. Public and commercial broadcasters serve well over 300 million listeners every week, NPR 26 million alone.
Vivian Schiller was to NPR what David Rehr was to NAB. Both were leaders who never fully understood the power of broadcast radio, and consequently pursued misguided goals.
Take a close look at this shot of Toyota’s Entune infotainment screen courtesy of engadget (click to enlarge). Of course Pandora is there, but look just above it. You’ll see iheartradio.
As reported some time ago, when Toyota rolled out Entune, all the headlines were about Pandora's coup. Few stories bothered to mention that Clear Channel had also cut a deal, and iheartradio would be on the screen as well.
At the time we observed that:
Apparently it hasn't occurred to writers that an Internet equipped car means that drivers can also listen to alternatives to Pandora including the streams of local radio stations.
As the screen shot illustrates, Pandora’s lead in securing screen real estate will fade as mobile streaming becomes more common and more apps compete for space.
The digital dashboard will open up opportunities for all streaming radio stations including local radio stations.
As we pointed out in January:
Broadcast radio groups are well positioned to capitalize on Internet radio's development. Pandora might seem to have a tremendous lead in mobile streaming right now, but this will turn out to be another tortoise and hare story.
And don't forget, the tortoise won that one.
Inside Radio solemnly declared:
The Consumer Electronics Show signaled the imminent arrival of the mobile broadband car. For radio to remain competitive in tomorrow’s digital dashboard, a faster industry-wide push towards digital is needed.
Yes, coverage of CES focused the digital dashboard, as bacchalian boosters celebrated the announcements by Ford, Mercedes, Hyundai, BMW, Buick, and Toyota that at least some of their cars would be wired for broadband.
Once again Pandora ran promotional circles around its competitors by grabbing all the headlines. While Clear Channel’s iheartradio will be a featured app in Toyotas along side Pandora, you wouldn’t know it from the press coverage.
A recent USAToday press release story gushed about Pandora’s success and goals:
Westergren's goal: Pandora in every vehicle. "We think that 50% of music listening is done in the car," he says. "That's a huge market that we haven't been able to be part of." Westergren says half the company now is focused on advertising and expansion to autos and other devices.
Apparently it hasn’t occurred to writers that an Internet equipped car means that drivers can also listen to alternatives to Pandora including the streams of local radio stations.
How else explain this feeble Forbes analysis of Pandora’s impact on CBS:
Pandora is now pushing into the drive-time radio market. Traditionally, this market has been dominated by larger radio services like CBS. But can the stalwarts withstand Pandora's push?
Here’s Consumer Reports’ reaction to Ford’s MyFord Touch system:
None of the options works as well or is as easy to use as old-fashioned knobs and switches, and they can be more time-consuming and distracting to operate. First time users might find it impossible to comprehend.
The center screen’s cluttered pages, tiny buttons, and small fonts make choosing the right spot to touch difficult. (Speaking of voice control) Synch isn’t perfect, so you might find yourself uttering some words not found in the system’s vocabulary.
Apparently things are so bad that Ford has begun offering 45 minute sessions on how to operate the system. This from Engadget:
Some folks, folks who apparently didn't spend their childhoods mashing thumbs into D-pads, are finding it all a little confusing. Many dealers now offer tutorial sessions that owners of Touch-equipped cars can attend, a 45 minute thrill ride that'll let you and your salesman get just that much closer.
As we recently wrote, people adopt a new technology only when they find it solves a problem. The Ford story shows that it is also true that people resist a new technology when it creates bigger problems than it solves.
Noting Pandora’s push for in-car listeners:
The majority of drivers place a higher value on convenience than capability in a car. The average commute is less than an hour, the average errand by car considerably less.
The likelihood that you are going to plug in your iPhone, navigate to the app of your favorite music service, launch it, and then select a stream in the 15 minutes it takes to drive to the grocery store to buy milk is small.
Ford’s MyFord makes listening to streams even more complicated than just plugging your iPod into an auxiliary jack.
One day voice controls will work better, the screens will be easier to use, and people will get used to digital dashboards. However, it will take years for this to happen.
By that time, the entire Internet radio landscape could change.
Broadcast groups are not standing still. Inside Radio today quotes Bob Pittman declaring, “The whole digital world is an untapped opportunity for explosive growth.” He notes, “You’re going to find adaptive radio becoming a feature on a lot of streaming properties.”
