Radio InSights

Is Radio Chasing Newspaper to the Bottom?

By every measure digital has been a disaster for newspaper.

Newspaper was the first legacy medium to take a serious hit from digital alternatives. Revenue peaked in 2006 and has dropped virtually every year since.

Take a look below at the last 10 years of newspaper’s revenue and circulation performance. (Click on it to enlarge.)

Pretty ugly, isn’t it?

It wasn’t that long ago that newspaper revenue was nearly three times that of radio. Today it’s just slightly ahead and at the rate its falling, newspaper revenue may fall behind radio in the not too distant future.

Given newspaper’s miserable failure to remake itself as a digital medium, why is it that radio is following a similar path as it evolves into a digital medium?

With revenue declining newspapers took the easy way out. They cut expenses.

Newspaper companies placed a higher priority on protecting profits than defending revenue.

They bastardized content firing newsroom people, replacing local stories with syndicate content, eliminating pages and even whole sections.

Some papers are not even printing seven days of the week.

At a time when newspapers needed to reinvent themselves, they made little more than token efforts to better compete with digital alternatives.

Circulation and revenue declines moving in lock-step confirm the folly of their efforts.

Yes, newspapers are selling more digital space, but while giving up print dollars, they are recouping digital dimes.

Take a look at the graph below. It shows newspaper newsroom employment from a yearly survey conducted by the American Society of News Editors.

Newspapers started cutting staff going into the recession, but have since continued cutting staff. Today newsrooms are 40% smaller than just eight years ago.

Do those numbers give you the impression that newspapers are working hard to develop more compelling print products, products designed for tomorrow’s readers?

Do those numbers give you the impression that newspapers are developing new digital products to compliment their print editions and effectively compete against pure-play digital products?

Gutting content to protect profits hasn’t worked.

Gutting content may be looked back upon as newspaper’s fatal mistake from which it never recovered.

Radio is following a similar course.

Cut expenses to protect profits. Bastardize the on-air product and make token digital efforts that are neither innovative nor effective.

We know how it turned out for newspaper.

Should we really wonder how it will turn out for radio?

 

The Lie Behind Live and Local

Live and Local!

It is radio’s greatest strength. It is the single most important advantage that local radio has over its digital challengers.

That’s what we’re told.

Invariably Live and Local is the battle cry of industry leaders and broadcast CEOs when they defend local radio against radio’s critics.

How can it be that these same leaders are the ones aggressively stripping radio of both?

Live local shows are disappearing with voice tracking (often with out-of-market voices) replacing them.

Untested inexperienced hosts are replacing successful experienced (but expensive) personalities.

Popular teams are broken up with (less expensive) side-kicks doing solo shows.

Various excuses are given for the cut-backs, but we all know that these are cost-cutting moves.

The sole motivation is to maintain profitability in the face of declining revenue.

How do we reconcile the rhetoric surrounding Live and Local with these actions?

As we recently noted, television seems to be weathering digital assaults better than radio.

Perhaps one reason is because television continues to invest in its people while radio is aggressively shedding people.

Randy Stine writing in Radio World recently highlighted the difference by noting that while television has steadily added jobs since the Great Recession, radio has continued to eliminate jobs. See graph at left. (Click on graph to enlarge.)

When will radio acknowledge the hypocrisy of claiming the importance of Live and Local and then taking actions that undermine it?

At this year’s NAB Show Gordon Smith declared:

There is no other industry in the world like broadcasting... ...no other industry has, at its core, such an overarching focus on bringing communities together and serving the public good.

Perhaps he was talking about local television.

 

Social Media Fails to Deliver

U.S. companies spent a combined $5.1 billion on social media advertising last year. According to new research, it appears most of the money was wasted.

Gallup research found that two-thirds of U.S. consumers say that social media has no influence on their buying decisions. The conclusion of the authors:

“Social media are not the powerful and persuasive marketing force many companies hoped they would be.”

That’s an understatement. Only 5% of those polled felt that social media has a great deal of influence on their purchasing decisions.

In another study Nielsen (paywall) found that global consumers trusted ads on radio in addition to television, print, and billboards more than social media ads.

Radio Insights recently pointed out that fraud is rampant in the video ad business with more than half of online video ads never seen, and that an equal percentage of  banner impressions served on advertising networks and exchanges are never seen.

Now it turns out that social media is ineffective.

It makes one wonder how many products and services are losing out because they are pulling dollars from radio and other traditional media so they can buy online video ads, banners, and a Facebook presence.

