Radio InSights

Apple iPad: Toy or Listening Tool?

Is the iPad a major advancement in computing, or is it just an upscale teckie trophy, something to be seen using?

The pace of sales would suggest the former. Apple is on pace to sell 30 million iPads this year. The rate of growth exceeds anything else Apple has launched.

But new app research raises some interesting questions.

Localytics looked at the length of time users spend with different apps, and the number of times they use them. Graphs of the results are shown at the left. Click to enlarge.

Users spend the most time with news and music apps.

 

Unfortunately, the results are expressed as a percentage of the average time spent with apps. Users spend 228% of the average with music apps.

 

We suspect that Localytics doesn’t share the actual time because it is quite short.

What’s more interesting is the second graph showing the number of times people use an app. Games lead at 13 times a month followed by news and music tied at 5 times.

So an iPad user accesses her music app about once a week, and spends about two and a quarter times more time than the average app–-whatever that number is.

 

 

What does accessing a music app just once a week say about music apps?

 

Perhaps the iPad is more a toy than a really useful tool. Maybe users access their music with their iPhone or computer mostly and the iPad only occasionally.

Or maybe the app is the toy, just something to play with occasionally.

Either way, the study raises more questions than answers. But they are interesting questions.

Creating Radio’s Next Killer App

One of broadcast radio’s greatest strengths is its availability, its ubiquity. Radio is everywhere.

Radio’s continued strength will increasingly depend on creating useful applications and making sure the apps end up on the screens of connected devices, like smartphones and digital dashboards.

Getting a user to download an app is easy. Apple users have downloaded over 10 billion apps alone.

Estimates place the average number of apps a user has downloaded somewhere between two dozen for some devices to over 60 for iPod/iPhone users.

The vast number of apps are downloaded, launched once, and then never used again.

So the key metric of success is not how many people have downloaded your app. It is how often it is used. Radio stations need an app that listeners go back to time and time again.

By that measure, we believe radio is headed in the wrong direction with apps.

The entire approach has to be rethought, and a good place to start is the 1970s.

Back then car radios had a limited number of pre-sets, often just two or three for each band. The push buttons were valuable and stations fought over who got a button.

Programmers knew that if they could get on one of the presets, people would come back over and over again. Listeners just found it easier to switch between a few buttons rather than use the dial.

That’s when liners like Make us your first button and Set your dial and rip the knob off entered radio’s lexicon.

The push button was radio’s first killer app.

Fast forward 40 years, and radio finds itself with a similar challenge and similar opportunity.

Except instead of the push button, today’s challenge is to become the screen’s killer app, the first app that listeners turn to.

With an Internet connection, one can potentially listen to thousands of radio stations from anywhere in the world. Yes, listeners can, but most won’t.

People haven’t changed much from the 1970s. While the number of options has exploded, most listeners still settle on a handful of stations and just switch between this small set of stations.

It means real estate on the screen is just as valuable as the push buttons were years ago. Get on the screen and you have a big advantage. Create an easy to use useful app, and you’ve got it made.

That’s why Pandora has worked so aggressively to create an easy to navigate app and then to get it on as many screens as possible.

Pandora has cut deals with Ford, BMW, Toyota, and others so that their app appears on the dashboards of the auto makers’ cars.

Pandora has a significant advantage over broadcast apps because Pandora’s single app gives a user direct and convenient access to as many as 100 personalized streams.

A user need not navigate through hundreds or thousands of stations to find something of interest. Having created every station on the app, a user wastes no time having to sift through a bunch of stations she will never listen to.

As we recently pointed out, Clear Channel also has a deal with Toyota so that iHeartRadio will share the screen with Pandora, which is a good start.

Harker Research believes, however, the corporate approach of bundling a group's stations into a single app will need to evolve if radio is to overcome pure-play’s app advantage.

There are two problems with the corporate radio group approach. First, only the company’s stations are available. (We should note that the Radio.com app includes AOL Radio.) Secondly, there are hundreds of stations on each app, most of which a person will never listen to.

With a corporate app, a listener has to use some other app or browser if she wants to listen to a station outside the company’s own.

There are other apps like TuneIn Radio. It offers access to 50,000 AM and FM streams, but the sheer number of stations can be overwhelming. It takes five taps just to reach a market's listings.

Does a corporate gateway help or hurt broadcast groups maximize TSL? We think it ultimately hurts.

Most people listen to three or four favorite stations owned by two or three companies. Groups offering access to only their own radio stations force listeners to use multiple apps, which discourages listening.

So we are back to the 1970s, when stations fought over a limited number of buttons, except in this case radio has the additional problem of pure-plays.

We believe most listeners won’t go through the effort of navigating multiple apps to listen to the radio. It is far easier to navigate within one app like Pandora's that offers enough choice.

One solution is for a broadcast group to welcome stations outside the company (for a fee) to be part of their app. Call it Radio USA.

This inclusiveness eliminates the need to navigate between apps, but the number of stations in the US alone creates navigational challenges within the app. 

A better solution would be for entrepreneurial aggregators to create market apps, combining stations in a single market regardless of ownership.

Most people spend the majority of their time listening to local stations. Enabling users to install an app that offers all the local stations will increase over-all broadcast listening by making it more convenient.

The aggregator could pay stations to be included, or app advertising revenue could be shared among stations on the app.

This approach is an improvement, but Harker Research believes that to maximize broadcast TSL and marginalize pure-plays an entirely different approach is necessary.

We believe to successfully compete against pure-plays the ultimate solution will be an app that combines local stations with a Sirius-like lineup of format channels along with personalized channels. It will transform the broadcast app into a supermarket of audio options.

The app will have several local morning show channels offering different mixes of local services and information.

The app will also include a wide range of national generic music stations and syndicated talk programming. Customizable personal stations will round out the offerings. All on the same app.

It will be a package that offers a mix of stations to keep listeners on the app most of the time.

Over time we expect that all broadcast groups will create similar packages. Ironically, radio will end up pretty much where it was in 1970, but with groups rather than stations fighting over a couple of push buttons.

And broadcast radio will continue to be the dominate source of audio entertainment.

Want to Build Your Own Pandora?

Want to build your own music discovery platform? Work at Columbia University may soon help. According to the Chronicle of Higher Education:

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.

To get started, download the app Discovr. Here’s what Discovr does:

Discovr lets you see how the music you love is connected, and makes it easy to find great new bands and artists that are similar to what you like.

Music and Program directors take note: For $2.99, your listeners can learn more about your music than you know. That should be a sobering thought.

