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BY KURT HANSON
In yesterday's issue of RAIN (here),
I drew from a new speech called "The
Future of Radio," that I've been  delivering
at radio conferences around the world lately (albeit not yet in
the U.S.), and expressed the following opinion:
There are technological and cultural changes going on right
now that will have a major impact
on how consumers will access and use radio in the future
— and the U.S.'s radio broadcast group owners are understandably
but perhaps dangerously ignoring
those trends.
Today, we'll look at how the perceived-as-dead Internet
radio medium has actually achieved a midday audience of hundreds
of thousands of listeners... and why
that has happened. Tomorrow, we'll look at some factors that I believe
will cause that growth to ramp up significantly
in the next two to five years.
"Dead" medium has benefits
that
appeal to certain groups of consumers
Yesterday, we looked at current radio industry attitudes
towards new delivery mechanisms such as satellite and Internet  radio
in the context of the "First Law of Technology" (see slide
at left) which suggests that people will tend to underestimate
the long-term impact of such new technologies.
True to the law's prediction, most US broadcasters in 2003
have pretty much abandoned their Internet
radio initiatives, concluding that since initial wild
predictions of growth didn't come to pass, the medium is "over."
Consumers, on the other hand, have not
abandoned their interest at all! Internet-delivered radio offers
several benefits that are apparently appreciated by certain types
of consumers: (1) More formats
than the 20 or so that there are room for on the FM spectrum in
any given city — hundreds, in fact, including pop standards,
 jazz
vocals, alternative country, Broadway from various decades, traditional
jazz, electronica, Americana, blues, and more.
(2) Low spot load, at least currently — one or two
spots per hour versus the 10 to 20 that are now standard on broadcast
radio. (3) "Now Playing" information
available continuously (in text form). (4)
Interactivity — including, for example, the ability
to pause or skip a song.
And for many office workers, a key benefit is: (5)
No radio required! For many millions of people who do
not have an AM/FM radio at their desks but do
have a broadband-enabled PC, Internet radio is a more
convenient way to get music in their work space.
 Note,
however, that on several key attributes of performance, Internet
radio is a lower-quality product
(at least today, anyway) than broadcast radio. (This fact will become
extremely important later this
week when we look at the type
of new technology that Internet radio is — a "disruptive"
or "sustaining" one)
Specifically, most Internet radio stations today choose to
stream at a bitrate that means they have worse
sound quality than FM radio. And it's not
portable — you can't listen in the bathroom or kitchen
or in your car or on a Walkman. And the Internet-only stations typically
have dead
air between songs and lack such "quality"
elements as DJs and contests,
Internet radio "not happening?"
Current midday AQH is 500,000 and growing
On the whole, however, the benefits, at least for certain
consumers, apparently outweigh the disadvantages, as the
medium continues to gain audience.
It's somewhat difficult to see this, however, as the industry's
published "ratings" reports require the active
participation of webcasters before they can be included.
Thus, ratings tabulations are to some extent more a
measure of the ratings firm's success in signing up clients
than they are a measure of industry growth or decline.
As shown in the graphic at right, I believe that the "top
networks" in ratings reports are just the "tip of the
iceberg" in terms of the size of the medium's audience. The
top four networks in a recent Measurecast report, for example, may
actually be only four of the top eleven
or twelve webcasters when you add in such probably-major
players as Shoutcast,
Radio@AOL, MSN Music, Yahoo!
Launch, and others.
Add up reasonable estimates for the REAL top twelve, make
some reasonable assumptions about the rest of the players, and you'll
get a monthly TTSL for Internet radio of about 140,000,000
hours. Divide by the number of hours in a month and you'll get a
full-week AQH for the medium of about 250,000
listeners. Factor in the typical hour-by-hour pattern for the medium
(it's extremely heavy Mon-Fri 9AM-5PM), and you'll get a midday
AQH of about 500,000.
(In the full speech, I go into this in more detail.)
That's not insignificant! It's about 2% of the size of the
total U.S. midday broadcast radio audience. It's about the same
midday audience
size as Atlanta's, which is the #11 market in the US And if it continues
to grow at its current rate, the medium's midday audience size will
be the same as San Francisco's by the end of this year, Chicago's
by the end of next year, and New York's not too long after that.
However, the medium's growth may take off on a whole
new, faster trajectory in the near future due to certain
technological changes I've already alluded to. We'll look at that
tomorrow in RAIN. And then, on Thursday, we'll look at the
reasons that broadcasters are perhaps inappropriately ignoring this
growth.
Read part 3 of our "The Future of Radio"
series here.
Part 1 is here.
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The
U.S. debut of Kurt's "The Future of Radio" speech
(in a slightly-condensed preview version) will take place next
week in Las Vegas, immediately preceding the RAIN
Reader Cocktail Party at Gordon Biersch Brewery Restaurant
(Tuesday, April 7th, at 5:15PM). To reserve a seat for the presentation,
call 1-312-527-3879 or write
kurt@kurthanson.com. |
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If
you're planning to attend NAB 2003 in Las Vegas (April 5-10;
details here),
we hope you'll join us for our RAIN reader get-togther.
We've reserved the patio of the Gordon Biersch Brewery Restaurant
(about a $4 cab ride from the Convention Center) on Tuesday,
April 8th.
This year, we've also reserved a private room for the U.S.
debut of Kurt's "The Future of
Radio" speech for those who'd like an advance
look at it. (Presentation at 5:15pm, cocktails at 5:45pm.)
See you there! |
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those for the use of music on Internet radio — has been rescheduled
for this afternoon.
