What’s Driving Internet Radio
“In the not-too-distant future, a car with a radio that receives only AM or FM will qualify as an antique.” So says a WSJ article covering a new study released by Deloitte on Generation Y’s automotive buying power and preferences.
The study finds that 59% of 19 to 31 year olds place in-car connectivity as the top interior feature when shopping for a new car. This year one out of every four persons in that age group will buy a new car, almost half of them will purchase new or used in the next two years.
That’s driving heavy interest in tuners and platforms that are app ready and adaptable to safe car use. Pandora, TuneIn, iHeartRadio, NPR and others are working with auto manufacturers to place their apps in the cars, as is SiriusXM. Leading the way, Pandora has deals in place with almost 2 dozen auto manufacturers already.
I think there’s a short term and long term view to all of this and long term my money is on all-in aggregators like TuneIn who provide access to anyone who wants to be listed in their directory. If you are a car manufacturer, isn’t that what you would want to offer? I’m thinking that’s what buyers will want to buy.
2011 in Webcast Metrics: Some Winners, Some Losers
Triton Digital has released its monthly top 20 report for December 2011, based on its measurement of streaming platforms that subscribe to its Webcast Metrics service.
I’m weary of the microscopic monthly analysis of this data, so I decided to take a look at what has happened to the general space in a year.
- Pandora continues to completely dominate the measured pack. From January 2011 to December 2011 they grew their AAS (Average Active Sessions) by 88%. Session starts grew by less, meaning they did a pretty good job of holding on to their listeners. Their Time Spent was down, but only slightly from .83 to .75.
- Slacker was the big winner in terms of share of growth, they increased the size of their AAS by nearly 93%. The numbers are much smaller though, Slacker ended the year with an AAS of 50,767, in part thanks to the addition of AOL‘s streaming audience to its network. Slacker’s growing their audience and their tsl — gaining listeners and getting them to listen longer.
- Clear Channel’s online platform is iHeartRadio, although on the ranker it appears as Clear Channel. Their online audience grew as well, but not as much as you might expect given all the promotion. AAS is up by 48%. TSL down from 1.15 to .63 – more listeners spending less time listening.
- CBSRadio’s online platform suffered the loss of AOL’s streaming audience when they moved to Slacker. Their online audience dropped nearly 40% last year.
- ESPNRadio.com started the year on a big high of 17000, the largest standalone streaming number. At the end of the year they were still the biggest, although their number is down to 13,959 in December. It is possible given their singular focus on sports that January’s exciting football playoffs factor into that, I’m not sure.
Got more observations? Chime in! Here are the rankers I took my observations from:
Pandora’s Local Market Clout
Pandora released audience data today showing that they have grown their audience by 50% or more in top markets across the country in the past year. Releasing data that compares January’s audience stats with “holiday 2011″ stats, Pandora now claims to have a 1.0 rating with Adults 18-34 in top markets across the country. 
The report uses audience information provided by Pandora and analyzed by Edison Research using methodology that resembles that used by Arbitron, however, they make no specific comparisons to Arbitron’s reports or other stations in their press release. Releasing audience data in this form enables advertisers and agencies to assimilate Pandora’s audience reach with traditional broadcast radio stations’ reach. This assimilation of data and direct comparison to broadcast audience data is precisely the kind of thing that some broadcasters are trying to prevent.
It’s a powerful statement about Pandora’s popularity that they are able to deliver a 1.0 rating in all of the top ten markets in the US with Adults 18-34. You can read the press release here.
Digital Song Sales and Streaming Performances Were Up in 2011
For the first time, digital music sales are larger than physical sales; accounting for 50.3% of all music purchases in 2011. Digital track sales set a new record with 1.27 billion sales in 2011; an increase of 100 million sales (8.4%) over 2010. Total digital album growth was 20% in 2011 as well, according to Nielsen Soundscan.
Adele had the top selling digital song, but Lady Gaga was the most streamed artist with more than 135 million streams while “Super Bass” by Nicki Minaj was the most streamed songs with nearly 85 million streams (according to Nielsen BDS).
