Radio InSights

If You Think Change is Dangerous....

If you think change is dangerous, try the status quo. It is lethal.

Listener tastes are not carved in stone. They are more like icebergs floating through the ocean, constantly changing shape.

Radio stations grow in this sea of change not by maintaining the status quo but instead responding to these changes.

This continual evolution of listener expectations requires continual innovation and change.

Formats need to evolve to remain relevant, but too often ownership, general managers and programmers (particularly when things appear to be going well) are more comfortable maintaining the status quo.

Its human nature. Most people fear change. On top of that, the more successful the station the more tempting it is to just keep doing what your doing.

The larger the organization, the more maintaining the status quo seems like the safe thing to do.

Multi-station groups develop a “best practices” mentality based on prior successes. If it works in market A, it ought to work in market B.

The assumption might be true in some limited circumstances over limited time-frames, but continual changes in listener expectations can turn prior successes into future failures.

Even once it is clear that maintaining the status quo isn’t tenable and that change is necessary there’s still a reluctance to change.

This reluctance leads to the dragging of feet, half measures, timidity, and incremental change—all deadly if a station wants to remain relevant.

Next time you're tempted to leave things alone, remember: If you think change is dangerous, try the status quo. It is lethal. 

 

Is Your Competitor a Super-Achiever? Wonder Why?

Stations using Voltair are still pretty tight-lipped about it.

Like any other competitive advantage, stations want to keep the box to themselves as long as possible, so few will admit they’re using one.

There’s also the issue of Nielsen’s position on the use of Voltair.

The thing about a competitive advantage is that if it works, everybody eventually finds out about it.

All one has to do is look at a station’s ratings.

If your competitor spikes one month, maybe it’s a wobble. However, if the station holds on to the gains, maybe it’s more than a spike. Maybe they’ve plugged in a Voltair.

Harker Research looked at March’s published ratings and compared them to March 2014. We found some interesting surprises.

Looking at all 48 PPM markets, we found what we always find: About half of stations gained share, while a nearly equal number of stations lost share.

It’s something we’ve written about several times. Most month to month changes are wobbles. You go up. You go down.

However this year a number of stations have moved wildly higher, setting new PPM records. We’ve seen mature stations that normally move a few tenths at a time gaining multiple shares over a few months.

Doesn’t it make you wonder?

How do mature stations essentially doing the same things they were doing the year before suddenly spike up, and then sustain that spike month after month?

We suspect that it’s because groups are installing large numbers of Voltairs.

There are well over 400 installed Voltairs spread across every PPM market, so you either have a Voltair, you’re competing against Voltair, or both.

To look at the ratings impact more closely we examined the ratings performances of several large Nielsen client groups.

We used the published 6+ share numbers, the numbers everyone has access to.

While most installations are just few months old, we compared the latest published month to the same month last year.

We calculated the percentage of stations within each group that gained and lost market share from 2014 to 2015.

The accompanying graph shows each group’s performance as well as the average for all stations across the groups. We’ve concealed one group’s identify by request.

The dark blue bars represent the percentage of stations that now stand lower than they did in 2014.

For example, about a third of iHeart stations lost share comparing March 2014 to March 2015.

The red and yellow bars represent the percentage of stations that gained share over the same period.

Nearly 60% of iHeart stations gained share in the past year. (The balance were flat.)

The average performance for all stations across these groups (nearly 500 stations) is shown on the right side.

Half (49%) of stations gained 6+ market share over 2014. Meanwhile, 51% either lost share or were flat, about what we find in any given month.

We’ve divided the gainers even further.

The yellow bars represent the super-achievers, the stations that grew more than 20%.

We chose 20% because historically the super-achievers make up only the top third of gainers. And that includes format changes.

The red bars represent the typical gainers, the percentage of stations that grew, but less than 20%,

Fully two-thirds of gainers usually grow less than 20%.

This year is different.

Instead of the one-third we expected, half of all gainers grew more than 20%.

Put another way, about one-quarter of all stations in these six groups posted gains of 20% or more.

That’s quite a performance.

The average of all groups, however, conceals a wide range of performances across the groups. A relatively small percentage of Cumulus and CBS stations managed to break the 20%+ barrier.

In contrast, Entercom and our mystery group managed to have a majority of gainers break the 20% barrier.

Of special note was the performance of iHeart.

iHeart is a large group, but combined the other four groups have more stations.

Despite that, iHeart had more over-achievers than all the other groups combined!

So if you’re wondering whether your competitor is using Voltair, we’d look to see whether the station has had any recent ratings spike.

Is it well ahead of last year’s numbers?

If the station is up more than 20%, and you see other stations in the same group going up at the same time, it’s likely that Voltair has played some role.

And if we were competing against iHeart, we’d place an order.

 

 

 

NPR: Canary in Radio's Coal Mine?

Digital. That’s the future.

Over-the-air radio is sooo 20^th century. Broadcasters must shake-off their rear-view-mirror attitudes and nostalgic musings, and get on with digital!

That’s what broadcast critics tell us. "The future doesn’t care who the winners are, and listeners don’t care about your margins," we’re told.

Listeners might not, but you probably care about your margins, and revenue too.

All this locker-room pep-talk punditry about digital might be inspiring if it didn’t fly in the face of the financial facts of digital.

Local broadcast radio generated $889 Million in digital revenue last year. Pandora, the music service that claims to have more listeners than most radio stations had advertising revenue of $521 Million.

In other words, this backward-thinking ludditious industry did 70% more digital business than the darling of every radio critic, Pandora.

Let that sink in a little.

In a 2010 post entitled Radio’s Digital Future Revealed Radio Insights noted NPR’s aggressive digital initiatives. According to then NPR CEO Vivian Schiller:

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.

As we noted at the time NPR was following the game-plan of those who declared that radio must move faster, lest it miss the digital revolution all together.

Ms. Schiller went on to predict that in the next five to ten years Internet radio would take the place of over-the-air broadcast radio.

Four years later, Ms. Schiller is no longer with NPR, and 93.6% of NPR listening is still done the old fashion way, on broadcast AM and FM stations.

There’s still time for Ms. Schiller’s prediction to come true, but online listening trends for NPR are not encouraging. As the graph at left illustrates, Triton Digital shows a steady decline in the rate of streaming growth for NPR stations.

In an analysis of NPR streaming Steve Mulder, director of user experience and analytics at NPR Digital Services noted:

In a comparison of the year-to-year data, the cumulative audience for pubradio streams dropped 9 percent. And while visitors were listening to a wider variety of content, the total amount of listening time per streaming session remained flat, at about an hour.

Live streams total only 6.4% of NPR consumption. That, after four years of an all-out digital effort.

NPR is radio’s canary in the digital coal mine.

If a multi-million dollar attempt to transform (don’t call it radio) NPR into a digital product is already sputtering, what’s the likelihood we’ll be melting down broadcast towers and turning them into wind turbines anytime soon?

Broadcast spots brought in $14 Billion (that’s with a B) last year. Yes, its not as much as the in the past, but then again what is radio doing to protect its share, let alone grow it?

How much innovation have you seen on the broadcast side of the business?

Sorry, talking about Twitter and Facebook on the air is not tranformational. Where are the new formats? Where are the new morning shows?

Name one thing that local radio has done in the past five years that we’ll still be talking about five years from now.

Where would Clear Channel be today if they put as much energy into their radio stations as they do with iHeartRadio?

Too many broadcast leaders share Ms. Schiller’s view of the future of broadcast radio. They have given up on local radio.

And they have no idea on how they are going to replace that $14 Billion of revenue.

Are Radio’s Leaders Waking Up?

First quarter revenues were flat again, further evidence that radio is stuck in neutral.