 

Continuing developments in music discovery only reinforces the point we’ve been making. Pandora may have been the first to market artist linkage as a means to discover new music, but they are not alone, and in some respects they are already behind the state of the art.

Speed-Bump on Digital Dashboard Highway

Last month radio trades and blogs were filled with ominous stories about how Pandora and the Internet were invading broadcast’s last sanctuary, the car.

Inside Radio solemnly declared:

The Consumer Electronics Show signaled the imminent arrival of the mobile broadband car. For radio to remain competitive in tomorrow’s digital dashboard, a faster industry-wide push towards digital is needed.

Yes, coverage of CES focused the digital dashboard, as bacchalian boosters celebrated the announcements by Ford, Mercedes, Hyundai, BMW, Buick, and Toyota that at least some of their cars would be wired for broadband.

Once again Pandora ran promotional circles around its competitors by grabbing all the headlines. While Clear Channel’s iheartradio will be a featured app in Toyotas along side Pandora, you wouldn’t know it from the press coverage.

A recent USAToday press release story gushed about Pandora’s success and goals:

Westergren's goal: Pandora in every vehicle. "We think that 50% of music listening is done in the car," he says. "That's a huge market that we haven't been able to be part of." Westergren says half the company now is focused on advertising and expansion to autos and other devices.

Apparently it hasn’t occurred to writers that an Internet equipped car means that drivers can also listen to alternatives to Pandora including the streams of local radio stations.

How else explain this feeble Forbes analysis of Pandora’s impact on CBS:

Pandora is now pushing into the drive-time radio market. Traditionally, this market has been dominated by larger radio services like CBS. But can the stalwarts withstand Pandora's push?

From reading all the stories, you’d think there’s only blue-skies and smooth sailing ahead for Pandora and others that are counting on the digital dashboard. Think again.

Here’s Consumer Reports’ reaction to Ford’s MyFord Touch system:

None of the options works as well or is as easy to use as old-fashioned knobs and switches, and they can be more time-consuming and distracting to operate. First time users might find it impossible to comprehend.

The center screen’s cluttered pages, tiny buttons, and small fonts make choosing the right spot to touch difficult. (Speaking of voice control) Synch isn’t perfect, so you might find yourself uttering some words not found in the system’s vocabulary.

Apparently things are so bad that Ford has begun offering 45 minute sessions on how to operate the system. This from Engadget:

Some folks, folks who apparently didn't spend their childhoods mashing thumbs into D-pads, are finding it all a little confusing. Many dealers now offer tutorial sessions that owners of Touch-equipped cars can attend, a 45 minute thrill ride that'll let you and your salesman get just that much closer.

As we recently wrote, people adopt a new technology only when they find it solves a problem. The Ford story shows that it is also true that people resist a new technology when it creates bigger problems than it solves.

Noting Pandora’s push for in-car listeners:

The majority of drivers place a higher value on convenience than capability in a car. The average commute is less than an hour, the average errand by car considerably less.

The likelihood that you are going to plug in your iPhone, navigate to the app of your favorite music service, launch it, and then select a stream in the 15 minutes it takes to drive to the grocery store to buy milk is small.

Ford’s MyFord makes listening to streams even more complicated than just plugging your iPod into an auxiliary jack.

One day voice controls will work better, the screens will be easier to use, and people will get used to digital dashboards. However, it will take years for this to happen.

By that time, the entire Internet radio landscape could change.

Broadcast groups are not standing still. Inside Radio today quotes Bob Pittman declaring, “The whole digital world is an untapped opportunity for explosive growth.” He notes, “You’re going to find adaptive radio becoming a feature on a lot of streaming properties.”

We have repeatedly noted that broadcast radio groups are well positioned to capitalize on Internet radio’s development. Pandora might seem to have a tremendous lead in mobile streaming right now, but this will turn out to be another tortoise and hare story.

Thanks Pandora, We'll Take it From Here.

Pandora is the face of Internet radio. By every measure it has achieved far more than any other Internet audio service. The company has over 65 million registered users, generates one-quarter billion listening sessions every week, and even generates a modest profit.

For most consumers, Pandora defines the entire category of Internet radio. There’s Pandora and the rest. You can listen to Pandora on your computer, your iPhone, Android, Blackberry, Tivo, and soon probably most Internet connected toasters.

Tim Westergren is an icon in Internet media circles. As the creator and face of Pandora he has scored interviews in mainstream media including the New York Times and Wall Street Journal.

And none of this will ultimately matter.

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.

We are in the first inning of Internet radio. This is why Harker Research suggested that it was better for broadcasters to watch and wait for Internet radio to mature. Better to continue to invest in the broadcast product while Internet radio evolves.

Now that an Internet radio leader has emerged, broadcasters can develop a competitive strategy to defend against Pandora, and the services that might overtake it.

Broadcasters owe Pandora their thanks. Pandora’s success is a textbook example of doing a lot of things a little better than the competition, something broadcast once knew, but seems to have forgotten.

The company's success also proves that caring about listeners still matters. A fact broadcast has also forgotten.

Fortunately, even with Pandora’s tremendous on-line lead broadcasters can close the gap by adapting key elements of the company’s success.

Lesson 1: Marketing is key.

Pandora has out-marketed everybody, broadcast and on-line competitors alike.

The company has a cool laid-back persona from its logo and website to the folksy emails it sends out. It solicits user input, and takes every opportunity to thank their users for listening.

The company’s Music Genome Project has given Pandora a unique position. It is little more than a marketing gimmick, but it has effectively created the appearance of a listener benefit not found elsewhere.

Arbitron's PPM focus on exposure rather than listening has deflected broadcast’s priorities away from marketing and positioning. The importance of differentiating a radio station will play an increasingly important role as broadcasts transits to digital.

Lesson 2: Make radio personal (again).

Tim Westergren, founder and chief strategy officer, has been a tireless booster of Pandora. Like a general personally leading his troops into battle, Westergren has traveled the country meeting with users and promoting his product.

At every stop, in every interview he takes the opportunity to position Pandora as the future of radio, taking every shot at broadcast he can.

What is the face of broadcast? Too many listeners see broadcast as a business full of large corporations run by greedy suits who see listeners as a commodity.

Broadcast radio needs to understand that it has an image problem, one that the NAB and RAB efforts have only worsened (think Radio 2020).

Broadcast needs to rethink its image as a product catagory. Broadcast needs a positive face and image.

