Google has finally arrived at the Internet Radio table although I must say the name of its service, “Google Play Music All Access” leaves something to be desired. Apple will most likely follow by the end of the year. There are still a lot of unknown details especially if any free ad-supported models will be forthcoming. One thing is for sure, there are only so many hours in a day to listen so most likely everyone’s share will decrease. This includes terrestrial radio. Terrestrial radio appears too busy trying to bail out the waning AM radio service and make non interactive HD radio work to attack IP audio. CBS was an early leader but their bets did not pay off. Clear Channel has now grown an impressive Internet radio service with over 30 Million registered users. However, we have gotten to the point where Clear Channel’s future interests may not fully align with the rest of the radio industry.
Social Media is a key indicator of audience engagement and what is resonating in the social media ecosphere. While there are a number of social media channels for purposes of this analysis I chose Twitter. I utilized the services of Socialping, a company that specializes in Twitter audience metrics. Socialping provides twitter analysis including monitoring key words. I decided that I would apply Socialping measurement to Internet Radio. I created watch lists for key words for the following;, iHeartradio, Pandora, TuneIn, KROQ, Rdio, WBLS and Spotify. The measurement period is for one week beginning 2/25 – 3/3.
The above data reveals several key findings;
1) Spotify is the leader in followers with almost 3x that of Pandora. This is probably due to its more international offerings. However, Pandora and Spotify have approximately the same reach.
2) iHeart radio has more followers than Pandora. However, the # of tweets is only 3% of that for Pandora (Note: iHeart’s radio audience as reported by Triton Digital is 15.9% of Pandora’s). Has Clear Channel driven people to follow but they are not engaging with the service?
3) One of the top single stations in the country, KROQ has roughly half the followers of iHeart Radio.
4) While Tunein has less than one third the number of followers as iHeart they have 3x the reach.
As discussed in my prior post the technical side of car integration for Internet radio is difficult due to the many car companies, their suppliers and in dash systems. Pandora, Tunein, NPR and iHeart radio have an amazing lead on the terrestrial radio industry for real estate on the car entertainment systems. Pandora was integrated with every car company we visited at CES and claims to be integrated with 1,000 different devices. These integrated applications appear prominently as listening options. The rest of terrestrial radio streaming is for the most part not represented except as embedded in Tunein, Aha or iHeart. This is a major factor as to why many other radio stations have agreed to be included in the Tunein and iHeart platforms as it give them access to these distribution systems which also have in car access. However, in a point I made in an earlier post they are lost in a multitude of options.
Yes there is still a radio button in the car and this will not disappear any time soon. However, it is now just one of a multitude of choices. As we know people typically have about 6 presets (their favorites) and scroll among them. How will terrestrial radio compete in a fragmented dashboard. In my view it will not be based on music but other unique and local content. Unfortunately radio has reduced its investment over the last several years in its product. Very little programming is local and unique. Competition for other information such as news and weather is readily available from other sources. Those that do invest and have a multi-pronged distribution approach will be the winners.
We just returned from the Consumer Electronics Show in Las Vegas. The primary theme was Internet radio in the car. One of our portfolio companies, Livio Radio, announced FMConnect which allows terrestrial radio stations the ability to now take advantage of two-way communication (read; digital) utilizing the cell phone connected to your car’s entertainment system. Also Kudos to Fred and Paul Jacobs for inking a deal with Ford for their Ford Sync product. Unfortunately the car ecosystem is fragmented and confusing to a degree that is frightening. While developing an app for Ford is an attractive idea, keep in mind that this app will not work with all the other car companies’ entertainment systems. As currently stands a station would have to develop a different app for each car platform which is what Livio Connect is trying to eliminate. Livio is integrating with all car companies and their suppliers. Internet radio in the car can be achieved by many means as follows:
1) physical cable
2) Blue tooth
Some systems just mirror the phone with navigation still done on the phone. Others such as provided by Livio Connect allow listeners to control access to streams from the cars control. This makes controlling audio options much safer. This is also true of Ford Sync’s product but it of course is one of many in the car ecosystem and I don’t think that Chrysler is going to allow the Ford platform into their cars. Thus the need for a company like Livio which can work with all car companies because it has integrated into the chipsets of major suppliers of the in-car entertainment systems. Radio companies should leave getting connected in the car to auto industry experts given the vast, confusing world it represents and should partner with a company like Livio to deal with integration.
I have received numerous comments about the post I wrote last week entitled “What do Broadcasters’s see in iHeartRadio”. My post has been interpreted in a number of different ways. Let me first state that iHeartRadio is a great service and one that I have loaded on my iPhone. Clear Channel has markedly improved the user experience, especially on a mobile device. In order for terrestrial radio to continue to be successful I believe these elements are key:
1) Reduction in number and length of ad breaks – iHeartRadio’s decision to run no ads was a great decision. When ads are introduced hopefully the spot load will be low.
2) Customization – With its newly designed customized listening experience iHeartRadio is on the same playing field with other services such as Pandora and Spotify for the first time.
I would like to highlight one reader’s excellent point. For smaller stations that can’t afford to invest in a mobile platform iHeartRadio is a way to for their listener’s to access their streams on mobile devices. Also integration with Facebook may be beyond smaller broadcasters capabilities. Further, due to its larger scale, iHeartRadio’s potential access to in-car systems would give smaller stations in-car presence.
My intention with last week’s post was to have readers take away that stations looking for monetization should not rely on iHeartRadio’s platform to deliver meaningful revenue.
Is it extension of their brands? Is it increased advertising revenue? A new distribution platform? A number of broadcasters have agreed to have their internet streams added to Clear Channel’s iHeartRadio platform. Even though I believe in added distribution channels, there simply is very little benefit for stations to join and distribute their programming via this platform. Being added just means that you are one of more and more stations/channels on this increasingly fragmented platform. While stations may get to keep their in-stream audio ad revenue I’m sure Clear Channel is keeping all pre-roll and display revenue. Will this platform result in some added ad impressions and therefore revenue? Yes but not enough to buy a cup of coffee. Of the five featured stations today, all were owned by Clear Channel.
For Clear Channel this is a beautiful thing. They get content for free to add to the offerings on their platform to the consumer and take advantage of the effects of “the long tail” (No one broadcaster will benefit dramatically but Clear Channel may in the aggregate).
It appears that this is more a feel good strategy that terrestrial radio is doing something in digital. As I have noted before, Clear Channel is tiny compared with Pandora’s audience (about 15%). Based on Triton Digital December 2011 Internet Audio ranker, even if you added all of the top 20 terrestrial stations’ audience including Clear Channel it would still only be 42% of Pandora’s audience . What’s more, Pandora’s audience is increasing rapidly while the terrestrial stations audience has not increased over time.