Humpty Dumpty & the Meaning of Local Radio

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

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

An example is the word local as in local radio.

Three years ago one pundit proclaimed:

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

At the time we declared it new-media rubbish.

Now Seth Godin has essentially rewritten the piece, writing:

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

Humpty Dumpty would be proud.

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

They believe radio’s economic survival depends on it.

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

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

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

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

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

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

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

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

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

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

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

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

Stay tuned.

Howard Stern Desperately Tries to Remain Relevant

Radio and television remain powerful vehicles to launch and sustain entertainment careers, something that new media cannot do.

The drama playing out right now for Howard Stern is the latest illustration.

Remember Howard Stern?

You may have to glace at his Wikipedia bio to remember how successful and influential he was while he was on the radio.

TV shows, two books, two highly successful pay-per-view deals. Even three covers of Rolling Stone.

At one point his self-proclaimed status as “King of All Media” might have been true.

But no more.

Scroll down his Wiki entry to the brief Satellite radio section and you’ll see very little. No book deals, no TV, nothing but two channels on Sirius and a huge paycheck.

Stern’s move to satellite made him very rich but also an increasingly irrelevant talking head. Maybe that's why People declared Ryan Seacrest the new King of All Media a few years later.

So it shouldn’t be surprising that someone leaked that Stern was in negotiations with NBC to be Piers Morgan’s replacement on America’s Got Talent.

He’s floated plenty of deal rumors in the past, but this one is different. He really needs this job.

A chair at the judge’s table would give him the prime-time exposure he needs to rebuild his image as someone who still matters.

Because mass media still matters.

Satellite radio is a niche. Something like 95% of Americans don’t listen to satellite, and only a small proportion of the 5% listen to Howard Stern.

Satellite radio is great place to hide if you want to become obscure.

The only way Howard Stern could become even more obscure would be to move to digital media.

All the upbeat predictions about how new-media is replacing traditional media come from new-media stakeholders who pray it’s true.

How many entertainers have come from Social media or YouTube and gone on to become stars?

Yes, there are plenty of events and people that go viral. Singing cats and talking dogs can generate millions of views. But how many careers have been launched through digital media?

 

The Internet and social media create instant buzz that fades quickly.

Stern is not the only mainstream media star that has lost relevance by abandoning mainstream. Oprah is struggling with her OWN network. Both Keith Olbermann and Glenn Beck are off most people’s radar screens.

As the Wrap recently noted:

With Olbermann moving to Current TV and Beck leaving Fox for a subscription internet service, both have fallen out of the national conversation. The power of broadcast and cable has, in this case, trumped the power of their personal brands.

Howard Stern is a highly talented personality, the kind of personality that radio needs right now. But Stern needs radio as much as radio needs Stern--maybe even more.

People talked about Howard Stern because radio gave him reach and influence.

Let's hope he gets the America's Got Talent job, and then abandons satellite's obscurity for a real radio gig.

Is Radio Embracing Digital Too Quickly?

 

Is radio embracing digital too slowly, or too quickly?

While the answer may seem obvious given the barrage of criticism directed at broadcast radio, the answer is not as obvious as you might think.

 We’ve all heard the criticism:

“Many terrestrial station owners resistant (streaming), in part because it is human nature to resist change.”

“The inability of today's leaders to see tomorrow is as old as industry leadership itself.” 

“The sooner broadcasters step into that space (streaming), the better.”

But like the calls of religious zealots, the self-assured beseechments of new-media types are based on faith rather than facts.

BIA/Kelsey thinks that digital will contribute half a billion dollars to radio this year. How much more would digital contribute to radio’s $15 billion revenue if radio moved faster?

Critics don’t have a clue. Like a scene out of Field of Dreams, they just believe if you build it, the dollars will come.

Jerry Lee, owner of Philadelphia’s WBEB, disagrees:

For me to go out and sell digital is playing with pennies against the dollars I could make by becoming sharper at selling my product.  The money comes from selling commercials.

As it turns out, radio just may be doing what Lee warns against, working too hard to bring in digital pennies instead of working to bring in more spot dollars.

Harker Research recently analyzed radio revenue patterns going back to 2009 and to no one’s surprise found that a growing proportion of revenue growth is coming from digital.

Radio critics point to this as proof that digital is the key to radio’s future growth. But is it?

 

Take a look at the graph at left (click to enlarge).

 

 

We have indexed quarterly revenue for spot radio, spot TV, and newspaper print against 2009 as media were coming out of the recession. To smooth out seasonal effects, each data point is the average of four quarters.