Lesson 3: Listeners want a sense of control.

Pandora claims the Music Genome Project (MGP) creates the perfect personalized radio experience. Type in an artist, and Pandora will start streaming songs by that artist along with similar artists.

Harker Research found that MGP had little to do with Pandora’s appeal. Listeners just want the ability to listen to an artist when they want to.

The message for broadcasters is that listeners want some control and the ability to listen to specific artists. This can easily be added to a broadcast group’s streaming package.

Lesson 4: Radio needs to be everywhere.

Pandora has been aggressive in making its service available on many devices. Users can stream the service on every mobile platform as well as Google TV, Tivo, and several Blu-ray players. NPR has pursued a similar strategy quickly developing apps for every device.

Broadcast streams must be available everywhere and on every device people use to listen to audio.

Lesson 5: Make it easy to listen.

People want easy access to their stations, not tens of thousands of stations they will never listen to.

The Pandora player is elegantly simple. Users can quickly find their custom streams with a minimum of distractions and clutter.

Broadcast has gone the other way, aggregating dozens and even hundreds of station on websites and applications that make it difficult to find particular stations.

Compare the simplicity of Pandora’s iPhone app to Clear Channel’s iheartradio. Pandora users hear music the moment the app launches. One has to go three pages deep in search of a radio station to listen on iheartradio.

Lesson 6: Radio is still a local medium.

Broadcast’s most powerful strength is its localism. Pandora understands this and is trying to develop a local sales strategy.

As broadcast migrates to the Internet, radio needs to remain a local medium. Services like iheartradio and AOL Music downplay broadcast’s most powerful tool, localism.

As the migration proceeds, large groups may have a more difficult time than small local groups making the transition. Small groups will feel no need to aggregate hundreds of stations into a single Internet service.

A small radio group with a single smartphone app will offer listeners a simple gateway to hear their local radio stations.

If broadcasters take to heart the lessons learned from Pandora’s success and apply them, broadcasting will prevail in the digital frontier. Thanks Pandora. We’ll take it from here.

If Steve Jobs Ran Radio

Apple is the second most valuable company on the planet.

Every product it produces is a technical marvel, yet at the same time simple and elegant. It gets more positive coverage from the media than any other technology company.

Apple now is on top of the world, but it wasn’t all that long ago that the company was struggling. The mid 1980s through much of the 1990s were a dark period for the company. Unprofitable with an aging product line, Apple seemed doomed.

It took a reinvigorated returning Steve Jobs to make Apple profitable again.

Watch a video of Steve Jobs rolling out the company’s newest products. He’s dramatic, he’s enthusiastic, and he deeply believes in Apple’s superiority.

He’s an evangelical partisan. He pokes fun at the competition. He’s willing to stretch a point or two to exaggerate Apple’s strength.

He seems to sincerely believe that every Apple product is born perfect in every way. When talking about his products he uses words like remarkable, awesome, and amazing a lot.

Steve Jobs is obsessed about changing the world, in little ways, and in big ways. He thinks big, and he encourages his people to think big.

His goal is to create products with a big oh wow factor.

Which begs the question, what would Steve Jobs do if he ran radio?

If you want to make something really great, you have to believe in it. He would be just as enthusiastic about radio as he is about Apple.

He would understand and believe that radio can be great again. Reflecting on Apple’s turnaround he said:

Apple was in very serious trouble. Apple had to remember who Apple was because they’d forgotten who Apple was.

Despite what Jobs says, Apple products are rarely perfect. Apple tries to create perfect products, but not until they are in people’s hands can Apple make them better.

There is a myth about Jobs and Apple that they don’t do research, they don’t do focus groups. It helps promote the image of a company that makes perfect things. But it is a myth.

Watch Jobs talk about his products. When describing changes, he invariably mentions user feedback. As you watch the video, count the number of times he says, “users told us....”

Jobs may hate the word research and deny that Apple does research, but he is obsessed about understanding the user’s experience.

Apple relies on a constant flow of information coming from users to modify and improve its products. Call it what you will, it is research, and Apple would be less successful without it.

How else can you explain the evolution of the iPod nano?

Jobs would talk to listeners, not about radio stations, but about the listening experience. Why do you listen to a particular station or format? Why do you tune away, and where do you go?

He would ask about online alternatives and the differences between the digital and analog experience. How do they differ?

Understanding the user is the key to making meaningful changes. Every new generation of an Apple product is incrementally better than the previous one because users told Jobs how to make it better.

Steve Jobs would surround himself with people who believed in radio, who understood the radio experience, and who believed Steve Jobs could change radio for the better.

Radio today is like Apple in 1993, battered, beleaguered, and unsure of itself. And like Apple, radio needs leadership.

Where are radio’s evangelicals? Who among radio’s leaders are unashamed believers who talk about radio as remarkable, awesome, and amazing?

Anyone at the NAB? Anyone at RAB or Arbitron? Any radio group CEO come to mind?

More than anything else, radio needs its own Steve Jobs, someone who believes in radio.

Who will be radio’s Steve Jobs?

Internet Radio in the Car: Belief Driven Research

Would you rather zip to work in your personal hovercraft in no time at all, or would you rather waste hours each day stuck in traffic driving to work the regular way?

Of course, the hovercraft is an impractical hypothetical option, but if you were asked in a hypothetical way which you would prefer, you might choose the hovercraft. Why not?

This speculative approach is Belief Driven Research. It is research designed to give the illusion that one's viewpoint is true even when there is little proof it is.

If you are a strong supporter of hovercraft and you want to prove their popularity, do some research. Just make sure the questions are designed to persuade participants that hovercraft are a great idea.

Which brings us to Internet radio in the car.

A new piece of research making the rounds recently "proved" that a third of drivers would listen to Internet radio rather than local broadcasts if they had Internet access in their car.

The research question that proved this is a classic example of belief driven research. Here’s the question asked:

If tomorrow you could get Internet access from the dashboard of your car and you could listen to thousands of stations from all over the world through an Internet receiver on your dash as easy to use as your radio, would you (a) Listen less to my local radio stations as I explore new ones online, or (b) Listen just as much to my local radio stations no matter what's online.

The question is designed to influence the response by over-selling the desired outcome.

Given the phrasing, of course people are going to be interested. As easy as listening to local stations? Thousands of stations? From all over the world? Sure, sign me up!

If there’s a downside, the question doesn’t mention it.

By emphasizing the positive aspects of Internet radio, and ignoring the negative aspects, the authors of the question are manipulating the outcome to show support for Internet access in the car.