We have repeatedly noted that broadcast radio groups are well positioned to capitalize on Internet radio’s development. Pandora might seem to have a tremendous lead in mobile streaming right now, but this will turn out to be another tortoise and hare story.
Tell a media pundit that broadcast radio is growing and you’ll be met with howling laughter. You’ll be dismissively told that everyone knows that broadcast is on the ropes, that no one listens to radio anymore.
Then insist you have proof and the laughter will turn to hostile derision. It can't be true! Yet the true picture is clear and unequivocal:
Total broadcast radio listening is growing.
As surprising as it might sound, it is true and easy to prove. It is also easy to explain why so many pundits believe the opposite.
People listen to broadcast radio stations two ways. The majority listen the traditional way, tuning to the terrestrial signal. A small but growing number of people listen to the Internet streams of these same stations.
To determine the real strength of broadcast radio, we have to combine these two audiences. Unfortunately, it turns out to be harder than you might think. The two audiences are measured by two companies and reported differently.
Terrestrial radio is measured by Arbitron. The company ranks individual terrestrial broadcast stations by share in separate distinct geographic metro areas.
Streaming radio is measured by Ando Media. The company measures streams by counting IP addresses "tuned" to the Internet streams of these same stations. The company aggregates the data across stations within groups irrespective of the location of the station or the IP address of the user.
As a result, we have national numbers for broadcast group streams, but local numbers for the broadcast signals of the individual stations that make up the broadcast streams.
For example, if you want to know how Citadel Broadcasting radio stations are doing, you can go on the Arbitron web site and find market shares for each of the company’s radio stations. Unfortunately, it won’t tell you anything about how large the company’s national audience is, and there’s no way to convert the local numbers to national numbers using the web site.
If you go on the Ando Media web site you’ll find Citadel radio station streams listed in a monthly domestic ranker as one group.
There are no publically released ratings that show how Citadel radio stations are really doing nationally taking into account both the terrestrial and streaming numbers.
The lack of publicly released national broadcast radio ratings is true for all radio groups, but more critically extends to the broadcast industry as a whole.
The absence of a single national measure of broadcast radio usage guarantees that broadcast listenership will look much weaker than it actually is. It also means that if and when listeners replace their terrestrial listening with Internet listening, the transition will be interpreted as a decline in broadcast listening.
The lack of a single national measure also allows pundits to cite faulty and fatally flawed research to support their claim that broadcast radio is in decline. Combine that with a steady stream of self-serving press releases from new media stakeholders who selectively report misleading listenership numbers, and it is easy to understand why so many people believe broadcast is declining.
Arbitron recently looked at listening trends in the largest US markets and concluded that broadcast radio listening was steady, even growing in some demographics. And that’s just looking at the terrestrial signals of broadcast stations. This is consistent with a Harker Research analysis.
Ando Media rating trends show that broadcast radio’s streaming audience is growing, nearly 20% in just the past six months.
If terrestrial broadcast listenership is at worst flat and listenership to broadcast group streams is growing, total broadcast listenership has to be growing, even if we don’t have the actual combined numbers.
The reason we need a single combined number is that it tells us how much it is growing, and gives us a useful metric to compare broadcast to pure-play Internet streaming services.
We’ve shown in previous posts that both Arbitron and Ando Media audience ratings can be converted into hours of consumption. We could use this calculation to create a national "rating" for broadcast radio if we could get both company’s cooperation.
First, we need Arbitron to publish national numbers like they once did. Prior to PPM, Arbitron published national ratings each quarter, and promised to resume once PPM was rolled out. So far, they haven’t done so.
Then we need Ando Media’s cooperation.
The company needs to publish a combined broadcast stream rating consistent with Arbitron’s so we can see how much more listening the streams adds to broadcast listening.
The streaming numbers will be incomplete because unlike Arbitron that publishes ratings of all radio stations regardless of whether they subscribe (pay money) to Arbitron, streaming services have to pay Ando Media to be included in the ratings. It means that some broadcast streams would not be included, but at least the major groups would be.
If this were done, it would quickly silence broadcast radio’s critics and new media pundits because we would then be able to see the size of broadcast’s total audience--and its lead over pure-play streaming services–even Pandora.
So it is up to Arbitron and Ando Media to collaborate and finally answer the question: How fast is broadcast radio growing?
