Radio InSights

Infinite Dial. Infinite Drivel.

In an earlier post we observed that Arbitron’s Infinite Dial study didn't seem designed to help radio. In this follow-up, we’ll go one step further and show that the presentation does a disservice to radio, portraying radio weaker than it is, while painting a rosy future for radio’s  new-media competitors.

We have pointed out in the past that most media research ignores radio. (See here, for example.) A steady stream of television and Internet video research provides television broadcasters a clear understanding of what’s going on in the video space.

Not so with radio. The little audio research that we see is generally small self-serving projects intended to bolster one new-media segment. There are few current comprehensive studies on radio.

Arbitron could have come to radio’s aid. It could have provided radio broadcasters the same comprehensive overview of radio that Nielsen has repeatedly provided television broadcasters, but it didn’t.

If you are a broadcaster anxious to learn about where radio is headed and the challenges radio will face, you will be deeply disappointed in Arbitron’s Infinite Dial study.

Why would Arbitron put its imprinteur on a study that seems so biased towards radio’s competitors? Why would the company be party to a study that is so irrelevant to radio?

Let’s first take a look at the few radio questions.

Online Radio Audience Stable at 43 Million

The study includes a bar graph showing online radio’s seemingly inexorable growth. It is designed to exaggerate the strength of online radio. The headline boldly declares that 43 million people listen to online radio. Sounds like online radio is a big deal, doesn’t it?

Take a look at the graph up above (click to enlarge). We’ve redrawn the graph adding local radio listening to give a useful reference point. Putting the reach of local radio next to online radio paints a very different, and more realistic picture of the medium. Online listening remains a tiny sliver of radio listening.

The authors chose to call online radio stable. It’s an interesting choice of words for a medium that had been growing 30-50% a year and then suddenly stops. Shouldn’t that be the headline for a study ostensibly for radio? What does this say about the authors’ loyalties?

Internet Leads TV (and Radio) as “Most Essential”

This is the sort of question a questionnaire manipulator designer puts in to torpedo something (in this case radio). The question is silly and the answer means nothing, but it does help cast radio in a negative light. Why not include electricity? How about garbage collection?

Given the arbitrary choices, why would we expect anything but the Internet to win? The Internet means email, Facebook, Flickr, YouTube, Google, and Mapquest. It is not a medium in the same way that radio, television, and newspaper are media.

While the question is meaningless, it does give new-media pundits more ammunition in their efforts to paint radio as dead.

Internet Narrowing Gap with Radio as New Music Leader

The graph comparing 2010 to 2002 shows radio’s role plummeting along with a dramatic increase for the Internet. This is contrary to other research that shows radio with a significant lead in new music discovery.

We wanted to see the 2002 data, but the 2002 study posted on Arbitron’s web site doesn’t include the question. Where did the original numbers come from? Are we really looking at trendable numbers?

More Listening Most to Internet-Only Radio

The graph shows a decline for broadcast streams and an increase in Internet-only listening. The question was supposedly asked in 2006, but like the previous question, it doesn’t appear in the results posted on Arbitron’s web site. Where did the previous data come from?

Cell Phones & Broadband Have Most Impact on Users

Not content to just include the meaningless “most essential” question, the authors immerse themselves even more deeply in nonsense by having participants rate 20 far-ranging services, media, and devices on an impact scale.

The question doesn’t pass the sniff test. According to the study, Twitter and YouTube are insignificant. Really?

According to the study, Satellite radio has had a more profound impact on people than AM/FM and online radio. In fact, online radio is ranked 17th out of 20 items.

Can we really measure impact? Even if we can, can we really compare the impact of such things as high-speed Internet to Twitter, or social networks to E-Readers? And aren’t people going to focus on new things, not things they grew up with?

Then there’s the fact that only users rated each item. The iPhone was the third highest “impactful” device. A radio broadcaster looking to understand what is “impactful” for the future of radio might take the iPhone’s high rank to mean that it will have a dramatic impact.

However, only 7% of the participants own an iPhone. When we take into account the small number of people who own an iPhone, it becomes clear that the iPhone’s true impact is insignificant. Even while the study headlines say just the opposite.