Meanwhile SoundExchange reported that they distributed a record amount of money to artists during the 4th quarter of last year - $89.5 million with more than 18,000 payments, bringing year-end estimated royalty payments to $292 million (up 17 percent from the prior year). The royalties are paid by Internet radio, satellite radio and cable TV music-only channels for their use of sound recordings, and are distributed by SoundExchange to recording artists, record labels, and a non-featured artist fund.
The upward trends in both digital song and album sales and in streaming consumption and compensation are all evidence of a healthy online listening marketplace, something we can all be happy about.
More Music Sharing on Facebook
Facebook has a new music sharing feature that allows friends to listen to what their friends are listening to – at the same time. When connected friends see what their friends are listening to in the chat sidebar on facebook they can click to join the listening experience and hear the same song at the same time from the same service. It’s a new feature that facebook launched last week with integrated partner Spotify. Plans are to roll it out with other music streaming partners in the coming weeks.
It’s easy to see how this could really take off virally and increase time spent with facebook as well as time spent with music services. Spotify has 4.6 million daily active users on facebook already, while other services have far less – MOG has 10,000 daily active users, iHeartRadio has 230,000.
As friends join friends in listening, they can chat about the music they are hearing. Other friends can chat and listen as well, joining a group chat that can expand into new networks of friends of friends.
On demand services like Spotify and MOG probably stand to gain the most from these features which allow any user to become a DJ for their friends, and their friends’ friends. At the same time, it’s bound to be building the online listening audience and time spent with the medium..
Lots of New Internet Radio Deals and Devices at CES
As it was last year, Internet radio in cars is a big topic at CES this week. Ford and Subaru both announced deals and devices that enable listening to Internet radio while you drive.
Subaru announced a deal with Harman’s Aha platform. Aha is powering the Web-connected “fourth band” of radio, alongside AM, FM, and satellite 
radio. Offered on future models, Subaru owners will have instant access to tens of thousands of stations of Web-based content such as: on-demand music from MOG and Rhapsody; Internet radio from SHOUTcast, CBS RADIO, and Slacker; live news; the latest information, news and entertainment podcasts from NPR and others; free audio books; personalized traffic reports; Facebook and Twitter newsfeeds; personalized restaurant recommendations from Yelp; and much more. Functionality will be via an iPhone app, already released, and an upcoming Android app.
On a similar note, Ford announced a new integration for its SYNC AppLink which will bring voice enabled iHeartRadio to its cars. ”Now Ford drivers will be able to create their own custom stations, tune in to the leading radio stations from 150 cities and stay connected to their favorite on-air personalities. Through Ford SYNC AppLink, iHeartRadio will offer drivers the ultimate voice-controlled, personal listening experience.” said Brian Lakamp, president of Clear Channel Digital.
The SYNC enabled iHeartRadio app is already available for iTunes and Blackberries, and coming soon for Androids. Which may be the big selling point that’s attracting folks like Greater Media and Cumulus who have recently signed on with iHeartRadio as their exclusive digital aggregator for online and mobile streaming.
Slacker Adds Live Sports, Customizable Weather
It’s CES week in Vegas, and that means lots of Internet radio companies are announcing new deals and developments.
Slacker will now offer live streaming of major professional and collegiate sports events from ESPN. The new feature began last night with the live broadcast of the BCS Championship game — No. 1 LSU versus No. 2 Alabama — which was available to all Slacker listeners. Slacker also announced a partnership with The Weather Channel to offer customizable forecasts and updates to Slacker listeners.
Adding real-time updates from The Weather Channel to Slacker’s millions of songs and non-music content further highlights Slacker’s commitment to creating the best Personal Radio experience. “Every person is affected by weather; it’s an important part of our lives,” said Jonathan Sasse, senior vice president of marketing at Slacker. “Including weather on our stations is one more way that Slacker is offering the most relevant content to listeners, providing the best possible personal radio experience.”
Meanwhile, Targetspot and Livio Radio have announced that TargetSpot will be the exclusive third-party advertising provider for Livio Connect, which allows consumers to access digital radio content while in their vehicles. Through this partnership, TargetSpot’s advertisers will be able to reach an audience of listeners comprised of 65 percent of the automotive Bluetooth market as well as drivers of major auto brands.
