Radio InSights

Nielsen to combine TV, online ratings

Nielsen to combine TV, online ratings

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Is PPM Anti-Personality?

Radio personality and job stability are two phrases that have rarely appeared in the same sentence. Most morning personalities have a resume' longer than that of most college coaches.

 

Short stays have always been part of a developing talent’s education. Bouncing from station to station was the price one paid on the way to the big time. Today, however, holding down morning drive in a major market is a tough job. The list of major market talent on the beach is long and growing: Steve Dahl, Jonathan Brandmeier, J.C. Corcoran, Dave, Shelley, and Chainsaw, Jeff & Jer, Deminski & Doyle  to name just a few.

 

In most of these instances, the transition to PPM seems to have played a role. Strong morning drive numbers in the diary have been replaced with lower (and sometimes dramatically lower) PPM numbers.

 

As the role-out of PPM continues, morning drive people have reason to be a little nervous. Is PPM anti-personality? Did PPM just reveal the weaknesses of the sacked morning personalities, or does PPM unfairly punish morning personalities?

 

The first challenge PPM presents is lower morning drive listening. Diary TSL in most markets runs about five to five and one-half hours. The markets that have switched to PPM now have about three to three and one-half hours of listening. Two hours of morning drive listening has evaporated with PPM.

 

Adding to the problem is that PPM panelists seem to wake up later than diary holders. The greatest losses are in the first couple hours of morning drive. By 9:00 a.m., TSL of diary and PPM books are about the same.

 

Interest in talk is greatest in the first few hours of morning drive and declines in the later hours. Many people who prefer talk over music first thing in the morning are looking for music by the time they get to work.

 

It is bad enough that Time Spent Listening has declined by a third, but to add insult to injury, PPM cumes are higher. This means that the lower TSL that remains is spread across more stations. According to PPM, listeners are spending very little time with any one station. PPM panelists appear to listen to stations just a few minutes at a time. It is not unusual to see stations getting the majority of their morning drive quarter-hours one at a time. In other words, the PPM is registering a total of five minutes listening during most listening incidents.

 

Questions remain regarding the accuracy of PPM. Some critics believe participant panels are too small. They note that AQH and share are calculated based on a very small proportion of active panelists who actually carry their meter. Unfortunately, most personalities won’t get very far with their general manager rationalizing low numbers with methodological explanations.

 

The goal of a morning show has to be to produce ratings regardless of measurement issues or problems. PPM may be flawed and unfairly punish personality radio, but personalities have to understand that the game has changed. The personalities that survive will be the people who adapt.

 

We at Harker Research have studied morning shows for over thirty years. We’ve used Real Time Analyzers giving us continuous listener feedback to tell us what people like, what they dislike, and how long they listen to good and bad material.

 

The overwhelming evidence is that morning listeners want to be both informed and entertained. Very few listeners prefer music in the morning, and if PPM really is anti-personality, and music intensive morning shows outperform talk with PPM then something about PPM is badly mis-calibrated.

 

On the other hand, our research shows a change in the patience of listeners. Today they are less tolerant of self-consumed talent that wastes a listener’s time. Today listeners are less likely to sit through a rambling pointless story. Today’s listener demands interesting relevant entertainment.

 

We therefore believe that growing listener expectations have combined with PPM’s atomization of listening spans to create the challenging environment that personality radio finds itself in. The bar today has been raised so high for personality that radical change is called for. Morning shows of the past just aren’t going to cut it.

 

Some personalities won’t be able to adapt and radio will pass them by. Fortunately, the troubles created by this seismic shift at the same time create opportunities for personalities with the flexibility and skill to adapt. There will be space on the dial for personalities, but only for a new approach.

 

Here are the changes that personalities must embrace if they are to survive:

 

1. Shorten bits. A wandering five minute story was never entertaining, but now we can see it in the numbers. If panelists aren’t listening to morning shows much more than a few minutes, there has to be a pay-off every few minutes.

 

2. Ruthlessly edit your material. Now every word counts. Bits need to be shorter, but equally importantly, they need to get to the point quickly.

 

3. Talk to the listener. Teams must avoid the temptation to focus on each other. Talk about things that touch everyone. (Hint: most people don’t play golf.)

 

4. Constantly create surprises. Reoccurring elements made sense with longer listening spans. Today’s drive-by listening demands change and surprise.

 

5. Balance entertainment with information. Tell the listener something he or she doesn’t know but should.

 

6. Understand what is important for your listeners. Be in touch with what they are talking about, what they like and dislike, and the things that get their attention.

 

7. Be honest with the listener. Today’s listener has a very sensitive B.S. meter and we can no longer fake interest or relevancy.

