Sirius XM Is The Elephant In the Room
Sirius XM grew their subscriber base by 8% last year – from 20.6 million subscribers to 22.3 million. First quarter 2012 revenue meanwhile grew at an even more impressive rate of 11% to $805 million. That puts them ahead of the largest broadcaster Clear Channel Radio‘s $672 million. For this year, they are forecasting revenue of $3.3 billion, compared to Clear Channel Radio’s $3.0 billion.
What’s even more impressive is the way they are monetizing their listener base. They make close to $138 per listener/subscriber per year against Clear Channel’s $12.55 (and Pandora‘s $5.84). Sirius XM sure makes the subscription model look attractive. In fact, they have the same number of subscribers as Comcast. They’re projecting household penetration of 13% by the end of this year.
Meanwhile, as I have mentioned before, Sirius XM continues to expand their offerings online. They recently announced a suite of enhancements for their online offering that will allow listeners to pause, rewind and skip, start shows and songs at the beginning, set alerts and record programming. These features will give Sirius XM listeners a highly interactive online listening experience. They’re also redesigning their player and rolling out new mobile device apps.
Sirius XM’s subscriber base is huge, and their ability to monetize it is impressive. While lots of media attention is focused on Pandora, Spotify, Clear Channel and others, when it comes to assessing the new audio marketplace, Sirius XM is the elephant in the room…
Spot Radio Revenue Stands Still While Digital Surges
Broadcast radio revenues grew 1% in the first quarter of 2012, with revenues derived from digital assets at the helm, according to the Radio Advertising Bureau. Digital revenues for broadcasters grew 10% during the same period, or ten times as fast as spot revenue. Network revenues grew 8% and fueled the growth as well.
“While advertisers continue to capitalize on Radio’s Spot and Network efficiencies, they’re increasingly utilizing local digital capabilities and audience engagement that this medium affords.” said Erica Farber, the newly appointed President and CEO of the Radio Advertising Bureau.
Digital revenue now accounts for more than 4% of radio’s overall revenue. Digital revenue grew 15% in 2011, while spot radio lost 1% and network grew 3%. Digital Revenue is made up of activity generated by websites, Internet/web streaming and HD Radio.
So if you were a car dealer that sold ten times as many efficient hybrid cars as you did station wagons, you’d order more hybrid cars for your lot, right? You’d train your salespeople in the best ways to sell hybrid cars, and you would make sure that everyone knew you had a lot of them. In fact, you would move them right up to the front of your lot. That’s the way broadcasters should be looking at their online and digital products. As the engine that is driving their future…
Pandora Is Second Only To Google In Monetizing Mobile
Pandora now has more than 150 million registered users, and more than two thirds of that number has listened on a smartphone or tablet. More than 70 percent of all listening to Pandora occurs on a mobile device. 
To that end, mobile revenues grew from $25 million in 2011 to $100 million in 2012 for the most listened to online radio platform in the US. That puts them second only to Google in terms of mobile advertising revenues, according to a recent press release. This is a good response from Pandora to Wall Street analysts who have been skeptical of the company’s ability to monetize its mobile ad inventory.
Pandora also noted that they are now included in the dashboard of 48 models of cars, and have partnerships with 25 brands of autos and auto aftermarket devices.
Pandora’s mobile strategy has been a key component of their growth – they were early into the iTunes app store and experienced enormous popularity from the beginning that continues today as a mobile platform. With more than 70% of their listening occurring on mobile, their ability to monetize that listening is critical. $100 million sounds like they are on the right path..
Spotify’s Converting Lots of Listeners to Its Premium Service
Music industry analyst and fellow blogger Mark Mulligan posted an analysis of Spotify‘s progress in adding listeners and converting those listeners to premium subscribers recently. Spotify has enjoyed great audience growth in its first year in the US, driven in particular by its integration with facebook earlier this year.
Spotify just hit 20 million users on its facebook app, having added half a million in less than 2 weeks from the 3rd to the 15th of May. That number represents their global, not just US based, audience. Pandora has 100 million registered users in the US.