Yes, digital revenue grew, but broadcast spot sales continued to erode.

Digital’s growth was a hollow victory: Digital contributes a mere 3% of radio’s revenue.

Broadcast spots contribute over 90%. If spot sales decline by a mere 1%, $140 Million in spots is wiped off the books. Given digital’s meager contribution, it has to increase 15% just to stay even, let alone jump-start sales.

As we pointed out in our previous post, digital grew by 16% last year, but growth is on a downward trajectory. It is increasingly likely that digital sales growth won’t be able to make up for even modest declines in broadcast spot sales.

What should broadcasters do?

The only practical solution is to put a stop to the decline in spot radio sales. Radio has to put considerably greater effort into growing the broadcast product, continuing to develop compelling programming, then selling it better.

If radio has any hope of growing revenue in today’s environment, it is going to come from increasing the value of broadcast spots, then selling more.

The arithmetic is obvious, but actions of the major groups suggest they don’t get it. They are still of a mind-set that digital will save the day.

That’s why the major groups are continuing to increase digital funding at the expense of their broadcast products.

Major cut backs in broadcast station staffs. No programming innovation. No marketing budgets, no research. Degraded morning shows to save money, and half-hearted efforts to sell time on these gutted radio stations.

If radio is cutting costs, telegraphing that it believes broadcast radio can’t successfully compete against digital competitors, why should we be surprised that spot sales are declining? If radio isn’t prepared to invest in broadcast, why should advertisers?

If radio continues on its current path, flat revenue is just a brief pause in broadcast’s rush towards self-destruction.

The good news is that maybe, just maybe broadcast leaders are waking up.

After years of touting digital initiatives and ignoring local radio, broadcasters rolled out three new projects spotlighting broadcast radio’s strengths.

Last month Nielsen and CBS collaborated on a study showing local radio’s ability to boost the effectiveness of television campaigns. According to the study, using local television and radio together can double the reach of TV alone.

(The study found that) an advertiser could reach anywhere from 84% to as high as 93% of all adults 18+ within a month by leveraging local television and radio together.

The CBS announcement was quickly followed by an Advertising Research Foundation hosted presentation on new research looking at radio’s impact on retail sales. The study found that for every dollar spent on radio advertising, there was a sales return of six dollars.

Clear Channel’s Insights and Analytics EVP Rada Subramanyam noted:

We have always known that radio delivers big returns for advertisers and these studies provide the much needed support of that return. The deep personal connection and trust that consumers have to their radio stations and on air personalities generates significant value for advertisers.

The latest defense of broadcast radio comes courtesy of Southern California Broadcasters Association. Earlier this month the group released a report making the case that some television money ought to be reallocated to radio. The bottom line (PDF):

We are urging advertisers to make a 39% adjustment in TV budgets from TV to Radio based on these findings and the growing DVR use/ownership in the LA DMA. Weekend sales events, limited offers, and expiring special offers are being compromised by delayed or no viewership from DVR usage for TV advertisers.

Three studies in the span of two months. And this after years of nothing of substance coming from local radio’s leaders defending the medium from relentless attacks from radio’s critics.

Maybe this is a turning point in the battle to get radio’s fair share of advertising dollars.

But broadcast leaders have to also recognize that radio can’t gut its product without ultimately hurting radio’s adverting effectiveness, and ultimately revenue.

We applaud these three efforts. They are long over-due. However, now these leaders have to reinvest in their radio stations if they have any hope of having this work impact their revenue numbers.

Talk Radio 2.0

Is Talk Radio dying?

There are plenty of pundits who think so, but as we recently pointed out every mainstream radio format goes through repeated life cycles. At some point every format seems to be near extinction only to come roaring back, renewed and stronger than ever.

We’ll save a deeper discussion of format life cycles for a later day, but here’s the one aspect that we need to keep in mind as we debate the health of Talk Radio: As a format gains more momentum it attracts listeners of a certain demographic and psychographic.

These listeners become the core audience of the format, and continue to listen as they age. The core audience grows older, moves through the demo, and ultimately ages out of the demo.

The format’s momentum stalls because the format cannot replace its aging listeners with younger listeners.

Talk critics delight in pointing out Talk Radio’s aging audience as proof that Talk is on its last legs, but every format reaches this point in its life cycle.

At this very moment virtually every mainstream format is aging. CHR, AC, and Classic Rock as well as Talk are all getting older.

(Consolidation and radio’s current fixation with centralized programming is worsening the problem, and the major groups that operate cookie-cutter formats across markets are going to pay a price in wilting market shares. But we digress.)

The basic problem is this: People don’t listen to their parent’s radio stations.

Listeners who are aging into Talk Radio’s prime demos have parents who listened to Talk Radio. They may be as politically engaged as their parents, they may share many of the beliefs and viewpoints of their parents, but they still want their own radio station.

If you’re in a format that’s getting a little too old, you have a choice. You can stick with the old format and squeeze as much money out of the aging audience as possible, or you can bite the bullet and recreate the format for younger listeners growing into the target demo.

History shows that the first option makes more money in the short term, but only delays the inevitable. Worse, it opens the door for a new competitor to reinvent the format and hasten your station’s demise.

(There are rare heritage stations that manage to reinvent themselves every decade or so, but the odds of success are low, particularly if there are competitors ready to pounce.)

What does all this mean for Talk Radio?

As formats go, Talk Radio is long in the tooth.

The formula has worked well beyond any other format’s normal life cycle. But while Talk has proved it’s ability to outlive other formats, a format’s age span is no more elastic than a listener’s age span.

The title of  Part 1 of this discussion, Talk Radio is Dead, Long Live Talk, is a reference to the 15th century phrase The King is Dead, Long Live the King, addressing the ephemeral status of a king. A king is the ruler of his empire, but upon his death, a new king becomes the ruler. Thus the notion of succession, that kings may die, but the throne is forever.

One day Talk Radio 1.0 will run its course, but that does not mean the end of Talk Radio. It will simply herald Talk Radio 2.0.

History and the cyclical nature of formats makes this a certainty. The only question is what form Talk 2.0 will take.

Pundits and self-proclaimed futurists speak confidently of the future as if they have some special gift for seeing the world over the horizon. However, study after study has shown that the only accurate futurists are the ones that admit we can’t predict the future.

CHR was pretty much written off as a tired out-of-fashion format when Saturday Night Fever reignited the format in 1977. Alternative came out of nowhere to reinvigorate a stumbling Rock format twenty years later.

Reborn formats rarely announce themselves before they take off, and rarely take the form that radio assumes. That’s why we suspect that Talk Radio 2.0 is not going to follow the arc that Talk pundits are predicting.

A lot of the punditry predicts that Talk Radio will become less tempestuous, more measured, less extreme. Nicer.

We don’t think so.

Stations will try it. We’ll have more intellectual hosts, more balanced discussions, less verbal bomb throwing.

But it will fail.

We talk with literally thousands of Talk Radio listeners every year, and our research has shown that the next generation of Talk listeners is different than this generation’s, but no less passionate.

They are not looking for a watered-down version of Talk Radio 1.0

We think Talk Radio 2.0 is going to sound considerably different from today’s Talk, but more from a structural standpoint, not an ideological standpoint.

Perhaps when Rush Limbaugh and Sean Hannity decide to retire there will be others capable of filling their shoes, but perhaps not.

In their absence, the format will begin to experiment with shorter faster paced shows, and there will be few three and four hour shows. Talk 2.0 will have more in common with the old radio networks than Talk 1.0.

So is Talk Radio dying? No. Talk 1.0 maybe, but there will be a 2.0. Long live Talk!