“(In-car listening) is the holy grail for us,” says pandora founder Tim Westergren. “We just have to figure out a solution to get Pandora into cars that’s as easy as radio is now.”
Bloomberg declares: Pandora needs a foothold in cars to challenge traditional radio and attract more advertisers.
Variety warns us that:
The attempt to break onto car dashboards is a stab at the heart of AM/FM radio, which, while still dominant in the field to the tune of 90% share of all radio listening, has seen troubling signs in the behavior of young consumers.
(The author then goes on to cite the discredited Edison Research study that Arbitron and the Southern California Broadcaster’s Association showed is just plain wrong.)
These two new articles join a growing pile of speculative stories on how Pandora might now finally be ready to put a dent in broadcast listening.
While these stories are PR disguised as news, they inadvertently reveal that while Pandora is a spectacular success in the context of streaming services, it is a minor player in the broader context of radio listening.
Will Pandora’s assault on in-car listening hurt broadcast?
Radio’s dominance in the car has been under assault since the 8-track tape. Each new addition to in-car entertainment has had the potential to hurt broadcast listening, yet none has had much of an impact.
Satellite radio was designed to challenge broadcast for in-car listening. After a near bankruptcy and bale-out, merger, and countless upbeat predictions by Mel Karmazin, Sirius XM finally passed 10 million subscribers, less than 4% of the registered vehicles on the road.
While Sirius doesn't PPM encode and therefore cannot be measured by Arbitron in large markets, in diary markets where listeners can still report their satellite listening, there’s hardly any.
Pandora is already on after-market Pioneer and Alpine car radios. Ford’s Sync features Pandora. Mercedes is rolling out an iPhone app that will one day enable Mercedes drivers to cordlessly listen to their iPhone through the car’s entertainment center.
The problem for Pandora is that these systems are more expensive and complicated than radios. Today a driver can hop in the car, flip on the radio, and within seconds be listening to information and music coming out of the speakers.
Need the latest traffic report? Turn on a news-talk station. Bumper to bumper traffic? Hit the scan and find some music while you’re staring at the brake-lights ahead of you.
The majority of drivers place a higher value on convenience than capability in a car. The average commute is less than an hour, the average errand by car considerably less.
The likelihood that you are going to plug in your iPhone, navigate to the app of your favorite music service, launch it, and then select a stream in the 15 minutes it takes to drive to the grocery store to buy milk is small.
But fast-forward a few decades to the future envisioned by new-media boosters when most cars will have a high speed internet connection, and radio apps reside on the built in entertainment console of most cars.
Do you really think Pandora is going to be the only app on the dashboard? Not a chance.
We have frequently pointed out that broadcast groups are the best positioned to capitalize on the migration of listeners to online listening. By the time a significant number of drivers begin listening to radio streams in their car, broadcasters will be there.
In fact, it is already happening. Toyota just announced a mobile deal with Clear Channel to integrate iheartradio with some Toyota vehicles beginning next year.
Of course, the hovercraft is an impractical hypothetical option, but if you were asked in a hypothetical way which you would prefer, you might choose the hovercraft. Why not?
This speculative approach is Belief Driven Research. It is research designed to give the illusion that one's viewpoint is true even when there is little proof it is.
If you are a strong supporter of hovercraft and you want to prove their popularity, do some research. Just make sure the questions are designed to persuade participants that hovercraft are a great idea.
Which brings us to Internet radio in the car.
A new piece of research making the rounds recently "proved" that a third of drivers would listen to Internet radio rather than local broadcasts if they had Internet access in their car.
The research question that proved this is a classic example of belief driven research. Here’s the question asked:
If tomorrow you could get Internet access from the dashboard of your car and you could listen to thousands of stations from all over the world through an Internet receiver on your dash as easy to use as your radio, would you (a) Listen less to my local radio stations as I explore new ones online, or (b) Listen just as much to my local radio stations no matter what's online.
The question is designed to influence the response by over-selling the desired outcome.
Given the phrasing, of course people are going to be interested. As easy as listening to local stations? Thousands of stations? From all over the world? Sure, sign me up!
If there’s a downside, the question doesn’t mention it.
By emphasizing the positive aspects of Internet radio, and ignoring the negative aspects, the authors of the question are manipulating the outcome to show support for Internet access in the car.
