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.
We just returned from the NAB last week and while there we attended the NAB’s day long session, Digital Strategies for Broadcasters. The panels were well prepared but sadly there were only 60 people in the room (92,414 attendees at NAB). One of the better panels covered the connected car. Panelists were from the Consumer Electronics Association, Connected Vehicle Trade Association and a consultant formerly with Lexus/Toyota/Scion. One slide I wanted to highlight came from Michael Bergman from CEA. This slide illustrates what is projected to occur through 2016 in the car. Note Internet radio growth with over 80% in-car penetration by 2016. Penetration is more than twice that of HD Radio. As I have posted previously HD radio lacks full two-way interactivity, a few extra channels with no compelling advantage in content and/or audio quality cannot compete with Internet radio. The Digital Strategies session opened with a chart showing current internet listening vs. terrestrial radio. Obviously an emphasis on today rather than the future…
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.
Today Pandora announced audience metrics for June 2012. While these stats represent significant growth over the prior year, June results were lower than May except for share of total radio listening as can be seen below:
Listener Hours – 1.08 Billion (- 1.8% May to June)
Share of Total U.S. radio listening ( +3.1% May to June)
Active Listeners (- 2.2% May to June)
May also includes the Memorial day holiday (listening is often lower during such periods) which makes the decline worth noting.
Ad targeting in Internet radio does not deliver for advertisers at the local level. No it is not rooted in a problem with technology. As recent announcements from Triton Digital and Abacast make clear, the technology exists. However, since most station’s audiences are small and a significant amount is out of market listening (often over 40%) targeting will not yield impressions needed to generate significant revenue. As a result targeting at the station level makes little sense other than possibly to guarantee to an advertiser an ad won’t be heard out of the metro. Targeting is useful on a national basis as a combination of stations on a network can deliver results as long as the target is not too narrowly defined. Pandora is probably the only service that can target locally without aggregation due to the size of its network.
Most radio stations do not collect listener data for their streams so the only targeting that can be done is geographic based off of an IP address. Listeners will give up this data for something they value if it cannot be obtained from other sources, e.g. Facebook. Some targeting is done based on station format, e.g. an AC station’s audience is primarily 25-54. This is not always accurate. IP addresses are not always correct as well which can result in lack of delivery of the campaign.
Mobile targeting is perhaps the holy grail as you can reach consumers closer to the point of purchase. As with targeting to desktops the problem of scale is even a greater issue in mobile. We have heard that Pandora is having difficulty monetizing its mobile audience which is 70% of their total audience. I don’t quite understand this as I would argue that engagement is greater with a mobile phone than on a desktop (you may leave your desk but typically you don’t leave your phone). I believe that longer term we will see premium CPM’s for mobile. Effective ad creative and proper delivery will help.
Tunein is perhaps one of the largest directories of Internet radio stations with over 50,000 stations listed with most available to be streamed. The company has been signing up stations to be part of their directory although we do not know the business terms of these deals. I think it is safe to assume that they are not exclusive. Tunein was created by the merger of RadioTime (on line station guide) and TuneIn (mobile Internet radio app). While Tunein provides information about radio programs and can stream your favorite station, for many years they allowed users to connect to a station’s stream through their guide without having the station’s explicit approval. Some radio station companies such as CBS have asked Tunein not to carry their streams. Although obtaining a $6 Million investment from Sequoia, they struggled for many years on how to monetize the service. Since they did not have a relationship with the underlying station they had no way to insert audio ads. The revenue component could only come from preroll ads (audio or video), display ads, and featured listings. Even preroll ads are questionable as many stations insert preroll video so Tunein would have to insert a preroll video ad in front of another preroll video ad, something that would not make for a great user experience. They appear to be running only ad network display ads. There were preroll videos in front of some streams but again these are most likely the ones inserted by the stations themselves.
While no public data exists on the size of the Tunein network in a press release dated 3/22/12 announcing the carriage of The Wall Street Journal Radio Network, Tunein claimed to have 30 million listeners and be in the top five in Apple’s App Store’s music category. It would be great if Tunein would release more audience metrics but I can only surmise that they need to develop their business model first by entering into an agreement with stations whereby they can obtain part of the ad inventory or solidify premium placement for accessing streams. Any measurement would a duplicate of that also measured at the individual station level but at least we would have a better feeling for the use of the Tunein platform. Tunein is a great service and one that we watched the founder, Bill Moore, develop and where we came close to investing on several occasions. Whether we made the right decision or not remains to be seen.
Arbitron has recently made clear it’s intention to measure Internet radio’s audience. This will be Arbitron’s second attempt at measuring Internet radio. Arbitron purchased Measurecast at the end of 2002 and then shut it down in 2004. Measurecast utilized server side audience measurement similar to what we eventually utilized for Ando Media’s Webcast Metrics (we sold Ando Media to Triton Digital). When it shut down Measurecast, Arbitron believed that advertisers and agencies would rely on panel based estimates which had been Arbitron’s methodology for measuring the Internet in other areas. I have always been amazed that one could even think of using an estimate when actual data is available. This data is one of the factors that has driven the meteoric increase in Internet advertising including search. Arbitron would like to be able to combine terrestrial radio listening with Internet radio listening and produce one collective audience number. This may be difficult due to different methodologies. This is one reason they may resort to utilizing an estimate again.
Arbitron will either purchase Webcast Metrics or start their own Internet radio measurement service. Whichever path they choose let’s hope they get it right this time. Arbitron’s involvement may lead to added credibility for Internet radio. However given their terrestrial radio customer base their thinking may be weighted more toward what’s good for their terrestrial radio clients who are streaming, rather than the Internet radio only services such as Pandora, Accuradio and others.