Talk Radio is Dead. Long Live Talk.

Have you heard? Talk Radio is dying.

At least that’s what the pundits say. Talk Radio is dying. It’s history!

Of course it has been dying for years according to the critics. Newsweek alluded to its passing in a cover story in 2009.

The fact that Talk Radio is still alive while Newsweek is gone should not go unnoted.

Since then there has been a steady stream of stories questioning the survivability or relevancy of Talk, invariably invoking the name of Talk Radio’s bad-boy poster child Rush Limbaugh.

Remember Sandra Fluke? Rush Limbaugh called the poor Georgetown law student a slut, and all hell broke loose.

The Fluke controversy led to sponsor boycotts, and a condemnation pile-on that included many Talk Radio “experts” and high profile personalities including Don Imus of nappy-headed hos fame. (There’s the pot calling the kettle black.)

Look at the impact of the Fluke remark on Limbaugh's Google search traffic below (click to enlarge). The blue line is Mike “more conservative less controversial” Huckabee’s searches over the same time.

Meanwhile others were taking a wider swipe at radio. The Hollywood Reporter gave a bitter Tom Leykis a platform to vent in a breathless piece called How Radio Will Kill the Radio Star.

Shirley Halperin, who penned the piece tells us that:

Leykis left his first love (broadcast radio) not because he couldn’t get paid, but because he believes traditional radio is dying.....Radio audiences are getting older (more than a third of talk-radio listeners are 65 and up) and the personalities are aging out of relevance.

And if there were any doubt whether Talk Radio was dying, it was put to rest when a major Captain of the Radio Industry, Lew Dickey, confirmed the prognosis.

Even a year after the Fluke incident, Lew Dickey was still talking about the destruction that Rush had done to Talk Radio and his company. And it was newsworthy enough that the Huffington Post picked up a radio trade story quoting Dickey:

Clearly, it's been well documented that the talk side has been challenged....There has been residual hangover on the talk side in terms of advertisers sitting out and not placing there.

Clearly that's had an impact not only on our network business but it's had an impact on some of the news talk stations that we own.

Arbitron added its official imprimatur to the Talk Radio is Dying meme last month noting ominous trends in Talk Radio’s ratings:

News/Talk's lead over Pop CHR and Country has shrunk in each of the past two months, and for the first time since we began keeping our format records, it recorded two consecutive books below a 9 share, finishing at an 8.7 in July.

Now summer is historically the lowest time of the year for News/Talk listening, and we will be keeping a close eye on the results as August and September approach, but it's worth noting that the format's summer shares have declined about 10% since 2011.

So is it true? Are we looking at the end of Talk Radio?

No, to paraphrase Mark Twain, the report of Talk Radio’s imminent death is greatly exaggerated.

All formats go through periods of boom and bust. Every one of them.

Think about Top 40. According to Arbitron, CHR is currently the top rated format in PPM markets, in 25-54 no less! Yet Top 40 has been declared dead more times than Generalissimo Francisco Franco.

CHR might be riding high now, but in the 1980s stations were bailing out of CHR right and left. And many stations that stuck it out denied they were CHRs.

It was a time when every CHR tried to pretend they were really AC and every AC wanted to call itself Mix. Now look at the two formats.

Today Country is doing well, but there have been dark days for that format too. Remember when the Eagles were in power rotation?

Every format experiences different levels of success in repeating life-cycles. Every format goes through periodic transformations, periods of creative destruction.

For the most part, a cycle is roughly every ten to fifteen years, coinciding with generational shifts in tastes.

Few people want to listen to their parent’s radio station.

The CHR format dates back to the 1950s, but today’s CHR is very different from Gordon McLendon’s KLIF, Bill Drake’s KHJ, or Mike Joseph's WCAU.

The KSAN of Tom Donahue was unlike any of today’s Rock stations, but AOR continues to thrive. The same is true of virtually every other mainstream format.

What about Talk Radio?

Modern Talk Radio was born on August 1, 1988. That was the day that Rush Limbaugh debuted on WABC, 25 years ago.

Back then Ronald Reagan was President. Miami Vice and Murphy Brown were hit TV shows. Rick Astley, George Michael, and Richard Marx all had Billboard’s Top 100 hits.

In those 25 years we’ve seen at least one boom and one bust period for every music format. Yet Talk Radio has not really changed that much.

Why? Because Rush Limbaugh is still on the air.

Limbaugh is about all radio has that is still relevent for many people. Were it not for Rush, radio would hardly be mentioned at all in general market news sources, and the few mentions would be the same old radio is dying story. 

The clock has stood still for Talk Radio because the format’s spiritual leader continues to command the biggest megaphone, the most buzz, and the largest audience.

The pattern of radio format transformations suggests that formats evolve because they have to. Even after a format falters, intrenched leaders refuse to adapt.

Leaders make too much money to risk taking a chance.

Talk Radio is too successful, and Limbaugh is too critical for the format’s continued success for stations to try something new.

But what if Limbaugh quits tomorrow? What if he tires of carrying the format and decides bottling tea is more fun?

Talk Radio will have to reinvent itself. It will have to experience (some might say suffer) the same transformation that every other format experiences.

And like every other format before it, Talk Radio will ultimately be stronger because of it.

In part 2 we will explore what Talk Radio 2.0 might look like. Hint: It won't sound like your father's Talk station.

Ford Dumps Digital Dashboard

It’s easy to get caught up in the analog is dead, everything will be digital movement.

We are bombarded with a seemingly endless stream of breathless press releases and gushing reviews about new digital devices that boosters claim will transform our lives.

One such development is the automobile digital dash, the move to replace numerous dashboard controls, knobs, and switches with a single touch screen.

Digital pundits proclaimed the “infotainment” touch screen the next Big Thing. But the pundits don’t always get it right, and now Ford is paying the price.

MyFord and Sync were supposed to catapult Ford into digital first-mover status in automotive. No more knobs or analog devices. Ford’s cockpit would integrate virtually all of a car’s controls into one multimedia touch screen.

And to top it off, many controls would be voice-activated. Want to listen to Pandora? Keep your hands on the wheel, your eyes on the road, and order up Pandora.

Ford has hit several speed bumps along the way, speed bumps that we first noted in 2010, and again a year later as complaints grew.

Putting a smiley face on MyFord, the maker repeatedly defended the digital decision, citing positive research, strong sales and enthusiastic buyers. Ford kept claiming that they were just one software upgrade away from perfecting Sync.

Now Ford has finally admitted that Americans aren’t ready to abandon their analog ways. Because of the difficulty of using its touch-screen system, the auto maker is putting radio tuning and volume knobs back in their cars.

As reported by the Wall Street Journal:

One of the things that bothered customers was the inability to quickly change the channel or volume on the radio through familiar knobs.

The story notes that after switching to a digital dashboard, Ford’s ranking in J.D. Power’s Initial Quality Survey plummeted, falling from a top spot to below average.

According to Automotive News:

Ford was (once) the highest-ranked non-luxury brand in J.D. Power & Associates' annual Initial Quality Study. After MyFord Touch was launched, Ford dropped from a fifth-place overall ranking in 2010 to 23rd in 2011 and 32nd in 2012.

All over a few knobs.

How can it be that Ford’s research says that people buy Fords because of the digital dash, but the buyers complain about it to J.D. Power?

It’s called Buyer’s Remorse.

One buys something with great expectations, only to discover that the product doesn’t work as well as the maker promised.

Digital devices seem to generate considerable buyer’s remorse, perhaps because digital promises too often fail to deliver.

Ford’s reversal should be a warning for us all.

Gullible consumers might be willing to shell out a couple of hundred dollars for the latest toy, but they understand that these shiny new digital objects have life spans measured in months.

