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Net-only listening "stagnation" result of less aggressive promotion, experts say

Posted on: 02/19/2008

From the February 15 Radio & Records: On the surface, the sound bites are alarming: Online radio listening flattened in 2007! Royalty rates for streaming are on the rise! Pure-play operations face a loss of market share! But insiders say that these trends actually reveal a maturing industry—not a deteriorating one…

According to JPMorgan’s Internet Radio Scorecard for November 2007 [RAIN coverage of the December Scorecard is here], total unique visitors to Internet radio stood flat compared with year-ago levels. Within this metric, however, was a telling detail: Traffic rose more than 20% at the terrestrial operators’ sites, while Internet radio pure plays dropped 11%…

The reason for the drop in pure-play market share can be attributed to a number of factors.

First, Bill Rose, senior VP of marketing and business development for Arbitron, observes that Internet-only broadcasters have to be “mindful of how many listeners they have” because every new listener requires additional bandwidth. Rose suggests that some of the larger pure plays may simply have been “easing off the accelerator” in the past 12-18 months in their promotional efforts, which in turn might have resulted in audience declines. He adds that “online broadcasters can also cap how many people they allow to listen at a time. They can manage growth to match what they can pay for.”..

Yahoo Music GM Ian Rogers [pictured at right] says that while the accessibility of Yahoo’s radio service has not changed—it’s still available on the home page and the company’s messenger service—Yahoo isn’t aggressively pushing to expand its online radio division. “We’re not doing anything more with it,” he says. “We’re not investing heavily right now. We have a fantastic product, but we’ve been backed into a corner with a cost structure that makes no sense.”

Read this full article in the February 15 edition of Radio & Records, or online in R&R’s “News” section at here.

RAIN ANALYSIS: Kurt actually pointed this out in December (here), in response to coverage of the then-most-recent JPMorgan study. He wrote:

“This ‘stagnation’ is, of course, a response on the part of large portals to the CRB royalty decision. As has been covered on a regular basis in RAIN all year long… Yahoo, Microsoft, and AOL have all been explicitly pulling back on their promotion of their Internet radio features ever since the CRB decision came out.”

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  1. Someone should analyze this side by side with all the illegal / unlicensed services out there.

    You would see while big players stagnate as we all are faced with royalty uncertainties – the share of unlicensed, disruptive services is growing like weed.

    Will the big labels wake up please, while it’s not completely too late…

    Ari Shohat · Feb 19, 07:31 AM · #

  2. The stagnation in audience can’t simply be explained by less marketing because of the copyright problems (as much as I’d like to blame EVERYTHING on that). It’s also the vastly increased competition, both from unlicensed services as Ari points out, but also for us it’s the increased usage of “create your own” stations like Pandora etc. Which brings up the question, is passive-listener radio dying, or is active-listener radio just a fad?

    Wanda Atkinson · Feb 20, 04:53 AM · #

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