Spotify appears to be doing a pretty good job of converting those users to paying premium subscribers, their conversion rate globally against the 20 million registered users is 17%. (There is no way to understand what it is in the US alone). Spotify’s premium service comes with no ads, unlimited streaming, and at the higher tier the ability to use the services mobile apps.
Mulligan notes that conversion rates seem to be declining against the massive uptake Spotify has enjoyed via facebook integration. This is of course a natural phenomenon where broader reach is going to result in fewer conversions to paying customers. But among active users, Spotify is converting a strong 27% to subscribers. At that rate, they’ll have more than 6 million paying subscribers by next year.
Triton’s Webcast Metrics Makes It Easier For Buyers To Compare, Invest In Streaming
Triton Digital recently announced that they will add standard radio measurement AQH, or Average Quarter Hour, to the ratings metrics offered by their Webcast Metrics server based audience measurement service. In addition to the MRC-accredited audio metric of Average Active Sessions (AAS), customers subscribing to the new Local Reports feature inside of its Webcast Metrics® product will receive Average Quarter-Hour Rating (AQH Rating) by market – the same metrics typically used when measuring analog radio stations.
This is actually a return to previous practices for Webcast Metrics – the service originally offered ratings in terms of AQH and Cume, metrics used by traditional radio stations to discuss the size of their audience. Webcast Metrics later began using the AAS term instead. Now subscribers will have access to both terms. This will make it much easier to offer side by side ratings between on-air and online listening to services. That’s what advertisers want to see.
“Seeing internet audio in the same terms as traditional radio gives a holistic sense of the audio market, making it easier for buyers to make informed decisions when purchasing ad space,” said Lauren Russo SVP and Director, Audio & Promotions at Horizon Media. “We are excited to see how the ability to provide such a direct comparison will impact advertisers’ views on the value of streaming.” Triton will provide the data to third parties such as advertisers at the request of subscribing stations and platforms.
This is a good decision by Triton Digital, one that is meaningful for the Internet radio marketplace in terms of stimulating revenue. While there are some in the industry that may be in favor of keeping everything separate and magnifying the differences between on-air and online listening, it’s all audio in one form or another. Facilitating the use of data so that advertisers can more easily evaluate and invest in the space is a good thing. This decision by Triton is a step in that direction. Hats off..
Internet Radio Ads Net High Response Rates
Targetspot has updated its yearly study of Internet radio listeners. The newly released information was first presented at RAIN Summit West by Targetspot CEO Eyal Goldwerger. Today, the company made the whitepaper more widely available on its website.
The benchmark study, done by Parks Associates and with the support of the Interactive Advertising Bureau, was first released at last year’s RAIN Summit West. Results of this year’s update show increased listening, particularly to mobile devices, along with increased social activity and response to audio ads.
The findings are all good – the audience is growing, taking Internet radio with them on mobile devices and sharing it with friends on social platforms. Listeners are interacting with their stations, and that’s having a very positive impact on advertising as well. Ad recall and response rates increased 11% since last year, with 58% recalling having seen or heard an Internet Radio ad within the last 30 days compared to 52% in 2011. Of those listeners, 44% responded to an Internet Radio ad in one way or another compared to 40% in 2011, a 10% increase versus last year.
Grooveshark Has Lots of Listeners and Lawsuits
Grooveshark, an on-demand streaming service with a large global audience, is being sued by the four big record labels. They’re the talk of the town when it’s time to discuss services that make it harder for others that follow all the rules to keep listeners happy.
Grooveshark takes a bold approach to music licensing, allowing listeners to upload and share music, and other listeners to listen to any song in their library. Artists can ask to have their music taken down, although there are reports that this is easier said than done. Nonetheless there is an extensive explanation of how to do it on their website.
I first encountered Grooveshark in 2009 when they contacted me and asked me to write about their service. At the time, since they were running an on-demand service that was pretty unique in the US because it was free, I asked them about their music licenses. They told me they had experimental licenses with the record labels. Shortly after that they were sued by EMI – and I realized that it was experimental licensing on the part of Grooveshark – that they likely had no agreement at all with the labels and were waiting to see what would happen.
