Young people have fled terrestrial radio. The medium now brings in less revenue than streaming platforms. People purchase smart speakers to listen to “better music.” So, will radio go the way of the dodo?
A new study by Musonomics will make you wonder how many years radio has left.
Larry Miller, Director of New York University’s Steinhardt Music Business Program, performed the study. He grew up in the radio industry and started his career as a DJ.
In the executive summary of the study, Miller highlights eight dangers that the radio industry currently faces.
1. Digital services are severely crowding traditional radio.
2. Music charts once driven by AM/FM broadcasts are increasingly driven by digital.
3. Generation Z listeners prefer streaming platforms like Spotify and Pandora over AM/FM stations.
4. Younger music listeners have increasingly turned to sites like YouTube to discover new artists and songs.
5. Digital services, including streaming platforms, have become an important source of revenue.
6. Carmakers have started to marginalize radio on their dashboards, decreasing radio listenership.
7. Smart speakers have begun shaping consumer practices and preferences.
8. Radio’s rating system fails to deliver on specifics that advertisers demand.
Radio lacks the innovative features found in streaming platforms.
In a recent MusicWatch report, only 53% of respondents said that they felt “very satisfied” using the radio in the car. Just 27% said that they felt satisfied with the quality of sound. 25% said that AM/FM stations played the best music. 13% felt satisfied with radio’s integration with social media.
Summarizing MusicWatch’s data, Miller writes,
“ Music fans today have many choices for access to music and are becoming increasingly dissatisfied with AM/FM radio’s traditional service offering.“
Car companies have started to abandon the terrestrial medium
Looking at newer vehicles, Miller notes that in-car media screens allow easier access to platforms like Spotify, Pandora, and iTunes. This, in turn, “[relegates] radio…from the center of the dashboard,” decreasing listenership. He explains why.
“AM/FM controls are often found below this screen, rendering them less prominent and less accessible than in the past.”
Why did you buy a smart speaker? To listen to “better music.”
According to Edison Research, 7% of Americans 12 and over now own a smart speaker in their homes.
70% of smart speaker owners said that they listen now to more audio. 62% of those surveyed said that the smart speaker allows them to “hear better music than on AM/FM radio.” Only 38% said that they still continue to listen to music through the terrestrial medium.
Why has radio fallen behind in the American home? Miller writes,
“[It] has not meaningfully invested in new programming or advanced digital services for smart speakers.”
Pandora Radio’s Glenn Peoples writes how broadcasters could take advantage of the rise of the smart speaker.
“With established brands in local markets associated with certain genres and formats, radio stations could earn a key place in the smart speaker market by building out their digital presence.“
To survive in the digital age, broadcasters must invest in “strong and compelling digital services”
At the end of his report, Miller notes that music remains the lifeblood of the radio industry. However, today’s listener has access to “virtually unlimited choices for audio and music consumption.” So, what can broadcasters do?
For the terrestrial medium to survive, broadcasters will have to “embrace a new vision for their content.” That includes moving toward a “more communicative experience in line with millennials and other younger generations.”
In addition, Miller writes,
“[The medium] needs to invest in strong and compelling digital services. If it does, [broadcasters] can look forward to a robust future built on the strong foundation it already has in the marketplace…“
Speaking about the terrestrial medium, Scott Burnell, Ford’s Global Lead of Business Development and Partner Management, has a simple message for broadcasters.
“My message is evolve or die.”
Miller issued a strong warning for the terrestrial medium should it fail to innovate.
“If it doesn’t [innovate], radio risks becoming a thing of the past, like the wax cylinder or 78 RPM record – fondly remembered but no longer relevant to an audience that has moved on.”
In the report, Miller cites more reasons why the terrestrial medium may fade out if it fails to adapt to the rise of digital services. You can check out the complete report here.
Image by Alan Levine (CC by 2.0)