A more objective effort to determine the interest in Internet access would mention both the advantages and disadvantages.
Mentioning up-front costs and a continuing subscription fee would offer the participant a more realistic choice, but it would drive interest down.
The notion that the driver could listen to thousands of stations as easily as listening to local stations is also a bit of wishful thinking, but is portrayed as a given.
As we recently wrote, the average listener has little interest in listening to stations from around the world, let alone while driving to work.
Perhaps that is why despite the absence of a balanced description of in-car Internet only a third of the participants chose Internet radio over local radio.
Presented with the disadvantages, the numbers would have been even lower.
The survey question that followed is just as manipulative. The question asks:
Which would you rather have a radio in your iPod or mp3 player or an Internet radio and access to thousands of stations in your car.
This is an odd, confusing, and arbitrary choice to present to participants. First, are we talking about an iPod like the Touch with Wi-Fi, or just a music player? Why not include iPhone and Android phones?
Are we talking about radio apps to listen to streaming stations or the FM chip?
The question is clearly selling the Internet radio option and downplaying the iPod option. Why else emphasize the thousands of stations aspect of the radio?
Despite selling the in-dash option, only 58% chose it over the iPod suggesting that the in-dash Internet radio is far from a slam-dunk.
These questions were not designed to objectively look at the future of in-car entertainment. They were created to support a belief about the future, and give the illusion that the belief is based on research.
Internet enabled cars are not exactly flying off the showroom floor. US car sales are a little over 11 million a year, and Ford has sold about 2 million Synch equipped cars since 2007.
What consumers are buying is a far more accurate indication of intent than a study with hypothetical questions. As the author of this study once observed:
The difference between opinions and behaviors is the difference between a poll and a vote. Dewey, meet Truman. This study is, in other words, fine for publicity - and that it certainly got. But it changes nothing and means nothing and is, in a word, wrong.
In this case, we agree with him.
In an upcoming post we’ll look at a different misuse of research, mischaracterizing the research of others to advance the new-media narrative.
While people can now listen to thousands of streaming online radio stations, hundreds of channels on services like Rhapsody, and over a hundred channels on satellite in addition to local radio, the number of radio stations people listen to in a typical week has hardly grown.
Technology has created a virtually limitless source of audio entertainment for listeners. However, a new technology doesn’t always change the way people behave. People adopt a new technology only when they find it solves a problem.
Few people are yearning for more radio options. Few listeners need thousands of streaming stations or hundreds of satellite channels.
As it turns out, there is little relationship between the number of stations available to a listener, and the number of stations a listener regularly tunes to.
The number of radio stations a person uses is based on need, not availability.
Most people listen primarily to two or three stations. They occasionally switch to other stations, but they have two primary stations they return to time and time again.
The graph at the left shows the average number of radio stations people listen to in three different size markets. The largest market has over twelve times the number of choices as the smallest market, yet the average number of stations barely increases.
Has the explosion of digital options changed this relationship? A lot less than you might think.
While Sirius XM boasts over 150 channels, most subscribers use fewer than seven channels and listen primarily to just two or three.
Listeners of online services show a similar pattern. While one could conceivably listen to hundreds of streaming stations from around the world, most people gravitate to one service and listen to a couple of channels within it.
Listeners regardless of whether they prefer broadcast, satellite, or streaming ultimately settle on a handful of outlets that they tune to time and time again.
This is one reason so few people have abandoned broadcast for digital. The average listener only needs two or three stations to be reasonably satisfied.
A second reason relatively few listeners have replaced local listening with digital options is the convenience of broadcast.
For many listeners, digital just isn’t worth the extra effort.
The days when listeners sat in rapt attention staring at the radio are long gone. Radio is a service that is primarily consumed passively while doing other things. Today radio is background, an accompaniment to other activities.
(As an aside, academic research has shown that radio advertising works despite the secondary nature of the consumption. People are generally involved in a visual activity while they listen, so as an aural medium, radio still cuts through.)
Yes, for a small segment of the radio audience, listening is a much more foreground activity. These are the listeners who have embraced digital. They are young with time on their hands. They have considerable interest in music discovery--just like their parents before them.
Because radio is primarily an accompaniment, most listeners don’t want to work at finding something to listen to. The reason that broadcast radio continues to be the overwhelming choice for most people is that it is simple.