Sure it might be more complicated than promised. It might not work as advertised, but there will be another shiny object to distract us, and another one after that.

A car is another matter.

People spend a lot of time in their car. People keep their car for a long time, a lot longer than an iPhone, game console, or piece of software.

And most people don’t want to invest a great deal of time fumbling around to do something that ought to be pretty simple and quick, like switch stations or just crank it up.

It’s telling that the first Ford model to see the reappearance of radio knobs is their F series pickup. Ford makes a lot of money selling the top selling pickup in America.

Next time you hear that something is the next Big Thing, or that you’re foolish to not spend money on it, think about Ford.

Who knows. Mabe the next real Big Thing will be analog.

Admitting Internet Radio's Failure

After nearly a decade of declaring broadcast radio near death, a touch of reality is beginning to seep into the internet radio discussion.

Digital pundits now admit that local radio is far from dead. And you won’t believe what they think will save internet radio.

Writing at Engadget.com, Brad Hill, former VP of AOL, admits that American use of local AM/FM radio hardly budged between 2001 and 2011:

So it’s evident that people are dipping their toes into various forms of internet radio without abandoning their terrestrial stations.

Dipping their toes?

Mr. Hill is way too kind to internet radio.

As we have repeatedly shown here at Radio Insights, large numbers of people have sampled various streaming services, but the numbers are tiny compared to American consumption of local radio.

But in the digital world, hope springs eternal.

In the digital world, pundits believe a major disruption is always just around the corner, just one gadget, one line of code, one algorithm short of a major breakthrough.

The latest digital straw pundits are grasping at is Apple’s iRadio.

While admitting that internet radio hadn’t hurt local radio much yet, he notes that Michael Robertson CEO of DAR.fm, feels that Apple’s recently announced iTunes radio service will accelerate consumer adoption of internet radio:

There’s no question that it will change from 10/90 (digital/analog) to 90/10 because FM cannot compete with the benefits of internet-delivered music.

What’s odd about quoting Robertson is that DAR.fm is a broadcast radio time-shifter. According to the website:

DAR.fm is a service that lets you record radio stations and shows so you can listen whenever you like. Please browse the site to find some radio to record.

The home page lists suggestions that include Rush Limbaugh, Rachel Maddow, Glenn Beck, Sean Hannity, Stephanie Miller, and many other broadcast talk shows.

Noticeably absent are internet originated shows.

Apparently Robertson hasn’t found any internet content worth recording, so he has built a business model around recording AM and FM shows.

After declaring Internet radio flawed, flailing, and failing, Hill finally gets around to the point of his piece. Internet radio can succeed only if it has compelling content!

Yes, Internet radio needs content!

After a decade of watching Internet radio sputter and stall, at least one digital pundit has finally admitted the problem: Internet radio doesn’t have compelling original content! Local radio continues to succeed because of it does.

And Hill has a solution:

It is up to Apple, or Google, or Rhapsody, or Spotify, or Pandora, or Amazon, or another internet player to break down the perceptual walls within which internet radio is trapped, developing content or importing stars that will compel users to commit more of their attention to the platform.

Well that’s simple enough.

Of course, internet radio is now twenty years old. Internet radio isn’t new. It’s not novel any longer.

If any major internet company knew how to create compelling content, it would have already tried.

Remember how Google was going to create original content for YouTube? How’s that going?

Hill’s alma mater, AOL, has been trying to create compelling product for years. So has Yahoo.

Internet companies are brilliant at creating new technologies to steal and repurpose content created by others (like DAR.fm), but they are really lousy at creating original content.

Amazon create original content? Not likely. Apple? Forget about it. iRadio is about selling more tunes on iTunes, not creating original content.

Hill reveals the depth of his naivete when he closes with this:

Technology alone might not be enough to disrupt the nearly 100-year-old technology of terrestrial radio. But technology plus killer content can do it.

Technology has nothing to do with success. It's all about content.

The continuing success of local radio proves that compelling content  trumps technology.

The danger is that local radio is starting to pay more attention to delivery systems than content. Radio is distracted and somewhat intimidated by digital competitors, and is responding in the wrong way.

Too much energy and attention is focusing on platforms. Meanwhile, product innovation is lagging. Radio hasn’t created a new format in decades.

In that sense, Hill has a point. If local radio stops innovating and creating compelling programming, it opens the door for internet radio.

If local radio falls into this trap, broadcast will have lost a tremendous advantage.

Humpty Dumpty & the Meaning of Local Radio

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean--neither more nor less.”

With that attitude, Humpty Dumpty might have been the first new-media pundit. Like Humpty Dumpty, new-media types take delight in twisting the meanings of words to illustrate their more evolved view of the world.

An example is the word local as in local radio.

Three years ago one pundit proclaimed:

There is no longer any such thing as "local" as we traditionally use the term....The definition of "local" is both expanding and shrinking at the same time.

At the time we declared it new-media rubbish.

Now Seth Godin has essentially rewritten the piece, writing:

We're discovering that when given the chance, people are a lot more interested in what they're interested in, as opposed to what their physical neighbors are doing. Going forward, then, the real kings of media will be local in a totally different sense.

Humpty Dumpty would be proud.

Godin first fabricates a past, and then declares that the future will be different from this fabricated past. And finally he redefines the word local based on this fiction.

Seth has essentially doubled-down on the original new-media rubbish about local changing, not only redefining local radio, but also distorting the notion of community.

Both the original and this copy-cat post are committing the biggest mistake that new media pundits make.

They believe that delivery systems are more important than content. They then compound the mistake by believing that new delivery systems will change what people want and value.

None of the new-media delivery systems have replaced local radio because local radio is local because of its content, not the location of its transmitter.
 
Yes, today it is primarily delivered through local broadcast facilities, but that is because broadcast is the means by which the majority of local media consumers want it delivered.

One day a majority of listeners may want it delivered a different way, and local radio will have to change the way its content is delivered.

Radio critics keep claiming that the latest new media product whether Twitter, Pandora, Facebook, Craig’s List, or some other new product will make local radio less relevant and ultimately render local radio obsolete.

Yet radio keeps hanging in there defying a decade’s worth of new-media death notices.

And local radio will continue to defy the critics’ predictions as long as it ignores these self-serving criticisms.

The only way that local radio could become less relevant is if radio lets it happen.

Those within the radio business who advocate homogenized centralized voice-tracked radio in the belief that local no longer matters will pay a price as long as there remains broadcasters who understand the value of real local radio.

This latest Godin effort only serves to illustrate how little new-media pundits understand about traditional media’s strengths.

But then again, why should we be surprised? He doesn’t even understand his own business.

 

On-Line Listening Growth Anemic. Maybe Even Declining.

The latest on-line radio ratings raise serious questions about the future of digital radio.

Aside from a couple of exceptions, on-line listening growth is at best anemic, and in some cases even declining.

Broadcast groups that are betting everything on streaming and an app may be making a very bad bet.

In 2010 Radio Insights introduced Hours-Tuned in order to create a metric that would enable the industry to compare broadcast and streaming listening levels. Hours-Tuned tells us how many hours of listening a station attracts.

Think of it as a measure of the total “consumption” of a radio service.

Hours-Tuned illustrates the fact that when it comes to on-line radio, there’s Pandora and then there’s everyone else.

Pandora alone makes up 75% of listening reported by Triton Digital. Not only does Pandora dominate Triton ratings, the service’s share is increasing, up from 66% a year ago.

But even Pandora’s growth is slowing. The first graph at left shows the monthly year-over-year percent change in Hours-Tuned for Pandora.

