Richard Harker
by Richard Harker
The fates of record companies and radio stations have been intimately intertwined since the first recorded music was played over the airwaves. It is no coincidence that both record companies and radio stations flourished during the hey-days of the LP. The importance to radio of a healthy and productive record industry is no less true today than it was decades ago. Consequently, the precipitous decline in CD sales in this decade should trouble radio stations more than it seems to have. The implications for radio may be nearly as great as they are for record companies.
The decline in CD sales has been the frequent subject of stories in a wide range of publications from computer and lifestyle magazines, to radio trade publications and newspapers, but the basic statistics bear repeating. According to the RIAA, CD sales peaked at 943 million units in 2000, and have declined every year since. In 2005 only 705 million units were sold, a 25% decline in just five years. According to Nielsen Soundscan, in the first quarter of 2007 only 117 million CDs were sold, a decline of 17% from just a year ago, so the trend may be accelerating. At this rate, CDs may be virtually extinct in a few years.
The decline of CD sales has been written off as a consequence of legal and illegal downloading. Apple’s iTunes alone is selling nearly a billion downloads every six months, and legal downloads are growing exponentially. While accurate illegal download numbers are difficult to get, rough estimates place P2P downloads at 5 billion in 2006 alone. The stories have focused on these top-line numbers, but the numbers most significant for radio are the statistics that are barely mentioned. In previous decades, albums outsold singles by better than a six-to-one margin. Combining LP, CD, and cassette albums, the total sales of albums far exceeded that of vinyl, tape, or CD single sales. Today, album sales still exceed single sales, but the margin has slipped to less than two to one. If we look just at digital downloads, the ratio has completely flipped. Digital singles outsell digital albums nearly thirty-to-one. To stimulate album sales, Apple now gives purchase credits if a downloader buys a single cut and then later wants to buy the entire album.
So there are really two trends going on at the same time. The first, well discussed, is that digital downloading is replacing the physical disc. The second trend, not discussed at all, is that the single is replacing the album. Growing numbers of music buyers are choosing to buy their one or two favorites on the album rather than the entire album. If this reversal continues, it will be the most significant change in buying patterns in nearly five decades. And while the transition from vinyl, to cassette, to CD had virtually no impact on radio, this seismic change will have a dramatic impact on radio.
The growing impact of the single is in many ways a return to the 1950s and ’60s before LP sales hit full stride. During the ’50s and ’60s, the single was king. LP’s were for music aficionados. The general public bought just the hits on vinyl 45s. The top selling singles during this time spanned a wide range of genres. For example, in 1960 the top selling records included songs by Elvis Presley, Connie Francis, Marty Robbins, and Ray Charles. Beginning in the late 1960s and accelerating into the ’70s and ’80s, album sales began accounting for a much larger piece of the record sales pie. Genres such as Progressive Rock were gaining traction and concept albums and extended songs were replacing the two-minute single. LP covers were raised to an art form, and in many cases consumers bought the album as much for the cover as the music inside. The single faded in significance and virtually disappeared. Today, the single is not only back, but could drive CDs out of existence.
There are many reasons why downloaded singles outsell albums. First, the technical quality of digital singles equals that of albums. There is no sonic advantage to downloading an album. Secondly, each album technical advance from LP to CD and now digital download has increasingly marginalized cover artwork. If artwork exists at all, it is virtual and the same for single and LP. While these changes have impacted the way consumers think of albums, they haven’t had much impact on radio. The other reasons that single downloads outsell album downloads, however, have tremendous implications for radio.
Today’s music consumer is immersed in music. The original Napster and today’s peer to peer sources of music make hundreds of thousands of songs available at a key-stroke. Streaming services like Rhapsody enable consumers to hear nearly as many songs at their computers. Now subscribers can even download these streamed songs into their MP3 players, so they can take their Rhapsody or Yahoo music with them. Many of the services attempt to learn the music tastes of the user and recommend songs, exposing the listener to songs that she might not have thought of. Television series now use new hits as background rather than generic instrumentals of the past. Computer games feature new songs and expose users to new artists even before radio has discovered them.
