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.
Last Year’s Biggest Story
Last year was quite a year for Internet radio and related streaming music services, and judging from some of the end of the year activity, this year should be lots of fun as well. I took the week between Christmas and New Year’s off, so here’s my just-a-little-late 2011 recap, summed up in what I think were the stories of the year.
1. Pandora went public. They raised $234.9 million in their public offering in June, selling 14.7 million shares at $16. The stock has struggled to regain that kind of price since then, but the service continues to gain listeners, ending the year with well over 100 million registered listeners.
2. Spotify launched in the US. While they would have liked to get their ducks in a row and have launched before Pandora’s public offering, Spotify did launch in July. Europe’s most popular streaming service began serving US listeners and gaining great attention with mobile apps, on-demand and programmed offerings.
3. Facebook made friends with streaming platforms. In September at its f8 developer conference, facebook announced that it would integrate third party streaming music apps into its platform, opening up the gates for those services to gain listeners as folks listen and like songs and share them with their network of friends.
4. iHeartradio revamped and relaunched. The all new iHeartradio includes all the streams offered online by Clear Channel stations as well as streaming channels. Other broadcasters are offering their programming through the platform as well – including Univision, Cumulus/Citadel/ABC, and EMF. These changes signal Clear Channel’s intention that iHeartradio become a portal to streaming broadcast stations.
5. Digital trendspotter and investment analyst Mary Meeker predicts that online audio is the next big thing.
Those are the five things that I think were the biggest stories in online radio in 2011. I think the real story is a combination of all of them – an investment friendly marketplace with increasing competition and opportunities. What do you think?..
Katz Drops Pandora
Katz360 has dropped Pandora from its list of clients, according to a story in Inside Radio this morning. Katz360 is owned by Katz Media Group which is owned by Clear Channel. (Inside Radio is also owned by Clear Channel.)
This is the latest development in a series of events leading to an increasing divide between streaming broadcasters and online stations over whether the two types of listening platforms should be assimilated in terms of measurement – and now in terms of sales strategies and representation. There’s been a big argument brewing over when and how Arbitron will measure Internet radio – with many of their broadcast clients applying heavy pressure to limit the exposure that online only stations such as Pandora have in Arbitron – arguing instead that online only stations should not appear alongside streaming broadcast stations in rankers.
This of course would make it difficult for advertisers and agencies to accurately assess the Internet radio options in one place. Which is apparently the goal of broadcasters. Instead, they want Arbitron ratings that enable them to add their on-air and online audiences so they can represent and price them as one. And they want those ratings to exclude Pandora and other online only stations.
I have to say that I saw this coming. Readers here may be aware that Katz360 is the former Net Radio Sales, a company that I founded in 2003. We sold it to Katz in 2007 and I ran it for another year there before leaving in 2008. It was always our goal to represent both online stations and broadcaster streams together as one large Internet radio network. There is no indication that Katz will discontinue its relations with other online stations. Yet.
Katz, and in particular its spokesperson Mary Beth Garber, have been outspoken in denouncing Pandora’s attempts to position itself as radio and pursue local and national radio revenues. In fact, they’ve been so outspoken that I have been wondering how Katz360 could represent Pandora. (see my comment below my post, here.)
This is hardly a massive blow to Pandora – Katz was representing only their local market revenue and I am sure that both Triton and Targetspot will be eager to add them as clients. It is a blow to Internet radio as I see it – Clear Channel and Katz have declared war and refused to work together with Pandora to develop the Internet radio marketplace…What do YOU think?
Triton Announces Local Market Measurement Product for Internet Radio
All of the data available in Triton’s Media Rating Council (MRC) accredited national monthly rankers will now be available on a local market level, per an announcement yesterday by Triton Digital. Triton’s Webcast Metrics audience data will now be made available to subscribers on a local market by market basis. The updated solution will enable publishers to highlight their audience metrics within individual markets and combinations of markets as well as segment the audience across demographic attributes within geographies.
Unlike the top 20 ranker that Triton releases monthly, local data garnered through Webcast Metrics will not be released publicly. It will be the exclusive property of the subscribing publisher.
“We believe there is a substantial monetization opportunity for publishers within the local digital and mobile marketplace,” said Mike Agovino, COO of Triton Digital. “Local mobile advertising alone is expected to grow by more than $2 billion over the next several years, and this evolution of Webcast Metrics will further assist our customers in fully capitalizing on this market opportunity.”
This development has been in the making for a while – I know that Triton has been examining their local market reporting for a while with something like this in mind. And Pandora, the most listened to Internet radio station on Triton’s rankers, has been stepping up the demand for market by market ratings. In fact, a few months ago Pandora partnered with research firm Edison Research and began releasing hybrid local market ratings using Triton’s Webcast Metrics data and standard AQH formulas and comparing them to ratings and shares in Arbitron‘s local market broadcast reports.
Which caused a furor among broadcasters and their spokespeople who believe that broadcast radio should only be measured in a vacuum and never compared to other audio content sources like Internet radio or satellite radio. Of course, that’s silly — any ad supported audio content will ultimately have to measure up to any other to demonstrate performance and garner ad investments.