You turn the radio on, scan quickly to find something acceptable, and leave the radio alone. As Nielsen recented demonstrated, broadcast listening even among teens has shown little decline. There are times when the simplicity of broadcast appeals to even teens.
Listeners gripe about commercials and hearing the same songs over and over, but the “costs” involved in finding another station often outweigh the benefit.
Now with thousands of digital alternatives, the cost of seeking a better choice is even greater, too great for the majority of listeners. It’s just not worth more than minimal effort to find something intended to be background.
The reason is that few people are willing to invest the money and time necessary to use them. Table top Internet radios promise access to tens of thousands of audio sources, but the effort required to program them just isn’t worth it for the majority of listeners.
We find that the majority of listeners don’t even have all their car radio buttons programmed.
Android and iPhone radio apps offer greater convenience than computers and appliances, but they too present complications that most listeners don’t want.
People primarily use mobile phones to communicate. People use a smart mobile to text, email, and occasionally have a conversation. It is just easier to turn on a radio.
Again, while some listeners are willing to endure the inconvenience to have the control, the majority of listeners just want some background music.
Online radio has to become a lot more convenient before the majority of people are willing to abandon something that has served them very well for their entire life.
Would you like to look into the future to see what radio will become if broadcasters follow the advice of their harshest critics, the critics who say that radio is moving too slowly?
Look no further. The one organization that heard the digital herald calling most clearly was National Public Radio...I mean NPR. (They don’t want people using the R word when referring to them.)
NPR, under the leadership of NYTimes.com alumnus CEO Vivian Schiller, has pursued an aggressive agenda preparing for a digital future:
We are agnostic about whether somebody listens over broadcast or listens to the exact same radio stream on the Internet.
As younger generations are consuming content on their cellphones or on their iPhones or on their iPads or on their Android phones or whatever, we want to make sure that we're there. So it's very important for us to be on every platform.
So NPR is following the game-plan of those who declare that radio must move faster, lest it miss the digital revolution all together. Today, NPR listeners can find the same quality programming on pretty much every digital device they own.
Why the rush? Because Ms. Schiller thinks broadcast radio will be history in as little as five years:
In the next five to 10 years, Internet radio will take [the broadcast tower's] place, and there's no reason why we should be fearful about it. In fact we should embrace it, especially on mobile. Mobile is the second coming of radio. It has been a godsend for us, because mobile devices are so easy to take with you, and you can listen to any stream you want.
NPR's Audience Insight & Research group recently analyzed hour by hour broadcast, web, and mobile audiences to see how the three audiences vary through the day. You can find their analysis on the NPR research web site.
We looked at three key hours, 7:00 a.m., 12:00 noon, and 5:00 p.m. We graphed the number of broadcast, web, and mobile listeners separately during the three hours.
Based on their data, a whole lot has to change in a short period of time if Ms. Schiller’s predictions are to come true.
NPR’s digital audience is a tiny fraction of the organization’s total audience.
Despite the availability of NPR on virtually every digital device whether it be computer, iPhone, Blackberry, iPad, Android, or almost any other, only 2-5% of NPR’s audience is listening to the digital product in mornings, midday, or afternoons.
To hear Ms. Schiller speak, one would think that the death of broadcast radio is right around the corner. Yet to match NPR’s broadcast audience, the organization’s digital audience has to grow well over 2,000%! Even Pandora isn’t growing that fast.
NPR has reached radio’s digital utopia with its programming available on every possible digital platform, yet 95% of NPR listenership is still broadcast. Maybe NPR is National Public Radio after all.
What does the slow adoption of digital platforms on the part of NPR listeners say about the digital future of broadcast?
If NPR’s affluent well-educated tech-savvy audience is still overwhelming analog after NPR’s tremendous investment in digital, what is the chance that commercial stations will soon see a significant migration of listeners to digital?
None, certainly not in the time frame Ms. Schiller is predicting.
In a recent post we wrote that people who most confidently predict the future rarely fully understand the present.
The hyperventilating broadcast critics who tell radio that the sky will fall unless broadcasters abandon their analog ways need to first explain NPR’s overwhelmingly analog audience.
They need to explain why an organization that followed their advice and rapidly mobilized for a digital world is still primarily a group of FM radio stations.