Television has rebounded from its post-election doldrums, and is now growing steadily. It now stands ahead of where it was in 2009. Newspaper continues its free-fall, now at 70% of 2008 print revenue.

Radio is better off than newspaper, but worse off than television. It appears stuck at about 92% of 2009 spot revenue.

The contrast between the three media’s recovery from the recession suggest that each is on a different trajectory.
      
Television spot growth is considerably stronger than radio’s, suggesting that radio might be inadvertantly following newspaper's path. Instead, perhaps radio ought to emulate television’s growth strategy.

The curious thing is that as the second chart illustrates, newspaper generates the highest proportion of revenue from digital, television generates the least, and radio is in between.

The medium that has focused primarily on its traditional product, television, is the most successful, while the medium that has essentially gutted its product, newspaper, is the least successful.

If digital is the key to growth, why is television, the medium that has done the least preparing for a digital future doing better than either radio or newspaper?

Newspaper was the first medium to decide that the future was digital. Newspapers put all their resources into re-inventing newspaper as an online product.

They fired reporters, writers, and editors, eliminated whole newspaper sections, and in most ways hollowed-out the product they delivered to readers.

During this time, print revenues dropped like a rock. $23 billion of annual print revenues have evaporated.

After eight years of gutting print to grow digital, newspaper has $3 billion of annual digital revenue to show for it, still leaving the medium $20 billion in the hole.

Radio has approached its digital future much like newspaper. It too has taken an axe to the product, firing air staff and program directors, cutting marketing and research dollars all the while it pours more money into digital.

If gutting newspapers backfired and left print in a deep hole, will it happen to radio too?

The third graph traces newspaper’s growth in digital revenue from 2003 when the Newspaper Association of America starting reporting digital separately.

 

As with the first graph, the data points are four-quarter averages of quarterly digital revenue as reported by the association, in this case indexed to 2003 revenue.

Revenue grew steadily until the recession, fell back, and then returned to pre-recession levels. Perhaps digital revenues will continue to grow, but so far this year digital growth has been anemic.

Newspaper may be facing a future of falling print revenue, combined with stalled digital growth.

The second trend in red on the graph is radio’s performance indexed to 2008 when the RAB started breaking out digital.

At this rate, digital revenues will reach about 8% of radio’s on-air spot revenue in about five years.

Newspaper’s failure to stop the bleeding with a digital focus, in contrast to television’s continued success improving its traditional product should be a warning to radio.

Digital has turned out to be a trap for newspaper. Gutting its print product to fund digital efforts has not solved newspaper’s problems. If anything, it has made the problems worse.

Television seems to be doing just fine with only 3% of its revenue coming from digital.

Television’s focus on creating a product that consumers want–even in a digital age, seems to be paying off.

Time spent sitting in front of a television set has inched upwards even as time with computer and mobile video consumption has grown.

Maybe if radio devoted more energy in creating compelling products like television has, radio might grow its revenue like television has.

Otherwise radio might find itself in the same deep hole in which newspaper finds itself.

Why “Crusty Old Buzzard” Media Keep Winning

There’s nothing more frustrating to broadcast radio critics than radio’s continued success. The critics tell us that radio along with the other traditional media will soon be toast, just a distant memory of past glories.

Soon listeners will abandon radio for Internet alternatives. Media buyers will follow them pouring more and more money into new media, ultimately starving radio to a financial death, the critics tell us.

Yet listeners keep listening, media buyers keep buying. The latest projections have broadcast radio spot revenue continuing to grow for the foreseeable future even without digital.

How can that be? How can radio critics be so righteously confident they’re right, and yet so wrong-headedly wrong?

A recent MediaPost column by Bill Rose, Seiter & Miller VP/Director of Account Services, notes that:

Big, old media brands with their passive audiences, one-way communication and clunky buyer/seller interactions (face-to-face selling, really?) are just not ready to leave the party. Many of these crusty old buzzards are having banner years in this, the second decade of the 21st century.

Rose believes these crusty old buzzards aren’t toast for a very good reason: They deliver value to the advertiser. He attributes traditional media’s continued strength to its ability to:

Drive fundamental awareness and positive perceptions for a product or brand. It is the gateway to deeper brand relationships; (it) is the battleground for the biggest marketing bucks.

He believes that “Digital media (online, mobile and social) have not inspired confidence that they can be the lead spears in putting a brand quickly on the map of consumer's consciousness.”

