Radio InSights

Dashboard Confession: Pandora Wants Your Listeners

Two new Pandora press releases stories outline the company’s latest assault on broadcast radio, in-car listening.

“(In-car listening) is the holy grail for us,” says pandora founder Tim Westergren. “We just have to figure out a solution to get Pandora into cars that’s as easy as radio is now.”

Bloomberg declares: Pandora needs a foothold in cars to challenge traditional radio and attract more advertisers.

Variety warns us that:

The attempt to break onto car dashboards is a stab at the heart of AM/FM radio, which, while still dominant in the field to the tune of 90% share of all radio listening, has seen troubling signs in the behavior of young consumers.

(The author then goes on to cite the discredited Edison Research study that Arbitron and the Southern California Broadcaster’s Association showed is just plain wrong.)

These two new articles join a growing pile of speculative stories on how Pandora might now finally be ready to put a dent in broadcast listening.

While these stories are PR disguised as news, they inadvertently reveal that while Pandora is a spectacular success in the context of streaming services, it is a minor player in the broader context of radio listening.

Will Pandora’s assault on in-car listening hurt broadcast?

Radio’s dominance in the car has been under assault since the 8-track tape. Each new addition to in-car entertainment has had the potential to hurt broadcast listening, yet none has had much of an impact.

Satellite radio was designed to challenge broadcast for in-car listening. After a near bankruptcy and bale-out, merger, and countless upbeat predictions by Mel Karmazin, Sirius XM finally passed 10 million subscribers, less than 4% of the registered vehicles on the road. 

While Sirius doesn't PPM encode and therefore cannot be measured by Arbitron in large markets, in diary markets where listeners can still report their satellite listening, there’s hardly any.

Pandora is already on after-market Pioneer and Alpine car radios. Ford’s Sync features Pandora. Mercedes is rolling out an iPhone app that will one day enable Mercedes drivers to cordlessly listen to their iPhone through the car’s entertainment center.

The problem for Pandora is that these systems are more expensive and complicated than radios. Today a driver can hop in the car, flip on the radio, and within seconds be listening to information and music coming out of the speakers.

Need the latest traffic report? Turn on a news-talk station. Bumper to bumper traffic? Hit the scan and find some music while you’re staring at the brake-lights ahead of you.

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

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

But fast-forward a few decades to the future envisioned by new-media boosters when most cars will have a high speed internet connection, and radio apps reside on the built in entertainment console of most cars.

Do you really think Pandora is going to be the only app on the dashboard? Not a chance.

We have frequently pointed out that broadcast groups are the best positioned to capitalize on the migration of listeners to online listening. By the time a significant number of drivers begin listening to radio streams in their car, broadcasters will be there.

In fact, it is already happening. Toyota just announced a mobile deal with Clear Channel to integrate iheartradio with some Toyota vehicles beginning next year.

Game on.

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.

Radio in a Post Internet World

Do you sit down in front of the television and marvel at the technology that sends pictures through the air? Probably not.

Do you call friends in another part of the world and marvel at the technology that connects telephones throughout the globe? Probably not.

Each was transformational in its time and had a profound impact on the people who first used it. Yet, today each is taken for granted. We use them without thinking, never considering what life was like without them.

Boosters always over-sell the importance and transformational impact of a new technology. Then, as the innovation matures, people begin to realize that maybe it was not quite as tranformational as first thought.

Such is the case today with the Internet. The Internet and new-media are the latest transformational innovations to grab all the headlines. Boosters tell us that everything is different with the Internet.

Yet there is growing evidence that very soon (perhaps even now) the Internet is joining steam engines and incandescent bulbs as yesterday’s transformation.

So it isn’t too early to start thinking about radio in a post Internet world, a world when people think as much about the Internet as we do about electricity. To understand what a post-Internet world might look like, consider how the next generation, the so-called net-natives, are using the Internet.