 

8. Don’t “break” for news and commercials. Weave all elements on the station into a single cohesive product.

 

The majority of these recommendations are not new. What is new is the critical importance of them. High priced talent once thought that these basic principles applied to lesser personalities, but not to them. Because of their talent, listeners would put up with their indulgences. That is no longer the case.

 

PPM doesn’t have to be a career ending change.

 

Terrestrial Radio: Audio's Gold Standard

Look up the definition of radio in the dictionary, and you’ll find some reference to electromagnetic waves. For example, Random House’s dictionary says radio is:

 

A system of telecommunication employing electromagnetic waves of a particular frequency range to transmit speech or other sound over long distances without the use of wires.

How quaint. Can you think of anything as 20th century as the term radio?

Yet look at the logos of the leading Internet streaming services.  Pandora calls itself radio. And Slacker. And Live 365. And it is called Last dot FM.

Why?

Because all these audio services aspire to be radio. Terrestrial radio is audio’s gold standard. Look at any audio media usage study, For example:

 

 

 

 

 

 

 

 

What is the one audio source that nearly everybody uses? Terrestrial radio. Nothing comes close.

That fact gets lost sometimes.

The Long-Tail Myth

In a post entitled New Study: Internet Radio Plays 800,000+ Stiffs, we suggested that advertising supported Internet radio could not succeed if it chose to play songs that the majority of listeners didn’t want to hear. We noted:

Across the entire (music) spectrum, there are only so many songs worth playing (if your goal is to have a measurable audience). That means there are only so many "marketable" artists that listeners want to hear.

We were taken to task for our comments. Internet radio supporters argued that there is plenty of room for long-tail Internet radio, stations that play songs that the majority of listeners don’t want to hear.

A Billboard analysis of Nielsen Soundscan data raises further doubt about the economic viability of long-tail radio. This is from Nielsen's blog:

For most people, Chris Anderson's 2006 book The Long Tail marked a new way of thinking about selling goods on the Internet. Being free of the physical limits of shelf space, he predicted, would alter what people bought. For music, this would mean the most popular music titles would become less popular as consumers were able to tap into vast online catalogs. In most corners of the business world, and especially in the music industry, The Long Tail was controversial. Would consumers actually start to ignore the hits?

A Billboard analysis of Nielsen SoundScan data going back to 2004 shows Anderson wasn't correct on all points. Hit digital albums have lost market share to far less popular titles. But hit digital tracks have gained market share over the years. The top 200 tracks accounted for 14.5% of sales in 2004 and rose to 15.8% in 2005, 17.1% in 2006 and 2007 and 17.2% in 2008. Through October 25, 2009, the top 200 tracks' share stood at 18.7%.

This is not the first analysis to find that online music’s long-tail appears to be a myth. The U.K.’s Guardian noted the myth of music’s long tail in 2008. Recently they wrote:

The study discovered that, of the tens of millions of tracks available for sale on the web, 80% sold no copies at all - and that 80% of the money spent on the 20% that did sell went on just 52,000 songs. As Andrew Orlowski pointed out in his excellent Register article on the subject, the typical inventory of a conventional high-street record store is around 4,000 CDs, or 52,000 songs.

Rather than create a longer tail, digital downloads appear to be shrinking the tail. This in turn suggests that the Internet may be expanding access to diverse music, but the majority of listeners are rejecting this diversity and instead focusing on an even smaller portion of music.

It would be ironic if crowd-sourcing actually tightened radio stations rather than opening them up.

Radio's Future Gets Murkier

It’s the silly season, the time of year when pundits make their predictions for the year. Barrett Sheridan writing in Newsweek’s Techtonic Shifts blog declared 2010 the year of the paid subscription.

He suggests that cloud-based fee charging services will replace both the mp3 as well as free services such as Pandora and Last.fm. Sheridan points to Apple’s purchase of LaLa as evidence that Apple intends to create a subscription iTunes.

Last year the Wall Street Journal's VentureWire wrote:

One thing most entrepreneurs and investors seem to agree on is that the free, ad-supported model isn’t working as planned. "Paid is the future of music, that’s the model," said John Cogan, co-founder of online music retailer Lala Media Inc.

Paid subscriptions might be what investors want, but it isn’t clear listeners agree. We have pointed out in the past that many of the music streamers offer a fee-based premium service in addition to their free streams. Only a very small percentage of members opt to pay for a slightly better version of something that they can get for free.

A new Harris Interactive poll raises further questions about whether Newsweek’s prediction will come true in 2010 or ever. Only one in four people would be willing to pay to read a newspaper on line. Only 23% will pay any amount, and of those, 83% would only be willing to pay less than $10 a month.

The study looks only at newspaper, but there’s little evidence supporting a subscription model for music. Yahoo! tried and failed, Rhapsody is suffering massive cancellations, and even satellite radio subscriptions are slipping.

