Radio's resiliance is weakening: American study | radioinfo

Radio's resiliance is weakening: American study

Thursday 31 August, 2017
Radio has been historically resilient when confronted with new competitive technology, but "that resilience is weakening," according to a report compiled by Larry Miller of New York University's Business Program.

Streaming now provides record labels the majority of their revenue, as well as directly impacting the Billboard Hot 100 chart. 

Radio is now less of a tastemaker and more of a validator of the biggest hits often discovered on streaming music platforms.

Younger music fans are not turning to radio first for music discovery, and the music industry is responding, according to the report, which details the growth of music streaming services as taste makers, compared with radio:

The addition of streaming data to the Billboard Hot 100 chart, which both reflects and drives hit radio playlists, means that streaming is now playing an important part in determining which songs are played on radio rather than the other way around, reducing its status as a taste-making tool.

In fact, streaming now accounts for 20 - 30% of the data that comprises the Hot 100, with sales at 35 - 45% and airplay at 30 - 40%. Streaming data was first added to the Billboard Hot 100 singles chart in 2007, when nascent streaming services like AOL Music and Yahoo Music were available in the U.S. After Spotify’s arrival in 2011, Billboard launched the On - Demand Songs chart and added Spotify, Rhapsody and others into the mix. The chart fed directly into the Hot 100 and was supplemented by the more comprehensive Streaming Songs chart in 2013, which added music video plays from YouTube and Vevo to the formula.

Immediately following the new rules, Baauer’s “Harlem Shake” jumped to #1 on the Hot 100 driven by more th an 100 million first - week views. 7 “From then on, radio would have to compete with the Internet as the primary motor of pop stardom.” Pandora data was added to the Billboard formula in January 2017, immediately moving nine songs up the Hot 100 rankings by at least five places and breaking Callum Scott’s “Dancing on My Own” onto the chart for the first time.  

2016 marked a tipping point for the music industry, with streaming overtaking sales as the single highest source of revenue in the U.S. Streaming accounted for 51% of all U.S. music industry revenue, up 68% from 2015 to $3.9 billion. It’s an astonishing turnaround, with streaming accounting for just 9% of revenue in 2011, only five years prior. In addition, 2016 marked the first double - digit revenue growth (11.4%) in the U.S. recorded music industry since 1998, driven primarily by a 114% increase in revenue from paid subscription streaming services to $2.5 billion.   

Until now, AM/FM radio has remained the dominant force in U.S. music listening, and when the numbers are seen in aggregate, radio listening arguably remains relatively stable. But competition for audience and attention is mounting.

Miller's report outlines the following areas important in this time of transition for the radio industry:

1. A New Challenge: AM/FM radio has been a resilient medium in the Internet era, but that resilience is weakening. While it was able to survive and adapt to the introduction of television, new digital services are beginning to change the way people listen to music, endangering radio once again.
2. From Tastemaker to Validator: Record labels and key industry charts are flocking to digital in search of tastemakers and breaking music. Increasingly, digital plays are being integrated into radio - driving charts like the Billboard Hot 100 and tou ted in trade ads seeking spins for new songs, weakening radio’s traditional role as a minter of hits.
3. Dawn of the Digital Generation: Gen Z music fans, born in 1995 or later, are embracing digital formats at the expense of radio use. Having grown up as true digital natives, this generation is uninterested in AM/FM radio and prefers the increased interactivity and personalization of digital services like Spotify and Pandora.
4. Discovery Migration: Radio is declining as a source to discover new music. Younger music fans are increasingly turning to sites like YouTube to find new artists and songs, leaving radio in the lurch.
5. Revenue, or Lack Thereof: Broadcast stations pay no royalties to record labels for the use of master recordings . Digital services, by contrast, are a source of discovery and revenue.
6. Dashboard Invasion: Cars, once the bastion of AM/FM radio, have now introduced competition to the dashboard, decreasing radio listenership. As newer models with improved technology continue to proliferate, radio is being pushed further and further from the center of in-car entertainment systems as drivers demand choice and access to more customized, often commercial-free , digital services.
7. Talking Is Not the Cure: Smart speakers like the Amazon Echo have sparked a new opportunity for audio - only entertainment in the home and are shaping consumer practices and preferences. Unlike cars and traditional home audio receivers, smart speakers access wi - fi networks and don’t have an AM/FM antenna at all. Without a strong digital presence, and a focus on digital streaming services, traditional broadcasters are going to be left behind in this critical and growing part of the market.
8. Improper Measurement: Radio’s ratings system can be gamed and fails to deliver on the specifics that advertisers demand. Nielsen’s current system, reliant on Portable People Meters (PPMs) in top markets , fails to take into account the passion a listener feels toward specific stations, under - samples younger and ethnic demographic groups , and has led to the mass format changes by stations devoted to softer music genres that can’t mask the PPM signal in noisier music , and led to a race for technology - driven advantages that allows richer stations to buy bigger ratings.

Some of the assumptions made in this report can be challenged as too narrow a view of radio, a nostalgic view that makes radio seem weaker than it is today, but it is an interesting report because it has so much detail about music streaming growth and its influence on top 40 charts.

The American radio market is different from Australia. For years it lost its dominance due to mergers, networking and over stretched credit borrowing, while Australian radio strengthened itself gradually. However it's worth a look.

Download the full report here.




Post a Comment


Log InYou must be logged in to post comments.
radioinfo ABN: 87 004 005 109  P O Box 6430 North Ryde NSW 2113 Australia.  |  All content © 2012. All Rights Reserved.