A recent Der Spiegel article gives us a glimpse:

Older generations may consider it a revolutionary medium, enthuse about the splendors of blogging and tweet obsessively on Twitter (but) the first generation that cannot imagine life without the Internet doesn't actually consider the medium particularly important, and indeed shuns some of the latest web technologies.

The story goes on to cite research raising questions about whether the next generation will be as net-centric as new-media “visionaries” think:

The findings show that the image of the "net generation" is almost completely false -- as is the belief in the all-changing power of technology.

The next generation resembles the last generation a lot more than new-media boosters want to admit. They have integrated the Internet into their lives, like their parents and grandparents integrated previous innovations into their lives. This is a cycle that has played out many times.

Growing up is about becoming a social animal, developing networks of friends, and sharing experiences.

Today’s kids have new tools and a greater ability to stay connected to their friends, but one could make that argument about the first generation that traveled by car, or spoke on the telephone, or flew to see distant friends.

The magazine article points out something that should be painfully obvious. The Internet will change future generations far less than it has changed us.

Further evidence comes from Pew Research. The Pew Internet & American Life Project has been studying Internet usage among Millennials for many years, and pundits have been using Pew’s research to bolsters their claims that the Internet is creating a new and very different generation.

The longer the project proceeds, however, the more evidence accumulates that net natives, those who have grown up with the Internet, don’t seem quite as enthusiastic about many aspects of Internet 2.0 as their parents.

Virtually all teens (93%) now have access to the Internet, and nearly 80% of these teens have a high speed connection. Over three-quarters of teens also have a cell phone, nearly as many who own an mp3 player.

Three-quarters of teens are also members of social network websites, over half have profiles on multiple networks.

Yet usage of a broad range of social network activities is declining among teens. Posting messages, emailing through the networks, and similar activities are in decline.

Teen use of twitter never took off and has already dropped in half. Blogging too was never embraced by teens, and interest has fallen by half in the past three years.

Yes, social networking is important, but the notion that our children will be connected 24/7 may overstate the case.

The Internet may be a marvel to those who didn’t grow up with it, but to future generations, it may not be.

The Nielsen study on smartphone use we reported on reinforces this point. Watching videos, listening to music, all the things we are told the next generation of radio listeners will be doing with their mobile phones is a tiny fraction of their phone use.

We can see that directly in the impact of mobile phone usage on Pandora usage. Pandora was one of the first online music services to embrace smartphone apps. You can find a free iPhone, Blackberry, and Android app for Pandora.

The convenient access of Pandora has impacted usage of Pandora in a somewhat paradoxical way. While millions of new users have signed up, and session starts are up, the average session exposure has stalled.

Rather than grow the service, mobile phone apps have simply moved usage from the computer to the smartphone. Since people spend less time listening to radio with their smartphones than their computers, their listening to Pandora has declined.

So what does that mean for radio?

It means that radio will change less then we think.

As we recently pointed out, radio’s success is based on its convenience and ubiquity. You turn it on and it’s there. It is portable, and can travel with you, regardless of the availability of hotspots or a mobile Internet connection.

The Internet is changing the definition of convenience and ubiquity. In the future, the scales may tip in the direction of a hotspot and internet connection, but the product that listeners are looking for will be less transformed than pundits predict. 

 

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.

 

Mark Ramsey versus Reality

We believe that the best way to judge a futurist’s ability to see the future is to have him explain the present. If a person doesn’t understand the present, what chance does he have to understand the future?

We wrote those words just a few days ago, so we didn’t expect to find the perfect example to illustrate our point so quickly. But we did.

Mark Ramsey in a challenge to our recent ratings analysis used this analogy to explain why radio listening has to decline as listeners embrace new alternatives:

Ask your friends in television - they'll tell you that erosion in time spent consuming a media product is GUARANTEED to occur when consumers are confronted with new options worth embracing. Yes, guaranteed. So let's stop pretending, okay?

So we have a radio critic building his case about the inevitability of radio’s erosion on his belief that it is happening in television.

Not only that, he GUARANTEES it!