Advertisers may like to dabble in new delivery systems, but ultimately they put the lion’s share of their budgets into media that deliver value. Radio’s reach is unsurpassed. Radio’s ability to efficiently target an audience beats even television.

New media is not radio’s greatest threat. It is radio’s self-doubt and a fire-sale mentality that diminishes the product and willingly drives CPPs down.

Be sure to read his entire commentary.

Pew Distorts & Misleads to Torpedo Radio...Again.

 
Pew calls it the Project for Excellence in Journalism, but it is really anything but.

Excellence doesn’t come from patching together a journalistic quilt of conflicting and contradictory research to support a biased and agenda-ridden narrative.

Excellence doesn’t come from selectively choosing data that supports a predetermined narrative while burying data that doesn’t.

Here’s how Pew sees the state of radio (emphasis added):

Most people still listen to news, talk and music for at least a little while every week, and they do most of this listening through traditional broadcast, or "terrestrial," radio. Yet this is where the profit and revenue are under the most pressure. Many stations have left the air and some owners of multiple stations have entered bankruptcy.

Terrestrial broadcast radio continues to serve the greatest number of overall listeners....This dominance, though, is based on an old advertiser-supported model that is showing serious cracks, especially if trends that are accelerating in other sectors hit radio in a way they haven't yet.

One has to gasp at the inaccuracies and misleading characterizations made in a mere two paragraphs.

This is simply an uninformed opinion based on nothing. It isn’t objective. It has nothing to do with excellence nor journalism nor even Pew’s own research.

The people behind this report appear convinced that radio is on the ropes, and they seem prepared to dismiss (or hide) any facts to the contrary. Radio’s imminent demise fits into a nice simple storyline, even if it is fictional.

A Pew study of news consumption last September produced this Inside Radio headline: Radio news hits lowest point in 20 years.

The story reproduced a Pew graph showing plunging radio news listenership. Unfortunately, Inside Radio appears to have relied on the Pew press release rather than studied the actual data.

The precise phrasing of a survey question is critically important. Small changes in a question can produce very different answers. For newspaper, the survey simply asked: Did you get a chance to read a daily newspaper yesterday, or not? The TV question was similar.

Simple and straightforward enough. Now take a look at the radio question:

About how much time, if any, did you spend listening to a radio news program or any news on the radio yesterday, or didn’t you happen to listen to the news on the radio yesterday?

Huh? What'd they say? Would you understand that question?

The radio question is long and confusing. By the end, it isn't clear what's being asked. It invites the participant to just say nope and be done with it.

Fortunately, Pew studies have included a different question that provides more straightforward insights into radio's role in informing Americans. The question is: Do you listen to news on the radio regularly, or not? Similar questions were asked of television and newspaper.

While Pew didn't see fit to graph the trend, we've created a graph showing radio, television, and newspaper over time.

Radio is down about 17% in 16 years, with the majority of losses in the 1990s. Since 2000, the losses have dropped by half. Television shows a similar pattern with the majority of losses occurring early in the polling. Newspaper losses are nearly twice radio’s.

Yes, radio is down, but the erosion is modest and similar to TV’s. But you wouldn’t know it from the report or press release.

Wonder why.

Perhaps showing radio holding its own against television and gaining on newspaper doesn’t fit Pew’s narrative. If the authors believe commercial radio is fast approaching the abyss, perhaps it is easier to just bury any evidence to the contrary.

Now Pew has produced a new report, The State of the News Media 2011. It once again uses a mash-up of factoids gathered from Nielsen, Arbitron, the Audit Bureau, NPR, and their own studies to weave a tale of traditional media in a tail-spin.

And once again Inside Radio dutifully reprinted their talking points without any critical analysis. 

In the way a picure tells a thousand stories, the Pew graph at left tells a thousand lies.

The only bar that goes up is the Internet. By comparison, traditional media looks in bad shape.

The problem is that the graph is mixing Pew’s news consumption data with Nielsen viewership and Arbitron listenership data.

The graph is worse than meaningless. It is a distortion of the worst kind.

Pew claims Internet usage for news is up over a year ago, but their own data says it is actually down (p137). They had to pick another starting point to make sure it looked like the Internet was growing.

If you take the change in Internet news consumption from July 2009 to July 2010, Internet actually declined 19%. Oops.

For radio (what they now call Audio) Pew’s graph shows radio declining 6%, but according to their own data, Radio was off compared to July 2009, but flat from December 2009 to July 2010.

