As can be seen in the recent Edison Research study, 67% of music listening while in the car is to AM/FM.  This is 52% greater than when all locations are considered.  The focus on the car as a listening environment and the changes taking place in-car infotainment systems is justified and should be a focus of the radio industry.  I have struggled to determine how the radio industry can resist the force of consumer choice and automotive movement to make more listening options available.  screen-shot-2016-11-04-at-10-15-21-am-copy

The RAB just released 2013 radio industry revenue information which reflected no growth over 2013 in total.  However, while spot radio was down 3%, digital revenue increased 18% over 2012.  The percentage of digital revenue is still small, only 5%.  Digital represents the greatest hope for increasing radio revenue.

We need better information on the components of digital revenue as there are many;

– website advertising (banners and pre rolls)

– streaming audio ads (desktop and mobile/ banners and pre rolls)

– other destination sites (separate URL – local community news, events, etc.)

– reselling other tools to advertisers (reputation management, SEO/SEM, social media, etc)

Some radio groups understand the need to be competitive for digital revenue and are forming digital agencies.

As the percentage of digital revenue increases we need additional data to understand what areas are gaining the most traction.

Screen Shot 2013-12-09 at 9.14.36 AM copy

Last week we closed on an investment in Closely.  Closely has brought a number of local merchant marketing tools together in one platform.  The Company has just launched Perch 2.0 which brings reviews, social posts and promotions for you and your competition, all in one place. A significant change in this new version is the new Home screen where activity of all watched businesses is shown in a live stream. Popular posts are highlighted, so it’s really easy to understand which activity is most popular with consumers.

Nielsen has announced plans to utilize the same audience panels for website measurement for measurement of Internet radio.  As I have espoused for many years why would you use estimates when you can have actual audience data.  That is one of the great features of Internet radio and helps advertisers have more confidence in audience data.  Of course the other great attribute is an advertiser can actually know that an ad was heard unlike terrestrial radio where affidavits just reflect the fact that the ad was played but no data is available as to how many people heard the ad (other than to apply the estimated audience).

Given Nielsen’s clout they may be able to pull this off but I don’t believe its a good thing for Internet radio.

Google has finally arrived at the Internet Radio table although I must say the name of its service, “Google Play Music All Access” leaves something to be desired.  Apple will most likely follow by the end of the year.  There are still a lot of unknown details especially if any free ad-supported models will be forthcoming.  One thing is for sure, there are only so many hours in a day to listen so most likely everyone’s share will decrease.  This includes terrestrial radio.  Terrestrial radio appears too busy trying to bail out the waning AM radio service and  make non interactive HD radio work to attack IP audio.  CBS was an early leader but their bets did not pay off.  Clear Channel has now grown an impressive Internet radio service with over 30 Million registered users.  However, we have gotten to the point where Clear Channel’s future interests may not fully align with the rest of the radio industry.

We just returned from the NAB last week and while there we attended the NAB’s day long session, Digital Strategies for Broadcasters.  The panels were well prepared but sadly there were only 60 people in the room (92,414 attendees at NAB).  One of the better panels covered the connected car.  Panelists were from the Consumer Electronics Association, Connected Vehicle Trade Association and a consultant formerly with Lexus/Toyota/Scion.  One slide I wanted to highlight came from Michael Bergman from CEA.  This slide illustrates what is projected to occur through 2016 in the car.  Note Internet radio growth with over 80% in-car penetration by 2016.  Penetration is more than twice that of HD Radio.  As I have posted previously HD radio lacks full two-way interactivity, a few extra channels with no compelling advantage in content and/or audio quality cannot compete with Internet radio.  The Digital Strategies session opened with a chart showing current internet listening vs. terrestrial radio.  Obviously an emphasis on today rather than the future…

Screen Shot 2013-04-16 at 9.42.15 AM

Social Media is a key indicator of audience engagement and what is resonating in the social media ecosphere.  While there are a number of social media channels for purposes of this analysis I chose Twitter.  I utilized the services of Socialping, a company that specializes in Twitter audience metrics. Socialping provides twitter analysis including monitoring key words.  I decided that I would apply Socialping measurement to Internet Radio.   I created watch lists for key words for the following;, iHeartradio, Pandora, TuneIn, KROQ, Rdio, WBLS and Spotify.  The measurement period is for one week beginning 2/25 – 3/3.

