Six percent of automotive aftermarket car radios sold this year will be Internet radio capable, according to the Consumer Electronic Association. That number will increase to 14% by 2015 based on projections from the CEA.
In sync with that trend, Ford will no longer put cd players in the dash of their cars, opting instead for their connected dash approach, according to Digital Music News. “In-car entertainment technology is moving digital more rapidly than almost any other element of the vehicle experience,” said Sheryl Connelly, global trends and futuring manager at Ford Motor Company. “The in-car CD player – much like pay telephones – is destined to fade away in the face of exciting new technology.”
The automotive aftermarket is hot for Internet radio, and most notably, Pandora enabled devices. Seattle-based Car Toys’ Jim Warren said, “Pandora products are selling through quite well. Typically, the Pandora feature is packaged in with other step up features so it is difficult to isolate the impact of the feature by itself. Regardless, we love seeing our suppliers adding step up features that connect the smartphone to aftermarket car audio.”
This year has seen a lot of interest by automotive aftermarket companies in introducing Internet radios. Alpine says that 60% of their 2011 radios have Internet radio features. Pioneer, Kenwood, Livio Radio and other manufacturers have introduced devices as well. “When we first started selling Internet radio products in 2008, we were cold calling customers and the main question we had to answer was “What’s Internet Radio?” Now customers are calling our office and asking us what products we have that can add Internet Radio to their cars.” says Jake Sigal, Founder of Livio Radio.
No doubt Pandora’s big brand helps to create the kind of buzz that sells these radios. Functionality that leaves the listening choices to the listener will be important to the industry as a whole. I look at the way that Sirius and XM drove the success of satellite radio’s expansion into cars and wonder who – other than Pandora and to some degree Clear Channel – is driving online radio’s automotive future?
Last week was a busy week for Internet radio. Clear Channel shook things up at the beginning of the week with their announcement of the coming “New iHeartRadio”, later in the week Spotify launched its US based service. While I think Spotify’s entrance here is interesting, I don’t think it will have an enormous impact on free streaming radio options.
Spotify’s on-demand service is more competitive with other highly interactive services that are looking to replace personal listening collections. Those include services like MOG, rdio and Rhapsody. Cloud based services that allow a listener to sync their own music files and stream from multiple devices are a competitor to on-demand services as well. Premium Internet radio services, such as Pandora One and Slacker’s premium ad-free option may also be affected, as I think they will compete for the same dollars.
More than 2/3’s of Internet users here in the US have paid for digital/online content already, according to The Pew Internet and American Life Project, 1/3 have paid for digital music online. That information validates the consumer subscription model. But how many different services will the consumer pay for? Probably not more than one or two.
In addition to all the streaming on-demand services competing for digital dollars, there are subscription based podcasts such as Adam Carolla, Bubba The Love Sponge and others. In fact, I think Sirius XM, with its monthly subscription fee, is ultimately competing for the same monthly listening subscription dollars.
The arrival of Spotify, long heralded by themselves, has been anticipated by industry watchers aware of their large listening share in Europe. But the general public is largely unaware of them so far. Interest in earlier Euro based services has been weak – GOOM Radio launched and quickly fizzled, and UK born Last.fm, which CBSRADIO picked up a few years back, has not been able to build a massive following.
It’s an interesting case study from the get go, one that I’m looking forward to tracking..
Pandora’s stock price, much to the dismay of most of the broadcasting world, was back over its IPO price as of close of the market on Monday. It turned out that Pandora’s IPO hit the market the day before the (most recent) bad news about Greece. It wasn’t just a bad time for Pandora, it was a bad time for Apple, and lots of other stocks as well.
Nonetheless, last week some radio trades were gleefully reporting on Pandora’s tanked stock price and failed IPO. Which is exactly what many broadcasters wanted to hear. So my question is this: Why was the broadcast marketplace generally so delighted at the failure of the first significant IPO in Internet radio?
After a week mulling this over I have to conclude that it’s because radio broadcasters are so determined that their FCC licenses and their towers retain value that they cannot see the vast opportunity that lies in front of them. They are so invested in their status quo that they are ignoring the fact that listeners want to listen online. And they’re cheering for the failure of companies like Pandora rather than watching their progress as a signal of their own opportunity.