A more objective effort to determine the interest in Internet access would mention both the advantages and disadvantages.

Internet access will cost money. For example, Ford’s Synch adds $395 to the cost of a car, and the owner will be paying $60 a year.

Mentioning up-front costs and a continuing subscription fee would offer the participant a more realistic choice, but it would drive interest down.

The notion that the driver could listen to thousands of stations as easily as listening to local stations is also a bit of wishful thinking, but is portrayed as a given.

As we recently wrote, the average listener has little interest in listening to stations from around the world, let alone while driving to work.

Perhaps that is why despite the absence of a balanced description of in-car Internet only a third of the participants chose Internet radio over local radio.

Presented with the disadvantages, the numbers would have been even lower.

The survey question that followed is just as manipulative. The question asks:

Which would you rather have a radio in your iPod or mp3 player or an Internet radio and access to thousands of stations in your car.

This is an odd, confusing, and arbitrary choice to present to participants. First, are we talking about an iPod like the Touch with Wi-Fi, or just a music player? Why not include iPhone and Android phones?

Are we talking about radio apps to listen to streaming stations or the FM chip?

The question is clearly selling the Internet radio option and downplaying the iPod option. Why else emphasize the thousands of stations aspect of the radio?

Despite selling the in-dash option, only 58% chose it over the iPod suggesting that the in-dash Internet radio is far from a slam-dunk.

These questions were not designed to objectively look at the future of in-car entertainment. They were created to support a belief about the future, and give the illusion that the belief is based on research.

Internet enabled cars are not exactly flying off the showroom floor. US car sales are a little over 11 million a year, and Ford has sold about 2 million Synch equipped cars since 2007.

What consumers are buying is a far more accurate indication of intent than a study with hypothetical questions. As the author of this study once observed:

The difference between opinions and behaviors is the difference between a poll and a vote. Dewey, meet Truman. This study is, in other words, fine for publicity - and that it certainly got. But it changes nothing and means nothing and is, in a word, wrong.

In this case, we agree with him.

In an upcoming post we’ll look at a different misuse of research, mischaracterizing the research of others to advance the new-media narrative.

Radio's Digital Future Revealed

Want to see what radio’s digital future will look like? 

Would you like to look into the future to see what radio will become if broadcasters follow the advice of their harshest critics, the critics who say that radio is moving too slowly?

Look no further. The one organization that heard the digital herald calling most clearly was National Public Radio...I mean NPR. (They don’t want people using the R word when referring to them.)

NPR, under the leadership of NYTimes.com alumnus CEO Vivian Schiller, has pursued an aggressive agenda preparing for a digital future:

We are agnostic about whether somebody listens over broadcast or listens to the exact same radio stream on the Internet.

As younger generations are consuming content on their cellphones or on their iPhones or on their iPads or on their Android phones or whatever, we want to make sure that we're there. So it's very important for us to be on every platform.

So NPR is following the game-plan of those who declare that radio must move faster, lest it miss the digital revolution all together. Today, NPR listeners can find the same quality programming on pretty much every digital device they own.

Why the rush? Because Ms. Schiller thinks broadcast radio will be history in as little as five years:

In the next five to 10 years, Internet radio will take [the broadcast tower's] place, and there's no reason why we should be fearful about it. In fact we should embrace it, especially on mobile. Mobile is the second coming of radio. It has been a godsend for us, because mobile devices are so easy to take with you, and you can listen to any stream you want.

No commercial radio group has prepared for radio’s digital future like NPR, so looking at NPR’s progress is like looking into radio’s future. So what do we see?

NPR's Audience Insight & Research group recently analyzed hour by hour broadcast, web, and mobile audiences to see how the three audiences vary through the day. You can find their analysis on the NPR research web site.

We looked at three key hours, 7:00 a.m., 12:00 noon, and 5:00 p.m. We graphed the number of broadcast, web, and mobile listeners separately during the three hours.
 
Based on their data, a whole lot has to change in a short period of time if Ms. Schiller’s predictions are to come true.

NPR’s digital audience is a tiny fraction of the organization’s total audience.

Despite the availability of NPR on virtually every digital device whether it be computer, iPhone, Blackberry, iPad, Android, or almost any other, only 2-5% of NPR’s audience is listening to the digital product in mornings, midday, or afternoons.

To hear Ms. Schiller speak, one would think that the death of broadcast radio is right around the corner. Yet to match NPR’s broadcast audience, the organization’s digital audience has to grow well over 2,000%! Even Pandora isn’t growing that fast.

NPR has reached radio’s digital utopia with its programming available on every possible digital platform, yet 95% of NPR listenership is still broadcast. Maybe NPR is National Public Radio after all.

What does the slow adoption of digital platforms on the part of NPR listeners say about the digital future of broadcast?

If NPR’s affluent well-educated tech-savvy audience is still overwhelming analog after NPR’s tremendous investment in digital, what is the chance that commercial stations will soon see a significant migration of listeners to digital?

None, certainly not in the time frame Ms. Schiller is predicting.

In a recent post we wrote that people who most confidently predict the future rarely fully understand the present.

The hyperventilating broadcast critics who tell radio that the sky will fall unless broadcasters abandon their analog ways need to first explain NPR’s overwhelmingly analog audience.

They need to explain why an organization that followed their advice and rapidly mobilized for a digital world is still primarily a group of FM radio stations.

Before declaring radio hopelessly out of touch by not rushing to embrace this brave new digital world, explain National Public Radio.

 

Apple exploring HD Radio for future iPods & iPhones

Apple Insider reports that Apple may be more interested in radio than it appeared:

A new patent application from Apple this week centers around HD Radio. The application suggests that future handsets from Apple, such as the iPod or iPhone, could embrace HD Radio technology to allow users greater flexibility when listening to broadcast media. The system describes both an external radio receiver, wirelessly transmitting audio and data to the portable device. It also suggests that such data could be shared with a stereo system in a vehicle.

Bloggers once declared that Apple would never put a radio receiver in an iPod.When one appeared in the new Nano, the pundits back-peddled a bit, but still maintained that Steve Jobs had no interest in putting receivers in other Apple products. This patent suggests otherwise.

And there's a good reason. Last September we wrote:

Make no mistake. This move was not designed to help radio. It was designed to give iTunes a revenue boost. Radio stations do share in the download revenue that tagging brings to Apple, but it probably won’t be enough to reinstated the Christmas party.

