On his blog over the last several days, Larry Rosin has made a compelling case that broadcast radio simply hasn’t kept up in the streaming department. His posts are worth your time and your consideration.
Along the way, Larry points to factors like a poor streaming experience, commercial clutter, and the shaky assumption that simulcasting the broadcast signal is sufficient. In a post last year, we urged radio programmers to “eat their own dog food” by monitoring every week on their stream to get a better gauge of the UX – or user experience.
Thankfully, Larry points to the wisdom of station-branded apps versus “umbrella apps” that cram hundreds of radio channels under one roof. Aside from the hoops to get to your content, these aggregated apps may be cheaper in the short run, but limit a station’s ability to truly shine in the mobile space, not to mention profiting from it. There’s more to Z100 and KROQ than a stream – and that’s where individually branded apps can provide a great mobile experience if they’re well-designed.
But none of this addresses the central question about why broadcast radio streams lag compared to Pandora. Larry used this chart to make a compelling point:
So here’s some ‘splainin’ courtesy of taking off my research hat and looking at the reality of radio’s streaming lag.
First, Pandora (as well as Slacker and other pure-plays) have a distinct focus advantage. That is, the stream is the only way to listen. While Internet radio channels have had to establish their presence on apps, dashboards, and other outlets, streams are the sole pathway to listenership. It is similar to how Amazon only sells books online, not having to concern itself with bricks-and-mortar problems; it can simply do its straight-ahead, focused e-commerce dance without having Barnes & Noble’s worries. It’s not a shock that retail stores simply haven’t had the online shopping success of a “pure-play” like Amazon.
The radio industry may be lagging in the streaming department, but part of that may be due to the fact that AM/FM’s main means of access is so simple, easy, and ubiquitous. At the Worldwide Radio Summit, Pandora’s Tim Westergren almost enviously referred to radio having an elegant “one button” solution, providing easy access everywhere with no unnecessary steps. Perhaps one of the 
reasons why radio’s streaming numbers languish is that its over the air access is so simple and understood by consumers from 8 to 80.
But the other piece of the streaming malaise has to do with radio’s ongoing fear-based relationship with PPM. Streaming numbers still don’t add up to a whole lot of revenue for most broadcasters and because the loss of a meter or two to a laptop, tablet, or iPhone translates to a down monthly, stations rarely bother promoting their streams. That’s a big reason why most stations spend more time and energy promoting “Block Party Weekends” than their streams.
Imagine if by the wave of the Nielsen wand, streaming listening all counted, it was accurately measured, it was all aggregated, and media buyers from all across the land would accept those numbers, I have a feeling we’d all be treated to on-air promos and website videos that would help the audience connect the streaming dots.
If you don’t promote it, they won’t come.
And in the case of radio’s streams, between PPM phobia and royalty fees, the industry is simply not incentivized to aggressively compete in this universe. And that’s too bad given the unstoppable rise of streaming and the fact that it is becoming a more accepted and natural way of listening to audio as WiFi becomes available in coffee houses, gas stations, and center stacks.
There is tremendous potential, even with onerous royalties, to reimagine the streaming environment with fewer or no commercials, personalization, and creativity. The importance of ROI based buying will also compel broadcasters to get in the game. As we saw once again in Techurvey11, two-thirds of those who stream their favorite station would gladly sign in and provide info in exchange for the privilege of streaming.
Larry makes some great points that help explain the increasing gap between Pandora and the rest of the field. But until radio decides this is a race that it wants to win, we can expect more of the same in 2015.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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What we, as Local Broadcasters, want streaming to do is allow people in OUR coverage area to access our Brands where they can’t get over-the-air reception. The reality is in markets our size, the average number of people on the stream would be under 200 at any given time, at least for now. The connected dashboard could change that over the next 5 years. The solution for local Radio is NOT a world-wide web stream, but rather a geo-fenced web stream matching our coverage area. That stream needs to be royalty-free, because it’s exactly like an off-air pickup retransmission on a translator.