Sorry to disappoint, but despite the guarantee, it isn’t true...not even close.

Here’s what Nielsen has to say on the subject:

Nielsen data shows that time spent on each of the three screens-TV, PC and Mobile-is increasing. In particular, the consumption of video content is on the rise across all platforms. Since the mainstreaming of the Internet about 10 years ago, TV viewing is up by about 20%.

Not only is Mr. Ramsey wrong, he is spectacularly wrong. Time spent on all three screens including traditional television is increasing. The impact of new media on television is just the opposite of what he says is happening. Traditional TV viewing is up eight hours in two years.

If a pundit doesn’t bother to understand the present, how on earth can he predict the future?

Back in November 2008 we noted Nielsen’s discovery that traditional television viewership was growing, not declining because of the Internet. We felt the same could be happening with radio. We wrote:

There is no convincing independent evidence that radio listenership is declining. Listenership as measured by Arbitron is declining, but it has been declining for decades--long before new media could be the cause. Methodological changes by Arbitron are a more likely explanation of reported declines.

Which brings us back to our original question: What about radio? Since Internet use doesn't hurt TV viewership, why should we assume that Internet use hurts radio listenership?

Two years after we wrote these words, we have a radio critic declaring flatly that radio must be declining because television must be declining. And neither is true.

Which brings us back to our original point. If someone makes false assumptions about the present with such confidence that he GUARANTEES them, then it is likely he will be as wrong about the future too.

So let's stop pretending otherwise, okay?

Predicting the Future is Easy. Explaining the Present Not.

We believe that the best way to judge a futurist’s ability to see the future is to have him explain the present.

If a person doesn’t understand the present, what chance does he have to understand the future?

The future of radio is a case in point. We hear a lot about how radio is falling behind and has to quickly adapt.

We’re told broadcast radio will soon fade away. No one will be listening over-the-air. Everything will be streamed, streamed to your car, streamed to your iPad, maybe even streamed through your refrigerator.

No one will own music anymore. Apple will own every song every recorded (except the Beatles) and we will all stream from Apple’s cloud. (And it really will be a cloud, because Steve Jobs will create his own iAtmosphere.)

Pandora will have 300 million registered users. Their $10 billion IPO will be a great success, and they will buy Clear Channel, CBS, and Entercom so they can turn them over to all the artists they’ve snubbed by refusing to play their music.

See how easy it is? Predicting radio’s future is easy. You can pretty much make up anything short of little green people, and no one is going to question you.

The hard part is explaining the present.

We recently pointed out the disconnect between what pundits say about the health of local radio, and the reality.

There is no credible evidence that people are abandoning broadcast radio. None. Yet we hear time and time again that radio is dying because it isn’t embracing new-media.

If radio isn’t dying--which it isn’t, then what does new-media have to do with local radio's health?

Based on the logic of those crying wolf about radio’s slow response, one can make the argument that maybe local radio is healthy because of radio’s slow response.

We believe a digital strategy is essential for radio, but not because radio is dying. It is essential because radio’s convenience and ubiquity has always been its greatest strengths. A digital strategy will simply keep it that way.

So next time a new-media salesman offers his vision of the future, and tells you why radio needs his services, ask him to explain the present.

What is the essence of radio’s continuing success?

If he really understands why despite all the new alternatives that 93% of Americans continue to listen to broadcast radio every week, and they continue to spend over 17 hours a week listening to it, then pay attention to what he has to say.

If he sputters a bit and then starts talking about how little time radio has to adapt, walk away.

 

Radio's Orwellian Embrace

In George Orwell’s novel Nineteen Eighty-Four, the English language is replaced by New-Speak with the goal of eliminating words that authorities believe might lead to Thoughtcrimes, thinking the wrong thing.

One character declares, It’s a wonderful thing, the destruction of words.

Radio is witnessing its own devolution into Orwellian Newspeak as the word radio fades from radio.