The real value to radio is the acknowledgment that radio can move product. They were looking for more revenue, and they knew that the Internet couldn’t deliver. There is no other vehicle that can expose people to music like commercial terrestrial radio. The Labels and performers may have forgotten this, but Apple didn’t.

Perhaps Steve Jobs is the one person that can save HD radio. Its survival is far from assured, even if Apple adds an HD receiver to its product line. However, if radio responds by finally creating unique formats for HD that people like, HD just might make it.

Radio Has Only 10 Years to Live...Or 31 Years...Or 112!

The year 2041, thirty-one years from now, will be the year broadcast radio reaches only 80% of Americans.

By year 2122, one hundred twelve years from now, only half of Americans will be listening to broadcast radio.

The last broadcast radio listener will switch to streaming (or however people listen then) in 2254, two hundred and forty-four years from now.

It looks like you’ll have plenty of time to update your resume'.

Vivian Schiller, CEO of NPR, recently remarked that in five to ten years from now, Internet radio will replace broadcast radio, apparently abandoning AM/FM radios for computers and smartphones.

To her credit, she’s the first new-media proponent we know of who has been willing to go out on a limb and give us a date for radio’s death.

Pundits love to declare broadcast radio dead without offering supporting evidence. They love to claim that radio will soon collapse under the weight of new-media without offering a timetable or date when radio will succumb.

The reason pundits avoid specifics is that there aren’t any. No research, no studies, nothing but their self-inflated egos to back up their claims. At least Ms. Schiller had the guts to throw out a number for the end of broadcast.

We decided to look a little more closely at her timetable using a statistical technique called regression analysis. It takes past performance and projects it into the future.

Futurists like to use the technique to tell us how soon we’ll all be using iPads or commuting to work using hovercraft.

Arbitron produces a yearly report showing radio’s reach in the markets it surveys. According to Arbitron, in 1999 radio reached 95.1% of Americans over the age of 12. By 2005, radio’s reach had fallen to 93.5%. The latest report has radio’s reach at 91%.

Most people are surprised to learn that radio’s reach has only declined 4.3% in the past decade. The decade of satellite radio, the iPod, Internet radio’s adolescence, and the birth of the iPhone barely impacted radio listenership.

Perhaps future innovations will hasten radio's decline, but perhaps some future innovation will reinvigorate broadcast. Rather than guess, we just assumed that radio would continue moving in the same direction at the same rate.

Using data from 1999 to 2009, we projected the decline into the future. For example, regression suggests that radio’s reach will be 87.7% in 2020, and down to 83.9% in 2030, two decades from now.

The graph above shows reach beginning in 1999 projected out to 2032.

How reliable is the forecast? Just as reliable as the many forecasts we read in the trades every day, and considerably more reliable than the off-handed guess of Ms. Schiller.

Remember, more than two decades after television stations starting broadcasting in color, half of Americans were still watching TV on black and white sets.

So what should you think about a forecast that shows 80% of Americans still listening to AM and FM in 31 years? Believe it as much as you believe broadcast radio will be gone by then.

Based on our research, we think there’s a very good chance a majority of Americans will still be listening to broadcast even three decades from now.

Just remember that next time you hear a new-media pundit declare radio dead.

 

The Disconnect Between Pundits and Listeners

What do the pundits say about local radio?

(Radio) is hilariously obsolete in the digital world.
Radio has been thrown out the door.
I’m not so sure how savable radio is.
The radio industry is a melting ice cube.
(Radio) programming is just not appealing enough.

What do listeners say about local radio?

Yes, there are new options, but I’ll continue to listen to radio as I do now.

The listener comment is actually our summary of a question from Arbitron’s Infinite Dial that has been asked since 2005. Radio listeners show a consistent and persistent commitment to local radio.

Asked whether they will, "continue to listen to AM/FM radio as much as you do now, despite increasing advancements in technology," an overwhelming majority say yes. And the number has barely wavered over the past six years.

Oddly enough, while the authors of this year’s study chose to show many trends, they chose to essentially ignore what is perhaps one of the most relevant trendable questions asked in the study. Our rendition of the trend is shown above.

Do these numbers suggest radio is obsolete? Do they suggest radio is in trouble and can’t be saved? Absolutely not.

These results are not an isolated case. Study after study confirm what this study suggests: New media are having a far smaller impact on local radio listening than pundits claim. Either pundits are ignorant of the truth, or choose to ignore it.

Clearly there is a disconnect between what pundits say, and how listeners feel. What we don’t know is whether these new-media pundits are liars or just idiots.

The CD's Premature Burial: A Lesson for Radio

Apple’s iTunes passed a historic mark the other day. They sold their 10 billionth song. The web site sells 25% of all music in the US, and nearly 70% of digital downloads. Compare that to the number two source of downloads, Amazon that sells 8%.

We see headlines all the time about the popularity of  digital downloads, over a billion tracks downloaded last year alone. Then there are all the CDs are dead stories. We read about plummeting CD sales, bankruptcies of record store chains like Tower Records and just assume that nobody buys CDs anymore.

Guess again.

Actually according to NPD Group, CDs remain the most popular music format at 65% of all music sold in 2009. According to NPD’s Russ Crupnick, VP of entertainment industry analysis:

Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking retail footprint for physical products.

Crupnick might as well be talking about terrestrial radio. Given all the attention to Internet radio, many people are surprised that terrestrial radio is still the dominant music and information delivery format.

But it is.

It is refreshing to see someone correct the misconception created by stories that selectively highlight digital’s growth. We see it all too often in stories about Internet radio listenership. The emphasis is always on percentage change, not the absolute numbers.

Growth as measured by a percentage gain is always going to be greatest in the beginning. Starting out at close to zero, any new product or service is going to register double digit gains with even relatively modest unit gains.

As more people buy a new product or begin using a new service the absolute number of users will get larger even as the gains as a percentage decline. This is a favorite trick of new-media pundits. Don't talk about the number of actual users. Just talk about the percentage increases from last year.

A variation of this trick is to use past gains to project into the future. After admitting CDs outsell downloads, Crupnick dismisses it as a temporary situation, assuming the past growth rate will continue:

But with digital music sales growing at 15-20%, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010.

Not so fast.

Just because digital downloads once grew by double-digits does not mean that growth will continue at that same pace.

The new iPods sold very quickly at the start, but now sales are declining. The pace of iPhone sales is declining. Satellite radio subscriptions grew very quickly in the first few years, but now they are declining. Same with Rhapsody.

