03/04

Yes, Pandora is a Radio Substitute

From Inside Radio:

Is Pandora a substitute for radio… or for stored music collections? What impact is the personalized internet radio service having on terrestrial radio usage? To date, no published research survey has asked consumers whether they use Pandora as a substitute for listening to radio or whether it serves as a replacement for listening to music stored on iPods, CDs and other physical media. Not surprisingly, Pandora chief strategy officer Tim Westergren is among those who see the top-rated webcaster as a replacement for terrestrial radio usage. “Fundamentally, we’re all chasing after the listener hour,” he says. “Radio is the biggest share with more than 90% of the listening hour, so it’s safe to say our growth will come from that particular bucket, because that’s where listeners are now.” But Coleman Insights VP Sam Milkman believes Pandora serves primarily as a substitute for stored music. Much like iPod users, Pandora listeners want to control what they hear to create a fundamentally different experience from traditional radio, he reasons. “The curated world is bigger than the total control world — more consumers want somebody else to do the work than having to do the work themselves,” Milkman says. “When Pandora eats something, it will eat iPod usage, not radio.”

This ranks as today’s most ridiculous argument.

The consumption of entertainment content is about time and place and value, not about black and white buckets of distribution channels trading off against each other.

In other words, the notion that Pandora usage – “like iPod usage” – will come from non-radio time is utterly ridiculous and completely without merit.  There is no such thing as “non-radio time” – there is only entertainment time.  Pandora is clearly a radio substitute just as iPods are a radio substitute, and all the evidence indicates that consumers are spending less time with radio not for any one reason but because there are many more ways to be entertained today than there used to be.  It’s not just iPods or Pandora, it’s video games and everything Internet and Apple TV and so on.

The issue, therefore, is what radio substitutes are present in the same time and place as radio, and what radio substitutes solve the same problem as radio for consumers in that time and place.  Further, the issue is how well that substitute solves that problem and whether or not that substitute adds value to the user experience that can’t be gotten from radio itself.

The idea that folks would simply trade listenership one to the other is too simplistic.  I have X number of hours for entertainment in the day.  If Pandora consumes some of those hours then it is very likely some of those hours are coming from radio, assuming I don’t expand my entertainment hours.

This is why time spent with radio is declining over time, particularly among the tech-endowed.

So, in other words, while Westegren isn’t completely right, Milkman is completely wrong.

Unless one wants to imagine “denial” is a river….you know.

Or unless one wants to view reality the way Arbitron views it:  100 shares of listening only to the thing called “radio.”

* = required field
  • http://james.cridland.net/ James Cridland

    I can quite buy the premise that “Pandora will replace non-stop hit-music radio”. Indeed, EVERYTHING will replace non-stop hit-music radio.

    I can't buy the premise, at all, that Pandora has the capacity to replace thoughtful broadcasting that connects to audiences – you know, all the things radio should be.

    Pandora isn't radio. And it won't replace it. However, Pandora is an intelligent jukebox, and it'll certainly replace dumb jukeboxes.

  • http://www.markramseymedia.com Mark Ramsey

    Of course, I never said “replace.” But if we think (and I know you don't) that Pandora's usage comes entirely from the ether and not one bit from radio we're being naive.

  • http://www.markramseymedia.com Mark Ramsey

    To be clear, this is not about one solution “replacing” another. This is about spreading time across appropriate substitutes. Technology is abundant. Time is scarce.

  • http://www.facebook.com/people/Scott-MacKenzie/1066263194 Scott MacKenzie

    “Replace thoughtful broadcasting that connects to audiences” How should I say this, oh when I'm in the mood for music, I could give a hoot about thoughtful broadcasting! Press and play would be the core pleasure minus all the thoughtful jiberish.

  • Pingback: A “Radio Substitute” is what your Clients say it is | Mark Ramsey Media LLC

  • alehm

    “And all the evidence indicates that consumers are spending less time with radio not for any one reason but because there are many more ways to be entertained today than there used to be.”
    ——–
    And the fact these others ways to be entertained are playing things radio IS NOT playing underscores a more important point IMO.
    The CD player in my car replaced radio long before Napster was even a word.
    It is not uncommon to change a radio station because it's playing a song you don't like only to hear the same song also playing on a different station. Why? Because they only play 40-50 of the same songs over and over for weeks at a time.

  • alehm

    “And all the evidence indicates that consumers are spending less time with radio not for any one reason but because there are many more ways to be entertained today than there used to be.”
    ——–
    And the fact these others ways to be entertained are playing things radio IS NOT playing underscores a more important point IMO.
    The CD player in my car replaced radio long before Napster was even a word.
    It is not uncommon to change a radio station because it's playing a song you don't like only to hear the same song also playing on a different station. Why? Because they only play 40-50 of the same songs over and over for weeks at a time.