Audio – Summary Essay
The dynamics impacting audio’s future are clearer with each year.
Most people still listen to news, talk and music for at least a little while every week, and they do most of this listening through traditional broadcast, or “terrestrial,” radio. This is where the audience is largest. Yet this is where the profit and revenue are under the most pressure. Many stations have left the air and some owners of multiple stations have entered bankruptcy.
Everything else, by comparison, is small, and in the newest forms the revenue model is not yet clear, though it will almost surely involve direct user payment.
With every year the signs grow that terrestrial radio is already having, and will continue to have, a harder time. And yet another clearly foreseeable threat is the arrival of Internet-based car radio.
Web developments have already impacted the wider universe of news greatly. But they have yet to be made available inside cars, where most audio listening occurs. If developed, this now-captive audience would have a much wider universe of listening options.
Terrestrial broadcast radio continues to serve the greatest number of overall listeners. Fully 236 million Americans listened to at least some radio in an average week in the fall of 2009, a number that has been basically static for the past five years.1
This dominance, though, is based on an old advertiser-supported model that is showing serious cracks, especially if trends that are accelerating in other sectors hit radio in a way they haven’t yet.
While ventures such as pure-play Internet radio, or audio available only through the Internet, have yet to significantly hurt terrestrial radio, other technologies are already eating away at the time people spend listening to traditional broadcasts. The number of people who say they listen to less terrestrial radio as the result of their use of an iPod/MP3 player has increased from 37% in 2008 to 42% in 2009.2 A parallel pattern is evident with online radio. In an Arbitron survey, 27% of respondents said they listened to online radio in the previous month (about 69 million people), which is up from 21% in 2008. While these numbers are still small, they do show a steadily increasing number of people seeking audio service from other technologies.3
People like the control and variety that newer technologies offer, according to polls. And though it is not yet available, already a third of Americans say they would like online radio in their cars.
Indeed, though predicted only a few years ago, other competing audio systems now seem to pose less of a threat to terrestrial broadcasters than had been expected.
Satellite radio, for example, had its first decline in overall subscribers in January 2009, and some experts believe this could be a sign that a technology that was once seen as a serious competitor to terrestrial radio may be only a small piece of the competition.
Another technology, HD radio, has struggled to gain listeners. Only one seventh of radio stations transmit HD signals and only a third of Americans say they have much interest.4 One problem is that few HD outlets provide programming different from their main signal, thus reducing listener incentive to purchase the still pricey receivers.
The more serious threat, beyond fragmenting audience, is the increasingly uncertain future for on-air advertising. Terrestrial broadcast radio saw an 18% drop in ad revenue in 2009 compared to 2008.5
Other economic woes could be even direr for SiriusXM satellite radio. In the year and a half since the merger of the only two satellite companies, the economic benefits have not come through in the way the companies hoped. SiriusXM reduced, but did not eliminate, its losses in 2009.
In 2009 SiriusXM lost $441 million, down from the $902 million loss in 2008.
As with other services, SiriusXM is facing the lagging economy in general. Consumers may not see a satellite radio subscription or the cost of the receiver as essential to their lives the way cable TV or the Internet is.
Mobile developments, though, hold some economic promise. Market analysts predict both terrestrial and satellite radio could make money from both advertising and subscriptions on mobile devices such as smart phones. Analysts at Veronis Suhler Stevenson, a media research firm, predict that revenue from mobile platforms will grow to $167 million by 2013.
News plays an unusual role on the radio. The number of stations identified by Arbitron as “news/talk/information” rose in 2009 to 1,583, up from 1,533 in 2008. This category is broadly defined, and includes a large amount of talk programming.
A much smaller category is “all news” stations, of which there are just 27 commercial stations around the country, down from 31 the year before. And even here the label is self-defined and may include talk or other less news-oriented programs. Commercial all-news stations thend to be people-intensive operations and thus expensive and viable only in the largest markets.
Given this, one organization that clearly has developed an advantage in radio news isNational Public Radio.
In 2009 NPR had 26.4 million listeners to its news programming, this is up 0.1% from 2008. In addition NPR had 268 member stations, down 2 from 2008 and was heard on 901 stations across the country (including non-member stations) up from 866 stations the year before.
NPR’s connection to local markets around the country though its member-station format makes it uniquely poised to take advantage of audience fragmentation. Some report, though, that NPR’s attempts to reach out to local markets has caused friction with member stations that prefer to emphasize their own brand to local listeners and fear the encroachment of the national entity.
1. Arbitron Radar, December 7, 2009
2. “The Infinite Dial 2009,” Arbitron, April 2009
3. “The Infinite Dial 2009,” Arbitron, April 2009
4. Awareness of HD radio was up slightly in 2009, when 32% of respondents in an Arbitron survey said they were somewhat or very interested in HD radio. However, this has not translated into adoption of the technology. There are 2,012 stations in the U.S. broadcasting in HD, up only slightly from 1,828 in 2008. This is but a fraction of the 14,000 radio stations in the U.S.
5. Radio Advertising Bureau, “09 Year-End Results Confirm Positive Signs for Radio Digital Sector Continues To Gain Importance,” February 19, 2010.