Growth for all things digital is not infinite. Whether it is a device or a service, there comes a point when things start turning negative. The same is true for things in decline. As this graph from the Wall Street Journal illustrates, after peaking in 2000, CD sales have steadily declined. That is a fact. The past, however, is a very imperfect predictor of the future.

As it turned out, after digital downloads had increased 27% in 2008, 2009 downloads grew only 8%. Maybe it’s because of the recession. Maybe it’s because of rising prices. Maybe it’s because the empowerment that comes from being able to download songs is wearing off. Whatever the reason, the rate of growth is declining, and that normally precedes an actual decline.

The belief (or hope) that digital music sales will surpass CD sales now has been pushed out a few years. Instead of a cross-over by the end of 2010, latest estimates put the date at 2015.

Maybe.

So there appears to be some life left in the CD. Just like radio’s imminent death, the death of the CD is more pundit hype and hopefulness than fact.

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.

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.

Slow Down: The Folly of First Movers

Advertising agencies,  pundits, and radio’s own leaders regularly castigate radio for being woefully behind the times. They harangue stations to spend more on developing an Internet presence, spend more on social media, spend more on streaming, spend more on multimedia, spend more on mobile. Spend, spend, spend.

 We’re assured that if we just throw enough money at new digital opportunities, then radio will be relevant and hip again. They claim the cost of doing nothing is far greater than spending all this money.

Oh really?
   
This is calledthe First-Mover Advantage. The theory is that you can’t let the other guy do something first. Being first at something gives us a leg up on those that follow. It is why venture capitalists threw money at every half-baked idea during the dot-com bubble.

The tremendously expensive failures during the bust that followed the dot-com bubble should serve as a warning to those broadcasters who believe the pundits. There’s little evidence to support the first mover advantage. Waiting to act, being a second mover, is generally safer and more profitable. And you still won’t miss the digital revolution.

History has shown that while some first movers succeed, the majority who are first pay a very high price, and still often fail. If you lived in New York City at the turn of the 20th century, would you have been better off owning one of several horse-drawn hack businesses or the only automobile taxi service? It turns out that the first New York taxi service went bankrupt. Then the second taxi service went bankrupt too. It took three tries before motorized taxis became profitable.

While the world moves a little more quickly a century later, the pitfalls of moving first remain.

Apple’s Newton, the first PDA, was a failure. Palm Pilot dominated the category for years. In contrast to the first-to-market Newton, the iPod wasn’t the first MP3 player, and the iPhone wasn’t the first smart phone. Both the iPod and iPhone were huge successes because Apple waited, read the market, and then produced products better than the earlier entrants.

How many times have we heard that over-the-air radio is dead? We’re told that the Internet is where everything is happening. The problem is that it isn’t clear what economically viable Internet radio will look like. A number of Internet-only radio companies are burning through a lot of cash in search of revenue, let alone profits.

Two different Internet products are emerging. The first essentially recreates terrestrial radio on the Internet. New-media visionaries have dismissed this model, arguing the future of radio is more along the lines of Pandora.

Pandora is a first mover in creating an entirely new type of radio. Started in 2000, private investors have so far sunk $56.3 million in Pandora, $35 million this year alone. For more on Pandora, go here and here.

Pandora has burned through millions of dollars to attract a claimed 30 million registered members. You can listen to it on your computer, some Internet appliances can stream it, and now there’s an iPhone and Blackberry app. Daily use is something like 50,000 users, but less than 4% of users make up over half of the visits.

Pandora has been advertiser supported, but recently started charging for excessive use and has created a pay tier of members. Revenue was $25 million last year, and are on track to reach $40 million this year. Pandora has yet to turn a profit, but it’s founder claims that the service will be profitable by the end of this year.

The nine year old company has yet to make a dime, but another has already replaced Pandora as new-media’s newest fascination, just based on the buzz in Europe. It is called Spotify. Spotify is not yet available in the US, and it may never be, but its fate says a lot about the status of music on the Internet.

We pointed out recently that pundits rarely predict radio’s death at the hands of today’s inventions. They always claim that radio will die at the hand’s of tomorrow’s invention. Pandora was supposed to kill traditional radio, but we hear less of that today. Now it’s Spotify. Spotify is tomorrow’s death-star for radio.

Maybe, maybe not. Here’s what one British blog noted a couple of weeks ago after the service froze memberships on rumors it was running out of money:

There's no firm evidence that people will ever be willing to pay to stream music in significant numbers and this in turn, exposes a fundamental flaw in the business model: the more people pay for a subscription (thus avoiding the ads) the less attractive the service becomes to potential advertisers. And the more ads it runs, the less music lovers will want to use the service.

The free aspect of Spotify is unsustainable. Across the media, people's faith in the ad-funded free content model is faltering. Advertising will never cover Spotify's costs: its only hope of success is in attracting (paying) subscribers in huge numbers.

More recently, Daniel Ek, founder of Spotify, confirmed the speculation, saying flatly that the service can't keep giving away free music, and wants cheaper music (talking about royalties paid to the labels) and a cut of concert revenue to keep it going.

So to say that the future of Internet Radio is a little murky is an understatement, particularly on the business side. It isn’t clear whether ad supported radio works on the Internet was well as it does on terrestrial radio. It also isn’t clear whether people will pay for a subscription. As we noted some time ago, Rhapsody is suffering massive defections.

We also have to consider whether establishing a more aggressive Internet presence has any potential for a financial return in the near future. One can find considerably more optimistic estimates, but a generally agreed upon estimate for 2009 puts Internet radio billing at about $260 Million. Terrestrial radio did over $17,000 Million last year. That’s 65 times more revenue. No one knows Internet radio’s potential, but even its boosters don’t expect explosive revenue growth from this point forward.

To commit substantial resources to something with so many unknowns is rather premature. It makes sense for station owners to watch and experiment, but not devote resources that might be better deployed on the terrestrial side, where the listeners are. There’s no evidence that Internet radio’s first movers have gained any advantage over late arrivals. Witness Rhapsody’s faltering and the (possibly misplaced) buzz about Spotify.

One can analyze each digital initiative and come to a similar conclusion. Don’t discount anything, but don’t spend a lot of money based on rosy predictions of pundits and vendors.

Harker Research works with clients testing digital concepts and approaches in search of viable digital solutions. Using simulations and controlled environments, we can gather useful qualitative and quantitative information, develop a business plan, and fine-tune the concept without the risks of launching a flawed product financial black-hole.

