Digital revenues, including performance royalties, pushed U.S. record industry into the black in 2011

Thursday, March 29, 2012 - 11:55am

Significant growth of digital performance royalties, music subscriptions, and download sales pushed U.S. record industry revenues into positive territory in 2011 for the first time since 2004, the RIAA reports.

SoundExchange distributed $292 million in digital performance royalties (the fees webcasters and satellite radio pay to play copyright recordings) to labels and performers last year, an increase of 17% over 2010.

Music subscription services (e.g. Spotify) paid the industry $241 million in 2011, 13% more than in 2010.

And digital downloads accounted for $2.6 billion, up 17% from the prior year. For the first time ever in a a single year, digital album sales topped 100 million digital albums. In fact, the 9.2% overall digital sales growth offset the decline in physical decrease of 7.7%.

"Overall, digital formats comprised slightly above 50% of total music shipments in the United States, as digital became more than half the market for the first time ever," the RIAA press release reads. "No longer just a niche, digital music has shown it can be a model - or perhaps more accurately a variety of models - for the music industry going forward." Read it here.

Media analyst predicts continued steady growth for local radio, TV in 2012

Friday, March 16, 2012 - 12:00pm

BIA/Kelsey says today that local radio 2011 online revenue was up more than 15%, to $439 million (for comparison, local television's online revenues grew even more). And they're predicting "a steady year of online growth" for local radio and television alike.

The data will appear in BIA/Kelsey's new Investing In Television and Investing In Radio publications. BIA/Kelsey credits local media's "assets" ("from valuable local content, to cross-promotional opportunities between on and off-air, and a trained sales staff that understands the local market and the advertiser community") which enable stations to "expand their position in their local markets from solely an over-the-air media source to a local media company that can provide access to local audiences in different, effective ways for their advertiser clients."

Read the company's press release here.

Revenue picture even brighter when all forms of radio included

Tuesday, February 21, 2012 - 11:00am

RABRadio's digital revenues for 2011 increased more than 15% over 2010, according to new data from the Radio Advertising Bureau (RAB).

That said, radio's digital revenues in 2011 ($709 million) accounted for just over 4% of total revenues. "While that number is growing, it’s not growing fast enough to replace ad dollars lost in the form of declining spot revenues," writes Jennifer Lane in Audio4Cast (here). Spot revenues reportedly dropped 1% from 2010.

Overall revenues for radio in 2011 increased about 0.6% from 2010. 

MoneyHowever, the industry's growth rate may actually be over 3 times higher if one includes revenue from Internet radio and satellite radio services!

If revenues from Pandora, other webcasters and SiriusXM were added to the totals from the RAB, the industry's revenue actually grew around 2% from 2010 (math below).

Moreover, including Internet radio revenue in the RAB's digital radio numbers would double the 15% annual growth to more than 30%.

Here's the math (all figures rounded): Radio's 2010 revenue, combined with Pandora (about $138 million), other webcasters (estimated at nearly $21 million) and SiriusXM ($2.82 billion) would be about $20.3 billion. In 2011, also including Pandora (projected to be $273-$277 million), SiriusXM ($3.01 billion) and webcasters (est. $41 million) would be about $20.7 billion.

Meanwhile, radio's 2010 digital revenue -- with web radio included -- would be around $773.4 million and 2011 digital revenue just over $1 billion.

You can find the RAB's data here-- MS, KH

Pandora listening growth and alliances attract attention from media and critics alike

Wednesday, January 18, 2012 - 11:00am

Pandora has been enjoying some attention from business and mainstream media lately. The webcaster took the opportunity of the International Consumer Electronic Show last week to show off not only their latest audience numbers, but their growing set of automotive- and consumer electronics-alliances.

[According to Pandora's own reporting of their audience, they now have more than 125 million registered users (which comes down to about 40 million "active" users), who listen for an average of 18 hours each month. The Triton Digital Webcast Metrics report for November (here) credits Pandora with its highest-ever share of measured Internet radio listening, 68%.
And for the record, more than 450 different electronics devices, from smartphones to DVD players to Dish Network receivers, now deploy Pandora (several of these were announced at CES, see our coverage here, here, and here). With the new alliances with Kia and Acura, Pandora has deals with 16 automotive brands and 7 aftermarket manufacturers.]
Jefferson Graham of USA Today interviewed Pandora founder Tim Westergren (with video, here), who said growth still takes precedence over profitability for Pandora (which has had just a single profitable quarter so far). "The opportunity for us is global," Westergren said. "That's the big vision."
That won't come at traditional radio's expense, insists Clear Channel CEO Bob Pittman. "Radio is doing very well. It's in every car and most homes. It's embedded in the world. If you want personalized radio, you have to be online, and not everybody can always be online."
Currently, Pandora is U.S.-only, because of prohibitive complexities in securing the necessary licensing deals with record labels country-by-country. And Westergren is far from satisfied even with the arrangements here in the U.S., which last year cost the company more than half its gross revenues. "That compares to satellite radio, which pays 7.5% or 8% of gross revenue, and broadcast radio, which is completely exempt from it," he told Fast Company last week (here). 
SoundExchange president Michael Huppe told the magazine he finds the comparison unfair. After all, Pandora is focused on growing listening, not profitability, right? "It's a bit disingenuous to simply look at percentage of revenue as a marker that you judge everything by. It's no secret that Pandora's focus over the last five years has not been on generating revenue. They've been trying to work on their product, their brand, and building a huge following. I salute that. But it's not unusual for companies in the early stages to focus on things other than cash flow."
Again, you can find the USA Today coverage here; the Fast Company article here.

Radio would likely reap rewards by focusing AEs on specific platforms

Thursday, January 19, 2012 - 11:25am

Online revenueA new survey shows the benefits to media companies of a "digital-only" salesforce. The new study, by Borrell Associates, compared media companies with digital-only sales people to companies with a combined, all-platforms sales staff.

Borrell found that those companies with an online-only sales staff generated 2.5 times as much gross online revenue per rep as other companies ($185,900 vs. $73,300). 

"It’s clear that having a staff dedicated to selling online advertising -- and combining it with the efforts of the legacy media sales force -- drives more digital revenues," the study ("Assessing Local Digital Sales Forces") states.

Borrell also found that just 11% of radio businesses employed dedicated online sales staff, compared to 55% of newspapers and 39% of TV companies.

"Too many radio stations are structured like a Border’s book store at a time when consumers are using Kindles," writes Paul Jacobs -- General Manager of Jacbos Media -- in reaction to  the study. "By utilizing traditional sellers, radio will be hard-pressed to morph effectively into viable digital media outlets that generate serious revenue." You can find Jacobs' full analysis at the jacoBLOG here.

Borrell's study also raises questions about how many digital-only sales reps are needed and whether it's better to split digital sales into a separate division. MediaPost has more coverage here.

BIA/Kelsey expects radio's online/digital revenues to grow from $479 million this year to $758 million by 2015

Wednesday, November 30, 2011 - 12:35pm

BIA/Kelsey growth forecastBIA/Kelsey says radio will finish 2011 with $479 million in online/digital revenues, up 15% from $405 million in 2010. The firm's five-year outlook, published in its Investing in Radio Market Report has that segment reaching $758 million by 2015, a 13.4% compound annual growth rate. [You can click the image of the chart to link to a larger, easier-to-read version.]

Among the specific opportunities powering online/digital growth for radio, according to BIA/Kelsey: local "deals" (think Groupon or Living Social).

The Investing in Radio Market Report profiles each of the 282 Arbitron-rated markets "with historic and projected market demographic and financial statistics... (including) estimated advertising revenues, technical data, ownership and acquisition information, and more for every market." This includes individual market-level online advertising revenue estimates based on BIA/Kelsey’s work with broadcasters and industry resources.

Read the press release here. Audio4cast reports on this story as well, here.

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