After six months of triple digit growth, Pandora growth has dropped precipitously. It’s still considerably higher than most other services, but well off the pace of earlier this year.

On top of that, Pandora is one tide that isn’t lifting any other boats.

The second graph better illustrates what’s happening at many streaming services.

After fourteen months of slow steady growth, AccuRadio went into reverse, losing total hours.

For seven months now, year-over-year Hours-Tuned comparisons have been negative, with the decline accelerating. (Note the difference in scale compared to the Pandora graph.)

Even a brand like ESPN isn’t immune from this trend.

The ESPN graph below isn’t pretty, with twelve of the last 16 months showing negative growth in consumption of ESPN streaming.

Clear Channel is the best performing broadcast group, but it too is showing decelerating growth. It’s growth rate is similar to Pandora’s but with a fraction of its total hours of listening.

Total Hours-Tuned for the top twenty streaming services has increased 54.5% in the past year, but most of this is Pandora.

If we take Pandora out of the picture, streaming hours have only increased 11.9%, not exactly robust growth.

Terrestrial groups have grown 8.3% in the past year, but this too is distorted by one outlier, Clear Channel. Take Clear Channel out, and terrestrial radio stream listening has declined 24%.

One of the problems in analyzing long term Triton Digital trends is the many changes that have taken place within services.

For example, CBS numbers included AOL listening until AOL moved to Slacker. The move led to an immediate decline in CBS numbers, and a gain for Slacker. Since then CBS has added Yahoo.

Interestingly, the combined listening of CBS and Slacker today is 28.4% lower than a year ago.

The September change in Hours-Tuned for several groups are summarized at the left. The numbers do vary somewhat from month to month, so the numbers might be different next month but the trend is unmistakable.

Aside from Pandora and Clear Channel, on-line listening growth is at best anemic, and perhaps even declining.

When we recently noted the precipitous decline in on-line listening spans, new-media pundits and stakeholders rose up to challenge the numbers.

One declared:

In fact, while ATSL is declining as people migrate to mobile, their number of SESSIONS per week is increasing at a FASTER rate, so that total Internet radio listening hours per consumer per week (or per month) -- i.e., TSL -- is INCREASING, not decreasing.

It sounds reasonable, but it isn’t true.

Hours-Tuned takes into account both ATSL (time per session) and Sessions, and total hours are declining for many services.

Pandora and Clear Channel are both growing, but over-all listening growth is slowing, and some services are declining.

The rosy new-media narrative of nearly infinite Internet radio potential might sound great, but the numbers paint a very different picture.

Streaming is becoming a game with many more losers than winners.

Pundits like to point to Pandora and its death-defying success story as proof of Internet radio’s inevitable dominance.

But we heard similar stories about on-line gaming and daily deals.

Is Pandora another Zynga or Groupon? These are each category leaders with what seemed like limitless possibilities.

Now Zynga is a $2 stock (down 88%) and Groupon is a $3 stock (down 89%). Meanwhile Pandora has fallen to $8, a 60% decline.

Are the declines in listening just confirming what Wall Street has already figured out?

Will iHeartRadio Kill Radio?

Is iHeartRadio an apocalyptic doomsday machine that will ultimately destroy broadcast radio as we know it?

Or is iHeartRadio a gateway to radio’s salvation, radio’s best chance to remain relevant in a digital world?

The rate at which Clear Channel is signing up new radio groups suggests that many believe the latter.

But is iHeartRadio really the answer?

Broadcast radio’s greatest strength is a station's strong link to its community.

Radio’s local link is the medium’s most potent weapon in the battle for a listener’s heart and soul.

That  personal connection between a listener and her radio station is something that national radio (both digital and analog) fails to understand, and can’t duplicate.

Yet iHeartRadio’s very essence diminishes radio’s local roots.

The service neuters local radio, homogenizing radio into interchangeable undifferentiated lumps of similarly formatted radio stations.

Don’t want to listen to New York’s Z100? We’ve got another dozen stations just like it a click away.

Were these choices really different, it might mean something, but the service offers choice without distinction.

Too often one hears the same national playlists, and the same national personalities talking about the same national contests with the same national promos.

The growing interchangeability of stations across the country is all that more apparent with the convenience of iHeartRadio. A listener is just a couple clicks away from hearing the same thing on dozens of stations.

The message of iHeartRadio is that unique local radio is dead. All local radio stations are interchangeable.

The impact of iHeartRadio is to take local radio’s insurmountable advantage, its local connection, and destroy it.

The message to listeners is that local radio is no better than anonymous generic national radio dispensed by an algorithmic driven computer.

In an effort to demonstrate that an aggregation of local stations is just as good as a national service, iHeartRadio inadvertently proves that local radio is just as bad as a national service.

Why else offer a Pandora look-a-like?

Yes, Pandora is the darling of new-media pundits, those people who can’t understand why anyone still listens to local radio.

Yes, Pandora has been growing exponentially armed with an endless array of metrics that suggest seemingly unstoppable momentum.

But the truth is that Pandora is losing money, and shows signs that it might be incapable of making money.

Last year Pandora proudly generated $240 million is sales. Broadcast radio stations generated over $400 million--in digital sales alone.

Why would a leader in an industry currently billing nearly twice the digital revenue of Pandora want to promote a Pandora-like feature, and do it on local broadcast stations at saturation levels?

iHeartRadio is just one of a number of industry actions that claim to be an effort to save radio, but instead may have the opposite effect.

Radio Insights believes this is an important issue that potentially impacts every radio station, and ultimately how local radio is viewed.

We question the wisdom of radio’s obsessive rush to focus on digital platforms, especially when they emulate trendy but failed and failing business models.

The growth of iHeartRadio could metastasize into something quite deadly for broadcast, a possibility that every broadcaster should understand.

That’s why we’ll have more on iHeartRadio and what it says about radio in the coming weeks.

Stay tuned.

Radio’s Great Schism: Two Visions of Radio’s Future.

There was a time not long ago when radio broadcasters were united sharing a vision of a vibrant industry full of opportunity and potential.

The recession and new-media’s growing threat has fractured this shared confidence, creating radio’s Great Schism. Today radio’s leaders are deeply divided by dramatically different visions of radio’s future.

One vision sees broadcast radio entering its sunset years. This mind-set believes that new media’s assault will prevent radio from ever recovering its former glory.

Those who share this vision believe the best is behind radio.

With a dark foreboding future facing the industry, they believe that radio’s past necessities are today’s luxuries.

Local program directors, live announcers, marketing budgets, and the other tools that every station once used to drive ratings are expenses that this faltering business can no longer afford.

Every traditional medium making the transition to digital has seen significant declines in revenue, so why would radio be any different?

As we noted in 2010 in the post Digital Dimes for Broadcast Dollars:

Even if we use the most optimistic newspaper numbers to estimate radio's future digital revenue outlook, there's still a good chance that local radio, once a $20 billion industry, will become a $6 billion industry.

If one believes that streaming will ultimately replace broadcast radio, then there’s no choice but to dramatically lower costs.

This realization is perhaps why large public groups in particular have chosen to cut expenses by abandoning radio’s unique historical strength as a personal local medium.

They believe radio’s economic survival depends on it.

But what if this pessimistic vision of radio’s future is wrong?

There are those who see radio entering a new transformational phase. While radio has faced challenges from new media in the past (and predictions of its imminent demise), it has survived by creating new products that revolutionized radio.

Believing that radio’s past is its prologue, broadcasters who hold this more upbeat view of radio’s future continue to invest in the broadcast product, with local talent, entitled local program directors, and respectable marketing budgets.

The hope is that good local programming will enable radio to hold on to its broadcast audience (along with their much higher cost per point value), while at the same time giving the industry time (and money) to develop new digital products.