Radio Credibility Up and Other Good News

There’s been a spate of upbeat news stories about radio lately. If you haven’t heard, it is probably because New-Media pundits write all the headlines, and an upbeat tone regarding radio does not jive with their world view.

First there was the Wall Street Journal story about how radio stations are paying more attention to listeners. Yes, it was simplistic and misguided, but it has been a while since anybody did a radio programming story without a “radio is dying” angle.

Then there was the Apple announcement that the new iPod Nano would have an FM tuner. Then we had the roll-out of Microsoft’s Zunewith an HD tuner.

We noted recently here that several radio stocks are trending upwards. Somebody thinks radio stocks at these prices are a good investment. That and Larry Wilson’s purchase of the CBS Portland properties has created murmurs about money starting to flow back into radio. Read our observation here.

Nielsen released ratings showing that young demos were actually listening to radio at levels considerably higher than Arbitron’s flawed method suggested. Furthermore, it turned out that technically savvy people were actually listening to more radio than theirless techy friends. We wrote about that here.

The latest upbeat story may be the most dramatic evidence that radio is healthy and growing. A just released ARAnet study (PDF here) on news usage was headlined, Americans Increase Use of Online and Radio News Sources. Newspapers and television were relegated to the second line. How long has it been since radio shared top billing with online?

The study looked at usage and credibility of seven news sources. Television was first, while radio and newspaper are tied for second. Read that sentence again so that it sinks in. When it comes to use and credibility, radio is tied with newspaper for news.

Online was fourth. Significantly, compared to the last study, newspaper was down while both radio and online were up. Keep those rankings in mind as we look at how the study results were reported.

To illustrate the New-Media bias radio battles, check out the MediaPost story on the study here. Headlined Changing Times: Online Trumps Newspapers, this is the lead paragraph:

A new survey on media usage from the Opinion Research Corporation confirms what newspaper publishers have long feared: Americans are abandoning print daily newspapers for information in favor of online news.

The study does not say that. Television and newspaper are down. Radio and Online are up. It would be just as accurate to write: Americans are abandoning newspapers for radio. But that does not fit the world view of new-media pundits.

The study’s authors gave the headline to both online as well as radio’s growth, but in reporting the results, MediaPost buried details on radio’s growth in the fourth paragraph.

However, even MediaPost couldn’t completely ignore radio's growth story in the findings. They begrudgingly gave some credit to radio noting:

The OPC (study) also found a slightly smaller decrease in the number of people turning to TV news. However, there were also some unexpected gains for traditional media, including a greater reliance on radio for news and information.

Keep in mind that radio was the only traditional medium that grew, but writing the words growth and radio in the same sentence sticks in the craw of new-media pundits. The solution as we illustrated in the past here, is to qualify any positive news about radio, so the author added the word unexpected as if to hint that maybe it isn’t true.

All in all, a pretty good couple of weeks for radio. As the negative slant of the MediaPost article illustrates, there is still a lot of work to be done before radio’s Chicken Littles give up, but things are moving in the right direction.

Is IBiquity's In-Band Digital Killing Radio?

The sorry shape radio is in today, it may be hard to remember how radio started this decade.

Radio was in its full. The National Association of Broadcasters pretty much got what it asked for in Washington. Consolidation had created a handful of enormously powerful groups. Their CEOs walked the halls of the NAB convention with a confident swagger. Revenues were growing 12% a year. And radio was about to enter the digital era.

After years of wrangling, Ibiquity’s in-band on channel (IBOC) digital technology would lead radio into the 21st century. The alternative, Eureka 147, was too radical. It meant shutting down AM and FM and moving everyone to new spectrum space.

Eureka would level the playing field, essentially eliminating the differences between AM and FM, and giving a Class A station the same coverage as a Class C.

After paying top dollar to secure the best signals, egalitarianism was not what the powerful groups wanted. They wanted to protect the assets they had bought, even if they had bought them with other people’s money. They wanted digital, but they also wanted the status quo.

So while Europe and most of Asia chose Eureka, the FCC gave it’s blessing to IBiquity and IBOC. The first US HD radio station signed on in January 2003. By the end of 2004 there were 200 digital stations on the air, and today the number is over 1000.

And the majority of Americans couldn’t care less.

After nearly seven years, not a single HD station registers in Arbitron. Not a single HD station can claim any success by any measure.

Radio is struggling to remain relevant in the 21st century, and the decisions of the swaggering CEOs of the last century now haunt today’s survivors. Perhaps by protecting the status quo and choosing IBOC, assets were protected, and performance bonuses were paid, but radio suffered a nearly fatal wound.

Instead of creating something new and bold, shiny and bright, we protected the old and worn. We made sure that all those old dusty boom-boxes worked. We made sure that dad’s old transistor with the analog dial still worked. We told America that same old radio, that throw back to an earlier pre-digital time, was still just fine.

Maybe when we discuss why the wheels fell off radio, we shouldn’t blame the iPod, or the Internet, or Facebook. Maybe we should blame radio’s protection of the status quo.

What would be different about radio today if Eureka had been chosen? A time would have come when analog radios no longer worked. All those accumulated clock radios, portables, and consoles with the fake wood trim gathering dust would become obsolete.

Old radios would be dead, and in their place, listeners would have to buy new radios–radios with new features and capabilities. Radios would look like part of the 21st century. People might even buy this $400 Pure Digital Sensia because they had to.

The imagery would have been priceless. Think about television’s transition to digital. Nothing says 20th century like the hulk of a wood encased CRT TV. Nothing says 21st century like a 30 inch LCD TV hanging on the wall.

The big groups wanted IBOC because it protected the value of their big sticks. But those big sticks have lost their value anyway. Instead of protecting their value, protecting the status quo doomed them. The positive impact of thrusting radio into the 21st century would have more than compensated for the negative impact of a level playing field.

If radio really wants to move into the 21st century, it needs to rethink its decision to protect the status quo.

HD's Killer App Goes Poof!

You’ve probably heard that Apple’s new iPod Nano will have an FM tuner with  iTunes tagging built in. Lost in radio’s coverage of the announcement was its impact on HD Radio. You may recall that in Fall 2007, iBiquity Digital announced a deal with Apple to enable iTunes tagging on HD radios.

Clear Channel, Cumulus, Cox, Entercom, and Greater Media all quickly announced that they would support tagging. You can read iBiquity’s complete explanation of the process here, and Apple’s latest explanation here.

