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…
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.