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iPod and HD Radio myths and realities

Posted on: Aug 12, 2008 in Radio's Future

From Broadcast Newsroom:

iPods are seen as complementary to the radio experience, not competing. “Listening to your own collection versus listening to a programmed experience is still fundamentally different and (there’s) still a need for both,” [Jupiter analyst David] Card said.

This is wrong.

Anything that substitutes for radio listening is competing against radio listening and sapping precious hours of listening. The iPod experience is “different” but not “fundamentally” so, since most music radio listeners value an unbroken stream of songs in a random order, and that’s precisely what an iPod provides. Saying “there’s still a need for both” is correct, but it doesn’t mean one fails to cannibalize the other. How else to explain the 20% drop in time spent listening in the past decade among persons 18-24, according to Arbitron’s own numbers.

Does all iPod listening come at radio’s expense? Of course not. But some of it does. You can bet your bottom dollar on that.

And this:

Breadth and depth of programming remain satellite’s greatest strength and HD’s biggest weakness. Edison Media Research vice president of music and programming Sean Ross said HD radio has not made enough significant programming breakthroughs to spike unit sales. “It’s still stuck in the same loop of not yet having the volume of content that would spur a sale that would make HD content profitable that would allow broadcasters to create a greater volume of content.”

Nope.

“Volume of content” is irrelevant. You guys need to understand this.

Premium content like pro sports and Howard Stern are satellite’s greatest – and perhaps only – strengths (well, that and default installation on the majority of new car models).

It would be irrational, meanwhile, for HD radio to spend big bucks on this kind of content when there’s zero distribution potential given the miniscule pace of HD radio adoption. If you can get Howard Stern, where are you going to place him? On the big signal with all the listeners and all the revenue or the little HD one with none?

I am also quoted in the article, but I’ll save my critique of my own dumb comments for another post.

View Comments
  • John
    18-24 has decreased because more options, such as MP3, internet, etc. But HD Radio will be a major player, and not satellite. Consumers will not pay 10-15 / month for satellite. Think about how many cancel once the free membership with a new car is done. HD Radio also provides local content, which satellite will never be able to. Consumer reports even says HD Radio signal is better as shown here. http://www.hdradioreview.com/html/consumer_reports_hd_radio.html
  • Jim, as I have long argued you can't tell me that a random collection of songs on an mp3 player is "fundamentally different" than a random collection of songs on the radio. Your anecdote about Radio Disney is an exception to the rule, I would argue. After all, your kids could have a Zune and listen to Radio Disney wherever they go, but they don't.
    I hope your network/cable TV analysis is correct, but we all know there's a lot more premium content on the average network affiliate than there is on the average radio station. So I am hopeful, but not optimistic.
    Harvey, I think you make a good point and certainly our abandonment of this demo accounts for some of our diminished performance here. However, which is the chicken and which is the egg? As you know, stations started abandoning this demo in part because it was abandoning us. And - by the way - 25-34 TSL is down, too, although not by this much.
    Your point about Arbitron's troubles with this demo (and, by association, its troubles will cell phone households) is quite correct.
    I don't think we could "fix" the 18-24 situation as easily as you think - not just because of Arbitron but because the options for this group are so great, they will likely never again gravitate to music radio the way they once did.
    Progress.
  • Harvey Kojan
    Jim's comments are dead on. Let me add that the fall in 18-24 listenership is also due to the simple fact that so few stations target that demo. We essentially abandonded them long ago. And with the increasing difficulties of reaching younger demos through traditional measurement, that philosophy is unlikely to change. I have absolutely no doubt that I could put a station on that would instantly appeal to 18-24s ... but will Arbitron's outdated methodology reflect that appeal?
  • Mark, your initial point is correct, but pointing to the iPod is far too specific. Whenever something new draws the attention of the consumers it will take away mindshare from some other category. For example, I would say that the beginning of teen TSL loss came with explosion of game consoles, not the iPod. Teens were listening to the sounds with their games, rather than listening to the radio. That said, you would have to say that game consoles aren't going to replace radio listening; although they are having an impact on TSL.
    This is similar to iPods and other MP3 players--they will have an impact on radio listening, no doubt, but Card is correct: The experience is fundamentally different. All three of my daughters have iPods, but in the car they often ask me to put on Radio Disney, removing their earbuds.
    Your point is accurate in that listening to music via an iPod is much closer to the experience of listening to the radio than playing Grand Theft Auto, but why bother splitting hairs? Card's point that the two are complementary is entirely accurate.
    But we have seen this all before in a much more specific example: The rise of cable television and its impact on network TV. Network television ratings have eroded spectacularly with the spread of cable television and its almost limitless channel choices, but the fact remains that network television is still a business that generates billions of dollars. The real question for radio is if it can monetize a smaller slice of the pie, as network television has been able to do.
  • Greg
    Much of Satellite Radio is redundant to terrestrial radio, so why pay for it? We decided not to subscribe, after our free trial period, just to hear some foul-mouth from Howard Stern - the rest one can get on terrestrial radio. As for HD Radio, just more of the same is not going to sell the technology. Why don't automakers put AM/FM/shortwave radios in-dash, instead of HD Radio, to get some really unique programming? Listening to China Radio International (CRI), during the Olympics, would be great, for example.
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MRM President Mark Ramsey has worked with innumerable television and radio broadcasters over his career, including all the biggest names, from Clear Channel, CBS, Bonneville, Sirius XM...

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