While radio group heads speaking at this morning's Leadership Breakfast seemed to have a more "forward" approach to the inevitable expansion of radio to include newer techologies, the respective heads of the two industry groups hosting The Radio Show took a somewhat more defensive posture discussing Internet and satellite radio. Especially Radio Advertising Bureau President and CEO Jeff Haley.
Both Haley (pictured at right) and National Association of Broadcasters President and CEO Gordon Smith seemed to limit their view of Internet-delivered audio as a sort of upstart competition, and not at all an opportunity for broadcasters to embrace. In his opening remarks yesterday afternoon, Haley referred to "niche players who after ten years have barely scratched 20 million subscribers." And he saved his best shot for Pandora in particular (though never naming them).
Pandora, the leading Internet radio pureplay (and whose founder, Tim Westergren, delivered the keynote address at our RAIN Summit Chicago right there at the Hyatt on Tuesday), went public earlier this year and recently issued its first earnings report. In it, the company reported a higher-than-anticipated second-quarter revenue of $67 million on 1.8 billion hours of listening, which Pandora boasted represents a 3.6% share of all U.S. radio listening. What's more, Pandora has lately made news (as Westergren acknowledged in his speech Tuesday) as a legitimate competitor to traditional radio advertisers.
Haley said, "Lately there have been players out there touting duplicative 'listener hours' in an apples to oranges comparison for our unduplicated long standing cume metrics. At a claim of just 3% of our reach, it may not be worthy of mention, but if we're talking about audience size, let's be fair and measure apples to apples. If you wanted to compare 'listener hours,' say 1.8 billion 'listener hours' for 2nd quarter...that claim includes duplicate reach across your user base, so it might be more fairly compared to our 'broadcast hours' against the base of people who use radio. Or, live, 24/7 radio across 10,766 commercial stations x the 12 weeks of a quarter x the U.S. population of 12+. Do that math and you get 6.1 trillion listener hours for broadcast radio. 6.1 trillion - yes, that's absurd."
Smith, in his opening remarks, acknowledged the difference of opinion on the issue of whether radio should be streaming -- and took no stand to endorse it, saying, "I don't know the right answer, but as someone who does not come from the broadcast business, I can tell you what I observe: that local, regional and national advertising for over-the-air signals still provides the strongest source of revenue for stations."
While Smith (pictured above-left) did acknowlede that "it's undeniable that radio must find a way to expand reception of its main over-the-air signal," he cautioned, "any expansion into the digital sphere cannot be at the expense of our core business." While Smith held strong in his support of technologies like HD Radio and "FM in cellphones," he seemed to view other technologies simply as an us-vs.-them proposition ("to continue radio's rightful place as king of the dashboard and help compete with new features, such as satellite and Internet audio").
Read Jeff Haley's prepared remarks here, and Gordon Smith's prepared remarks here.
||While Haley's overall point may be valid, the RAB's math does not seem correct: Assuming there are about 250 million Americans age 12+ listening to radio about 12 hours per week each, times 13 weeks, that works out to a total U.S. radio listening per quarter of about 40 billion listener-hours. In other words, as near as we can tell, the "6.1 trillion" number referenced in the speech is about 15,000% (i.e., 150 times) too high.
(On the other hand, if he meant to talk about the potential number of hours possible if every American listened to radio 24/7, it was 10 times too high; or, if it was supposed to reflect every American listening to all 11,000 U.S. radio station simultaneously, then it was 1,000 times too low.) -- KH