We have lots of research and reason to believe that listeners want to listen to Internet radio. Pandora’s success is just one example of that. The Arbitron/Edison Research Infinite Dial Study tells us that Internet radio’s audience is doubling every five years. But despite the empirical data that shows listeners wanting to listen online, many broadcasters won’t believe it. They think that if they close and lock the doors their listeners won’t be able to escape to other listening platforms.
It’s simply not true. Listeners can listen to whatever they want. Limiting access will cause them to look elsewhere. Delighting in a failed Internet radio IPO won’t make Internet radio go away.
In fact, Pandora’s IPO wasn’t a failure. They succeeded in raising almost $235 million in their IPO. And due to bad timing, their stock price dipped afterwards like many others. Like the emperor who was delighted to hear that his new clothes looked so smart, broadcasters are pleased to hear that Pandora’s IPO failed and Internet radio is doomed…
comScore, in releasing new data from its Total Universe report, has highlighted Internet radio and Pandora as an example of the kind of online service that is likely to gain more or most of its traffic via mobile channels. comScore’s Total Universe report “provides audience measurement for 100 percent of a site’s traffic, including usage via mobile phones, apps, tablets and shared computers such as Internet cafes.”
In its first blog post focused on the new reporting, comScore cites Pandora as an excellent example because it attracts “a significant percentage of its users via mobile (which in this case includes web browsing on phones and tablets, as well as access via mobile apps).” In April 2011, Pandora’s Total Universe web traffic was 74% higher than traffic noted solely on home and work computers.
It’s important to note that comScore data is focused on traffic to web sites rather than timed listening to streaming, so these numbers represent visitors to websites or web apps, but not actual listening.
In fact, 42% of Pandora’s web traffic was only via mobile devices, and they claim an impressive 35% reach among smartphones.
Having identified Pandora as a service that sees a very large proportion of its audience via mobile traffic, comScore goes on to note “that the example highlights the extent to which mobile can drive traffic for certain brands – especially those whose value proposition largely relies on mobility, such as Internet radio.“
More than one of every three Internet users will listen to Internet radio weekly this year, reports EMarketer. That 37.5% of 12+ Internet users in the US means more than 79 million listeners to online radio. That number will continue to grow and hit 157 million and 67% of that population by 2015.
EMarketer also projects that online stations are billing $800 million this year and will grow that number to $1.6 billion by 2015.
Hmmm. While I am liking the sound of these numbers, particularly the revenue, the write up that I read online isn’t sounding so smart to me, as it appears to compare broadcast revenues to online radio revenues in one breath, but then throws the term “pure plays” in. Revenues derived from pure plays would include online stations only and not include broadcasters’ streams. I ‘think’ it’s a mistake, and the $1.6 billion is meant to project revenues for all of Internet radio, not just for pure plays…
Pandora updated its SEC filing last week to give us a glimpse of what’s been going on in 2011. Impressive growth continues to be the story. In the 3 month period ended April 30th they added 1.6 billion listener hours and another 14 million registered users. Of those 94 million registered users, 34 million are active users who have “requested audio from our servers within the trailing 30 days to the end of the final calendar month of the period.”
Last year Pandora streamed 3.2 billion listener hours of programming, in the first quarter of this year they streamed 1.6 billion. Their listener hours are up 129% over a year ago. Those additional hours are not just coming from new listeners. Registered users and Active users are up (77% and 89%), but not by as great a margin, meaning that listeners are listening to the service longer than they were a year ago.
Pandora seems to be having no trouble finding demand for their inventory, which they are growing at an extraordinary pace. Pandora made $137,764 million in their fiscal year that ended at the end of January. They added more than $47 million of that in their final quarter (November – January). In the first quarter of this year, which for them is February – April, they added $51 million. Revenue from subscriptions was 15.4% last year, and is 16.9% for first quarter.
More and more listeners are accessing Pandora on mobile devices – in the recent quarter 60.3% of their audience came over mobile devices. Check out this trajectory – listener hours on mobile devices constituted approximately 4.6%, 23.5%, 50.5% and 60.3% of their total listener hours for fiscal years 2009, 2010 and 2011 and the three months ended April 30, 2011, respectively.
On the expense side the pace is stiff as well – Pandora’s licensing obligations tore more than $29 million out of the $51 million the company brought in in the new quarter. Billboard notes that the challenge for them will be to increase their ability to monetize every listener hour, which is a challenge given the rapid rate at which they are growing listener hours at this point.