There are questions about local radio, and the responses are overwhelmingly positive. The problem is that they are buried in a pile of meaningless questions that are totally irrelevant to radio. As a result, the headlines regarding the study direct the spotlight away from radio, not toward it.

We did not need another study to tell us the Internet and new-media are transforming broad swaths of media consumption. What radio needs to know is how best to adjust and adapt to this transformation.

On this, the study fails miserably.

Arbitron had an opportunity to create a study that shows radio’s continuing relevancy and value. The company could have provided insights on how radio could better prepare for a digital future. It did neither. 

Unfortunately, the company once again demonstrated  its ambivalence towards radio. It can’t live without radio, but it certainly would like to.

What If Radio Charged For Its Content?

Content is king. How content is distributed is less important than the quality of content. Radio people intuitively understand that. New-media people didn’t, but recent events suggest they will quickly find out.

Amazon, the current king of e-readers got into a tiff with Macmillian Books over pricing. Amazon sells its books for $9.99, a price it dictated to publishers. Macmillian Books decided that it wanted to set the price of its books. At first, Amazon balked and pulled all of the publisher’s books, but ultimately backed down and accepted Macmillian demands.

Amazon came to the realization that Kindle needed Macmillian much more than Macmillian needed Kindle. Now Hachette Book Group, another publisher, is looking to cut a similar deal.

Wired outlined the events under the headline, Macmillan’s Amazon Beatdown Proves Content is King. Here’s what Wired wrote:

This week’s spat between Amazon and a major book publisher is no mere blip on the radar, but rather part of a trend towards content owners dictating the terms of how their content is sold.

Last decade was all about tech companies eliminating brick-and-mortar middlemen. This decade could see content owners get the last laugh, leveraging creative monopolies to wrest control from Amazon, iTunes, and other innovators.

New media has had a cheap if not free ride, but that seems to be changing. Mark Cuban recently called Google a vampire sucking traditional media’s blood. Newspapers and magazines are threatening to block Google and start charging for their on-line products.

Google appears to accept the inevitability that providers will start charging for content, Google’s Krishna Bharat admitting, The industry appears to be moving toward pay walls...Google is very interested in working with whatever scheme ultimately takes off. The other day, News Corp’s CEO Rupert Murdoch observed that without content, the iPad and Kindle devices would be unloved and unsold.

This new assertiveness of content providers is not be choice, but by necessity. As newspapers became increasing dependent on Internet readership, they hoped that they could continue to make most of their money from advertising. They found that they couldn’t.

Internet advertising revenues haven’t come close to what they made from print. They need an additional source of revenue to service. They believe their only option is to charge news aggregators like Google and readers for Internet access to their product.

Radio is finding the same thing. It is becoming increasingly clear that radio isn’t going to replace all the revenue it has lost with Internet based revenue.

The debate over the future of radio has assumed that the battle would be between advertising supported pure Internet products like Pandora and advertising supported terrestrial stations. What if radio evolves differently?

What if radio also starts charging for its content?

Radio has unique content that people want to listen to. That is why 90% of Americans continue to listen to radio and why time spent listening to radio has hardly suffered in the face of all the new alternatives.

It might sound crazy, but charging might be the only way radio can afford to remain a local product.

Terrestrial radio’s greatest strength is its localism. That advantage is rapidly slipping away. With advertising options growing, spot pricing pressure is increasing, and revenues declining.

In response, many stations are cutting programming costs, laying-off expensive morning shows, using syndicated personalities, voice tracking, and in other ways providing a weaker less local product. The cutbacks may offer a short term solution to declining revenue, but the abandonment of localism makes commercial radio extremely vulnerable to national Internet products.

Degrading commercial radio by eliminating localism in an effort to maintain profitability plays into the hands of Internet radio. If all radio is national radio, terrestrial radio loses. On the other hand, if terrestrial radio rediscovered the power of local radio (rather than just pay lip-service to it), Internet radio will not succeed.

Perhaps the answer is for local station clusters to evolve into a mix of inexpensively programmed advertising supported terrestrial stations along side listener supported local on-line products with few or no commercials.

Commercial radio has the most creative and innovative programmers in the world. There is no question that this business can create high quality local products that can out-compete any pure Internet product. It may be our only hope.