Here’s how Wired’s Listening Post blog explained the process:

HD Radio stations send song information along with their signal; when the user hits the tag button, that information gets stored on any iPod in the receiver's iPod dock.  The next time the iPod is synced with the user's iTunes collection, the tagged songs show up for purchase within iTunes.

Tagging finally gave HD Radio something quite unique. It nudged HD Radio a little closer to hip by aligning the product with the essence of hip: Apple. There was a slight problem.

For tagging to work, your iPod had to be docked in an HD Radio designed for tagging. So those who already owned an HD radio without the feature were screwed. Today, some two years after the announcement, Amazon lists only five radios capable of tagging, all pretty pricey. Don’t plan on tagging with your sub $50 Insignia.

Wired added this analysis:

I suspect that Apple created this feature with more than HD Radio in mind, and plans something along the line of Rhapsody's hardware tagging feature, which lets users tag radio songs on Sandisk and Sonos players for purchase or subscription download.

Wired was pretty close. Apple’s deal with iBiquity was just a test. They wanted a system that could sell more downloads and trump Rhapsody, and HD was the perfect guinea pig. They already had tagging on the entire iPod line. With the kinks worked out, now all they had to do was add an FM tuner to the iPod. Which they did with the new Nano.

Make no mistake. This move was not designed to help radio. It was designed to give iTunes a revenue boost. Radio stations do share in the download revenue that tagging brings to Apple, but it probably won’t be enough to reinstated the Christmas party.

The real value to radio is the acknowledgment that radio can move product. They were looking for more revenue, and they knew that the Internet couldn’t deliver. There is no other vehicle that can expose people to music like commercial terrestrial radio. The Labels and performers may have forgotten this, but Apple didn’t.

As we stated in an earlier blog, Steve Jobs needs radio more than radio needs Steve Jobs.

And HD? Apple knows how many downloads HD generated for iTunes. Maybe that’s why they didn’t bother adding an HD tuner to any of the new iPods. Today, Apple has over a 70 share of the MP3 player market. In contrast, Microsoft has a one share. We think they’ll wait to see how well Microsoft’s new Zune with an HD tuner sells.

Pigs Do Fly!

Remember when Apple rolled-out the first iPod? New Media pundits declared that it would kill radio because iPods don’t have a radio tuner in them.

Here’s what one sycophantic New Media pundit, futurist, and frequent radio critic declared in 2007:

Will iPods feature FM tuners? Nope. Of all the new features iPod owners would like from their iPods, the one that tops the list is an FM tuner. Thus, Steve Jobs & Company should add such a tuner to the next generation iPods.

The odds of this happening are zero.

Since then 220 Million iPods have been sold, none with an FM radio. That changed on 09/09/09. In an event breathlessly covered by New Media around the world, Steve Jobs himself presided over the announcement of a new line of iPods, including a new Nano with...standby...an FM tuner!!! Pigs do fly!

The iPod was introduced in 2001. It has expanded from a single model in one color to a half dozen with an array of options and an array of colors. All 220 Million without an FM tuner, and yet as the iPod enters adolescence, the Chief Wizard has decided to add an FM tuner.

Know why?

Because the wizard is running out of new ideas. Once you’ve created the Swiss Army Knife of MP3 players, what do you do to keep the assembly lines humming?

Find something that people do with other devices, and add the capability to the iPod. What does nearly every person in the world do? They listen to the radio. But they don’t do it on an iPod (unless one buys one of the FM adapters that third party companies have created to fill the gap).

So with all the glitter and glamour that is Apple, we have the new Nano. Read all about the FM tuner here.

Turns out that Steve Jobs needs radio more than radio needs Steve Jobs. New Media pundits take note.

PowerPoint Punditry

Edward Tufte, former Yale University professor, design critic, and author declares PowerPoint an evil and wasteful "prankish conspiracy against evidence and thought." He asserts that PowerPoint reduces complex and nuanced issues into simplistic bullet-points and graphs. Read more about criticisms of PowerPoint here.

The ability to manipulate impressions using graphs and Powerpoint is no more obvious than in the graphs that accompany New Media’s attacks on radio. Before reading on, glance at the graph to the left and guess the authors’ opinion of the medium they are discussing.

The graph appears in Pew Research Center's 2006 Radio Audience Trends report. It shows the trend of radio’s reach as measured by Arbitron in its continuously measured markets. At first glance, reach seems to be dropping like a rock. It is only when one looks at the scale, does it become obvious that radio’s reach has declined only slightly. The scale goes from 95.4 to 94.0. In seven years, radio’s reach had declined little more than one percent. However, by choosing a very small range of values, the graph gives the impression that radio is dropping precipitously.

So how do the authors characterize this drop?

Seemingly overnight, satellite radio, Internet-only stations, podcasts, MP3s and iPods were changing the way America and the world listened. And all of it was quickly getting portable. A listener could carry around everything from an entire home CD collection to a radio show downloaded last night, and the new audio programmers were capturing and creating content limited only by the scope of imagination.

By traditional measures, the figures for the reach of radio continue to hold a stubborn line. According to data in the most recent edition (2004) of Arbitron's annual Radio Today report, 94% of people 12 years old and older still listen to traditional radio weekly. That is a drop of just one percentage point since 1998. Compared to some media, such as newspapers or network news, that is not only a remarkable percentage of the population but a remarkably consistent performance.

That number may soon be shifting....

By traditional measures? What does that mean? And radio is holding a stubborn line? Is that flattering? It is clear that the authors have an agenda. They are skeptical, but they don't have anything to refute the Arbitron numbers. Ultimately, the authors begrudgingly have to credit radio for holding its own against new challengers, but they can’t resist the temptation to suggest it is just a matter of time before radio succumbs.

While the report is several years old, it is interesting because it cites a Ball State University study that monitored media usage, similar to the 2009 study we reported on here. As with the 2009 study, the 2004 study found that participants under-reported their radio listening. While 83.2% of participants were observed listening to radio, only 72.7% reported listening. Participants listened an average of two hours per day. By comparison, the similar 2009 study found 79% reach and just slightly under two hours of listening.

In other words, using direct observational methods, researchers found that over the past five years, radio’s reach had declined from 83% to 79% and TSL has declined by perhaps 10 minutes a day. Considering all that radio has faced over the past few years, radio has performed remarkably well. But do you see that reported anywhere?

Pundits cannot believe that radio has survived the onslaught of New Media as well as it has, so they will continue to ignore research that suggests that radio has been minimally hurt. We will continue to see agenda laden fairy-tales like the Journalism.org piece. Don't believe them.