There’s no doubt about it, Pandora’s growth is impressive. I’m delighted to watch it..
Lipton Iced Tea has teamed up with Pandora for a summer promotion that encourages listeners and tea drinkers to “Discover the Natural Side of Music.” All natural Lipton Iced Tea will sponsor a summer long promotion designed to emphasize the all natural ingredients in Lipton Iced Tea by tying in with acoustic concerts, artist videos and exclusive channels on Pandora.
Lipton and PANDORA internet radio will continue to engage fans by bringing exclusive and compelling content from major artists including Train, Kelly Clarkson, Bon Jovi, and more—representing a variety of genres. Each will share the unique and personal natural roots of their music as part of a video series on Lipton’s Facebook page.
Fans can also interact with the natural elements of music on Lipton PANDORA internet radio stations to cater to their musical preferences. Stations include Lipton Pop (Pandora.com/liptonpop), Lipton Country (Pandora.com/liptoncountry), Lipton Rock (Pandora.com/liptonrock) and Lipton Hip-Hop (Pandora.com/liptonhiphop).
This is a nice illustration of smart creative ways that Pandora and other online stations can offer value to advertisers that’s far removed from cost per thousand advertising. Pandora’s channels are the centerpiece of this brand’s promotion, the added value that they are offering their customers. The interactive channels that they have created will extend their brand further than any generic ad campaign ever could.
Are you thinking about how can you create smart advertising that adds that kind of value for your advertisers?
Streaming music platforms are getting a lot of attention lately. Pandora’s been growing its audience at an impressive rate, MOG, rdio and others are getting funding, former radio personalities are showing up on Internet radio, and lots of folks are talking about it.
It’s a groundswell that started, like many do, as a teeny tiny trend that many folks said would never take off. Back in 2003 when I started Net Radio Sales (now Katz360), the other guys were starting RL Radio (now Targetspot). Arbitron was shutting down its streaming measurement platform (called Measurecast). And revenue was tough to come by.
That’s not the case anymore. Investment money is flowing into online music platforms, and Pandora recently announced a plan for an IPO to raise $100 million. Audiences are growing fast. Targetspot recently told Inside Radio that their revenues were up 75% over last year. The future looks bright and getting brighter.
But all of this seems to have thrown radio broadcasters off of their game. Instead of focusing on their core competencies, they can’t take their eyes off of Pandora or Slacker, or another streaming music platform. Don’t get me wrong, there’s lots to like about those platforms. They can deliver unique personalized streams and targeted ads to registered listeners, and that’s a great thing.
But they aren’t a replacement for broadcast radio. They’re not local and their not personable. They’re not…human.
In developing their online streaming presence, Radio broadcasters should focus on the human aspects of their programming. Concentrate on talent, news, and excellent programming. Not programming for the highest cume, but for the happiest and most engaged listeners. Interact with those listeners in meaningful ways, and give them ways to interact with the station and each other. Create fun and interesting blogs, side channels, Twitter feeds, Facebook pages that listeners can love. And please, register those users.
Stop thinking about what Pandora is and trying to be that, instead think about what they aren’t and play that card…
Internet radio is getting some attention at SXSW and there are several sessions on the agenda that pertain.
Jake Sigal, Founder of Internet radio device manufacturer Livio Radio, will present “The View From Detroit: In Vehicle Music” on Saturday the 19th. Sigal plans to discuss in car listening options that include AM/FM, Satellite, HD and Internet radio. He’ll ask, and may even answer questions like: Will one emerge as a leader as the others fall to the wayside? Are too many options hurting the overall industry? Where are the opportunities for emerging entrepreneurs?
Rebecca McInroy of WKUT, a public radio station affiliated with the University of Texas in Austin, presents a session called: “Baby’s Gotta Face for Radio: Web Based Radio?” It’s described as a panel that “will explore how public radio stations can build interactive visual components with the goal of becoming a hyper-local non-profit multi-media presence while serving a global audience, and at the same time maintaining the standard and mission NPR has developed.”
On tuesday the 15th Rusty Hodge, Founder and GM of SomaFM, is hosting an Online Radio Meetup at SXSW on tuesday the 15th. If you’re in town, don’t miss this chance to hang out with Rusty and other online radio folks.