August 1, 2014
There are two recent pieces of research that I have wanted to draw to your attention. They both shed new light on radio in the larger context of a changing audio environment.
The first is from Edison Research. Larry Rosin calls it “Share of Ear”, and it is the first study of the complete universe of audio that we Americans consume each day. The study found that the average listener spends 4 hours PER DAY consuming audio entertainment. This includes personal music collections, internet music services, streaming radio stations, podcasts, cable TV music services, and satellite radio, in addition to broadcast radio. I don’t know about you, but I would have estimated about half that amount as an average.
But what is really interesting is how that listening breaks down by the type of service. If you only read the tech press headlines, you may believe that online radio (Pandora, Spotify and others) is the way that most people listen to music, and you would be shocked to see that they represent only 11.6% of listening. What about CDs and digital downloads? They account for 20.3%. Podcasts take only 1.7% of listening time. Satellite radio registers 5.2% of the total, the same share as TV music channels.
Broadcast AM/FM radio accounts for the lion’s share at 52.1%.
It is unfortunate that we have no prior history to look back upon, but I suspect this was a significantly higher number 5 or 10 years ago, when we were the only game in town. We have always known that personal music collections (previously known as record collections) claimed a substantial portion of individual listening time, but radio was the portable and community-oriented way to stay informed, entertained and connected. New audio entries have always touted their disruptive impact on established listening patterns, but I would argue that radio’s relationship with and influence on its listeners has remained largely intact despite the occasional disruption. There is no reason for that to dramatically change in the foreseeable future.
The second piece of research was done a couple of months ago by Nielsen’s Catalina Solutions group, and was underwritten by Clear Channel Media and Entertainment. Its findings have implications and application for the entire radio industry.
Because only Nielsen has access to both listening and purchase behavior at the household level, they can draw a direct line between listeners hearing a commercial on a specific station at a specific time and the purchase behavior of those listeners. In late 2013, they sampled 14,000 people and studied 10 brands across multiple cities, and the results were amazing. Radio more than doubled the return on investment (ROI) when compared to digital or TV media. Every dollar invested in radio advertising, on average, returned a sales lift of more than $6. In one retail category, the return was as high as $23!.
This is a truly amazing piece of information, and adds substantial weight to the arguments made over the years that adding radio to the media mix for any brand is a smart, effective and affordable solution to marketing challenges. We in radio could arguably get a better return on our own investment if we spent less time focusing on features and benefits of our particular stations and instead took up the fight for more provable ROI information. Our industry groups, the RAB and NAB, as well as Nielsen (and Arbitron before them), have fielded studies and case histories that have proven the point before, but the Catalina study is the most persuasive I have seen to date. Put it in your briefcase to share with your clients tomorrow, if you have not done so already.
As we witness the continuing transformation of media in the digital, connected universe, everyone has an opinion about the evolution of radio into a local media solution. However, we need to be sharp enough to separate fact from opinion, bluster from actual behavior. Our medium continues to have a valuable place in the lives of consumers that many of our digital and analog competitors can only dream of having.
Share the news with each and every one of your advertising clients: If you are looking for simultaneous mass reach for your message, broadcast radio still stands as the most results effective and cost effective medium for your message. Bar none.
July 8, 2014
Two weeks ago, my friends Charles Warfield and Ed Christian had the difficult task of testifying before the U.S. House Judiciary Committee that is looking into music licensing issues. Charles, as Joint Chairman of the NAB, represented local broadcasters and Ed, as Chairman of the Radio Music Licensing Committee, spoke from his experience guiding that group. Both of these gentlemen did a yeoman’s job of attempting to focus on the benefits that the present free airplay/free promotion system has generated for the American consumer, and to caution about the unintended consequences of upsetting the status quo.
But if you watched the video of the hearing, it was easy to see that the proverbial deck was stacked, with seven proponents of various music industry points of view outnumbering our two friends. Now, no one expected this hearing to be impartial, but what struck me was the tongue-lashing that radio took. We were repeatedly accused of unfairness of the highest order. Why? Because we continue to run our business as usual, which includes continuing our role as the most influential source of new music sales in the United States? Whether country, pop, hip hop or rock, any musician knows that when they break on the radio, good things will happen to their career.
Now a brand new study, commissioned by the NAB and authored by Nielsen, demonstrates once again that there is a significant relationship between radio airplay and digital song sales and on-demand streaming. Certainly this is not news for those of us who watch hits made every day, but the study was meant to counter spurious allegations with actual facts. In this case, we were countering SoundExchange President Michael Huppe’s recent outrageous assertion that radio industry has contributed to the exponential declines in record sales.
I think Ed Christian summed it up best when he said, “With particular reference to the recurring demand for a sound recording performance [fee] to be imposed upon terrestrial radio, please understand that the radio industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital strategy that addresses a decline in its own brick and mortar income. Congress unambiguously intended that, in exchange for unique promotional support afforded record labels and artists, terrestrial radio should be treated differently from other transmission platforms.”
All of this grandstanding takes place in front of one of the most unproductive, do-nothing Congresses in the history of our country. While members ignore and dodge real questions about how to move our country forward, they waste time and energy playing for the cameras about music licensing. Do we need to keep pace with the digital revolution? Of course. But in the current atmosphere, self-interest and special interest have won out over common sense and the common good.
The only good thing about our current lawmakers is that it will take them a very long time to pass legislation to address the licensing patchwork. In the meantime, we need to be vigilant and continue to stand by the truth of the matter – that radio in the U.S. has been, and continues to be, the most effective medium for a musician’s success – and not allow rhetoric, stardom and hyperbole to carry the day.