Charlie, we continue to interface with people in local markets who simply don’t have access to a radio where they work, go to school, or in some cases at home. That streaming access becomes critical to radio’s future as ubiquitous media brands. As you note, the automotive piece is a game-changer. As for the royalty-free part, I’ll leave that to other commenters to tackle (as I know they will). Thanks for chiming in.
Thanks Fred for highlighting my series on my blog and continuing the discussion. It is surely true that for many broadcasters it indeed comes down to incentives — they see a negative incentive to push people to their apps, which pushes to their streams.
There is one giant exception however, and that’s iHeart, which promotes their app several times per hour on every station they own, and has pushed so ‘all-in’ that they renamed their entire company after the app. And even with what must amount to billions of dollars of advertising, even with giant concerts and television programs, even with a ‘Pandora-killer’ custom station function, even with purported download numbers that are ‘faster than Facebook or Pandora ever achieved’ — they failed to grow at all for listening from May 2013 through December 2014…before showing modest rises through the beginning of this year.
So even WITH promotion we have a test case where listening isn’t following in significant numbers.
Thanks again and indeed let’s keep the conversation going.
Why is the streaming number so low??? There is almost NO REASON to listen to broadcast streams! If people don’t have radios at home or at work, its because they don’t want em, not because the $20 price tag is too steep. I wish the industry would accept that terrestrial streams are necessary but have almost no chance of every amounting to anything noteworthy in use or revenue. iHeartRadio’s massive promotion commitment and lackluster use proves that this is a product that won’t be adopted en masse even with on air promos and website videos. When people want to listen to the radio – and at some point in a given week almost everyone does – they listen on a radio.
As for potential – there is a ton of it for use, and none for profits. Every terrestrial listener hour that’s migrated from radio to a stream (whether it a broadcast replication or the more likely Pandora/Slacker type stream) is transformed from a profit center to a loss center. Its tough to sell that premise when despite a large number of providers, huge audience growth and impressive sales results, not one streamer has has been able to crank out even one profitable quarter, much less a business model that will provide any thing close to a competitive return on investment. Its where the world is headed, but not the business. The better you do, the more money you lose. Nuts??? Sure. Fact??? Also sure.
I’ve ranted more than I should have about radio’s lack of vision, but I understand the reluctance to make a big investment in something with no foreseeable result but red ink in a “flat is the new up” world. What I don’t understand is why radio doesn’t see that in the radio vs. music industry streaming standoff radio is now the much bigger player – and remember what Napoleon said about god being on the side of the biggest battalion.
Fix the royalties and streaming is transformed from an expensive hobby to a wonderful opportunity. Personally, I think its time to trade a performance royalty for a streaming one that’s well, fair and balanced. But there are plenty of other ways to get to something reasonable. The first step is to recognize how important that is.
Bob, I always appreciate your royalty rants (and wonder what took so long today?). It is most definitely a conundrum as Tim Westergren would no doubt tell you. But you cannot argue with wear ears are headed, and I think that’s the point Larry’s making. Thanks for commenting and stirring it up.
And the convenient truth of your iHeart example possibly goes back to the point that you made about the complexity and clunkiness of aggregated apps rather than elegant, streamlined individually branded apps. 🙂 Thanks for the comment and motivating a good post.
I wonder if we’re looking at this from the wrong angle. Why not see the stream as a separate business? Promoted as such it can have it’s own identity and content. If we continue trying to pry listeners away from their radios to get them to listen to us online what are we doing to our core business? Especially when we’re producing different content online. I’d suggest we spend the time and money to make our over the air product better if we don’t want to completely lose to the Internet….
Thanks, Bob. Always important to get a vote for the “mother ship.”
I think you are onto something regarding content Bob. Just pushing the terrestrial radio product online is like putting a square peg in a round hole. I know very few people who are listening to digital content that way. Radio looks at our stations as the brand, and rightfully so for over the air listening, but in order to play in this new arena of on demand listening I believe the content will be the brand that matters most. That is why NPR and their spinoffs of Serial, Start Up, This American Life and others are so successful, because people want high quality, original content. Give people great content, promote it on the right channels, which may not necessarily be your radio station and the listeners will come.