As it turns out, by picking a different 2009 data set, you can show every medium moving up or down. Radio growth actually beat television between December and July! Oops, again.

But again, to admit to a less than clear-cut downward trend for traditional media, and a less than ballistic path for new-media would't fit the narrative. It seems, the graph has to fit the narrative, not the other way round.

The television numbers seem to be chosen arbitrarily, as well. Using Nielsen data, Pew concludes that cable news is down across the board. However, according to the Pew data (p138), Fox and MSNBC are as strong as they were last year.

But the notion that specific cable news channels might be losing while others gain audience adds nuance that compromises the over-arching theme of the assendancy of new-media. Simpler to paint a single brush stroke of cable news in trouble.

Of course, Pew couldn’t resist the temptation to take a shot at commercial radio by highlighting the growth of NPR:

NPR, by contrast (to commercial radio), has flourished as commercial all-news radio programming has become scarcer.

While Pew makes frequent use of footnotes to give weight to their claims, you won't find any support offered for the claim that all-news programming is scarcer, because it isn't true. The authors want to believe that commercial radio is abandoning news, even if it is untrue.

But Pew doesn't seem to be in search of the truth.

Ironically, Pew cites NPR’s internal data rather than their own Excellence in Journalism data. The graph at the left shows NPR listenership over time according to their polls.

Participants were asked whether they listen to NPR regularly, sometimes, hardly ever, or never. The numbers of listeners who answer regularly or sometimes has declined 23% since 1996.

In Pew’s report it claims that longer trends are not applicable due to changes in question wording, but the substantial word change took place in 1993. The only reason to ignore the trend from 1994 is the awkwardness of the direction.

For some reason, NPR’s decline just didn’t make it into the report that radio trades were provided.

At every opportunity Pew dismisses commercial radio and cheerleads for radio’s competitors. After having to acknowledge radio’s continued ratings success, Pew adds:

But the biggest change in radio listening maybe just ahead. We are on the brink of internet radio being widely available for the first time. Toyota is including Pandora in its multimedia systems in all models....

Of course, Clear Channel’s iHeartRadio will also be on Toyotas, but that fact would interfere with their narrative of imminent new-media domination.

Pew has actually been predicting broadcast radio’s demise since 2006, something we first wrote about in 2009. You have to give them credit, they are determined to prevent facts from dampening their dream. 

Giving Aid & Comfort to Radio's Enemies

It is a sign of broadcast radio’s self-loathing that a session at the NAB Radio Show was devoted to statistical flagellation. 

In a masochistic mood, the Radio Show program committee decided to highlight research purporting to show plunging usage of radio among young listeners.

The research results were duly reported by the trades with little comment and even less analysis. The dramatic decline was accepted as fact.

The study claims that in the past decade daily radio listenership among 12-24 year olds has fallen from two hours forty-three minutes to one hour twenty four minutes today. So according to the study daily TSL has fallen 49%.

Has young listening really dropped 49%? And if it hasn’t, can we trust the rest of the study findings?

The biggest problem with this study is that it is comparing apples and oranges. In fact, virtually every listening trend analysis published today is comparing apples and oranges.

To assess listening changes over time, we have to use a sound consistent research strategy. We have to be sure that listenership is measured the same way each time.

The 49% decline compares self-estimated listenership in a 2000 telephone-based study to the responses of a 2010 online panel of participants.

There are two problems with this approach.

Trending telephone study responses to online responses exaggerates radio listenership declines.

Research has confirmed what should be obvious: The apparent strength and popularity of digital media is higher in online research, while traditional media like radio tend to look comparatively worse.

There is nothing wrong with using an online panel to understand media usage today, but we can’t trend the information unless the prior study was also done online. 

The second well understood problem with the study is that it asks the online panelists to estimate the amount of time they use each medium.

As we reported some time ago, research shows that people tend to over-estimate their digital consumption, while at the same time under-estimating their traditional media consumption.

For example, Nielsen puts teen television viewership at nearly four hours a day while the study’s self-reported viewership is less than three hours, a major difference. Nielsen puts young radio listening at nearly three hours a day, twice the study’s claim.

So we have two factors that both exaggerate radio listening declines while overstating digital usage.

Then there’s the sniff test. Is the estimate consistent with directly measured listening estimates?

We have a decade of Arbitron trends along with two years of Nielsen estimates to judge the reasonableness of the study’s 49% drop in listening.

In a methodological sound analysis of Arbitron and Nielsen listening trends, Harker Research found that 12+ TSL had declined just 1% in the past year. 