Before declaring radio hopelessly out of touch by not rushing to embrace this brave new digital world, explain National Public Radio.
Technorati Tags: Blackberry, broadcast radio, commercial radio, FM radio, Harker Research, internet radio, iPad, iPhone, mobile app, mobile application, mobile radio, National Public Radio, NPR, smartphone
You may be used to seeing this sort of headline at RadioInsights, but this is the headline over at Digital Music News, not the sort of source you’d expect.
It’s based on a massive cross-media consumption study conducted by Ofcon, the U.K.’s independent regulator and competition authority for the country’s communications industries.
The report is useful for two primary reasons. First, it examines a wide range of media and activities, more than done in most studies. Secondly, it was done by a regulatory agency, not by a new-media stakeholder that might be interested in coloring the conclusions.
Of special significance to radio is the finding that radio listenership (TSL) has fallen 2% annually since 2004. Daily TSL dropped from 188 minutes to 170 minutes over the five years. The latest estimate works out to be 19.8 hours per week.
You'll recall from a recent post that we estimated TSL in the US dropped 1% last year. The Opcon study is further evidence that broadcast TSL is dropping at a much slower rate than many people think.
Digital Music News reproduced one interesting graph from the study shown at the left. It shows media consumption through the day with television and radio representing a good share of consumption, particularly during morning and afternoon drives.
We want to draw your attention to another graph shown later in the report. It illustrates shared media usage. People are naturally multitaskers. People often leave the radio or TV on while on the computer, for example.
Unfortunately, most studies examine only one medium at a time. One study might tell us how much time people spend on the computer. Another study might determine radio listening. What we rarely see are studies that show how much time people spend (say) listening to the radio while working at the computer.
Years ago when there were few U.K. commercial radio stations, media consumption patterns differed somewhat from US patterns, but more recently commercial radio in the UK has caught up with American broadcast radio. Consequently, the study is a useful read for American radio broadcasters. You can download the PDF here.
If a person doesn’t understand the present, what chance does he have to understand the future?
The future of radio is a case in point. We hear a lot about how radio is falling behind and has to quickly adapt.
We’re told broadcast radio will soon fade away. No one will be listening over-the-air. Everything will be streamed, streamed to your car, streamed to your iPad, maybe even streamed through your refrigerator.
No one will own music anymore. Apple will own every song every recorded (except the Beatles) and we will all stream from Apple’s cloud. (And it really will be a cloud, because Steve Jobs will create his own iAtmosphere.)
Pandora will have 300 million registered users. Their $10 billion IPO will be a great success, and they will buy Clear Channel, CBS, and Entercom so they can turn them over to all the artists they’ve snubbed by refusing to play their music.
See how easy it is? Predicting radio’s future is easy. You can pretty much make up anything short of little green people, and no one is going to question you.
The hard part is explaining the present.
We recently pointed out the disconnect between what pundits say about the health of local radio, and the reality.
There is no credible evidence that people are abandoning broadcast radio. None. Yet we hear time and time again that radio is dying because it isn’t embracing new-media.
If radio isn’t dying--which it isn’t, then what does new-media have to do with local radio's health?
Based on the logic of those crying wolf about radio’s slow response, one can make the argument that maybe local radio is healthy because of radio’s slow response.
We believe a digital strategy is essential for radio, but not because radio is dying. It is essential because radio’s convenience and ubiquity has always been its greatest strengths. A digital strategy will simply keep it that way.
So next time a new-media salesman offers his vision of the future, and tells you why radio needs his services, ask him to explain the present.
What is the essence of radio’s continuing success?
If he really understands why despite all the new alternatives that 93% of Americans continue to listen to broadcast radio every week, and they continue to spend over 17 hours a week listening to it, then pay attention to what he has to say.
If he sputters a bit and then starts talking about how little time radio has to adapt, walk away.
Using Chris Anderson's 2006 book The Long-Tail: Why the Future of Business is Selling Less of More, proponents have argued that the growth of long-tail online radio would destroy commercial radio.
Listeners would no longer be hostages of big commercial radio groups playing the same few songs.They could now break those shackles and find online radio stations that play their favorite music regardless of how obscure their taste in music might be.
We first raised doubts about the financial viability of long-tail radio in a January post, where we shared the findings of a study that showed that despite access to millions of different songs on sites like iTunes, the majority of people download the same few songs.