The purging has been going on quietly for some time as radio companies re-brand themselves as media companies, but it grabbed the headlines recently with two announcements.

The first came from Washington, D.C.’s WTOP. With the Program Director declaring, “We’re not a radio station,” the station banished the word radio from its branding.

The second announcement came from National Public Radio, which declared that henceforth it would just be NPR, erasing any mention of radio from its name.

We’ve noted NPR’s hostility towards broadcast in the past. This appears just another step towards the organization’s ultimate goal of eliminating the pesky problem of having to deal with affiliate Public Radio stations around the country.

Apparently some in this business believe that thinking of radio as radio is an Orwellian Thoughtcrime.The crime is lack of vision, not seeing the business in its broadest sense, on the Internet, on cellphones, downloading podcasts, and when all else fails transmitting over the air.

Let’s think this through.

Last year 96.5% of local radio’s revenue came from broadcast. Only 3.5% came from online. SNL Kagan’s latest guess is that online revenue might grow another 15% this year.

The graph at the left illustrates the range of estimates for online revenue growth for the next ten years. A decade from now, online revenue will probably still only contribute 7-16% of local radio’s revenue. Read about newspaper’s futile efforts to replace print revenue here.

No radio station stream audience comes close to its broadcast audience. The vast majority of listening is done the traditional way, using a radio. Even the majority of those who listen online from time to time continue to spend more time listening with a radio.

WTOP has a cume of 1.3 million and according to Quantcast averages less than 0.1 million web visitors. Is it more a broadcast radio station or a streaming audio station? What proportion of your listening is through the web?

Radio is a reference to broadcast that is instantly understood, universally consumed, and strongly linked to broadcast stations. If broadcast didn’t already own the term, it would have to invent it.

Does anyone think that the phrase multi-source audio is cooler than radio?

Broadcast should be defending its brand of radio like Keenex defends its brand of tissues, not tossing the term away.

Isn’t it curious that while stations have become self-conscious of the word radio, new-media is embracing the word radio along with its visual images?

To be thought of as radio is the dream of streaming services. There’s a reason Pandora calls itself Pandora Radio.
 
And the attempts to coopt radio imagery don’t stop there.

Take a look at Verizon’s new Rule the Air logo. It is a retro-looking radio tower. Apparently the people at Verizon think radio towers are cool.

Can you imagine a radio station using a logo like this today? The new-media pundits would pummel the perpetrator for such out-dated imagery.

Most people laughed when Prince became The Artist Formerly Known as Prince. You see where that got him.

Now the joke is on radio. We’re becoming The Medium Formerly Known as Radio.

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.

 

NPR CEO Radio Predictions Don't Add Up

Speaking at the D: All Things Digital conference, NPR CEO Vivian Schiller made two predictions:

In 5-10 years Internet radio will replace broadcast radio.

One day all cars will have Internet radio of some form.

She noted along the way that 40% of weekday listening is in the car.

Her comments were reported by Barrons, and picked up by FMQB. The Barrons story is well worth reading for the other things she had to say.

Her Predictions, however, just don’t add up.

Last year, 10.4 million cars were sold in the US. GM predicts that about 12 million cars will be sold this year. There are slightly fewer than 140 million registered cars in the US, out of a total of 250 million registered vehicles.

That means it will take at least 12 years to replace all the cars on the road today.

It is anybody’s guess how many of those new cars will have docking stations or built-in Internet access. GM’s OnStar has 5 million subscribers. That tells us that not a lot of people want to pay a monthly fee to be constantly connected.

Analysts predict that AT&T will sell 15.8 million iPhones this year. That suggests that more people are likely to use some sort of smart phone docking arrangement than pay a separate fee for car Internet access.

How many smart phone owners are going to buy a car in the next five years, or ten? Even if a quarter of iPhone and Android users buy a car in the coming years, it will take decades for most people to have convenient Internet access in their car.

If 40% of listening is done in the car, and it will be decades before the majority of cars have Internet access, how can Internet radio replace broadcast radio in 5-10 years ? It isn't likely in 20 years, let alone 10 years.

