Harker Research-Confronting Radio’s Challenges in the 21st century:

I happened upon this great article written by Ray Harker and Glenda Shrader Bos and initially published on Radio Insights…see www.radioinsights.com .  It is very much worth the read for those of us in radio/talk radio…I was unable to re-publish the graphs/charts…enjoy:

October 22, 2012

Smart-Phone: Radio Salvation or Another Nail in Coffin?

Over half of cell phones sold in the US are now smart-phones like iPhones, Androids, and Blackberry.

If the trend continues, one day virtually everyone will be able to listen to radio where ever they go.

While some have heralded this development as a huge opportunity for radio, the growing use of smart mobile devices may be at best a mixed blessing.

The reason is that compared to listening on a radio or computer, mobile listening-spans are dramatically shorter. And shorter listening-spans makes radio time harder to sell.

Even Pandora is not immune to the impact.

While Pandora regularly crows about all sorts of new records like number of subscribers, or session starts, the service never mentions TSL, the amount of time users spend with the service.

Maybe that’s because while Triton Digital ratings show average sessions and session starts growing, TSL, the average length of time a person listens to Pandora, is headed in the opposite direction.

The graph above traces Pandora’s TSL for the past three years.

In 2009 Pandora TSL was about an hour. At the time only computer listening was included in the ratings.

Then in December 2009 mobile listening was added to the service’s ratings for the first time.

Pandora TSL immediately started dropping. In just four months TSL plummeted to just 46 minutes.

Aside from a few positive months in late 2010, the service’s TSL has continued its steady erosion throughout 2011, even accelerating towards the end of the year.

Today Pandora TSL is down to 38 minutes, a loss of 34%.

The precipitous decline in TSL coincides with a dramatic increase in the number of users listening on smart-phones and iPads.

As Business Insider points out:

While 88 percent of Pandora’s listening hours came from desktop use in Q1 of 2010, by 2012, users spend (sic) 70 percent of their time on Pandora listening on their mobile devices.

On a computer one can listen to their favorite station as they continue to do other work on the computer.

Multitasking on a mobile device is much more problematic than on a computer. And if one is using the phone to make and answer phone calls, listening to radio for any length of time isn’t going to be practical.

So it stands to reason that TSL will decline as more people listen on mobile devices.

Is TSL for broadcast streams following the same pattern? Sure is.

Harker Research tracks broadcast streams measured by Triton Digital, and broadcast streams are suffering a similar decline.

The second graph above reflects the combined TSL of 12 broadcast groups for which we have multi-year trends.1 In the beginning of 2010 the combined TSL was over 35 hours, nearly three hours per radio group.

By 2011, the combined TSL was down to 24 hours, and today it is down to 16 hours, a decline of over 50%, a decline even greater than Pandora’s.

And what about Bob Pittman’s Clear Channel Communications, leading the digital charge with its iHeartRadio app?

As measured by Triton Digital, Clear Channel is the worst performing streaming service in terms of TSL, and one of the worse performing in terms of its decline.

The third graph tells the story.

Two years ago Clear Channel average sessions consistently lasted over an hour, some months exceeding 82 minutes.

As of August, TSL had fallen to 32 minutes, a decline of 61%.

If the time spent with mobile devices continues to grow at the expense of traditional computer use, we can expect TSL to continue to decline.

And that could cost radio a lot.

For Pandora who started with zero listeners and zero dollars in sales, the growth in audience more than makes up for the loss of TSL per user.

A loss of TSL for broadcast radio can’t help but hurt revenue.

Radio already reaches more than 90% of Americans. There is no more room to grow cume audience.

To grow AQH and revenue, broadcast radio has to increase TSL. And TSL is headed in the wrong direction.

Radio took a financial hit when AQH ratings dropped in the markets that switched to PPM.

Streaming is likely to be another financial hit as AQH ratings decline even further as people replace their radios with mobile devices.

Think about that next time you hear a promo for iHeartRadio.

1The 12 groups are Cox, Cumulus, EMF, Emmis, Entercom, ESPN, Greater Media, Hubbard, Radio One, Salem, Townsquare, Univision. Neither CBS nor Clear Channel are included because of their non-broadcast streams.

Posted by Richard Harker & Glenda Shrader Bos on October 22, 2012


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