Thanks for continuing this conversation, Sean.
The hard truth about streaming for broadcast radio is generally that less that 2% of their cume converts to streamers. That being said the cost of streaming and the associated fees for music stations makes it very difficult to monetize. The other problem seems to be lack of manpower. Curation is a full time job and radio isn’t staffed or trained properly to do this due to the lack of available time among PD’s and digital people. For advertisers, spending $2-5 cpms for less than 2% of a stations cume just isn’t a good value proposition. If we integrated streaming into a ‘mobile web’ strategy and sold the value of radio as reach we, as an industry would have a better chance of monetizing it and making it a core value proposition for the audience and advertisers!
Like any content play, Michael, it requires vision, resources, and investment. Up to this point, radio has taken the easy way out and the results speak for themselves. Thanks for reading our blog and commenting.
Great post, Fred. Thanks for moving this conversation forward. There’s a wonderful business opportunity here. Outsource the commercial breaks. Digital ad serving tech could help clean up a mess/headache for broadcasters, improve user experience and potentially optimize revenues via integration of RTB/programmatic/trading desk solutions.
Dave, as always, you’ve boiled it down well. Thanks for taking the time to comment.
Fred – Great conversation points here…In the short-time that I have been in Baltimore at WBAL one of my take-aways is that you have to be focused on driving your audience to the stream and then back to the broadcast radio presentation 24/7. This is not easy, and it requires dedication to the process every day. The reality is the consumer is telling us what they want, and that is access to their content wherever and whenever they want. The explosion in mobile means if you do not have a plan to get the audience engaged, you in the end will lose out. We have on-air promos consistently that drive to the stream and are working to have promos on the stream that drive back to the broadcast presentation. We saw last week with all the big news coverage here in Baltimore our stream numbers increase by incredible numbers. We all have so much to do with the day-to-day operation of our station, but it really is a priority now as the audience wants this!
Having a “litmus test” like you experienced in Baltimore can be a great way to truly see the value, even thought the event was tragic. Thanks for sharing your “pinballing” idea.
People over reacted and forget that the stream is a part of the radio station not a separate entity that shared the space.
Mark Cuban never did when he ran broadcasting.com
Appreciate you reading the blog, Lou. Thanks for the comment.
I spent a long time banging my head against the wall a number of years ago when the large company I work for thought they had a streaming strategy and basically had no clue. The opportunity to grab share in the streaming space is huge, and many radio stations have simply blown it because streaming is an afterthought at best and the user experience has been anywhere from bland to horrid. Sound coming out of a speaker to a certain extent is a parity product if access to a broadcast stream or a pure play stream is the same. At that point, it comes down to content and the user experience, and the difference between most broadcasters and most pure plays is that broadcasters see their stream as a afterthought and fill the long commercial breaks with garbage while the pure plays see the stream as literally everything. The care and feeding of a pure play stream is very different than the care and feeding of a broadcast stream in almost every situation. Broadcasters can promote all they want, but if they don’t up the quality of their product they will not be able to hold listeners and will ultimately lose to the professional streamers.
Mark, great points, especially the afterthought line. The fact that so few programmers monitor it says a lot about how streaming is truly valued. Thanks for the comment.
I’m amazed by the stunning lack of creativity of radio management regarding stations’ online presence.
It seems like a great opportunity to try some of those wild-and-wacky promotions radio stations used to do, back in the day when radio still had a soul.
And I f the idea really is compelling, someone just. might. be. willing. to. sponsor. it.
(just sayin’)
ΔV
From your lips, Dimitri.
As another commenter mentioned, digital/online was very much considered an afterthought for a business model that worked perfectly in the transmitter/tower mode. As that thinking has (thankfully) evolved over the past several years, the economic downturn has made it challenging for broadcasters to step up and turn the creativity and innovation loose. No excuses, but that’s the way it has played out. And it’s why radio is in the position it is today. Thanks for chiming in.