The fact that Triton will release local market audience data to subscribers is a great thing. In fact, I’m pretty sure it’s been available to them for a while, but the formal announcement and new product called Webcast Metrics Local ups the ante. Competition is good. It spurs development, keeps everyone on their toes, and is a sign of a thriving industry. Play on…
A Little Christmas Cheer
There are more than 425 stations streaming Christmas music this year, according to BRS Media, owner of web-radio.fm. That number includes AM/FM stations that are also streaming their Christmas programming online as well as online only stations. This year a record percentage of terrestrial AM/FM radio station are streaming online. Nearly 90% of terrestrial stations, playing Christmas music 24/7 over the air, are streaming online. That’s up from 75% in 2010; 60% in 2008 and up from only 35% in 2005. The total number of Christmas stations streaming has more then doubled in the past five years.
BRS Media, widely known for its top level domains .FM and .AM, has been tracking streamed Christmas offerings through it’s web-radio portal for 16 years as part of its more than 20,000 stations’ offerings. BRS Media launched the radio directory with two stations in the fall of 1995. Today, Web-Radio features nearly Twenty Thousand (20,000) radio station web sites, with over Fourteen Thousand (14,000) stations webcasting On-Line. Visitors to Web-Radio can search for their favorite station by call letters, format, state, country and Internet-only.
You can check out the extensive list of merry offerings here.
Last.fm’s New Site Is a Game Changer
Not to be outdone by recent enhancements by Spotify and Pandora, Last.fm has rolled out a new interface for Last.fm Discover that is easily the best looking offering I’ve seen by a streaming station. It’s based on HTML5 and was developed in tandem with Microsoft to showcase the new capabilities that HTML5 in Internet Explorer 9 can offer.
Last.fm Discover is a customizable, personalizable offering that focuses on new music and artists. Launched a few months ago, the offerings are influenced by Last.fm’s charts of what listeners are scrobbling and listening to on Last.fm.
The site is very playful and inviting – perfectly suited to the Discover theme – rolling green textured hills invite you to explore the various music genres. It’s a fun and inventive look that feels more like a game – listeners can’t help but poke around, relax, hang out and discover new music. Once you select a genre, it shows you some artists and endless options for listening to similar artists, or taking a new direction. It’s addictive – I found it hard to stop clicking. (The screenshot reveals my affection for K pop..)
While much of the new site can be seen in any browser, the experience is enhanced in Internet Explorer 9. In fact, I’m a Chrome user and this got me to open IE for the first time in a while. ”What we want is to see more and more websites using as much of HTML5 as possible and one of the reasons for that is we want websites to be more like apps in the way they feel,” explained Ian Moulster Microsoft product manager.
I really like this new development – I think they’ve done a great job of breaking the mold when it comes to streaming station interfaces, developing a look that matches the station’s theme of discovery. So we’ll see if it gets Last.fm a little more traction in terms of listening. Last.fm has been surprisingly stagnant in terms of audience growth and general awareness here in the US compared to Pandora and Spotify.
Streaming Station That’s Out of This World
Image by Arjan Almekinders via Flickr
NASA has launched a new space station and this time it’s an Internet radio station called Third Rock. They’re calling it “America’s Space Station” and it’s a custom-produced Internet music radio station that is crafted specifically to speak the language of tech-savvy young adults.
“NASA constantly is looking for new and innovative ways to engage the public and inspire the next generation of scientists and engineers,” said David Weaver, Office of Communications at NASA Headquarters in Washington. “We have led the way in innovative uses of new media and this is another example of how the agency is taking advantage of these important communication tools.” The station will be operated at no cost to the government by the Space Act Agreement. Houston based RFC Media is collaborating on the execution.
The station’s format is alternative/indie/new rock. Space related career info and job listings will also be featured. I’m hoping that – in addition to the new stuff, there’s room for a few space tunes. I tuned in and was hoping for some older space themed classics like Dark Side of the Moon, Walking on the Moon, Space Truckin, and maybe even Sinatra’s Fly Me to the Moon. No such luck, the station’s definitely much hipper than that…give it a listen for yourself, here.
Pandora’s Free Concert Series
Last fall when Tim Westergren keynoted the RAIN Summit in Chicago he spent time talking about how Pandora can use the information they gather from listener’s preferences to connect artists with their audiences. Based on a listener’s location, and the songs they give thumbs up or down to, Pandora can guess what other artists they might like.
Tomorrow night, Pandora will host the first in a new series of free live concerts based on just that kind of information. The concert will feature Dawes, an emerging rock band from Southern California. Pandora data shows that Portland-area listeners are 25 percent more likely to enjoy a Dawes song and 30 percent more likely to create a Dawes station on Pandora than listeners in any other U.S. city. Invitations based on a listener’s musical preferences were sent to listeners in the Portland area by email.
Pandora Founder and Chief Strategy Officer Tim Westergren said, “Connecting artists and their fans is part of our mission at Pandora and we bring some very unique capabilities to that task. Our data shows that Dawes has a sizeable potential audience in Portland and we’re excited to help bring them together.”
Westergren is a musician himself and someone who really cares about artist relations and music discovery. He often talks about the value that Pandora can offer to artists by helping them find their fans.
Taylor Goldsmith of Dawes said, “As we have traveled the country, we often hear from our listeners that they discovered us on Pandora. We are excited that, now, through this new concert series, we’ll get to connect in person.”
Sure wish I could be in Portland tomorrow night to see the power of personalized radio firsthand..