Inside Radio headlined Pandora’s achievement of profitability in 2009. Of course, as a private company they have no obligation to release their financials, and they didn’t. We’ll have to take their word that with $40 Million in advertising revenues, they were profitable.

We noted the other day that private investors had pumped $56 Million into Pandora, so they must be pleased that the company turned a profit, even a single dollar. However, to put the $40 Million revenue into perspective, WBBM-AM in Chicago billed nearly as much. Terrestrial radio managed to generate nearly $500 Million in online sales alone. Maybe Inside Radio could have pointed that out.

So it isn’t clear whether people will be willing to pay for subscription radio, and it isn’t clear whether Internet radio can be financially viable just selling spots and giving the service away for free.

Should be interesting to see how this all turns out.

Pandora: The Next Dot.Con?

It has been a pretty good couple of weeks for Pandora. The internet streamer showed up at the top of Ando Media’s latest Internet radio ranker. Then a study came out raising questions regarding Pandora listener fatigue, and the service's fans (or perhaps hopeful vendors) rushed to their defense declaring:

I worry about studies like this, because they tempt the broadcaster to lean back and say "look, see--Pandora's a fad." Nothing could be further from the truth, as Clear Channel, CBS and other webcasters can attest, since Pandora is cleaning their clocks right now online.

Soon after the ratings were released, a number of companies used this year’s Consumer Electronics Show (CES) to announce deals to offer Pandora enabled mobile entertainment systems.

This is how the Wall Street Journal reported the news:

Pandora Inc. has struck a deal with electronics maker Pioneer Corp. that promises to make it easier for drivers to listen to its personalized radio service in cars-bringing Internet radio one step closer to snagging a built-in spot on dashboards. The development represents a direct challenge to broadcasters of satellite and traditional radio, who have long dreaded the arrival of Internet radio in cars.

Back in November we noted that venture capitalists Crosslink Capital, Labrador Venture Partners, Selby Venture Partners and WaldenVC had thus far poured $56.3 million into the company. They must have been very pleased with all the coverage.

The deals Pandora cut with Ford, Pioneer, and Alpine might seem major breakthroughs for a company touted as the future of radio, one that is “cleaning the clocks of Clear Channel and CBS.” You might be tempted to agree with the Wall Street Journal that with Pandora on the dashboard, radio’s dominance in the car is over, but hold on a minute. 

Take a look at this press release from 1998:

XM Satellite Radio today announced agreements with leading radio manufacturers bringing satellite radio a giant step closer to American consumers....Hugh Panero, President and CEO of XM, announced that the company has signed agreements with Alpine Electronics, Pioneer Electronics, and Sharp Corporation to manufacture and distribute XM-capable radios and audio systems.

We know how that turned out. The company merged with Sirius, needed Liberty Satellite to bail it out, is losing subscribers, and the stock sells for less than 70 cents.  

But in the short term the announcement gave the new company a PR boost, temporarily helped the stock price, and made Pioneer and Alpine a few bucks. Did it have any lasting impact on the success of XM and its impact on radio? No.

Today’s deals signed with Ford, Pioneer, and Alpine will ultimately have less impact on Pandora than the XM deals had. But it may help the company’s backers get their money back.

To understand why Pandora, Slacker, and the other pure Internet radio companies seem to attract so much attention, one has to go back to the Internet bubble of the late 1990s when venture capitalists threw money at any half baked idea having to do with the Internet. A good place to start is John Cassidy’s dot.con. Subtitled How America lost its mind and money in the internet era, The book explains:

Depending on which Wall Street or Silicon Valley guru you listened to, the Internet was the most revolutionary development since the electric dynomo, the printing press, or the wheel. The most striking manifestation of this thinking was the extrodinary prices that people were willing to pay to invest in Internet companies.

The dot-com bubble burst for most types of businesses, but not for media. There is still the belief among many that while the Internet may not have transformed groceries (think Webvan) or pet food (think Pets.com), it will still transform media. Given what has happened to newspapers, that might seem reasonable. However, the fate of one medium like newspaper does not necessarily mean that radio will follow in it's path.

But that is what the backers of Internet radio want you to believe. Their success depends on it.

That’s why money continues to pour into Internet radio in staggering amounts, $56 Million into Pandora,  $70 Million into Slacker,  $30 Million to Imeem, and $16 Million to Goom . That’s just the players that are still playing. Add the investments in music services and already failed companies like Spirilfrog and we’re talking about some real money.

Venture capitalists are not patient people. They want to see a healthy return on their investment, and they want to see it fast. The key to making money is an IPO, Initial Public Offering. The investors issue themselves a bunch of stock, the company goes public, and the insiders sell their stock.