I’m not the only one that has a problem with this approach. I don’t often discuss licensing issues here on Audio4cast because I think there are other sources out there that do a better job. But it’s not okay with me that an unlicensed service may be growing audience and ad dollars at the expense of services that are operating legally and struggling to be profitable. It tarnishes the industry, creating distrust and dislike between labels and their artists, and the streaming services. It creates expectations among listeners that other services can’t deliver. It distracts ad dollars and casts a bad light on everyone…
Related articles
- EMI Abandons Grooveshark After Company Fails To Make Payments (inquisitr.com)
- Grooveshark now feels lawsuit wrath of all major music labels (news.cnet.com)
- Grooveshark email: How we built a music service without, um, paying for music (news.cnet.com)
- Six Reasons Why Recorded Music Should Be Free (gizmodo.co.uk)
Stitcher’s Got This Election Sewed Up
Stitcher, a service that enables listeners to create personalized podcast playlists, has launched a new service designed to help listeners keep track of their politics. Stitcher Election Center lets listeners follow their favorite political candidates, commentators and topics from one central audio hub and get custom audio updates from favorite news sources like Slate, CBS Radio News, Marketplace, Bloomberg, PRI and MSNBC. In addition to offering updates 
on candidates from news sources, campaigns can also sign up to offer updates to listeners that follow them. Obama for America is already signed up, and the Romney campaign is coming soon.
Stitcher’s niche is its focus on spoken word content and podcasts. They’re the only service concentrating on aggregating that content into an easy to use platform for listeners. With this new offering, they’re actually pulling in content directly from campaigns as well.
There’s a large quantity of unique content available in podcast form – from the vast array of NPR offerings, to Fox and CNN, to Rush Limbaugh and Adam Carolla.
A few weeks ago at RAIN Summit West, Stitcher Founder and CEO Noah Shanok joined a panel called Innovating the News/Talk Format Online to discuss ways that Talk is becoming more interactive and personalized. Stitcher’s definitely a key player in that effort..
SiriusXM Gets Serious With Streaming
SiriusXM will introduce a suite of very interactive features to its Internet radio offering later this year, they announced yesterday. The new offering looks to be designed specifically to compete with offerings by Pandora. Other platforms, such as iHeartradio, have been moving in a similar direction as well, creating personalizable channels and interactive features.
The features sketched out by SiriusXM are extensive in terms of their interactivity – listeners can go back up to 5 hours to select programming, pause their listening and pick up where they left off, replay or skip a song, and organize their listening on a single screen. In addition, Tune Start™ will automatically start the currently playing song from the beginning so listeners will hear the whole song when tuning to any music channel. These features will be available on their Internet Radio App update for Android smartphones and tablets starting later this year.
The new personalized radio stations will not have commercials, and will be available to SiriusXM subscribers who have streaming included in their listening plans. Pandora’s Pandora One service offers listeners the chance to pay a monthly fee for ad-free listening.
SiriusXM CEO Mel Karmazin’s comments on these new features tried to make light of the emphasis the satellite radio company is placing on competing with other online stations like Pandora. But these new features are innovative and sure look like an attempt to shift some of their listeners over to online listening – perhaps before they shift away from SiriusXM altogether. The rapid adoption of smartphones and spike in mobile streaming have no doubt caught the eye of the execs who understand that that’s a real threat to their listener base.
International Streams On Triton’s Webcast Metrics
Triton Digital has released March data ranking the platforms, groups and single channel stations that subscribe to their service. Very little has changed on the domestic side — Pandora continues to grow its audience, with 1.3 million average active sessions and over 6 million session starts in March. Clear Channel’s iHeartradio is ranked second, with a small fraction of that listening – a quarter of a million active sessions and 1.3 million session starts.
What’s catching my eye this time around is the All Streams ranker, which has begun to include broadcasting companies outside the US. Prisa Radio is a spanish broadcast group based in Madrid that shows up fourth on the All Streams all week ranker, right below CBSRADIO. They own more than 1200 radio stations and have 27 million listeners, primarily in Europe, South and Central America.
Sky Radio Group is another international player on the Triton All Streams ranker, showing up ranked tenth. They are based in the Netherlands and own stations in Germany as well.
