The following is an article by guest blogger Robert Maccini.
It continues to amaze me that some in the radio industry have not embraced digital. Terrestrial radio is a distribution system. Broadcasters have years of experience developing great content. One can argue that this content has been homogenized in recent years but I believe we still have the ability to attract listeners as evidenced by 92% of the population using radio on a weekly basis. Why would any broadcaster shun streaming their station and developing an effective sales strategy?
One cannot fight technology and a new two way communication system is here and quickly gaining ground, IP delivered audio and video content. Advertisers crave being able to more effectively and efficiently communicate with their target audience.
Streaming audio has the ability to not only know where a listener is located but also their age, sex and other qualitative information. Currently this new distribution system lacks full mobility but the coming advent of web browsers in new cars is going to quickly cure this limitation. Coupling that with the advent of 4G cell networks and WiMax results in the listening experience being as good as terrestrial radio including where bitrates are higher – HD radio. I could rant on about the millions of dollars wasted by the radio industry on this antiquated one way entertainment system… but I think this last sentence sums it up.
In these difficult economic times it becomes increasingly harder to contemplate investing money to develop this new distribution system for radio when expense line items are being scrutinized right down to the station copier lease. A common refrain is, “Am I just cannibalizing my existing revenue?” While in some cases this may be true, not providing content for this new distribution system puts stations in the position of not being able to fulfill advertiser demands and ceding this to a competitor.
The Internet radio industry is in the first inning and currently represents less than 5% of most radio station revenue. However, this is one slice of the advertising pie that is growing. I believe with an economic recovery (no prediction of when this will occur) ad dollars will continue to flow to digital at a greater rate.
In the end terrestrial radio stations will be one of thousands of listener options. The only elements that can set terrestrial radio delivered via IP apart are the quality of content including local news/information, personalities and unique approaches to this new medium. We are not in the radio business.
Robert J. Maccini is the CEO of Ando Media, LLC the leading provider of audience measurement and ad insertion technology for the Internet radio industry. You can learn more about Ando Media at www.andomedia.com
Radio is the top source of music
Radio is the top source of music consumption for 16% of teens globally and the secondary source for another 21%, according to a new Nielsen Study How Teens Use Music. (executive summary here.)
But it’s mp3 players that are the main source of music for today’s teens. Thirty-nine percent of teens globally say it is their primary method of listening to music, followed not by CDs or radio, but the home computer, which is the primary source of music for 33% of teens globally. Forty-five percent of teens globally say they listen to five or more hours of music per week on their computer; 12% say they listen to 20 hours or more. (Unfortunately, “on their computer” is not further defined as to whether that’s streaming or listening to music downloads.)
The study is interesting and finds that teens have not completely abandoned traditional media – they still spend time with newspapers and radio, and television viewership has actually grown with this demographic. It’s more difficult to get teens to notice ads, but when they do, they’re more likely to enjoy them and recall them.
It’s an interesting study. I don’t think the takeaway here is that radio or traditional media is doing just fine because teens haven’t abandoned it completely. Putting focus instead on what teen preferences are, and increasing options for teens to consume content while using their preferred platforms, is key to attracting younger listeners.
The current trend of declining music sales will continue, according to Bloomberg.com, citing a study released recently by PriceWaterhouseCoopers LLC. Internet piracy and declining demand for compact discs are the main reasons behind the prediction that music sales will drop 12% by 2012.
As consumers switch to online and wireless formats for music such as downloads, Internet radio and ringtones, revenue from online music sources will overtake physical sales by 2012. Because consumers tend to purchase individual songs rather than full albums when they purchase online, download music sales just don’t add up the way cd sales do.
Internet radio services such as Pandora and Last.fm will drive the increase in online music sales, according to a PWC analyst cited in the article, and collaboration between record companies and online music services will reduce the rate of illegal downloads.
This is another indicator of the benefits of mutually beneficial partnerships between the music labels and the online music services. Despite disagreements over royalties, the relationship between the two is symbiotic. While music labels are desperate to find new ways to grow revenue, online music services are reliant on the labels for the music they play.
Performance royalty payments are, in the end, nothing more or less than a revenue sharing agreement between the services and the labels. With that in mind, labels should be working hard to drive traffic to their Internet radio partners, who should be emphasizing music download sales to their audience and realizing revenue from that as well. Creative collaboration is the path to sustained profitability in digital music’s future.
The New York Times’ Bob Tedeschi recently wrote an article comparing his experience listening to Pandora and Slacker on a Blackberry Storm and an Apple iPhone – the goal being to compare the music services, rather than the phones. Slacker won for several good reasons that are a quick lesson in what listeners are looking for in mobile streaming services.
Slacker has 2.4 million songs in its library, which “dwarfs Pandora’s roughly 700,000” says Tedeschi. Both Pandora and Slacker offered up personalized music channels based on the selection of a single artist or song, and then refined those channels as the user indicated likes and dislikes of songs as they played.
Slacker offers the ability to download an entire station onto the Blackberry’s SD card, for listening without a cell connection. Atechnology that Pandora does not have. Both services offered easy ways to click and purchase songs.
Slacker’s sound quality was better, mainly due to the fact that Pandora adjusts sound quality to the user connection, minimizing sound files when the user is connected to 3G or 2G, and expanding them for wifi connections. But there’s a cost associated with that for Slacker…the better sound quality results in battery drain, whereas Pandora “hummed along happily”.