“Digital radio in-car is a game changer: until now, morning drive time has been served by over- the-air radio, but as digital access becomes more readily available in auto, this will change,” said Eyal Goldwerger, CEO of TargetSpot. “We are thrilled to offer our advertisers the ability to reach digital audio consumers in their cars. With TargetSpot’s widening network of distribution partners, advertisers can reach their desired target audiences wherever they are listening and whatever their listening preferences may be.”
Arbitron’s Internet Radio Measurement Headache
In 2003 I started a company called Net Radio Sales that was designed, in large part, to offer a sales solution to streaming broadcast radio stations. Later that year I met with an Arbitron executive to discuss their decision to shut down server based streaming measurement and shift to census based measurement through comScore. I told Arbitron that broadcasters in particular would suffer from that because their streaming audiences were small and local, and would never show up on a national panel. At the time, Arbitron told me that they had two clients (AOL and Yahoo) who were pushing them to move to panel based measurement, and since they were the only two paying clients, the decision had been made. They shuttered Measurecast and moved to estimating streaming audiences based on comScore panel behavior. In case you don’t know the rest, a few years later they abandoned that game as well.
I’ll bet Arbitron wishes they had stayed in server based streaming measurement way back then, because what they had was a platform that measured everyone – streaming broadcast and online only stations, all together. Which brings us to the topic of the day. Now, Arbitron has a bunch of clients who want things done a certain way. Again. This time it’s their broadcast radio clients, and they want Arbitron to measure streaming broadcast stations and online only stations separately. Not just separately but differently, so that the ratings cannot be easily combined.
It’s a problem for Arbitron because their broadcast radio clients pay them a lot of money and they don’t want to alienate them. Those clients want Arbitron to measure their streams – in such a way that they can roll up their broadcast and streaming audiences into one and sell that total audience to advertisers. And they don’t want to be compared to online stations.
And then we have Pandora. Pandora has a large audience – large enough that they can now claim to have more listeners in many markets than some broadcast stations. And they are claiming that – by working with research firm Edison Research, who has helped them crunch numbers and make comparisons. Using standard calculations that are not proprietary.
Under pressure from its clients, Arbitron recently sent out a letter intended to dissuade buyers from using the data that Pandora, with the help of Edison, has been releasing, stating: “We strongly advise clients to avoid comparing self-reported audience estimates from Internet music services to Arbitron radio audience estimates…” They offer several reasons why it’s a bad idea, including claiming that there’s no way to know if anyone is really listening. Really. The most overused objection to radio, the objection that every salesperson in the world learned to overcome in Radio 101? I just really think it’s the pot calling the kettle black on that one.
But on to the thing that really concerns me. Arbitron says comparisons between broadcast streams and online streams can’t be made because there is a vast difference between “one to one” and “one to many” streaming audiences. They’ve created an imaginary line to justify measuring the two categories separately and differently. Supposedly, because “one to many” audiences are all exposed to the message simultaneously while “one to one” listeners are exposed to the message during their unique sessions, the data is different and cannot be assimilated.
Huh?
“This is an absolutely meaningless distinction” says Kurt Hanson, Publisher of RAIN: Radio and Internet Newsletter and Founder of AccuRadio, an online station. “Case in point: If Samuel Adams wants to deliver one million impressions of a commercial to listeners in the 4pm hour next Friday (to use a simplified example), they can either buy (A) a couple dozen top AM/FM radio stations, in which case the WAAA listeners will hear it at 4:08pm, the WBBB listeners will hear it at 4:10pm, the WCCC listeners will hear it at 4:13pm, and so forth, or (B) they can buy their desired demographic slice of the audience of a brand like Pandora, in which case some listeners will hear it at 4:01pm, some will hear it at 4:02pm, and so forth. In BOTH scenarios, not all of the target consumers are hearing the spot at the same exact moment! That’s never been important to the advertiser. Both scenarios are precisely the same, in terms if effect, for Samuel Adams.”
I asked one of the smartest agency folks I know – Natalie Swed Stone, US Director, National Radio Investment, OMD, what she thought. She pointed me to her write up for RBR, which she wrote a few weeks ago, and I highlight this quote: “The research has to follow the investment patterns. The more uniform the data, the easier it will be–but marketers and agencies will continue to buy what they want and use best available research to evaluate and estimate behavior.” In other words, research firms should offer data based on the ways that buyers want to buy. If the research does not do that, buyers will do what they have to.