We were reminded of these differing visions as we surveyed the results of a Harker Research ratings analysis looking at radio group ratings success rates.

As we reported in the post Does Radio Group Size Help or Hurt Ratings?, taking into account group size, the most successful groups are not the largest.

Presumably with greater resources, one would expect the largest groups to have the highest proportion of winners, but that isn’t the case. Smaller groups with more limited resources are outperforming some of the largest groups.

Companies like Hubbard and Cox manage to win in more markets, despite competing against much larger groups.

Obviously there are many factors that go into a radio group’s ratings performance, but could it be that smaller groups are approaching radio’s challenges differently? Are they more optimistic that radio can remain masters of its own future? More willing to invest?

It will be years before we know which vision of radio’s future is the right one. The tell-tale sign will be whether future rating winners are the homogenized products of central planning, or local radio stations that take the slogan live and local seriously.

If radio’s optimists are right, and the pessimists preparing for radio’s sunset years are wrong, the pessimists will have done irreparable harm to their companies.

Stripping stations of the tools necessary to grow audience will ultimately back-fire, driving listeners into the arms of stations that continue to evolve and improve the product.

Stay tuned.

Group Size & Ratings: What about 25-54?

But what about 25-54?

We knew before posting Does Group Size Help or Hurt Ratings? that we’d hear complaints about using 6+ numbers.

Maybe the largest radio groups don’t dominate 6+ because they are too smart to worry about the 6+ beauty contest.

Maybe the big guys know that the real money is in 25-54, so that’s the demo they focus on. Maybe 25-54 is the metric by which they should be measured.

The problem is that publishing a 25-54 analysis similar to the 6+ shown below runs afoul of  Arbitron restrictions on the use of their numbers. Were we or any other organization to release the results, an Arbitron Cease and Desist order would quickly follow.

But we have seen the data.

If you want to know what 25-54 looks like, just take another look at the 6+ chart and visualize the largest groups slightly weaker than they look now.

Yes, the biggest groups perform no better when looking at the money demo.

So there’s no hiding behind the “6+ doesn’t matter” argument.

The edge that smaller groups hold is there even with 25-54.

Then there’s the argument that revenue and profit are better metrics to compare competing radio companies. Admittedly, profit is the ultimate goal of every company, so perhaps it is a better metric.

The problem is the availability of the data. It does not exist in any form that enable us to compare all radio groups.

Using share and rank to compare radio groups may not be ideal, but it uses the most complete set of comparable data available, so it serves as a useful proxy for the more telling data we can’t get at.

Besides, no company regardless of size ignores potential revenue, margins, or power ratios when choosing a format. Formats are chosen expressly because their advocates believe they can become successful and generate above-average profits.

And taking into account demo differences, there is a very strong correlation between a station’s rank and the revenue it brings in–particularly in PPM markets.

But all this is beside the point.

The contrast in performance between the large national groups and the smaller groups suggests that companies are responding to radio’s new challenges in different ways. And those different ways are producing different results.

Jerry Del Colliano in Inside Music Media (paywall) suggests that radio is evolving into two industries, monopolies and local operators.

We can debate the nature of the division, but the divergence is clear.

Radio groups are reaching starkly different conclusions about radio’s future, and in many ways those contrasting visions are reshaping radio today.

And one vision seems to be producing better results today than the other. The subject of our next post.

 

Anything You Can Do, I(HeartRadio) Can do Better.

Clear Channel recently started streaming the 24/7 comedy service, continuing to expand iHeartRadio channels.

It just may be coincidental, but Pandora rolled out it’s comedy channel last Spring, hoping to expand its personalized service beyond music.

Two years ago in a post titled Thanks Pandora, We’ll Take it From Here we pointed out that the barriers to entry onto Pandora’s turf were small:

Pandora may have a tremendous lead over its competition, but it remains to be seen whether the service can sustain its lead. As countless Internet companies have discovered, there is no "first-mover" advantage when it comes to new-media.

Nothing that Pandora does is proprietary. Every aspect of Pandora can be replicated, and ultimately improved upon.

Pandora’s lead may seem unassailable, but think about Netscape, MySpace, or AOL. Weren’t they just as dominant?

On the Internet, being first doesn’t prevent someone else from ultimately eating your lunch.

After Pandora’s lovely honeymoon with Wall Street, the investment community is beginning to recognize Pandora’s vulnerability. As we noted recently, Pandora’s stock price is well off its highs.

Writing of iHeartRadio’s growing popularity, Motley Fool recently declared: This is Pandora’s Biggest Nightmare.

Sometimes even fools get it right.

Face It: Shock Sells.

There’s no such thing as bad publicity.

It’s a cliche' that Rush Limbaugh is testing in his defiant response to efforts to get him fired.

(We’re going to skip a review of the controversy, but if you’ve been living under a rock, go to Google News and type in “Limbaugh Fluke slut” to get up to speed.)

We're also not going to gloat and point out that people who have declared broadcast radio dead, writing it off as totally irrelevant, are the same people who are apoplectic that a host broadcasting on this irrelevant medium can generate such passion on both sides.

As new-media centric Ars Technica observed:

It seems appropriate to make an observation that hardly anyone else has. This latest Limbaugh Eruption indicates that broadcast radio still really matters.

The teachable moment for radio is what interests us. Will the concerted effort to get Limbaugh canned succeed? Will this hobble his show, either creatively or financially?

Does this open the door for Mike Huckabee, who Cumulus was already grooming to compete against Limbaugh?

And if the effort to boot Rush fails, and it instead boosts Limbaugh’s status, what does it say to us about the kind of radio that your listeners want to hear?

A great deal has been made about “no Limbaugh” dictates coming from major agencies and businesses. While the latest dictates have fueled the debate, the truth is that every controversial host attracts similar dictates.

Howard Stern had more than his share. Virtually every controversial “shock jock” morning man has had them.

And what about upset listeners, critical tweets, and organized Facebook efforts to get controversial personalities fired?

With all this aggravation, why do stations hire shock jocks and then defend them?

Because shock sells, and it sells at a premium.

Limbaugh says outrageous things that infuriate his detractors. But he also has a loyal devoted audience that keeps coming back.

In many markets Rush delivers two or three times the audience that his competitors deliver.

“Mike Huckabee is the latest in a long line of those who have attempted to compete with Rush,” was Premiere’s response when the Wall Street Journal picked up on Huckabee’s roll-out.

And they’re right. Bill O’Reilly, television’s most watched political talking head, couldn’t. Dennis Miller hasn’t. No one at Talk Radio Network has.

Which is why 99.9% of Limbaugh affiliates have not cut him loose since the Fluke story broke.

Shock sells.

Which brings us back to Mike Huckabee.

More Conversation, Less Confrontation. That’s the pitch, and that’s Mike Huckabee.

Perhaps America is ready for less confrontation. Perhaps America is ready for a guitar playing alternative to Rush Limbaugh.

The WSJ reports that Huckabee will launch with 140 stations. We wish Mike Huckabee and his 140 affiliates good luck.

This is a battle that every radio station with a controversial pain-in-the-butt personality should watch.

And it could produce an outcome with profound implications for the future of Talk radio.

Radio Rolls the Dice...Again.

Critics complain that broadcast radio leaders are timid and unwilling to take chances.

Quite the contrary, history shows that broadcasters have been more than willing to roll the dice in search of the big score.

The latest example is the consolidation of programming, with stations in multiple markets carrying essentially the same product.

Major groups are in the midst of consolidating programming to an extent not seen in radio.

The most extreme efforts essentially eliminate programming decisions at the local level. All programming decisions are made at the corporate level.