The impact of this immersion is that today’s consumer is exposed to a wider range of music genres than ever before. The pervasive availability of music now enables consumers to indulge in broad eclectic music exploration. It is not unusual to find one iPod loaded with Country, Pop, Hip-Hop, and Alternative Rock. Today’s music consumers are not necessarily more eclectic than their parents. It is just that the access to a broad range of music allows them to express this breadth like no time before.
If radio trends are intertwined with record trends, could this seismic change in buying patterns be impacting perceptions of radio? Our research suggests it is. Historically, radio trends have always lagged recorded music trends. It was some time before radio embraced Rock and Roll despite growing record sales. Progressive Rock was initially relegated to difficult to hear FM channels. Hip-Hop was dismissed as an ethnic format for years after White Americans discovered it. So it is no surprise that radio has virtually ignored music’s return to the single.
When the single was king, there were few radio formats and most were extremely broad, playing a wide range of music. Coincidental with the growth of the LP, radio formats began multiplying with old formats becoming more specialized and new niche formats filling the gaps. During the ’70s and ’80s there were essentially eight formats generally recognized by the trades, and of these only four attracted the majority of listeners. By 1990 rating guides listed a dozen formats and no single format dominated the ratings. In 2000 the number of formats had grown to 16+ of which eight had sizable audiences. This was the year that album sales peaked.
With the intellectual and financial muscle that came with consolidation, one would think that some radio group could come up with a “break-out” format, one with the power to challenge the leading formats. But we haven’t had a serious contender in decades. Stations continue to launch new niche formats like Movin, formats that barely have an impact. The reason should be obvious. During a time when listeners have been gaining access to a wider more diverse music universe and developing more eclectic tastes, radio has gone in the opposite direction, creating more niche formats and more narrowly programmed radio stations.
Today’s music downloader would be very comfortable listening to a 1960s WABC, WLS, or KHJ. The listener of today cares little about formats and genres of music. For supporting evidence we need look no further than the ready acceptance and rapid ratings growth of the “Jack” format. The format successfully tapped into the growing discontent with narrow formats and predictable radio stations. The promise, “we play everything” appealed to listeners, because today’s listener wants to hear everything, and it presented Jack as an alternative to narrowly programmed stations. Many of the evolving Jack stations are seeing serious share erosion, and ironically, the losses only confirm the correctness of the original premise of the format. As the format evolves into a more traditional narrow format, paying only lip-service to the promise, listeners are becoming disenchanted with the stations. Listeners want broadly formatted stations – not just stations that claim to be.
To the degree that the Jack format evolves into essentially a Classic Hits format, it will continue to lose share, because Classic Hits is a niche format like too many other narrow formats. However, the initial success of the format proves that broad formats have appeal that goes beyond the niche that is its genesis. While the Jack format has attracted the headlines, other formats have successfully exploited listener disenchantment with narrow formats. KBKS, Seattle took on a narrow competitor by promising to play all the hits. It is an example of a CHR that succeeds by running counter to today’s conventional wisdom in CHR that a hit station has to specialize.
A common argument in favor of narrow formats is that listeners may have broad music tastes, but that they want narrow radio stations so they can switch stations when their mood changes. It is true that many listeners want radio stations to offer a single type of music so they can switch stations when they want something different. So should we give them what they want? Only if we are not interested in maximizing our rating shares. It virtually guarantees that the station will have a small share. Large shares are created by offering music that appeals to the largest possible audience while getting that audience to listen as long as possible. A niche format by definition appeals to a small audience. And because today’s listeners are both eclectic in their music tastes and restless, offering homogenous music will not boost TSL enough to over-come the smaller audience.
Harker Research believes that future radio success will be driven by tapping into radio’s history before the LP era when programmers felt less fettered by arbitrary format boundaries. In the not too distant future, the successful program director will not worry about whether a song fits. She will simply ask, “does my listener want to hear this song?”
Richard Harker is President of Harker Research, a company providing a wide range of research services to radio stations in North America and Europe. Twenty-years of research experience combined with Richard’s 15 years as a programmer and general manager helps Harker Research provide practical actionable solutions to ratings problems. Visit www.harkerresearch or contact Richard at (919) 954-8300.
