Internet streaming services such as Apple Music, Spotify, and Pandora have put a dent the past few years on the radio industry advertising revenue. According to Edison Research study; Sixty-six percent of people list Apple Music, Spotify, and Pandora instead of radio. Now other streaming services such as Amazon and Tidal have clouded the market as well. Regardless of what is taking place, radio broadcasting is one of the most widespread electronic mass media.
Approximately 20 years ago the internet brought us streaming technology that enables one to listen or to view live media on the internet. I grew in the 90’s, the early days of the internet (56k) when it became mainstream. I lived in the post broadband age which I still considered the greatest time to be on the internet. Anyways when I was growing up the AM/FM radio audience was larger compared to what it is now. One thing that everyone that I knew could agree on, was those annoying radio commercials were quite annoying at times.
So when Pandora came to the scene everybody began jumping on the bandwagon specially those who had Blackberry’s before the iPhone came out downloading Pandora to listen to music. Or at work in their computers. It was a breath of fresh air from those annoying radio commercials. You could listen to music you love and discover other music based on your tastes with Pandora. You would see ads instead of hearing them all the time.
I got asked a question once, is radio broadcasting going away? I pondered that question from two to three years. I came to the conclusion after bouncing my thoughts with others that it possibly could go away. But it is going to be determined by the broadcasting programmers and directors if radio broadcasting is going to go away. That determining factor is quality. The quality of the broadcast is determined not just in sound quality, but the content. The content is what people are after. Is it a talk show or is it a specific genre of music in area people like to listen to more. Data science can answer many of these questions.
If I were the director/owner of Entercom Communications, Clear Channel or Gennet I would be directing a gold mine. Because AM / FM transmitters in truth be told are content delivery platforms that deliver a broadcast.
Pandora, Spotify, and Apple Music are utilizing algorithms and are delivering a broadcast of what people want to hear instead of utilizing radio transmitters they are using the internet as their broadcasting tower + CDN. People choose what they want to listen in their platforms.
In contrast radio stations are broadcasting to their audience programs and music of what they believe their audience wants to hear. They adjust their programming based on the community they are broadcasting to and get their feedback. Radio stations competitive advantage is that they have boots on the ground and can interact with their audience live. Yes, it’s true that many that used to listen to the radio do not and rather just play their song list from their playlist. Also Spotify and Pandora also recommend people to listen to new music that comes on or suggest a broadcast.
Just as these companies have taken a nice chunk of the radio broadcasting market revenue in advertising, broadcasting companies have the power to take their market back. This is why I mentioned broadcasting companies such as Gennet are literally sitting in a gold mine. If radio stations come together and start developing broadcasting technologies become more software/ information technology oriented companies. The sky is the limit., specially for XM Radio.