There are lots of great ideas here but let me give you a real world practical example of why terrestrial streaming doesn’t work. I live in rural Southwest Oregon. Hardly any Medford stations are listenable from a signal standpoint. I have one station I like so I tune in on the stream every day. About half the time the stream is down. And they’re been running a spot for a heating and air conditioning company since I moved here and the copy is about how Fall is coming. Are you getting the picture? It was the same at the last few stations I worked with. Companies refuse to allocate resources (which most of them don’t have anyway) to streaming. It’s a complete afterthought. They do it because somebody told them a few years ago, “You gotta be on the web, man.”
I humbly submit that, while it’s great to speculate about what great things terrestrial radio could do with web streams, their entire future is on that stream. And I’m talking about their main channels. But, once again, save for allocating the appropriate resources for good, LOCAL content, it won’t matter.
I’ve preached this before until I’m blue in the face. Local radio stations don’t compete anymore with the guy across town with a transmitter and a tower. And it’s only going to get worse. You won’t bean Pandora, Spotify or somebody’s iPod or iPhone with music. You’d better have a unique reason for people to listen to your stream and I content it’s compelling, local content.
Cheers from Selma, Or. Go Ducks.
Bob McNeill
My wife’s a Duck and I’m still reeling from that Big House defeat eight years ago. But I digress…
The user experience is often terrible, and that’s probably more the case in smaller markets. But overall, when your streaming program is a part-time job, you’re not going to do it well. You are on the same page – how can you create all those creative streams when you can’t even get your main channel’s stream right? Thanks, Bob, and good to hear from you.
Fred,
Ditto on the earlier sentiments about your post. Excellent point regarding the fact that users are going to go with the easiest option for consuming media, and for real radio that is still the transmitter and the receiver they’ve always used. With Pandora, they only have one option — the stream. So let’s not be surprised that their stream beats our stream, while we keep in mind that the total size of the audience to real radio dwarfs Pandora’s total audience.
In terms of the radio industry, it’s difficult to justify a large investment (expense) for a second product line (a digital channel) that has much lower margins and possibly no chance of turning a profit due to the existing cost structure related to streaming music.
As businessmen, maybe we need to evaluate this in a different way. It’s usually much easier to determine the cost of doing something than it is to figure out what I lose by not doing something. If we stick our head in the sand and don’t invest in successful, profitable digital channels with content that draws a valuable audience, what do we lose? It’s possible that businesses like Pandora, which seem to lose more money every quarter, will not survive and real radio will again be the only show in town. But does it make business sense to put all our eggs in that basket? Or would it make more sense to try to beat them at their own game. There could be so much synergy for local broadcasters to provide multiple ways for users to consume their content. It’s OK to put our existing programming on the internet or an app for listeners that would prefer that, but as previous users have stated, we also need to provide content that takes advantage of the power of the digital channels.
– Targeting
– Getting what I want when I want it
– Being able to get more detailed information on a topic than can be put in a short audio segment
And much more. But make no mistake, this is a new business requiring investment in the resources required to do it right. To the victor goes the spoils. Let’s hope our industry is smart enough to take advantage of our strengths and parlay them into success in a new business before our advantage (our large, loyal audience) no longer exists.
Marc, thanks for the truly considerate and even-handed analysis of the situation. I especially like the point that Pandora and other pure-plays might somehow go away especially if they cannot solve their royalty problem. But what if they did get some relief or figured out a different way to start making money? As you point out, where would that leave radio?
(By the way, Bob Struble and his iBiquity team might be reading all this and wondering why the hell broadcasters don’t run more of their “experiments” on their HD2s and 3s, but that’s another conversation.)
You make a good argument that radio needs to realize that listening patterns are changing. Broadcast radio may be the easiest and actually have the best margins. But as personalization, content richness, and access anywhere become more and more desirable, the medium is going to have to step it up.
Thanks for keeping this excellent conversation going.
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