A Snapshot of Where the Radio Industry Is At

| September 22, 2016

By Holland Cooke
Media Consultant

 

cookewriterNASHVILLE — Even after a night-before in Music City, the double Omni meeting room was packed for Wednesday’s Broadcast Finance Forecast 2016 Leadership Breakfast.  Sponsored by Pillsbury Winthrop Shaw Pittman, this perennial session always buzzes.  And Wells Fargo Director of High Yield Media, Cable and Telecommunications research Davis Herbert didn’t disappoint as he ticked-off data and surmise:

  • Overall ad spending will near $200 billion in 2016.
  • Radio has slightly under-performed ad spending post-recession.
  • Radio’s share of advertising, now 7%, is projected to decline to 6% by 2019.
  • “Ad dollars follow eyes and follow ears.” Digital is expected to double in the next 2 years.
  • Live TV viewing declining in the same time frame.
  • “The pie is growing, media time overall is increasing, while radio remains stable.”
  • Despite audience fragmentation, time spent with radio is nearly 2 hours a day.
  • Radio is the top-performing sector in traditional media in 2016.
  • Radio has only slightly under-performed other local ad media (excluding political).

What do investors worry about in radio?

  • Audience fragmentation and Millennial reach,
  • Radio’s place in the dashboard,
  • The changing economics of Digital,
  • Royalty uncertainty,
  • Excessive debt.

Sound Bites from The Suits.

Among panelists’ comments:

    • S. Bank’s Garret Komjathy: “Anybody can put money [debt] on a radio station. The question is can you get it back.”
    • Alpha Media founder & Chairman Larry Wilson: “We like to hire superstars and let ’em run. We keep an eye on ’em.  If they don’t get it done, we make changes.  It takes perseverance.  It’s like a marathon race.”
    • Cox Media Group EVP of Radio Bill Hendrich: “None of the other issues matter if we allow the ad community to believe we don’t reach the Millennial generation.”
    • Beasley Broadcast Group interim CEO Caroline Beasley, regarding the Greater Media acquisition: “It doubles our revenue and cash flow and more than doubles our reach. We’re back in big markets, and along the eastern seaboard.”

Share the Road: The Changing In-Car Audio Space

IOU notes from this RAIN Summit presentation, just-released stuff, by Edison Research Director of Research Nicole Beniamini; but I recommend that you to watch her 20 minute presentation here

Short version:

  • 78% of in-car audio listening is to AM/FM;
  • Distant second, 17%: CDs and downloads;
  • Then at 15%, SiriusXM;
  • 5% of in-car TSL is to streaming audio’
  • Podcasts: 1%

So “AM/FM radio still has the wheel,” Beniamini says.  “It’s free, convenient and a lifelong habit.”

WHOSE lifetime is an issue however.  In-car streaming audio use by 13-34-year-olds triples that of 35-54-year-olds.  And younger listeners spend more car time listening to MP3.

Also impacting on-the-road TSL: the age of the car.

  • Those driving model years 2010 and older spend 77% of their in-car audio time with AM/FM, compared to 61% for people with newer vehicles.
  • In cars 2011 and newer, SiriusXM use rises to 25%.
  • Why streaming is growing slower: Only newer cars enable smartphones to pair-up with in-dash audio systems. Only 12% of cars on the road in 2016 have ’em.  “To date, streaming audio has not provided the ease of use and convenient experience that AM/FM and SiriusXM do. Users want to get in the car, press a button and start listening. Streaming audio will lag behind in the car until the technology is more developed and widely distributed.”
  • Of those who report listening to online audio in-car, 62% plugged-into the aux jack, 42% use Bluetooth, and 8% plug into those new-tech dashboards. Expect that last number to grow as people buy new cars, Beniamini said.

Everyone into the conference room.

I go to lots of conventions.  You can’t so I must.  And it’s uncanny at how many of them the first familiar face I encounter is affable attorney David Oxenford of the Washington firm Wilkinson Barker Knauer.  His sessions – and his BroadcastLawBlog.com – do a real helpful job translating regulation-to-English.  And his RAIN Summit session “Legal Snapshot: Issues for Audio Services” made me want to call a staff meeting.

As David translated what he characterized as “esoteric” recent developments on “100% licensing of joint works” and “Global Music Rights” and “pre-1972 sound recording royalty suits,” I felt newly grateful that I work mostly in spoken word formats.

Particularly as regards streaming a station’s on-air programming.  Unsurpisingly, his entire presentation was more Don’ts than Do’s, among them: During any 3-hour period:

  • No more than 3 sound recordings from one album.
  • No more than 2 songs from any album can be played consecutively.
  • No more than 4 sound recordings from the same artist or from any set or compilation.

Stations’ digital content presents related concerns…

DON’T help yourself.

“Using music in any on-demand service (including podcasts) or in video productions usually requires direct licenses from copyright holders.”  Accordingly “most stations can’t podcast their morning show because of difficulty in getting rights.”  And you’re not off-the-hook for the user-generated content so many stations invite.  “Do you let audience post music or music videos on your web site?”

Don’t be naïve about photos either, as we read almost daily now in trade press reports of photographers filing steep infringement claims against stations whose webmasters help themselves to images they find online.  “If material is registered with the Copyright Office, damages can be as high as $150,000 if infringement is willful or repeated.”

Oxenford’s advice: Register with the Copyright Office the name of the staffer you designate to get  take-down notices from those claiming you’re using their work without permission.  “If registered, and you follow rules like not encouraging infringement, having good terms of use, don’t have actual knowledge of infringement, and take-down infringing content when asked [it is] safe harbor from liability.”

FCC + FTC = Sponsor ID

Broadcasters and podcasters take note: As the FCC does for on-air commercials, the Federal Trade Commission requires disclosure of sponsors of any online content, and “that includes not only program material, but even social media posts.”  And not just for money received, “but getting anything of value, including free stuff for use in reviews.”  He warns of big fines for violations, and long periods of government supervision.

“Comprehensive Federal privacy rules are coming one day, but now a hodgepodge of laws and policies both state and Federal.”  To be on the safe side, you at least “need to disclose what you are doing with information that you are collecting.”  And “consider policies for using and disposing of information you gather, including upon sale of your business.”

You don’t need an attorney to tell you that “you need to be very careful with security for all data, especially financial information;” and Oxenford urges “watch out for collecting information about children.”

“But that’s not all!”

Even if you’re not here in Nashville, you can virtually attend Radio Sessions that are live streaming.  Hit RadioShowWeb.com

Look for more of my Radio Show notes – and read what Jeff McKay’s hearing from attendees — here tomorrow.  And follow my real-time Tweets @HollandCooke.  And ICYMI, here are  my notes from Tuesday’s RAIN Summit conference. tbugk3

Holland Cooke (HollandCooke.com) is a media consultant working at the intersection of broadcasting and the Internet; and his “Grey is Gold” video is this month’s feature on TalkersTV.

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Category: Analysis