I was in my friend’s car when I complimented him on the music he was listening to. He responded that we were actually listening to Pandora. I was quite fascinated with the idea of listening to streaming music using the stereo or navigation system while driving. He then told me that new car radios have Bluetooth capability that allows listeners to stream music using their phones. I found out later that new Ford owners would be able to listen to Spotify using the Ford Sync AppLink. Pandora and iHeartRadio also made deals with carmakers to add their apps to the dashboard and iTunes Radio is set to launch this coming Fall. Music consumption has been constantly changing and this technology is definitely altering how people experience music. An April 2013 Nielsen analysis found that five of today’s arguably must-have music streaming apps found double and triple-digit growth in unique users over the past year.
When we start analyzing the pros and cons of streaming versus terrestrial five main points keep on resurfacing. It’s all about accessibility, programming, music exploration, cost and music purchase. Let’s look at these in detail.
Accessibility
We have a desire to have access to music wherever we go and providers are meeting that demand. Terrestrial is still strong during AM and PM drives but that might change when Streaming services embed their apps in cars. On the other side of the coin, Terrestrial radio stations allow their listeners to stream through their website. Although it comes at a premium, we have seen an increase in advertising through streaming radio services especially for our music clients. It’s an environment that has proven to be effective and continues to have high CTRs.
Programming
Jim Rome and The Dan Patrick sports talk shows continue to deliver high ratings. Who has not heard about Ryan Seacrest’s Top 40? Howard Stern has avid fans. His audience will follow wherever he goes and he continues to do very well on Sirius XM. A lot of radio listeners enjoy quality programming. As they say, the proof is in the pudding. Syndicators continue to vie for these personalities and for good reason. Just like when Jim Rome moved to CBS Sports Radio leaving a seven-year run on ESPN. In contrast, streaming services allow more customization and control of their listening experience. In addition, on demand content has become more prevalent due to the fast paced nature of our society.
Music Exploration
Terrestrial radio dates back to the 19th century and has been a preferred medium for music exploration up until a few years ago when music streaming services such as Pandora and Spotify took off. Now there is an abundance of streaming services available at our fingertips. The Music Genome Project by Pandora allows listeners to create a personalized music experience when the listener rates the music they listen to. It presents opportunities for people to discover similar artists and can easily click on the album cover to learn more and possibly purchase the music.
Cost
Streaming and Terrestrial are both free of charge. Consumers could pay for the subscription fee on some streaming services to eliminate ads and have uninterrupted music experiences but only a small portion of the audience actually pay for it. One thing that is apparent is that the majority of music listeners do not mind advertising enough to spend for a subscription.
Music Purchase
Some people who pay for streaming services may think of it as a substitute to buying singles and albums, which results in a decline of music sales. Although streaming may be hurting the music industry it enables potential consumers to purchase effortlessly with just one click. Terrestrial radio conversion to sale cannot be tracked but it still plays a huge role in pushing consumers to purchase based on station spins.
As you can see there are advantages and disadvantages for each and both have an attractive audience for marketers. Our listening experience will continue to evolve and providers will continue to adapt to the needs and wants of consumers. Clients are allocating their budgets differently versus three to four years ago. The upside is that with new platforms and technology we now have a couple of ways to purchase inventory on these streaming sites without breaking the bank while we still provide cost efficient solutions to hit the terrestrial market.
How do you consume radio? Do you listen via streaming radio or terrestrial radio?
Trivia time! What country did Spotify originate from? Hint: It’s where the stylish and yet affordable home furniture brand Ikea came from. Yes, that’s correct it’s Sweden! Home of the classic pickled herring.
