Pandora and other digital music services have been in the news regularly as of late. Paragon’s Larry Johnson delves into comparing and contrasting terrestrial radio’s advantages with those of Pandora and their ilk. Johnson also discusses his own experiences with on-demand digital music services
Larry Johnson
By Larry Johnson
There’s been quite a bit of buzz in the virtual hallways at Paragon Media Strategies about the recent “ratings” claims for Pandora.
As a researcher keenly interested in ratings and an involved Pandora/LastFM user, it’s not surprising that Pandora is making its ratings claims. About 3% of all audio time spent listening (TSL)—both to AM/FM radio streams and pureplay/internet only radio stations—is online. A plurality of that internet listening is to Pandora. An average quarter hour (AQH) rating is the percent of the population listening during any Average Quarter Hour. Whether translating all TSL to audio (a share) to saying that 1% of people during any AQH Monday through Sunday 6 am to Midnight (An AQH Rating) are listening to Pandora is debatable. Nonetheless, an AQH rating of just under 1.0 for Pandora could be a reasonable estimate, factoring in the younger demos who listen more to online, on-demand services. Most well-performing radio stations have around a 1.0 Rating Share. Online audio enjoys the measurement advantage of having real-time, census ratings information available via Triton Digital. There may come a day when all audio is coded by Arbitron for measurement.
There is an apples to oranges problem of comparing Pandora to an individual radio station because Pandora can be many “radio stations” even to an individual user. It doesn’t surprise me that Pandora is presenting itself as comparable to buying an individual radio station because it’s counting the individual users who are exposed to an advertising message.
Mary Beth Garber of Katz is the best advocate for radio I’ve seen in rebutting Pandora’s claims. She has written poignantly about the DJ-listener bond which generates loyalty, and she makes a good empirical case about combining stations within a buy and comparing that buy to Pandora. Nonetheless, if I were considering placing an advertising buy on Pandora, which allows me to micro target the audience, versus buying an individual radio station; I’d be open to a pitch from Pandora. Pandora’s case will become stronger as more people find the benefits from on-demand services.
The on-demand train is coming down the track and headed straight at you. Online, on-demand services present real competition for radio. I believe these services will continue to grow.
Listener Becomes Producer: On-Demand Music Services’ Challenge to Radio
In the last three decades, the consumer has increasingly become the producer of his/her own listening experience. Pandora, LastFM, and Slacker have accelerated this process. Let’s critically compare radio’s unique selling propositions to the benefits of on line, on-demand, internet only services.
The listener-becomes-producer trend has been unmistakable: Beginning in the 1980s listeners could simply tune from one niched radio station to another to find different, predictably formatted music or a just a better song. The 1990s saw us shuffling CDs. In the 2000s, we saw the influence of personally-programmed iPods. This trend is now supercharged by services like Pandora. An individual now can design stations and/or a (tagged) library for one’s on-demand listening. This trend mightily contributes for the yearly decrease in Time Spent Listening (TSL) to broadcast radio.
Let’s critically examine and contrast radio’s advantages:
1: Radio is convenient, but so is Pandora. Pandora desperately wants to get into the car thinking in-car access will truly make it more competitive with broadcast radio.
2: Radio is used to discover new music. True, tastemakers playing new music in the correct rotations constitute an effective way to learn about new music. The on-demand world also seeks to expose new music. Once a listener likes a song, that acceptance is spread through word-of-mouth accelerated through social media platforms.
3: Radio provides a parasocial link between listener and DJ/announcer that station creates station loyalty. With the immediate bottom line having become the corporate be-all, there are precious little resources being devoted to fostering this parasocial link. Anyone who breathes is looked at as an unnecessary line item unless they voice track.
In many major and medium markets, radio has abandoned some well-performing formats like Alternative as cluster owners exclusively aim at the 25-54 “money demo.” Your personalized music of any format/genre is easily accessed via Pandora, LastFM, and Slacker.
When you can design your own musical universe with relative ease, it’s no wonder that online, on-demand, internet only audio services like Pandora, LastFM, and Slacker have earned a place at the ad-buying community’s table.
Confessions of an On Line, On-Demand User
Allow me to take off my researcher/ratings analyst cap and reflect on my experiences with on-demand music services. Pandora and LastFM have brought me back into actively listening to music. They have allowed me to build a library containing a lifetime of music, and that library continually is being supplemented. I’m no longer dependent on 300 (or even 900) song playlists dictated by broadcast radio stations.
I put a lot of time into first constructing “stations” on Pandora and then a tremendous amount of time in building an extensive personal library on LastFM. Although I’ve gone through ups and downs in the process, I’ve gotten it to the point when I play Your Mix Radio on LastFM, it is a very entertaining and aesthetically pleasing experience if I reject or fast forward through some songs. LastFM’s Your Mix station coupled with an occasional Friends/Neighoubor’s library supplements an already well defined body of music. Pandora requires the least effort, which probably largely accounts for its popularity. LastFM is great for cataloging music and finding lists of artist’s tracks and albums despite LastFM not being intuitive to me. The rotation of my library on LastFM drives me nuts, as do the tangents Pandora takes.
The process of building my own library and stations has given me renewed respect for music scheduling done by broadcast radio stations. My stations on Pandora represent different tempos, textures, and instrumentation because that’s how Pandora schedules/recommends songs; a.k.a. the “music genome project.” I haven’t gone through the tagging process on LastFM because I’ve spent too many hours compiling my LastFM music library.
In December 2010, there was a piece in the New York Times Magazine paralleling Pandora to the computerized chess program, Deep Blue, which has bedeviled chess grand masters. While acknowledging the roll of programmers and DJs in selecting and presenting music, the thesis of the article seemed to be that we should give up: computers simply do what we humans do much faster and better once the algorithms are established. I was particularly fascinated with a July 26th interview with Dwight Douglas in which he seemed to reaffirm that a well programmed music scheduling system can run rings around mere mortals.
So now we’re down to an argument about who can do the best algorithms. I’ve got my own, well-defined body of music that’s continually being supplemented and entertaining played back on LastFM. Yet after near completion of my personalized library, there’s a voice inside me saying that I can design a radio station superior any broadcast station or algorithm out there. Probably every on-demand listener has had the same thought! Given the amount of work it has taken to get that library, you’d think radio programmers would be mining the data from on-demand stations and songs within on-line libraries to more conveniently and engagingly give people what they’ve already told on-demand services they want.
This is a whole new world.
Larry Johnson is President/North American Radio for Paragon Media Strategies. Reach him at 831-655-5036 or via e-mail at ljohnson@paragonmediastrategies.com