Even groups that continue to allow local stations to make some programming decisions are making more corporate decisions. Corporate people may not be dictating programming decisions, but they are heavily influencing them.

Never have so few individuals had such an influence on the programming of such a large proportion of radio stations.

We call this process the nationalization of radio.

The goal is to create a consistent radio product across stations in the same way McDonald’s makes Big Macs and Starbucks makes Frappuccinos.

While today’s nationalization of radio has been the focus of a great deal of discussion, nervous hand-ringing, and criticism, radio has embraced nationalism in the past.

The last attempt was in the 1970s.

National programmers like Jim Schulke in Beautiful Music and Paul Drew in Top 40 called the programming shots for dozens of stations insisting on a consistent product across all stations.

Music was chosen, liners written and produced, and air staff hires approved. No major decision was made without their approval.

FM embraced automation, with entire staffs replaced with machines. Programming decisions were handed off to syndicators who provided canned formats on tape.

No air staff, no Program Director, just people to change the tapes. (This writer’s first job in radio was changing 14" reels of tape on a bank of Scully tape machines for a Beautiful Music station.)

Ironically in the 1970s, the dictatorial manner in which corporate decisions were handed down didn’t raise many eyebrows. Perhaps because it produced winners.

Jim Schulke stations were consistent ratings winners, more often than not ranked number one in their market. RKO under Paul Drew’s direction had the leading Top 40 station in virtually every major market in which they competed (during a time when all markets had at least two Top 40 stations).

But radio prior to consolidation was very different. Radio groups could only own a handful of stations.

RKO’s success may have heavily influenced the direction of Top 40 at the time, but there were proportionately far more independent Top 40 stations that didn’t have to follow Paul Drew’s instructions.

Consultants like Jim Schulke and Bill Drake programmed dozens of stations, but there were far more independent stations competing against them that continued to be programmed at the local level.

Today’s much larger groups may seem to be following in the path of 1970s innovators. However, consolidation has changed everything.

Consolidation has reduced the number of independent broadcasters creating fewer more powerful groups with many more stations.

Today the actions of just a few corporate programmers has a much greater impact on the industry as a whole than did the legendary programmers of the 1970s.

Consolidation combined with corporate driven programming puts radio in new uncharted territory.

Perhaps central control will take radio to a new level of sophistication.

Perhaps nearly identical corporate-wide products will enable radio to compete with digital alternatives that offer a consistent national product.

But product homogenization will only drive audience growth if those corporate decisions made by a handful of people are the right decisions.

It’s like putting all your money on one roll of the dice. If you win, you win big. If you lose, you lose everything.

The outcome has enormous consequences for radio. With digital alternatives gunning for broadcast radio’s dollars, the fate of radio may rest on that single roll.

In our next post we’ll explore the reasons why radio moved from the iron-fisted control of the 1970s to more decentralized control, and the implications for today’s consolidation of programming decisions.

Stay tuned.

Radio Alchemists, Butterflies, Pasteur, & Matt Damon

Down deep programming people want to believe that there is some magic formula that guarantees ratings success.

We’d like to think that programming a radio station is like baking a pie. Use the right ingredients, mix and cook it properly, and the station will be a winner.

And not only that. Once we found the secret recipe, we’d hope that the recipe could be duplicated in market after market, a success in everyone of them.

Unfortunately, most efforts to replicate successful stations have failed.

Time and time again a format that succeeds in one market fails in others. Each time a radio group replicates a very successful station across other markets, the results are uneven at best.

But like the persistent efforts of medieval alchemists to turn lead into gold, the search continues for that elusive recipe.

Arbitron and Mediabase recently collaborated in an effort to understand what makes a music station successful.

They analyzed music station playlists in an effort to find a link between playlists and ratings success.

Surely there has to be some difference between the playlists of successful and unsuccessful music stations.

Actually no, it turns out there isn’t any:

The percentage of airplay devoted to the most played songs in individual formats is largely the same–whether a station is ranked first in its target demo or not.

Two stations can play the same music in the same rotations and yet one can be a winner and the other not.

You might be thinking that there must be some overlooked non-music explanation. Maybe the winner has a better morning show. Maybe they market themselves better.

Sorry to disappoint, but even if stations in two markets are identical in every respect, the two stations will not produce the same ratings, or even the same rank.

It’s the Butterfly Effect.

Radio markets are like snow flakes: Every market is unique.

A radio station’s share and rank are the consequence of a complex mix of historical and competitive factors.

Long forgotten historical facts (called initial conditions) like a very popular Top 40 or Rock station can tilt a market more pop or rock.

The strength of an Oldies station can have a big impact on a Jack station. A Jack station can have a big impact on a Classic Rock station. CHR can impact rhythmic formats, and rhythmic formats can impact CHR.

A music format does not have some intrinsic appeal that determines a radio station’s share.

Share is determined by music appeal tempered by market history, market characteristics, competitive pressures, and even where the station is on the dial. And a thousand other factors we can’t control.

The Butterfly Effect refers to the belief that the flapping of a butterfly’s wings can help create a hurricane weeks later.

Initial conditions, nearly undetectable earlier perturbations can dramatically change an outcome.

It’s the stuff of science fiction. It’s Matt Damon and The Adjustment Bureau.

But it’s true.

Many if not most of the reasons one station succeeds and a similar station fails is beyond our control.

Skill, ability, and experience still matter. Louis Pasteur captured this by declaring:

Chance favors only the prepared mind.

Chance will determine what rolls past you. It is your skill, ability, and experience that determines what you do about it.

So stop looking for secrets of ratings success. Stop thinking that if you just copy what some successful radio station is doing, you’ll be equally successful.

Winning begins with understanding the Butterfly Effect. Winning begins by understanding initial conditions, chance, and randomness.

And winning happens when you create the best damn radio station possible when you’re handed all these things.

Is a Hit Song Just an Algorithm?

Is a hit song just an algorithm?

Is there a formula, some special combination of sound codes, that can tell us whether listeners will like a song?

Apparently some people think so. They feel humans are inferior to computers and artificial intelligence in determining what songs you should play.

There’s a tremendous effort going on to build large song databases, coding each tune with such things as tempo, key, and instrumentation.

Perhaps the best known is Pandora’s Music Genome Project (MGP). Musicologists coded Pandora’s 800,000 songs with up to 400 distinct characteristics, everything from chordal patterns to such things as instrumentation and even something called “motion inducing.”

At least Pandora enlisted the help of humans to build their database.

As we highlighted in Want to Build Your Own Pandora? the latest efforts eliminate human input altogether. Computers are replacing Pandora’s musicologists:

A new collaboration between Columbia University researchers and The Echo Nest, a company that tracks online music and delivers listening suggestions to users, hopes to take the human element out of Internet radio. One goal is to deliver better recommendations and more songs through improved artificial intelligence.

Leave it to computer geeks to conclude that the pesky “human element” is hampering song recommendations.

Echo Nest claims to have coded 30 million songs:

Echo Nest has some 5 billion data points for more than 30 million songs in its database, such as artist connections, song similarity, mood, style and acoustic attributes.

You may recall that Clear Channel hired Echo Nest to help create iHeartRadio’s personalizing feature, their version of Pandora.

So is curated radio dead? Will music directors be replaced by computers armed with 5 billion data points to decide what songs to play?

We don’t think so.

IBM’s Watson might be able to win at Jeopardy, a computer might even be able to compose bad poetry, but computers can only mimic. They still cannot create.

Creative music programming is an art, perhaps a dying art, but not a dead art.

The creative part of music programming is finding a balance between the predictable and familiar, with the unpredictable and unfamiliar.

One of the initial complaints with Pandora was that it was too predictable. Every song sounded like the songs that preceded it.