Since that post, more and more evidence has surfaced confirming our doubts.
Most people buy the same albums
Recent data on album sales suggest that greater access to a wider range of music doesn’t change the fact that most people buy the same albums.
At the recent New Music Seminar, it was revealed that of the 98,000 albums that sold at least one copy last year, only 2,058 sold 5,000 units, 1,319 sold 10,000 units, and only 85 sold 250,000 units.
In other words, 98% of last year’s albums sold fewer than 5,000 copies.
A very small proportion of the songs released each year are hits. At least one person out there loved each of those 98,000 albums, but only 1% of those albums were popular enough to become mega-hits.
Pandora continues to add users while playing few songs
Streaming services have song libraries in the millions. For example, Rhapsody has a library of over 9 million songs.
Pandora just celebrated reaching 60 million registered users. It manages to give the illusion that every one of those 60 million users can listen to a personalized music channel, just for them.
They manage to do it with a library of well under one million songs, less than one-tenth of the songs available on Rhapsody. On top of that, the library isn’t much bigger than when the service had half as many users.
A library well under one million songs serving 60 million users means that a large number of users have a personalized station that sounds pretty much like a lot of other people’s personalized station.
While Pandora generates mostly rave reviews, Indie music people are less than excited about their approach, complaining that Pandora doesn’t explore new music very deeply. And it’s true. Most new music submitted to Pandora for addition to their library is rejected.
Rather than exploit the long-tail opportunities of personalized radio, Pandora has taken a very conservative approach, playing the hits. The service’s growth seems to suggest that users don’t miss long-tail songs.
A Hit is a Hit is a Hit
One more confirmation of the myth of long-tail radio is the evidence that radio hits are download hits, which are social network hits, which are YouTube hits.
BigChampagne is a media tracking company. They decided that the traditional Billboard charts based on sales were obsolete. They decided to design a new chart that took into account many more measures of a song’s popularity, things like activity on social networks, YouTube video rankers, and any other place people were exposed to music.
Their Ultimate Chart would break the shackles of 20th century thinking and finally give us a 21st century tool to find out what today’s digital generation really likes. And what does the chart tell us? Did it finally confirm that music tastes are much more diverse than radio exposure would indicate?
According to NPR:
If indie music lovers were hoping that some of their standard bearers carried weight on the web that didn't translate to charts like Billboard, they're out of luck so far. It turns out the Ultimate Chart is not all that different from the actual Hot 100, though for the week ending July 13, Shakira's "Waka Waka" snuck on and Internet King Justin Bieber flexed his way into the top five. You can also search by artist; no surprises there either.
Shakira and Justin Bieber. Couldn't have seen that coming. So no long-tail on social networks either.
Has the Internet proved that tight playlists are a liability? No. Should radio stations continue playing a tight list and ignore those complaints that you play the same songs over and over? Yes.
There’s a reason big radio dogs wag a short tail. That’s what listeners want.
In George Orwell’s novel Nineteen Eighty-Four, the English language is replaced by New-Speak with the goal of eliminating words that authorities believe might lead to Thoughtcrimes, thinking the wrong thing.
One character declares, It’s a wonderful thing, the destruction of words.
Radio is witnessing its own devolution into Orwellian Newspeak as the word radio fades from radio.
The purging has been going on quietly for some time as radio companies re-brand themselves as media companies, but it grabbed the headlines recently with two announcements.
The first came from Washington, D.C.’s WTOP. With the Program Director declaring, “We’re not a radio station,” the station banished the word radio from its branding.
The second announcement came from National Public Radio, which declared that henceforth it would just be NPR, erasing any mention of radio from its name.
We’ve noted NPR’s hostility towards broadcast in the past. This appears just another step towards the organization’s ultimate goal of eliminating the pesky problem of having to deal with affiliate Public Radio stations around the country.
Apparently some in this business believe that thinking of radio as radio is an Orwellian Thoughtcrime.The crime is lack of vision, not seeing the business in its broadest sense, on the Internet, on cellphones, downloading podcasts, and when all else fails transmitting over the air.
Let’s think this through.
Last year 96.5% of local radio’s revenue came from broadcast. Only 3.5% came from online. SNL Kagan’s latest guess is that online revenue might grow another 15% this year.
The graph at the left illustrates the range of estimates for online revenue growth for the next ten years. A decade from now, online revenue will probably still only contribute 7-16% of local radio’s revenue. Read about newspaper’s futile efforts to replace print revenue here.
No radio station stream audience comes close to its broadcast audience. The vast majority of listening is done the traditional way, using a radio. Even the majority of those who listen online from time to time continue to spend more time listening with a radio.
WTOP has a cume of 1.3 million and according to Quantcast averages less than 0.1 million web visitors. Is it more a broadcast radio station or a streaming audio station? What proportion of your listening is through the web?
Radio is a reference to broadcast that is instantly understood, universally consumed, and strongly linked to broadcast stations. If broadcast didn’t already own the term, it would have to invent it.
Does anyone think that the phrase multi-source audio is cooler than radio?
Broadcast should be defending its brand of radio like Keenex defends its brand of tissues, not tossing the term away.
Isn’t it curious that while stations have become self-conscious of the word radio, new-media is embracing the word radio along with its visual images?
To be thought of as radio is the dream of streaming services. There’s a reason Pandora calls itself Pandora Radio.
And the attempts to coopt radio imagery don’t stop there.
Take a look at Verizon’s new Rule the Air logo. It is a retro-looking radio tower. Apparently the people at Verizon think radio towers are cool.
Can you imagine a radio station using a logo like this today? The new-media pundits would pummel the perpetrator for such out-dated imagery.
Most people laughed when Prince became The Artist Formerly Known as Prince. You see where that got him.
Now the joke is on radio. We’re becoming The Medium Formerly Known as Radio.
Because of the changes, we really only have seven months of somewhat comparable numbers. Despite the limited data, we’re already starting to see that the differences between broadcast and Internet are more than just the way the services are delivered.
We noted the latest change to Ando Media’s methods the other day. In the past the company counted listening spans of any length. Now Ando Media only counts listening spans less than twenty-four hours.
The latest change ought to have a negative impact on TSL, time spent listening--while providing more realistic numbers.
We looked at the top 10 services at the beginning of the year and compared their February TSL under the old rule, to their March TSL under the new rule.
Out of the top 10 services in Ando Media’s ranker, seven lost TSL in March. As the graph above shows, Pandora and Clear Channel lost the most TSL, 11% each.
Citadel, Radio One, and AccuRadio actually gained TSL despite the rule change.
The top 10 services started the year with a combined TSL of 18.7 hours, and by April the group’s TSL had fallen to 16.4 hours, a 12% decline.
Pandora stands out because when it first appeared in the Ando Media ranker in September of last year, it had the distinction of having the lowest TSL of any service in the ranker. In the seven months since, it has continued with that distinction, actually losing TSL every month since.
If you’ve followed the service’s growth, you know that registered users have skyrocketed. Total sessions have nearly tripled, and average sessions have more than doubled.
But what about that TSL?
Broadcast program directors understand that with most formats there is an inverse relationship between cume and TSL. Generally speaking, formats that attract large audiences (like Top 40) generally have lower TSL, while smaller cuming stations have longer TSL.
Is Pandora’s meteoric growth in users behind the declining TSL?
Were Pandora a top ranked mass-appeal broadcast station, we would expect low TSL. However, the service shares more characteristics with a small audience niche broadcast station with above-average TSL.
Pandora is a service that provides individually customized stations, in their words:
The result is a much more personalized radio experience stations that play music you'll love - and nothing else.
A service that creates personalized radio for each user ought to have high TSL. Consequently, the service should be able to rapidly grow users and see no decrease in TSL, especially given that its TSL is considerably smaller than the streams of broadcast groups.
A possible explanation is the growth of mobile. Mobile user are the fastest growing segment of Pandora’s user base. It stands to reason that TSL would decline as the proportion of mobile users increases.
While Pandora’s TSL was already declining before mobile users were counted, it doesn’t preclude mobile having a negative impact.
If mobile users spend less time with Pandora than computer-bound users, then the service’s TSL should continue to decline as smartphone penetration increases. That could become problematic for a service selling advertising.
Right now with everyone focused on Pandora’s rapid growth, the continuing decline in TSL hasn’t gotten much attention.
New well-marketed stations have always enjoyed a honeymoon period during which rapid growth concealed fundamental flaws. Over time the flaws invariably caught up with the station.
We suspect this is one rule that the Internet will not disprove.
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