Unfortunately, this recession has hurt the IPO business. Not the same confidence in new companies that one found during the Internet bubble. On top of that, Imeem just sold for a million in cash, pennies on the dollar, raising questions about what a pure Internet radio company is worth.

To protect their investment, the only option for a venture capital company is to keep pumping money into their company, subsidizing manufacturers to create specialized products and paying public relation companies to keep the company in the spotlight. All the while hoping that the public's appetite for high flying IPOs returns.

The irony of this past week's events is that while Pandora got the headlines at CES this week, the real hero was Apple’s iPhone. The new products work only through an iPhone. Unless you have an iPhone in the car, the interface with Pandora is worthless.

The penetration of Apple's iPhone is less than 5% and has probably peaked. The real buzz at CES was about all the iPhone competitors that are coming to market. 

In our November post we explained why we thought Pandora would fail. This month’s good news for the company hasn’t changed our view.

Ford Pimps Their Ride Geek Style

Each year, the Consumer Electronics Show (CES) becomes the epicenter of digital hype. Manufacturers large and small roll out new products hoping that their’s will be the next big thing.

This year’s keynote address was delivered by Ford CEO’s Alan Mulally. He announced MyFord Touch, an evolution of Synch, Ford’s multimedia digital cockpit. Read the live breathless account of the address on Engadget here and ZDNet’s write-up here.

Ford intends to integrate web browsing, email, Internet radio, Satellite, and even an AM/FM radio into a single console display. As the engadget shot to the left shows, the driver can listen to Pandora, answer the phone, get directions, and adjust the air conditioning, all while stuck in traffic.

This is part of a broader trend of digital hype shifting to mobile platforms. Digital hype has a relatively short shelf life. Pundits can only spend a few years predicting that digital will radically change some aspect of our lives before it becomes clear that their predictions are grossly exaggerated. The pundits must move on and find some other aspect of our lives to focus on.

Today we are being told that digital will transform our automobiles. Our vehicles will become mobile offices and entertainment centers. All the things that we now do in our homes and businesses we will be able to do in our automobiles.

If true, it could have serious implications for radio. The motor vehicle is a key bastion of radio listening. A significant proportion of radio time spent listening takes place in cars and trucks.

Fortunately, CES hype rarely correlates with marketplace success. Google any previous CES and you’ll find dozens of examples of radio killers announced with great fanfare that had no impact on radio.

At last year’s CES Acoustic Research announced their Infinite Radio, a streaming WiFi clock radio. You can buy one through Amazon along with a couple of other Internet radios, but they aren’t exactly flying off the shelf. The year before, the hot radio was TORIAN’s InFusion Internet radio. Despite a great deal of hype surrounding what would have been the first truly portable Internet radio, it never made it to market.

Now, in addition to Ford’s digital Swiss Army knife approach, Alpine has announced a car stereo that eliminates the CD player and replaces it with a Pandora interface:

The iDA-X305S is able to control the Pandora app on a connected iPhone 3G or 3GS, streaming your user-created radio stations over a 3G data connection and out of your vehicle's speakers. Users should be able to log in and access all of the Pandora app's functions using the X305S' 2.2-inch color display and double-action rotary encoder knob, including viewing album artwork and tracking metadata, changing stations, skipping tracks, giving a song the thumbs up and down, and bookmarking songs for later access.

 

Not to be outdone, Pioneer announced their own Pandora/iPhone device. Here’s how PC Magazine describes the device:

The AVIC-X920BT uses the iPhone as a delivery mechanism, streaming the audio through the receiver. Functions include skipping from track to track, bookmarking, thumbs up/down and changing of stations while playing the audio stream from the phone. Pioneer claims it's all a first for the industry.

So you have to have an iPhone, and much of the unit’s functionality works only with Pandora, which immediately eliminates something like 90% of the potential automotive market. At least the Pioneer unit still has a CD player.

One of the things we’ve learned about digital appliances is that just because an appliance has a feature or function, there’s no guarantee that people will use it. In this space we documented  that people spend the majority of time using their iPhone to make calls and read emails. They spend considerably less time using other features of the phone. Users of other smart phones spend an even higher proportion of time using their phone to make phone calls.

What is the evidence that people will embrace Ford’s MyFord Touch or enthusiastically trade their CD player equipped car stereo for one with Pandora? None.

Remember AT&T’s CruiseCast? Probably not. It was a service that streamed 22 video and 20 radio streams to automobiles. Launched in June of last year, it didn’t last to see 2010. MyFord Touch will last a little longer than CruiseCast, but if want to surf the web in your Lincoln you better act quickly.

Just keep in mind that you have to have the car in park to surf. Cool.