Using a similar approach, our analysis suggests that 12-24 TSL in diary markets declined less than 20% in the first eight years of the decade before most large markets had made the transition to PPM.

Arbitron’s yearly Radio Today has become an odd amalgam of diary and PPM based estimates, which compromises its value. However, despite the addition of lower PPM estimates, even Arbitron shows a much smaller decline in young listening.

Isolating PPM trends as we did in our earlier analysis raises further questions about the purported 49% decline. Some established PPM markets actually show 12-24 TSL increases coinciding with new CHR stations in large markets!

UPDATE: The Southern California Broadcasters Association just released an analysis of PPM showing 12-34 TSL up slightly in the past two years to 10:09. See the analysis here.

Many people in and outside of radio want to believe the 49% loss. They want to believe that broadcast has become irrelevant to young listeners.

Research that exaggerates radio’s decline is red meat for new-media bloggers and pundits. Studies like this give aid and comfort to broadcast’s enemies, those who delight in finding any factoid or tidbit that shows radio on the ropes. 

We do not deny that radio faces challenges. We are not attempting to conceal the truth in an effort to gloss over radio’s challenges. Radio listening has declined over the past decade, but at a much smaller rate than new-media stakeholders want you to believe.

We believe misguided research that portrays radio far worse-off than it really is does a disservice to radio. We wonder why the NAB would give its blessing to research that distorts radio health.

We believe that both radio’s supporters as well as detractors should know the real story-–even when many don’t want to believe it.

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.

 

Traditional TV & Radio: Still Way Bigger Than You Think

You may be used to seeing this sort of headline at RadioInsights, but this is the headline over at Digital Music News, not the sort of source you’d expect.

It’s based on a massive cross-media consumption study conducted by Ofcon, the U.K.’s independent regulator and competition authority for the country’s communications industries.

The report is useful for two primary reasons. First, it examines a wide range of media and activities, more than done in most studies. Secondly, it was done by a regulatory agency, not by a new-media stakeholder that might be interested in coloring the conclusions.

Of special significance to radio is the finding that radio listenership (TSL) has fallen 2% annually since 2004. Daily TSL dropped from 188 minutes to 170 minutes over the five years. The latest estimate works out to be 19.8 hours per week.

You'll recall from a recent post that we estimated TSL in the US dropped 1% last year. The Opcon study is further evidence that broadcast TSL is dropping at a much slower rate than many people think.

Digital Music News reproduced one interesting graph from the study shown at the left. It shows media consumption through the day with television and radio representing a good share of consumption, particularly during morning and afternoon drives.

We want to draw your attention to another graph shown later in the report. It illustrates shared media usage. People are naturally multitaskers. People often leave the radio or TV on while on the computer, for example.

Unfortunately, most studies examine only one medium at a time. One study might tell us how much time people spend on the computer. Another study might determine radio listening. What we rarely see are studies that show how much time people spend (say) listening to the radio while working at the computer.

The study shows that radio’s “shared” share is greatest during morning drive, then drops off to a steady level through the daytime hours. Television then dominates the evening hours.

Years ago when there were few U.K. commercial radio stations, media consumption patterns differed somewhat from US patterns, but more recently commercial radio in the UK has caught up with American broadcast radio. Consequently, the study is a useful read for American radio broadcasters. You can download the PDF here.

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.

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.

Surprise! NYT Discovers New-Old Media Synergy

Further evidence tempering expectations regarding traditional media’s imminent demise can be found in a New York Times article Old and New Media Coexisting Nicely, Thank You. Here’s the key quote:

"When digital came in, people said, `No one is going to watch TV,' " said Gloria Rosenberg, president at Market Fusion Analytics in New York, a consult firm that helps advertisers develop growth strategies.

But as it turns out, "there's a synergy and not a cannibalization," she added, which is leading marketers to "create integrated communications programs" involving multiple media.

Here’s radio’s problem: The articles finally acknowledging traditional media’s continued relevance focus on television. Over-the-air radio and over-the-air television both have continuing strong usage. Television viewing levels and radio listening levels have barely budged.

Nielsen has shown that media consumption is not a zero-sum game. Yes, people are now watching Internet video, but not at television’s expense. Yes, people are now listening to Internet radio, but not at terrestrial radio’s expense.

But television is winning the PR battle with the advertising community.

Why isn't there a more aggressive attempt to sell radio (not just HD) to Madison Avenue? Why waste millions promoting HD when we need to promote the continued strength and relevancy of all radio.

