12-23-2011
(by Ed Ryan)
It's become clear to most serious observers that the big players in the radio industry are not interested in Pandora wedging in on its revenue. And they've decided on a plan of action to protect their turf. This week, first Arbitron, and now Katz made moves aimed at dampening Pandora CEO Joe Kennedy's consistently stated goal of taking revenue away from the radio industry. You may remember, not too long ago, Cumulus' Lew Dickey made a deal with Bob Pittman's Clear Channel to move all of his stations to iHeartRadio. In return the combined radio station count of 1400 stations will promote Cumulus' SweetJack. That's some serious clout if those two companies decide to work together, which apparently they have, to slap Pandora down a notch.
The Katz Radio Group is an arm of Clear Channel and the official Katz line is, "we originally believed Pandora offered a complementary service to radio; however, its service has not proved comparable to the entertainment value offered by our client stations? online streams. We have found that many of radio?s best attributes?such as its ability to create an emotional connection with listeners through live broadcasts? are unique to broadcast radio and significantly differentiate the real radio experience from Pandora." It's important to note that recent cutbacks in the radio industry have resulted in fewer live voices able to create that emotional connection with listeners. It's a consistent criticism we hear from Radio Ink readers on a daily basis.
Consumers may also disagree that Pandora is "not comparable," Pandora founder Tim Westergren certainly does. He tells Radio Ink Katz wasn't bringing much revenue in for Pandora anyway. "The move has no impact on us since the radio ad sales staff hiring we have been planning will pick up the negligible amount of business that had been coming through Katz." He goes on to say the two moves made by radio this week are proof the radio industry is scared about what's happening. ?Radio ad buyers are beginning to spend their money on Pandora and broadcasters are reacting by trying to stop the flow of information about Pandora?s audience to the ad buying community. This week's actions by both Arbitron and Katz are examples of the broadcasting community's efforts to prevent advertisers from fully understanding the magnitude of Pandora?s audience.?
Kennedy, in conference call after conference call and presentation after presentation has said Pandora is redefining radio. On November 22nd, Kennedy said the following: "Pandora is one the largest radio stations in every single market in the United States and on track to be larger than most AM or FM stations in most markets in the not too distant future." When Lou Dickey and Bob Pittman and John Hogan hear those statements, some might understand why they seem to be putting the pressure on to shut Pandora out. Apparently they've decided they are not going to make it all that easy for Kennedy. Arbitron, in a very public letter, warned stations about comparing server-side research to the PPM. It was a not-so-subtle shot at the numbers Edison Research was releasing on behalf of Pandora. The Arbitron letter was understood clearly by Tom Webster at Edison who wrote his own letter defending the numbers.
And in response to Katz dropping Pandora, Webster writes the following comment on his blog: "And today, Katz360 dropped Pandora because traditional radio broadcasters pressured them to do so. Which makes Katz360 NOT A REAL COMPANY, since Pandora has well over 50% of the online radio market. Radio doesn't have a "tower" problem or a technology problem. It has a "not enough smart people in management" problem. Pathetic."
Mary Beth Garber of Katz has never been a big fan of Pandora or a believer in the Pandora numbers put out by
Edison. She often states the press gives Pandora a free pass. A pass Katz is not longer willing to give them, even if it means giving up revenue by dropping Pandora. "Our top priority is to help build the digital assets of our broadcasters, making sure we assist the more than 4,000 radio stations we represent to fully integrate their over-the-air and online businesses; therefore, we believe this decision is in the best interests of our broadcasting clients, and look forward to taking advantage of the extraordinary growth opportunities available in this digital space."
Westergren went on to say, "the Internet is radically altering the radio landscape. Internet radio already has a large, and very fast growing share of all of radio listening. There's only so long that incumbent radio broadcasters, and the layer of service organizations paid to serve them, can shield advertising agencies and their clients from the new reality. Modern standards for accuracy and accountability expected in the media industry simply won't tolerate it."
To be clear, most people in this space say that Internet listening, while growing, is still only about 4% of all audio listening. Over-the-air radio still dominates in terms of listening and revenue. Should make for a very interesting 2012.
Feedback at edryan@radioink.com or leave your Holiday Greetings and comments below
(12/23/2011 11:36:38 PM)
When advertisers are given the choice of reaching the exact audience in a one on one experience that can be tracked for effectiveness and measurable accountability, does the rationale that a format specific "guess" at who is listening really matter? These ridiculous arguments that PANDORA is not playing fair because it shows ratings based on actual listeners media consumption and not estimated ratings from single format stations shows how out of touch these people are...GO PANDORA!
(12/23/2011 8:49:16 PM)
Wow! This creates an amazing oppertunity for someone to start a business to represent the Internet Radio industry.
It is obvious that the radio industry is scared to death of Pandora and any other internet radio service that will likely rise behind it.