Maybe Ms. Schiller was just talking about NPR listeners. Most NPR listeners probably already own an iPhone and replace their Mercedes or BMW every couple of years. We wrote about them not too long ago here.

Is Jelli the Future of Radio?

The success of Internet-based services is based less on innovation, and more on the ability to give the illusion of innovation by adapting well-established practices to the web.

Combine that with a seemingly endless ability to create buzz by turning nouns into verbs (think Googling), and it is easy to understand why Internet companies attract so much attention and money.

Crowdsourcing, what we called collaboration in pre-Internet times, is one example. Coined by Jeff Howe in a June 2006 Wired magazine article The Rise of Crowdsourcing, crowd-sourcing is farming out a task to a large numbers of people (a crowd). Crowdsourcing isn’t new, but the Internet has expanded its uses and given it a higher profile.

Crowdsourcing has created search algorithms, art, consumer products, television commercials, and it is the driving force behind Jelli.

This is how Jelli bills itself:

Jelli is 100% user-controlled radio, enabling users to take over a radio station using their web browsers. Leveraging the power of the web to reinvent traditional broadcasting, Jelli empowers the community to interact with the broadcast in real-time and determine dynamically what plays on the air.

Read more about the company here.

In a companion post on Pandora, we questioned whether Pandora’s music genome project was a sign of radio’s future or a throwback to radio’s past. We concluded that while Pandora exploited some strengths of the Internet, it ultimately failed to offer any advantage to radio’s historical “top down” approach to programming.

Pandora simply replaces the traditional programmer’s role with musicologists and algorithms. Jelli does something very different. It puts the listener in charge.

But like most things on the Internet, it isn’t entirely new. Listeners have been gradually wresting greater control from program directors for some time.

Early on, radio Program Directors were like Pandora’s musicologists. They were the experts, and made all the decisions. Then forward thinking music stations starting paying attention to what listeners wanted to hear.

They started tracking record sales and requests. As a result, Top 40 playlists started better reflecting music tastes. Listeners were beginning to determine what they heard on the radio.

Then, in the 1980s, Program Directors discovered music testing. Music testing provided much more information than record sales and requests. Program Directors could not only determine the songs that listeners wanted to hear, they could determine which songs listeners didn’t want to hear.

Today with continuous online music testing, playlists can be refined on a nearly daily basis. Listeners are in charge to a greater degree than ever.

Jelli has taken the next step, and created a visible realtime link from listener to radio station. Not only are listeners in charge. They know it, and can watch it play out.

Jelli is also a social network, here again evolving a station-listener relationship that has existed for years.

The all request count-down has been an evening staple of Top 40 for decades.  In a sense, Top 40 evening shows were the first social network.

Listeners could call in and vote. They could hear their friends on the radio. They could interact with the DJ. And they could directly impact what songs made the count-down.

We think the concepts behind Jelli are worth watching. It is an online evolution of several effective aspects of radio that have helped the medium remain vital and relevant for 80 years.

It shows a path and a means by which radio can evolve to improve the product while at the same time better exploiting the strengths of the Internet.

Next, we’ll turn our attention to Last.fm and scrobbling. Is there a scrobble in your future?

 

iPad Hype versus Reality

Two weeks ago Steve Jobs told the world that iPads were flying off the shelves. Here's what  SFGate had to say:

Apple is up to 1 million iPads sold in just 28 days, more than twice as fast as the original iPhone. Apple said iPad users have downloaded more than 12 million apps and 1.5 million books on the iPad. The App Store has 200,000 apps now, with 5,000 iPad-specific apps.

"Demand continues to exceed supply and we're working hard to get this magical product into the hands of even more customers," said Apple CEO Steve Jobs in a statement.

The iPad might be magical for Apple, but maybe not so magical for media companies that hope the device will be their salvation. According to Mashable:

GQ, one of the first magazine titles to appear on the iPad, has sold 365 copies of its December 2009 Men of the Year issue, according to publisher Pete Hunsinger.