Nielsen Supports Television. Arbitron Pays Itself Millions.

Why is Nielsen so active in showing the continued relevance of television, while Arbitron pockets millions and does nothing to show the continued relevance of radio?

We’ve asked the question before, for example here and here, but a new Nielsen report again draws attention to the contrast between Nielsen and Arbitron. Nielsen has been studying the impact of the Internet on television for some time now. They’ve found that despite increased use of the Internet, television viewing has actually increased.

As reported in MediaPost:

Nielsen says nearly 60% of TV viewers now use the Internet once a month while also watching TV -- up 3% from a year before. The survey also notes that the number of people who are multitasking grew almost 5% from the year before to 134 million.

This is Nielsen’s seventh Three Screen report (television/computer/mobile). You can read the report PDF here.

The new-media pundits always view media consumption as a zero sum game. If use of the Internet has increased, then consumption of traditional media must have declined. Yet this study as the ones before show that the Internet is increasing media consumption, not cannibalizing traditional media:

Matt O'Grady, media product leader for The Nielsen Company, says from the report: "The initial fear was that Internet and mobile video and entertainment would slowly cannibalize traditional TV viewing, but the steady trend of increased TV viewership alongside expanded simultaneous usage argues something quite different."

So is Arbitron studying the relationship between radio and new media consumption? Has it produced any similar study supporting radio? No, it just buys a few banner ads in Inside Radio to say it cares.

Arbitron makes nearly all its revenue from radio. Net income for the company in 2009 was $42.2 million, a 13% increase over 2008. Arbitron just declared a quarterly 10 cent dividend, paying out $10.6 million a year to its stockholders, many of whom are the executives of Arbitron. That money came from radio stations.

Arbitron, how about giving back some of the money by emulating Nielsen and studying radio listener multi-tasking?

Humpty Dumpty, the Mad Hatter, and Localism (Part 1)

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

"The question is," said Alice, "whether you can make words mean so many different things."

We were reminded of this conversation between Alice and Humpty Dumpty while reading a recent blog post entitled What does "Being Local" mean, anyway?

Though not penned by Lewis Caroll, the post could very well have been spoken at the Mad Hatter’s tea party:

What does "local" mean when everything local is available from everything which is not?...There is no longer any such thing as "local" as we traditionally use the term....The definition of "local" is both expanding and shrinking at the same time.

Pure pundit gibberish.

We don’t dispute the importance of localism. Radio’s localism is its key to success in the digital age. Failure to exploit radio’s greatest strength could severely imperil radio’s resurgence. The trend within some radio groups to systematically eliminate localism by programming at the national level troubles us. The post, however, completely misses the point.

So let us pull up a chair to explore the madness that this Hatter has brought to the party.

Let’s begin with the word Local. New media pundits love to proclaim with great gravitas that digital changes everything–even the English language. They like to co-opt words and redefine them to suit their new world view. It might have worked for Humpty Dumpty, but not here.

The English word local comes from the Latin word locus meaning place. Local refers to or pertains to a particular place here or close-by.

A local landmark, a local crime, a local neighborhood. These things refer to something physically nearby. But local doesn’t have to be physical. Local history and tradition are not physical, but they are linked to here because they happened here.

That’s what local has always meant. The Internet has not, nor can it change what being local means.

As a child growing up on the west coast I would stay up late at night to listen to WABC. The fact that I can now listen to a stream of WABC hasn’t moved New York any closer.

The delivery mechanism has changed. That’s all. The Internet has not changed what local means. Local means here.

But this is how Internet punditry works. Today EVERYTHING is changing. EVERYTHING is going to be different. Even the very meaning of a word like local will be transformed by iPads, Pandora, and the Internet.

Don’t believe it.

A local newspaper, local television station, or local radio station might report on a local news story. The story is local, but so is the source of the news. It is the source--where it came from, that matters. That is why local radio has a tremendous advantage over national audio sources--if it does not abandon this key strength.

Last year AOL bought Patch and Going, two companies that they say operate in the local space. In addition to repurposing old words, new media love to invent new words and phrases. It isn’t clear why we needed a phrase like local space, but AOL gave it to us.

AOL too seems to have slipped through the Looking Glass because here’s how AOL announced the acquisitions:

AOL today announced two acquisitions in the local space: Patch Media, a local news and information platform aimed at serving local towns and communities and Going, a local platform for people to discover and share information about things to do in a number of leading cities across the country. Both Patch and Going offer local experiences, content and self-service applications for consumers and advertisers.