Pandora has over 100 million users, and has an average of over 700,000 active sessions at any given time. Pandora has added around 40 million users in the last year alone, and the growth continues. At this rate, Pandora could have over 200 million users by the end of 2013. That is hardly something to shake a stick at.
I managed radio stations and worked in radio for close to 20 years and decided to get out. I could see the writing on the wall. There was no future in radio if the industry contued to follow its current business plan. It is doing what Kodak did when digital cameras started to hit the market place.
Radio was the industry most well equiped to dominate internet radio as the space evolved, but has refused to do so. The internet radio space is now beginning to grow into something big and it appears the way radio will tackle it is to fight it and stick to its old business model.
Radio can say that it is streaming and has websites, but here is the problem. Radio is only replicating radio over the internet. Long music sweeps and 5 and 7 minute long stop sets. The internet is something different. On the internet people are "Users" not "Listeners". If radio can create something on the internet for people to "Use" then it will have something people are interested in.
If YouTube was run by the radio industry model they would stream the videos to you that they want you to see. You would not be able to chose the videos you want. If YouTube operated in this way not many people would use it.
All iHeartRadio does is stream radio stations, oh and now they have a service invented by soeone else. Pandora on iHeartRadio. If Clear Channel thinks that replicating Pandora on it's iHeartRadio App is a good idea then Pandora must be on to something.
Radio is still in the position to get in on the growing space of internet radio, but in order to do so it must innovate. Innovation is not streaming your radio station. Adding an extention of your brand to the internet that your listeners can "Use" is the answer.
Best
Bob
I have just returned to radio after being out of it since 1981. Wow, what changes have occurred. Took me a while to realize that my search for Cart Machinesm, Reel to Reels, phone couplers, etc was in vain. And where IS that paper log anyway? Today it's MP3's, NexGen, Adobe Audition and other computerized gizmos. I like a lot of it. But I'm at an AM Country station that is trying to compete with all of this. Yes we're streaming audio, have a website, aggregate to Twitter and Facebook. But there is so much more we should be doing. In the discussions about Pandora, Satellite Radio and all the other competitors, I am still naive enough to believe the one thing even an old fashioned AM station can do that most others don't is LOCAL, LOCAL, LOCAL. We're still the ones that sit in drafty pressboxes bringing high school football home to the fans. We're the ones out there in the blizzards, fires and tornadoes bring live coverage back. And THAT to me is what we need to imprsess our advertisers. We also need to recognize the world we knew has long since changed. Having ownership's buy-in is critical. I see that as my own personal battle in 2012, trying to get my ownership to see that the game has changed and we need to change with it, if we want to continue to be a player.
I've just found Radio INK and really enjoy the commentary and all the great responses. Merry Christmas one and all.
David G. Stern - PD - KGYN Radio in, of all places, Guymon, OK (Known for years as No Man's Land.)
It's a timeless scenario....the much heralded fight between the grim-faced, intensely determined gorilla squared off against the jovial, lighthearted deft dancer. "It's gonna be a thrilla, and a chilla, and a killa, when I get the gorilla in Manila," was Ali's chant leading up to the fight to crown the undisputed champion of the boxing world in 1975.
Fast forward to a new time. We're in the midst of a different battle, this phalanx is set to guard invisible turf. In this corner, it's PANDORA "floating like a butterfly, stinging like a bee." And in the other corner, it's GORILLA, and, by Jove, step in his path at your own peril. He's too slow these days to land solid punches but his frontal assault keeps coming at you, pushing, slapping, tripping. He won't stop because he doesn't know when the war is won,or lost. He's always lived to fight, now he fights to live. Bob Dylan said, "The times they are a changing," I say the times have a changed.
What is our attraction to exhibitions where the outcome is so certain. We knew Ali would win, we know that Tebow will pull out many last minute victories, we know there will always be space-protecting gorillas, and we know there will always be an unstoppable Steve Jobs of the world whose contributions cause societies' habits to shift toward new, exciting directions.
We know the GORILLA will dig in his massive claws to protect his turf, we recognize this as self-preservation. On the other side, we acknowledge as parenthetically clear that PANDORA's goal is not to occupy that turf, only to have its rightful access to the fruits of the larger landscape. See, in its mind, PANDORA sees the GORILLA's turf as located on the wrong side of town and far removed from the brisk hum of the modern super highway.
Make no mistake, both undisputed heavyweights will live on to fight another day with no clear winner crowned for years to come, but we know that in our brave new world 'years' can be reduced to nano seconds with a few decisive blows. I wonder if Don King understands the opportunity he's mssing here.
Why does Kennedy think "Pandora is one of the single biggest stations in each market" but then doesn't count a single Pandora station against radio. He's using the entire Pandora entity compared to a single terrestrial station. Buyers review the individual merits of EACH station, they don't look at the collective cluster ratings. Play by the same rules.
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