That shouldn’t have come as a surprise. Pandora’s MGP is all about finding songs that match the profile of the seed song.

Of course, the songs are going to sound similar. The very essence of Pandora was to offer up more of the same.

But a listener quickly becomes bored with a string of similarly sounding songs. She needs the right touch of variety. Something that surprises in a pleasant way.

That’s the art that every good music director, every good nightclub DJ understands.

So Pandora responded by adding variety, essentially de-tuning their algorithm.

But it still hasn’t solved the problem. Many Pandora users now just create a new channel every time they sign on in the hopes that the new channel won’t sound as boring as their old channels.

Will computers and artificial intelligence, outperform Pandora’s musicologists and radio’s best music directors?

Will the right algorithm make radio stations sound better?

More likely the opposite. It will make radio stations sound even more predictable and boring.

The trend towards homogenized national playlists has already made local radio stations sound predictable and boring. Layer on top of that an algorithm that makes sure all the songs sound the same.

That will make for some exciting radio.

Rock Dying? Wrong Question. Wronger Answers.

 Is Rock Dying???

That was the Molotov cocktail recently thrown by a trolling editor apparently in search of combustible material (link not provided–no sense encouraging trolls).

He found it in the form of a rock consultant, who predictably wanted to defend rock’s reputation along with the sizeable cash flow it provides.

Unfortunately, two wrongs don’t make a right.

The question was silly, only posed to serve as an ignition source. Worse yet, the defense was misguided, failing to answer the question, or the more meaningful question behind the question.

No format has ever died.

Formats are like bacteria. They evolve faster than they can be killed.

Each format can be traced back through a series of prototypical formats that preceded it. Formats continually evolve while retaining a good bit of the previous formats’ DNA.

It’s just like natural evolution. We all can be traced back to the original primordial ooze, and some like consultants can be traced back with very few intermediate steps.

The only reason we distinguish between bacteria, cheetahs, and ourselves is so paleontologists know what drawer to store the bones in.

They even invented a fancy name: taxonomy. Taxonomy, the Dewey Decimal System of life, divides the natural world into arbitrary unnatural categories.

Not to be outdone, radio divides programming into arbitrary formats.

As far as we can tell, the original purpose of format labels was to help record companies decide which stations to call to work a record.

Format labels don’t help radio stations or listeners. We’ve yet to find a listener who decides to listen (or not) based on what R&R (R.I.P.) called the station.

As an aside, the fluid amoeba-like nature of formats makes the notion that people “create” formats a slippery one. One can author a label (think Mix, Hot Hits, or Jack), but only God can create a format.

Mere humans and consultants can only make Recombinant DNA and give it a name.

In the days before Mr. Mike translators counted, there were 10,000 program directors, all independent, virtually uncontrollable, programming 10,000 fire-breathing RF emitting entities all providing entertainment. At least the PDs thought they were entertaining.

That PD independence meant there were something like 9,999 different sounding radio stations.

Anyone in radio back in the 1960s and out of rehab will back us up on that.

Like taxonomists who worry about what drawer to put the bones in, people like Bill Gavin tried to herd these cats into a few broad format categories.

He never fully succeeded, and as others reversed his efforts, radio started getting more and more formats, perhaps to help create more record rep jobs...and more lavish conventions.

While radio is now down to about five program directors, and an equal number of record reps, we now have 13,000 emitters, even 13,003 if you count successful HD stations, so the taxonomic task remains unsolved. Perhaps unsolvable.

Which brings us back to our bomb thrower and Rock.

First, Rock is not a format. It is a convenient–-some might even say lazy label that loosely describes a body of music lacking a meat-wearing lead singer.

Rock is to a listener what pornography was to Supreme Court Justice Potter Stewart, they know it when they hear it.

More specifically, people know Hard Rock with the emphasis on hard when they hear it.

This notion that we can lump the Eagles, Alternative, and Metal all together, call it Rock, and then debate whether it is dying is as arbitrary as calling Archaeopteryx lithographica the first bird.

The second problem is using Arbitron ratings to assess the health of a format.

How can both stations soaring in the troposphere with double digits and stations clinging to the right side of a one share be assigned the same format? And be given the same health status?

Its like creating an “average” injury report for a bus accident with a couple of deaths, a few people with serious injuries, and many minor injuries.

“How’s everybody on board doing?”

This is the problem with the response of Rock’s defenders. To “prove” that Rock is far from dead, they point to a few highly successful Rock stations:

But if Rock is dead, you're going to have to explain that to Greater Media in Detroit and Philly where their two Rock stations are usually Top 5 25-54 adults and often higher.

A factually accurate statement that says absolutely nothing about the health of Rock-–like highlighting the bus accident’s minor injuries and ignoring the deaths.

Last month WCSX had a 5.1 and WRIF had a 4.5 share (insert Arbitron disclaimers here).

A total of 84 other Rock stations didn’t fare as well. The average station scored a 3.7, and half of the field were below a 3.6. Seventeen stations couldn’t crack a 2 share.

Hell, the leading Classical station beat 39 Rock stations, and the Classical station is found on the left side of the few remaining analog dials!

Ah, the warm glow.

Other rock defenders channeling Mark Twain reminded us that there has always been talk of formats dying. (You post-literates need to Google: “Reports of my death are greatly”)

That defense misses the mark as well. Like Mel Gibson, all formats go in and out of fashion. Even if formats never die, debating the health of a format is legitimate and something the industry should do more often.

To really assess the health of Rock or any other format, we can’t just point to a few highly successful stations. It take a much more thorough examination of all the stations in a format, and over time.

An exercise that we will illustrate in our next post.  

HD Radio’s Latest Successes: This is Awkward.

You’ve probably heard about the HD Alliance’s recent success  in getting additional car  manufacturers to offer HD Radio in their new models.

The latest, the 2012 Kia Soul, joins the redesigned 2012 Toyota Camry and Lexus GS350 as new additions to a growing list.

The total number of badges is 19 including BMW, Bentley, Mercedes, Rolls-Royce, and Tesla.

With such a distinguished list of manufacturers, wouldn’t it be a good idea to have something for buyers to listen to?

According to the Alliance, there are about 1,300 HD2-4 stations in the US.

Back out the AM stations simulcasting on sister station HD channels and we end up with maybe another thousand FM options for the 213 million listeners in Arbitron’s 282 measured markets.

The limited number of new stations still might be enough to motivate some buyers to pop for an HD upgrade if the new options appealed to the typical new car buyer.

Unfortunately, buyers will find mostly specialty and niche stations.

HD Radio has created 17 new options for New Yorker FM listeners, for example. These include a Catholic channel from Seton Hall University, a Caribbean channel from SBS, and a “South Asian” channel offered by Emmis.

There’s certainly a place for Catholic radio, Indian radio, and all the other niche and ethnic stations that serve their communities. That’s what radio has always been about.

But is this the industry’s idea on how to make HD Radio a success? Offer mostly simulcasts and a few niche stations that attract small audiences?

All the work convincing more car manufacturers to offer HD may do more harm than good for the industry because it makes the paucity of HD options that much more apparent.

What are new Kia, Toyota, and Lexus owners going to think when they start looking for an HD station and find mostly the same stations they now find on AM and FM?

What are they going to tell their friends about HD Radio?

Let's not forget that many of the same car manufacturers who offer HD Radio today offered AM Stereo in the 1990s, some as standard equipment. Did that save AM Stereo?

Even if every car manufacturer makes HD Radio standard, the service will still succeed or fail based on the quality and variety of the programming buyers find on it.

Unless broadcasters create compelling programming exclusively available on HD channels, the service is dead in the water.