RAIN 9/20: Net radio begins annual recovery from summer slow-down

Paul Maloney
September 20, 2012 - 10:55am

Like the melting of the snow, the falling of the leaves, and "lambs and lions coming and going," Internet radio listening tends to slip in the warm weather months every year (see last month's ratings coverage here), and just as quickly start ramping back up as we near fall and then the holidays.

We'll likely see this trend soften as mobile and in-car become more typical listening methods, but even the mature broadcast radio medium generally sees its listeners looking to disconnect a little bit when on vacation or enjoying the outdoors.

Most every broadcaster and webcaster saw AAS (Average Active Sessions) improve in the just-released August Internet Audio Top 20 from Triton Digital. Non-commercial Christian broadcaster EMF's AAS grew 17% over July, while ESPN went up 13%, and Cumulus stations collectively added about four-thousand active sessions (in the Domestic Ranker, M-Su 6a-12M).

The rankings themselves remained mostly static. Pandora remains the monster of the industry, with an August AAS (1,282,444 U.S. only, M-Su 6a-12M) seven times that of the nearest competitor, Clear Channel (183,452). Pandora added 68-thousand average sessions over last month; its AAS is up 89% so far in 2012.

The distant-yet-solid second-place Clear Channel has actually more than doubled its AAS over the past 12 months (up 122%). We'll be looking for a bump following this weekend's iHeartRadio Music Festival in next month's report.

For months now, battling it out over slots 3, 4, and 5 have been Cumulus, CBS Radio, and Internet-only webcast service Slacker. (For perspective, the 46-48-thousand AAS each pulled in August is merely a quarter of Clear Channel's online figure.) Cumulus' (including the former Citadel stations) strong month was powered, it seems, by a remarkable 1.13 average time-spent-listening. That gave it the #3 slot over CBS and Slacker for the first time.

(The chart above shows the growth of Pandora, CBS, Clear Channel, the top 5 terrestrial radio groups and Slacker from September 2009 through August 2012. Note that Pandora's AAS numbers from December 2010 through mid-August 2011 were affected by the omission of tracking code in some of its mobile apps. Click to view in full size.)

The Triton Digital Webcast Metrics Top 20 Domestic M-Su 6a-12M ranking is below. Find out more from Triton Digital’s Webcast Metrics report here (PDF) and find our coverage of July 2012’s ratings here.

Paul Maloney
September 20, 2012 - 10:55am

Now a second broadcaster, Entercom Communications, has made an agreement with record label Big Machine to pay a percentage of ad revenue royalty on over-the-air plays of Big Machine recordings in exchange for lower streaming royalties.

In June Clear Channel and Big Machine announced a similar deal (coverage here), perhaps signalling Clear Channel's understanding that (a) online streaming will soon be a far larger part of its business than it is today; and (b) it's likely that broadcast radio's exemption from sound recording royalties days are numbered.

"As great and leading visionaries in the broadcast world continue to look into the future they are seeing where listeners are going in regards to how radio is being used now and where and how it will be used in the very near future," Big Machine president Scott Borchetta said. His company, an independent label with acts like country stars Taylor Swift, Tim McGraw, Rascal Flatts, and Reba McEntire, announced at the RAB NAB Radio Show in Dallas today its agreement with Entercom, owner of more than 100 stations in 23 U.S. markets.

Terrestrial broadcasters pay royalties amounting to a small percentage of their revenues to the composers and publishers of music. Congress has not mandated broadcasters pay for the use of copyright sound recordings, a fact that's long angered the record industry.

Internet radio, while paying similar compostion/publishing royalties as broadcasters, is required to pay sound recording copyright owners royalties that -- if not for emergency deals that temporarily reduced the rate the government set -- would have amounted to multiples of even the most successful webcaster's annual revenue.

Pandora founder Tim Westergren pointed to the Clear Channel/Big Machine agreement at the time as "evidence that even for a company of Clear Channel’s size and business competence, they are realizing that Internet radio is a tough business... I feel like it’s just one more signal that something is broken in the royalty rate setting for Internet radio." Westergren had addressed (here) the "Future of Audio" House Subcommittee on Communications and Technology hearing right after the Clear Channel deal was announced.

Apparently, CBS Radio has no plans to make any such agreements with labels. At the Radio Show, CBS CEO Leslie Moonves, said, "The idea that we have to pay them to put their music on our radio stations is absurd."

Read more in The New York Times here.

Paul Maloney
September 20, 2012 - 10:55am

For the first time, RAIN Summit opened not with a panel discussion, but with overview remarks, delivered by radio consultant Walter Sabo. In many ways, Sabo struck the first notes of several of the day's recurring themes: the importance of the willingness to test new "disruptive" ideas, the immeasurable value of compelling content, and the need for new metrics to measure a global, interactive medium like Internet radio.

[You can listen to all of Sabo's address below, via the SoundCloud link. We'll be posting SoundCloud links to audio of every RAIN Summit Dallas segment in the coming days. Please look to the right-hand margin of RAIN under "RAIN Summit Dallas audio:" for more.]

Sabo emphasized the need for radio to be willing to take chances on new ideas and new revenue models -- again, a sentiment echoed throughout the afternoon -- with the words "It might work," which he says are the three most powerful and imporant words in a truly creative environment.

Clearly understanding the position in which heritage radio broadcasters find themselves with the onslaught of digital media, Sabo looked back to the the migration of audience listeners to FM and the birth of satellite radio in the U.S. to emphasize the need for "original, exclusive programming." It's not big-budget marketing, or content aggregation, or slicker technology that wins, he stressed, it's "producing original, exclusive, compelling programming. "

At some point, when (Internet radio's listener base) goes from 'innovator' to 'early adopter,' it has to go to 'early majority,' and the early majority needs more to justify its money and time," he said. "And that is gonna be original content."

So why isn't digital easy to monetize for content producers like radio? The "dirty secret," according to Sabo, it's that "ancient metrics" designed for geographically-limited distribution channels with finite inventory are being applied to this brand new, global-reach, unlimited inventory medium. The "real gold," he stressed, isn't cost-per-thousand (that's the old thinking). It's user data... the "who and where" of each and every listener.

Sabo encouraged radio broadcasters to embrace video to increase the usability of their sites and apps, and interactivity as well. "Your programming is streamed to a device with a keyboard and a mouse, ask your listeners to use them."

See our first recap of RAIN Summit Dallas here. We'll have more from the Summit soon.