This is how Tim Armstrong, AOL’s Chairman and CEO explained the acquisition:

Local remains one of the most disaggregated experiences on the Web today -- there's a lot of information out there but simply no way for consumers to find it quickly and easily. It's a space that's prime for innovation and an area where AOL has a significant audience and a valuable mapping service in MapQuest.

Going forward, local will be a core area of focus and investment for AOL. The acquisitions of Patch and Going will help us build out our local network further with excellent local services that enable people to stay better informed about what's going on in their neighborhood.

AOL believes localism is one of the most disaggregated experiences and most promising white space on the Internet. Talk about gibberish.

New media people always think they can do something better than local media.

In an internal memo to AOL staff, the company declared that it wanted to be the global and local leader in sourcing, creating, producing and delivering high quality content. And how are they going to achieve this level of quality with local content? They are going to hire a bunch of journalism grads.

This is how a national company is going to conquer the Internet white space of localism--with grad students.

AOL will invest a tremendous amount of money in these companies, and they will fail.

Patch and Going will fail because while Internet companies are marvels at developing delivery systems, they are dreadful creators of content. They can develop generic music products, but beyond creating digital jukeboxes, Internet companies function solely as parasites aggregators of traditional media.

No, despite the ramblings of new media Mad Hatters, digital media and the Internet are not going to conquer or even redefine the meaning of localism. People have been using national sources to learn about local things for a long time. People may use weather.com or Google News, but that does not make either source local.

In part 2 we’ll explain why radio does not compete with Internet companies in localism. It competes with local newspaper and local television. And unless it understands this and starts to respond, it will find itself losing even more ground to these two media.

Traditional Media Begin Push-back. Where's Radio?

After years of touting their digital initiatives, traditional media are beginning to rethink things. The Wall Street Journal recently took note of a new magazine campaign spearheaded by Jann Wenner, creator of Rolling Stone. In a statement that might as well be referring to radio, Wenner wrote:

A lot of us sat back for way too long and listened to all this abuse and said nothing about it. Meanwhile, we sit on top of one of the greatest mediums.

The article adds:

The spark for the campaign was a "manifesto" Mr. Wenner penned last year, in which he said that just as TV didn't kill magazines, the Internet was a threat only to publications that lost focus on what makes magazines unique. "In a certain way, this campaign is aimed at the magazine business itself," Mr. Wenner wrote.

Time Warner's Time Inc., Hearst, Advance Publications' Condé Nast, Wenner Media and Meredith are coordinating a $90 million ad campaign touting the "power of print." Nearly 1,400 pages of the ads will appear in magazines including People, Vogue and Ladies' Home Journal this year. The ads were created by WPP's Young & Rubicam. (Click ad to enlarge.)

The WSJ authors note that:

Amid a decline in spending on traditional media, other industries are making similar pitches for themselves. The Newspaper Association of America has run repeated ads to publicize the number of people who read a daily newspaper. As with the magazine campaign, the newspaper trade group says its ads are designed to counter the notion print is a dead medium.

The local-TV industry's trade group is starting an on-air ad campaign this month to encourage companies to advertise on their local TV stations.

We predicted this last year. All these digital initiatives have done more harm than good. Last November we wrote:

Newspapers responded to declining revenue by drastically cutting print expenses. They fired reporters, consolidated staffs, eliminated whole sections of the newspaper, and in many ways they began producing a print product quite inferior to the newspaper they produced in the past.

They felt the future was online, and to hell with the print product. They plundered their print product to finance their digital push. Did it reverse newspaper's fortunes? No. Now newspaper finds itself with a hollowed out print product and little to show for its digital efforts.

Traditional media is beginning to understand that revenue lost from their core non-digital product cannot be made up for in their digital product. And paying for their digital efforts by diverting money from their core product inflicts damage on both.

We closed the post with this warning:

We believe that if radio continues to debase it's terrestrial product in the belief that all that matters is radio's digital future, it will suffer the same consequences that befell newspaper.

Newspaper, local television, and magazines are all pushing back. Where is radio? MIA. The HD campaign? No one listens to HD and no one cares about HD.

The Radio Heard Here campaign? Hopelessly misguided.

The magazine campaign directly targets the Internet, comparing it to print’s strengths. Radio is still selling against satellite, as if that’s the battleground.

Once again, radio demonstrates why it is not taken seriously.

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.

Nielsen to combine TV, online ratings

Nielsen to combine TV, online ratings

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