There are pros and cons for each service, and they’re both pretty good. But the takeaway here is that user awareness of mobile streaming technologies is expanding. Services that offer good user experiences are already out there and catering to the listeners. Want to play in the mobile streaming game? Make sure your platform and interface can keep up and keep your listeners happy…
I like music site Grooveshark, and have written about it several times (here, and here). They’ve got a great service that allows you to listen to any song you want. They’ve been exploring some unique revenue models – for example, in addition to selling advertising, they have a service that allows musicians or independent labels to purchase a certain number of song plays to listeners who like their kind of music.
I spoke with Jack DeYoung, VP of Label Relations for Grooveshark, and Josh Bonnain, VP Marketing, when I wrote an article about Grooveshark in May. At the time, I asked them about licensing deals. I wondered how they were dealing with the major labels given their on-demand streaming service is precisely the kind of thing that the labels dislike. Jack explained that their license was an “experimental” license with the record companies which allow them to stream songs on demand and share revenue with the labels and artists based on how often a certain song or artist is played. Yep, experimental was what he said – I went back and checked my notes. What he failed to mention at the time was that it was only an experiment on the part of Grooveshark.
Well…it turns out that might have been wishful thinking because EMI has now sued Grooveshark. In fact, it turns out EMI had sued Grooveshark prior to my first blog post on May 21st. hmmm.
In any event, as Peter Kafka points out in his article on this topic, Grooveshark now joins the list of services that are being sued by the major labels, and their chances of survival are looking rather slim. The labels – including some of the independent ones – see on-demand services as a threat to music sales. Other on-demand services – Imeem, MySpace Music for example, pay hefty fees to the labels.
I’m not sure what was going on with Grooveshark – but their experiment doesn’t seem to be working out so well…
Triton Media Group has announced that it will be an integrated sales partner for Wizzard Media. Triton will represent all Wizzard Audio podcast content to agencies and clients for targeted national campaigns, offering advertisers highly targeted content environments to reach very specific consumer lifestyles.
Wizzard Media provides industry-leading online publishing tools for media producers, creates strategic advertising products for marketers, combines the content and the advertising message, and distributes the resulting show to loyal podcast subscribers. In 2008, Wizzard received more than 1.2 billion podcast download requests and provides publishing services for 17,000 audio and video podcast creators.
“We are very excited about our partnership with Wizzard Media. The consumption of podcasts and On-Demand content is exploding and advertisers want highly relevant content. Wizzard is a leader in offering this type of content,” said Bill Freund, Executive Vice President of Triton Media.
This is an interesting step for Triton – adding a huge stable of downloadable audio and video content to their growing network. Triton also owns Dial-Global, one of the largest broadcast networks, which manages content and ad sales for many national radio programs. I wouldn’t be surprised to see that there’s a business relationship on the content side between the two companies as well that enables Dial-Global to offer on-demand access to their network programming affiliates.
Clear Channel and Front Line Management will partner to create new Internet radio channels hosted by well known artists. The platform will be called A.P.E. Radio, which stands for Artist Personal Experience. Front Line artists as the Eagles, Christina Aguilera, and Weezer will host their own channels, choosing the music and creating exclusive content, including personal commentary, opinions, and anecdotes.
“Fans always write to ask me what I like and listen to, which makes this such a great opportunity for me to share my musical inspirations with them,” Aguilera said in a statement. “My channel is going to be a special place for my fans to find out about my new music, upcoming tours and lots of other news and original content. It’s going to be fun.”
A.P.E. Radio will rollout next month and be featured on IHeartRadio, Clear Channel’s Internet radio platform. Individual artist channels will also be featured on those artists sites. The idea, says Evan Harrison, President of Clear Channel Digital and CEO of A.P.E. Radio,” is to have an additional creative platform to connect with fans…while
Last week there was lots of industry buzz about Microsoft’s Zune adding HD Radio technology. Broadcasters saw this move as 1) an indication of growing interest in HD Radio technology, and 2) as a move that would help raise awareness and build audience for HD Radio. While the move may very well build audience, the Microsoft Zune isn’t exactly flying off the shelves and it won’t be the savior for digital radio. As I wrote in an article last week, Zune and HD Radio are kind of made for each other – both are weakish technologies that aren’t cutting it against competing alternatives.
This week’s big news is that Apple will not follow Microsoft’s lead and put an FM radio in the new iPhone. Why would they? Apple is all about the Internet. They sell music via the Internet, and watched a streaming radio app (Pandora) reach the top position as the most popular iPhone app last year. Pandora’s iPhone app is selling lots of music downloads as well.
I doubt that Apple’s wireless partner AT&T, and soon other carriers are very interested in FM Radio capabilities. They want people loving their mobile broadband connectivity. This new iPhone will have faster connections, a video camera, and – my favorite – a fingerprint resistant case.
I worry that the stories reporting that Apple’s not building FM radio into the new iPhone are indicators of the kind of blind, wishful thinking that broadcasters have engaged in for too long already. Getting HD Radio onto Microsoft’s Zune was a nice win, but I don’t think it’s an indicator that digital radio is about to take off.
Apple isn’t about to put an FM tuner on the iPhone, HD Radio isn’t about to take off, and Internet radio is where it’s at. Broadcasters that can focus on that fact are the ones that will flourish.