The issue was priced at $2.99 per download — $2 less than the newsstand price — for a grand total of $1,091.35 in sales.

OK, it's a thousand bucks that Conde Nast hadn't made on the print version, and it doesn't tell us anything about how successful the iPad will ultimately be.

But maybe it should serve as a cautionary note to all those companies that believe an iPad app is a pot of gold at the end of the rainbow.

Don't Sell Radio Short

RadioInsights doesn't claim any great investment expertise. We do have pretty sensitive BS meters, however. Last year during the depths of the recession we questioned the rampant fatalism within the broadcast community.

We believed self-serving new-media pundits were fueling the radio is dead meme, and Wall Street was buying it. Read our comments here, here, and here.

As we noted then:

Don't you find it interesting that now that Wall Street has essentially stopped covering radio stocks and the new-media pundits have declared radio toast, that investors out there have started accumulating radio stocks? Doesn't it make you wonder?

If you read our comments and believed as we did that radio was not fatally wounded, you might have taken our advice to invest in radio stocks back in September. You're probably feeling pretty smug right now.

Since then, the stocks we highlighted have done rather well. Cumulus and Entercom have more than doubled, Emmis is up nearly as much, and Entravision, Saga, and Salem have risen nicely. (See the accompanying graphs.)

If you had invested equal dollar amounts in the groups we highlighted, you would have made a profit of 77%. Had you invested in the S&P500 over that same period, you would have made 10%.

The recession seems behind us. Revenues have begun growing again. Next time you read the latest dire predictions for radio, remember that those same pundits were declaring radio dead and buried back in September. Think about how wrong they were.

"The Death of Radio"

Here’s what one writer and observer of electronic media wrote about radio’s fate:

Everybody knows that radio is a dying medium. Nearly anyone who has a smattering of talent is deserting radio for the new medium.Throughout the nation radio lay apparently dying in the wake of new media’s irresistible onslaught. To many, the end of radio seems near.

Sound familiar?

These observations offered by Claude Hall, then Radio-TV editor of Billboard, were actually penned over 30 years ago about the fate of radio nearly 60 years ago. He was writing about the threat that radio faced from television in the early 1950s noting that many were writing off radio. Pundits back then declared that no one would listen to radio when they could watch TV.

Hall went on to explain why it didn't die:

The death of radio was somewhat exaggerated primarily because a few good radio people refused to roll over and play dead. Radio of the mid 1950s was made up of devotees who lived, ate, breathed, and slept radio.

Hall made the point that while television was busy adapting radio programming to TV, radio people were busy reinventing radio.

Television had taken Red Skelton, the Lone Ranger, and Fibber McGee and Molly, but innovators were busy devising new better formats to replace them. Gordon McLendon, Todd Storz, Bill Stewart, Chuck Blore and countless others help reinvent radio creating Top 40, Beautiful Music, All News, and other formats in the years following television’s debut.

Faced with a new-media threat, radio understood that winning was all about product. Deliver an exciting, dramatic, and entertaining product, and nothing can beat local radio. Hall noted even in 1977 that radio was forced to make constant adjustments almost on a day to day basis, but that radio was up to the task:

As a direct result of the dynamic, energetic people in it, radio, as a medium, seems to be totally regenerating.

The key to local radio’s continued strength is innovation. And the key to innovation is enlisting the help of people who do not accept the status quo, and do not accept the inevitability of radio’s demise.

Product innovation made radio successful. Product innovation saved radio in the 1950s. It will save local radio today-provided industry leaders understand that product innovation, not technology, will make the difference. People don’t listen to apps.

Radio Revenue: Predicting Weather Looking Outside

Happy days are here again. The latest revenue predictions are out, and they are up. In March, BIA/Kelsey forecasted a 1.5% increase for 2010, and 2-4% gains over the next few years. Their prediction came right after a 1% gain in radio revenue was announced for January.

Barclays Capital's team of analysts are now even more optimistic. They think revenue may increase 7.4% for the year. Their prediction came right after a 6% gain in radio revenue for February.

Predictions are a funny thing. When things are going well, predictions generally predict more of the same. When things are going poorly, predictions generally predict more of the same. It’s like a weather forecaster looking outside, seeing clouds, and predicting cloudy weather.

The graph at the left show the Barclays predictions for 2010 going back to December 2008. They were predicting a 10% drop for 2009, with things still negative but improving this year, to a 2% drop in 2010.

As we know, 2009 was a brutal year with revenue dropping 18%. As things headed south, Barclays’ predictions became more pessimistic. Their 2010 prediction was revised to -4.0% in March.

Revenue bottomed out in May at -25%. Then things started to turn around. By September revenues were down "only" 13%, and by December revenues were essentially flat with 2008.

In January Barclays predicted 2010 would be up by 2.2%. Now just three months later, the analysts think radio will gain over 7% this year.

In one year their prediction has swung from -4.0% to +7.4%. That doesn’t say much about their long-range predictive ability.

This level of uncertainty is not limited to Barclays. We can find a similar pattern with others that predict radio revenues. When things are going well, they predict growth. When things are going poorly, they predict declines.

It means that when the industry faces an inflection point like 2005 when growth suddenly stopped, or today’s break after three years of precipitous declines, the analysts are essentially punting. They really don’t know where things are headed.

During times like these radio needs analysts who do more than look outside. These are turbulent times. Radio could use analysts who study the cross-currents impacting radio and tell us something we don’t know.

Has Internet Radio Peaked?

Is it possible that Internet radio has peaked? Have we reached the point where nearly everyone who wants to listen to online radio is already doing it? That’s a possible conclusion based on Arbitron’s Infinite Dial study.

According to Arbitron, usage of online radio failed to grow last year. In both the 2009 and 2010 studies weekly usage was 17%. The percentage of participants who listened in the past month was flat too at 27%.  The percentage of people who have ever listened barely budged, moving from 49% to 52%.

Conventional wisdom has it that everyone wants to listen to radio online. Every knows that it will only be a matter of time before online radio overtakes broadcast radio. Maybe that is what everybody knows, but may be that’s wrong.

Take a look at the graph above. It shows online and broadcast radio listenership. Internet radio grew 300% in the first four years of the decade. In the second four years growth dropped to 50%, and now growth is down to 40%.

The rate of growth is slowing, and may be coming to a halt.

This wouldn’t be the first time a growth industry petered out a lot faster than anyone expected. Take satellite radio. When satellite radio first launched, there were wild projections that one day everyone would be listening to satellite radio.

Initially satellite grew very quickly. Sirius and XM subscriptions were growing over 30% a year for a time, and there were many discussions within radio about how to defend against satellite. It turned out the concern was unwarranted.

Sooner than anyone expected subscription sales started to decline, and subscriber churn increased. Recently the combined company proudly announced that net subscriptions had grown nearly 2% from a year ago.

Today the stock sells for a buck and no one talks about satellite radio as a growth industry except Mel Karmazin.

We hear a great deal about the phenomenal growth of social media. In early 2008, Nielsen declared Twitter the fastest growing social website with a one year growth rate of 1,382%.

A year later, the growth stopped. According to Quantcast, Twitter peaked in July 2009 and continues to lose ground. Details here.

Is Internet radio the next flame-out? Could Pandora become the Twitter of 2011? Stay tuned.

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.

Radio vs Newspaper: Different Boats-Different Fates

Back in September of last year when things looked pretty bleak for traditional media, we expressed guarded optimism for radio. We argued that while both radio and newspaper seemed locked in a death spiral, the ultimate fates of the two media would turn out differently.

The cost, physical nature of Newspaper, and its 24 hour delivery cycle puts it at a fundamental disadvantage to electronic media. Television and radio can adapt to a digital world much more easily than newspaper.

Mainstream media seems to be coming to the same conclusion. Recently MediaDailyNews noted:

Two of the hardest-hit traditional media will see their fortunes diverge in 2010, according to analysts who expressed muted optimism for the near-term prospects of broadcast radio, but warned of a fresh round of declines for newspapers.

The article contrasted BIA/Kelsey’s estimate of a steady improvement in radio revenue to J.P. Morgan’s prediction of an additional 8% decline in newspaper ad revenue.

Radio is far from out of the woods. It will take years of the projected single digit gains to make up for just the last two years of decline. It is, however, movement in the right direction.

We believe radio can do better than the anemic BIA projections if it gets its mojo back.

Radio needs to get back to work improving and innovating both the broadcast and Internet products. HD is a failure and we need to move on.

Radio also needs to work together under strong leadership to push back against the myths perpetuated by new-media pundits. As we noted in September:

Radio has only itself to blame for the financial shape it finds itself in. It let new media pundits perpetuate a self-serving myth about radio, and radio did nothing about it. It actually did worse than nothing–it panicked. Radio acted like it was in trouble, which only played into the myth.

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.

Having the Guts to Confront the Lies

Traditional radio is dying. How often have we heard that? How many seemingly sincere people say that while intelligent people nod in agreement?

Of course, the factual evidence says otherwise. We’ve recounted the results of numerous studies and listening surveys here, here, here, here, here, here, and elsewhere. Yet new-media true believers simply dismiss all this evidence, arguing (without any proof of their own) that no one listens to radio anymore.

When it comes to the battle between facts and beliefs, beliefs often win. Behavioral research shows that even in the face of overwhelming factual proof to the contrary, many people will continue to hold fast to their misguided beliefs.

Unfortunately, the willingness to accept radio's demise as truth is aided by those who’s financial interests line up with the lie. There’s a lot more money to be made on the radio is dead side.

Television fights a similar battle. New-media pundits dismiss over-the-air TV declaring (contrary to all evidence) that people don’t watch traditional television anymore.

The difference is that while radio seems to suffer from a lack of confidence problem and takes the abuse quietly, television more often pushes back. The latest example is the response to a Forrester forecast. Forrester is a "research" company that peddles pricey studies that often have an upbeat new-media theme.

Advertising Age reports that after Forrester analyst David Cooperstein predicted a decline in television advertising at the recent Association of National Advertisers, CBS Corp. Chief Research Officer David Poltrack (shown above) rose to challenge the prediction. According to Adage, here’s what Poltrack said:

This research says that advertisers are actually pulling money out of television. It is not true. In 2006 when you published this result, Forrester predicted, that 5% to 10% of advertising dollars would be taken out of television in 2007. Television advertising actually went up 4% in 2007. And since 2007, despite the recession, television has increased its share of advertising dollars two full percentage points. So advertisers are spending more of their money on television, not less.

Another account of the moment better conveys Poltrack’s frustration:

He was particularly set off by advertisers' claim (in the Forrester study) that only 41 percent of their media budgets went to TV last year versus 58 percent in a 2008 survey. Poltrack called those figures here "bullsh*t numbers." He added, "For that to happen, if advertising dollars during the recession went down 10 percent, TV advertising would have been down 30 percent. Everyone knows that didn't happen."

A review of Forrester predictions shows a pattern of understating radio and televisions strengths while predicting broad and rapid embracing of new media. The media dutifully print the Forrester predictions without bothering to look back to see how accurate their previous predictions were. (Not very.)

We raised questions about Forrester’s research in August of last year here. The company asserted listening levels were dropping precipitously and in 2009 were less than 7 hours per week. Arbitron’s PPM listening estimate was 12 hours, their diary based estimate was even higher, and both were at the low end of other estimates.

Why isn’t the NAB out front with a truth squad? Where’s the RAB? How about Arbitron supporting radio rather than just bleeding it?

Radio needs people like David Poltrack who are willing to call “bullsh*t” what it is.