         

Unique Reach

Service

Followers

Tweets

Retweets

ALL

Average

Iheart

154,957

9,993

6,553

16,546

2,909,856

KROQ

68,570

1,554

2,128

3,682

1,248,637

Pandora

148,716

521,263

118,693

639,956

35,760,075

Rdio

90,145

10,403

7,905

18,308

3,768,454

Slacker

41,270

20,952

481

21,433

1,430,976

Spotify

436,545

275,878

38,230

314,108

35,500,325

Tunein

42,649

68,691

18,147

86,838

7,000,918

WBLS

7,096

2,107

413

2,520

679,258

The above data reveals several key findings;

1) Spotify is the leader in followers with almost 3x that of Pandora.  This is probably due to its more international offerings.  However, Pandora and Spotify have approximately the same reach.

2) iHeart radio has more followers than Pandora.  However, the # of tweets is only 3% of that for Pandora (Note: iHeart’s radio audience as reported by Triton Digital is 15.9% of Pandora’s).  Has Clear Channel driven people to follow but they are not engaging with the service?

3) One of the top single stations in the country, KROQ has roughly half the followers of iHeart Radio.

4)  While Tunein has less than one third the number of followers as iHeart they have 3x the reach.

As discussed in my prior post the technical side of car integration for Internet radio is difficult due to the many car companies, their suppliers and in dash systems.  Pandora, Tunein, NPR and iHeart radio have an amazing lead on the terrestrial radio industry for real estate on the car entertainment systems.  Pandora was integrated with every car company we visited at CES and claims to be integrated with 1,000 different devices.  These integrated applications appear prominently as listening options.  The rest of terrestrial radio streaming is for the  most part not represented except as embedded in Tunein, Aha or iHeart.  This is a major factor as to why many other radio stations have agreed to be included in the Tunein and iHeart platforms as it give them access to these distribution systems which also have in car access.  However, in a point I made in an earlier post they are lost in a multitude of options.

Yes there is still a radio button in the car and this will not disappear any time soon.  However, it is now just one of a multitude of choices.  As we know people typically have about 6 presets (their favorites) and scroll among them.  How will terrestrial radio compete in a fragmented dashboard.  In my view it will not be based on music but other unique and local content.  Unfortunately radio has reduced its investment over the last several years in its product.  Very little programming is local and unique.  Competition for other information such as news and weather is readily available from other sources.  Those that do invest and have a multi-pronged distribution approach will be the winners.

We just returned from the Consumer Electronics Show in Las Vegas.  The primary theme was Internet radio in the car.   One of our portfolio companies, Livio Radio, announced FMConnect which allows terrestrial radio stations the ability to now take advantage of two-way communication (read; digital) utilizing the cell phone connected to your car’s entertainment system.   Also Kudos to Fred and Paul Jacobs for inking a deal with Ford for their Ford Sync product.  Unfortunately the car ecosystem is fragmented and confusing to a degree that is frightening.  While developing an app for Ford is an attractive idea, keep in mind that this app will not work with all the other car companies’ entertainment systems. As currently stands a station would have to develop a different app for each car platform which is what Livio Connect is trying to eliminate.  Livio is integrating with all car companies and their suppliers.  Internet radio in the car can be achieved by many means as follows:

1)  physical cable

2) Blue tooth

3) Wi-Fi

Some systems just mirror the phone with navigation still done on the phone.  Others such as provided by Livio Connect  allow listeners to control access to streams from the cars control.  This makes controlling audio options much safer.  This is also true of Ford Sync’s product but it of course is one of many in the car ecosystem and I don’t think that Chrysler is going to allow the Ford platform into their cars.  Thus the need for a company like Livio which can work with all car companies because it has integrated into the chipsets of major suppliers of the in-car entertainment systems.  Radio companies should leave getting connected in the car to auto industry experts given the vast, confusing world it represents and should partner with a company like Livio to deal with integration.

Angel Street Capital recently closed on an investment in Fundation, Inc‘s convertible note round.  Fundation provides on-line commercial loans of $50,000 – $250,000.  Fundation has developed an automated credit decision engine and will use the Internet to target its offering to select industries and geographic areas.  This is not a peer-to-peer lending model but rather a fund that will deploy capital utilizing Fundation’s platform.  The platform will launch in the 4th quarter.

%d bloggers like this: