BY KURT HANSON
Entercom's decision last week to drop streaming for the final 20 stations they still offered (see Friday's RAIN, here) was apparently an "allocation of resources" issue, in that it takes time, effort, and money to support streaming properly, and that streaming was perceived by corporate as serving only a small audience and with no foreseeable payback.

Well, perhaps. On the other hand, let's look at the numbers:

What those two numbers together suggest is the following:

In Arbitron diaries today, webcast listening
counts as radio listening!
Now, here's the key observation in this analysis: From the point of view of Arbitron's broadcast radio ratings division today, webcast listeners count as station listeners!

In other words, if a Boston-area resident receives an Arbitron a diary and writes in listening to WEEI's stream ( even as "WEEI via the Internet" or "WEEI.com"), WEEI gets credit for that listening in Arbitron's radio ratings book.

If WEEI's webcast listeners were (A) living in the Boston metropolitan area (as most probably were, based on what we know about the industry in general regarding simulcat streams) and (B) incremental listeners would not have been listening to the AM signal if the stream wasn't available, those individuals are currently worth almost $750,000/year to WEEI!

Of course, both assumptions weren't true for all 240,000 hours worth of streaming — but, on the other hand, webcast audiences are growing, so from a decision-making point of view, those two points could to some extent cancel each other out.

What will happen now that WEEI has pulled its stream down? Some of those listeners will find other, less-convenient ways to listen to WEEI — e.g. turning on the AM radio in their cubicle again. But some of that listening will go away, and WEEI's Arbitron ratings will thus be 1% to 2% lower from now on.

Are radio group heads making
a $200 million mistake?
According to the RAB (source: NAB FAQ here), radio is currently a $20 billion industry in terms of ad revenues.

If you're the CEO of a large broadcast group with, say, 10% of that total, you've got $2 billion in revenues. If you choose to stream your stations' programming on the web, you can probably increase your audience sizes across the group by, on average, about 1%; conversely, not streaming probably hurts your audience sizes by about 1%. Thus, the impact to your group of streaming or not streaming is about $20 million.

(Important note: Again, I am not talking about selling audio ads in your streams. I am talking here about the fact that mentions in diaries increase the Arbitron-reported size of your broadcast audience!)

In this scenario, your total AQH is about 3 million people, your web AQH would be about 30,000 people, your annual streaming costs (at, say, $.02/hour) would be about $600/hour (or $4 million/year), and your gross profit (before other expenses like manpower, royalty fees, etc.) would be $16 million.

There's some margin there to play with!

"But it's only 1%!"
One obvious counterargument to my thesis is that a 1% gain or loss of audience is unnoticeable in the big picture. But that argument could be applied to many, many aspects of a station's operations.

For example, you could replace your ten-year-veteran afternoon drive air personality with someone cheaper and your full-week numbers would probably go down by less than 1%. You could drop your co-sponsorship of various summer concerts and your full-week numbers would probably go down by less than 1%. You could drop your Fall quarter Auditorium Music Tests and your full-week numbers for the year would probably go down by less than 1%.

For successful radio stations, future gains and losses generally happen in incremental steps like this -- doing a lot of things right. This is one of those steps...and one that will become increasingly worthwhile as broadband penetration continues to increase and national levels of listening to Internet radio continue to rise.

WEEI's Tom Baker: "I am concerned
about the e-mails I'm getting..."
In this story, I've used WEEI as my example simply because it was the only Entercom station for which I had access to Measurecast data.

While writing it, I talked briefly to Entercom's VP/GM for its Boston cluster, Tom Baker, who told me: "Two things bother me: On the one hand, when we have too many listeners, the stream goes down. That was annoying. But I'm also concerned about about all these e-mails I'm getting from people in office buildings who say they can't listen to me now."

Overall, Tom seemed inclined to agree with the corporate decision: "But I still contend that if people are in love with a radio station, they'll find a way to listen to it."

(Screenshot above is from the WEEI website)

...

... The bigger picture: Streaming can counterbalance radio's long-term audience losses According to national Arbitron figures, the average consumer's total number of hours of radio listening has been declining at about 3% per year for several years now. This is not good. However, here's a counterbalance: By streaming your signal, you're offering an opportunity for your listeners to listen to you in an environment in which they otherwise might not choose to or might not be able to. If the industry can mitigate some of these losses, it seems rational to me to consider doing so. ...

"Being unable to get radio signal to come in clearly at work..."

From the New York Times: "Within a few weeks of having an XM Satellite Radio antenna and receiver installed in the family minivan, I found myself thinking of the old joke about the taciturn farmer who loved his wife so much that he almost told her. XM had lent me the equipment so that I could try its service, which costs $9.99 a month. I liked what I heard so much that I almost bought the equipment and subscribed.

"XM, based in Washington, broadcasts 100 channels of music, news, chat and comedy. A competitor, Sirius Satellite Radio, based in New York, is rolling out a 100-channel network of its own that is scheduled to be available nationwide by the end of this summer. Sirius is charging $12.95 a month...

"For now, all of Sirius's music channels are free of commercials; some of XM's music channels run ads (no more than six minutes an hour, according to its Web site). Industry analysts expect both companies to have more ads and raise subscription rates eventually — the same developmental trajectory followed by cable television as it tried to become profitable. On the plus side for consumers, the future is also expected to bring receivers that work equally well with both radio networks; the systems are now incompatible...

"Why was I impressed but not sold after a one-month trial? My wife and I enjoyed the service, but we found ourselves asking, 'Do I really need this?' rather than, 'Can I afford it?' Given that our minivan has a tape deck and a CD player, it is not as if we depend on radio to hear music we like."

Read this entire review from Sunday's New York Times online here.



From the Chicago Tribune: "The battle for the attention and the spending power of Chicago-area radio listeners intensifies Saturday with the entry of a second satellite radio service in Illinois.

"Sirius Satellite Radio will activate service in Illinois, eight other states and Washington, D.C., bringing its coverage to 37 states, and it plans to be nationwide by July 1.

"The New York-based company is nipping at the heels of the only other player in the field, Washington, D.C.-based XM Satellite Radio Holdings Inc., which went nationwide late last year and has made strides toward building its brand and subscriber base...

"To be sure, Sirius has some catching up to do. Originally the leader in the race to get satellites launched, it has missed deadlines on development of its chipset, or the brains of the radio kits; on the launch of service; and on the shipment of equipment to retailers.

"'I think this company did a great job in defining the concept, the vision, in getting a Federal Communications Commission license, in raising money, in putting a satellite up, but it didn't have the culture for taking product to the marketplace,' said Joseph Clayton, who was brought in as president and chief executive officer last November to turn things around.

"The company brought in new management and hired a consultant who worked out the kinks in the technology, he said. Manufacturers have been pressured to get the product to retailers, and the company is modifying arrangements with carmakers to try to accelerate its launch...

"With 200 million cars on the road, the two companies together will only have to capture about 3 percent of the market to have viable businesses, noted Robert Peck, an analyst with Bear Stearns. 'In general, I'm very bullish on the prospects for satellite radio,' he said, citing the digital quality, breadth of choice and the relative lack of advertising.

"Others are more skeptical.

"'People like what they have and it costs very little, so satellite will have to be head and shoulders above -- and I don't think it is yet,' said Rick Morris, associate professor of radio, television and film at Northwestern University. The mix will have to be more than pure music channels and reuse of talk programming already available on commercial radio, he said."

This article appeared in Saturday's Chicago Tribune. Read it online here.

This first item is in response to the news that Entercom has halted all station Internet streaming (in RAIN here)...

"Eight to ten hours a day..."

This is a sad day in Internet radio entertainment

"Reasonable minds..."

"Society is the loser..."