Network radio has been adding up time shifted audiences(that are not hearing the message simultaneously) for decades. It’s completely acceptable to represent a network audience’s AQH as the sum of the AQH’s of audiences across the country listening to a program on hundreds of stations at different times. Arbitron’s RADAR product does this. “When we buy national schedules—they can air on different stations at different times—within the prescribed daypart…” Swed Stone told me, “in TV, the currency is currently live plus 3 days (DVR) etc and the currency is the same –even if a person plays back the program 3 days later –it is included in the overall rating.”
To check my thinking on this topic, I spent a lot of time calling and emailing digitally savvy radio people, asking them about this issue. None of my broadcast sources would go on the record, but they uniformly told me that this is a spin game. No one thought the “one to one” and “one to many” distinction holds any water at all. “It’s not intellectually sound.” I was told.
Arbitron is caught in a tough situation. As a research firm, they’re obligated to create products that are fair and objective. But some of their clients don’t want them to do that in a uniform platform. The listening landscape is rapidly evolving into a space that includes new audio platforms. Ultimately, advertisers and listeners will decide the landscape – listeners will listen to what they want to hear and advertisers will spend to reach them.
The audio landscape has never been more diverse and interesting. Pandora, with its enormously popular platform is bringing new advertisers into the space, and this could be a big win for the industry. Grow the pie! Adapting to new dynamics would be time better spent that shoveling sand against the tide..
Beyond Oblivion Loses, SoundCloud Gains In Music Startup Funding
Music related startups received lots of funding in 2011. According to Digital Music News, who kept a tally going all year, startups received $458.8 million in funding last year. That includes $100 million for Spotify, which launched in the US in July.
It also includes $77 million for Beyond Oblivion, an obscure service that many have never heard of, that went belly up this week. Beyond Oblivion had received a ridiculous $87 million in total in funding, and counted News Corp as one of its investors. The service never launched. Boinc, as it was to be called, was planning to offer both ad-free and subscription fee cloud based music streaming which would be paid for by manufacturers of mobile phones, computers and other devices. The huge funding it received and the fact that it spent it all and went bust before launching is causing some to speculate about another online investment bubble (not to mention the sanity of News Corp.)
The new year started off with some new funding for Berlin, Germany based SoundCloud, which just took $50 million from Kleiner Perkins Caufield & Byers, the firm that tech trend expert Mary Meeker is partners with. Last year Meeker predicted that online music would be the next “big thing.” Fred Wilson’s Union Square Ventures is also invested in SoundCloud, a service that enables anyone to record, upload and share music.
Targetspot, MOG, Rdio and Turntable.fm are other Internet radio related services that landed funding deals in 2011. The complete list is here, and below:
eMarketer: 2012 Will Be A Big Year For Streaming Music
Cloud based streaming of music will be a key digital trend this year, according to a report by eMarketer. Rapid adoption of smartphones, tablets and other connected devices has shifted consumer expectations. Now, consumers expect consumption to be seamless across all of their connected platforms. This creates both a challenge and an opportunity for content providers and advertisers as they move to meet those expectations.
Music is a key example of content that consumers will seek to access mobilely and across multiple devices. Platforms and technologies that give listeners instant access to their music collection on their assortment of devices are perfectly suited to this challenge.
Streaming music, or cloud based music as eMarketer refers to it, will get its long term test in 2012. 
While a large part of the challenge to these online services is to keep listeners happy as they tune in on their collection of devices, that’s precisely the opportunity for streaming music as well. Music collections used to live at home, and then moved onto an ipod, but were purchased, collected and synced by the listener as a physical library. Cloud based music changes all of that, enabling listening to streaming services to replace the purchase of music. Services that allow that – from Pandora to Spotify to Amazon’s and Apple’s cloud services – are increasingly preferred by consumers.
Of course, the challenge in this major shift from purchasing music to streaming it from a service is the revenue, and the question remains whether the services can make money through subscriptions and advertising to cover licensing obligations and survive.
All of these challenges take place within a digital experience that continues to evolve – mobile commerce, targeted ads, privacy and social media are lending to an increasingly sophisticated online marketplace.
