Radio InSights

Pandora’s Home-Grown Ratings: Methods & Motives

2012-02-01T10:29:15-05:00

Pandora claims it has more young listeners than any local broadcast radio station. If 11 million Google hits are any indication, the world seems to believe it.

But is the claim a valid comparison, and is it a trustworthy claim?

The answer is no on both questions. The comparison is meaningless, and worse, the numbers supporting the claim are shaky.

And despite Pandora’s assertion that their efforts are to provide a useful comparison for media buyers, the exercise seems designed to do just the opposite.

Explaining why Pandora created their own ratings, Pandora CRO John Trimble claimed:

Accurately reflecting our audience listenership is critical to our clients....AQH, is the industry standard for buying radio advertising providing buyers with an apples-to-apples metric....AQH comparisons enable advertisers to fully understand the scope and scale of Pandora’s audience. (See here and here.)

But it seems the effort is more for Wall Street than Madison Avenue.

When Pandora first released its AQH numbers inviting comparisons to local broadcast ratings, we pointed out that comparing millions of streams to a single local broadcast signal is meaningless.

An honest apples-to-apples comparison is comparing one corporate audio service to other corporate audio services in the same area.

According to Pandora’s own home-grown ratings, the service has just a fraction of the local audiences of broadcast companies like Clear Channel, Cumulus, Univision, or CBS in any market.

And that is assuming the Pandora numbers are accurate.

The more troubling question is the reliability and comparability of Pandora’s local numbers.

Pandora invites comparisons to Arbitron numbers by using the same terminology, but how comparable are its numbers?

Arbitron weighed in with a carefully worded critique of “recent releases of audience estimates” raising numerous doubts about Pandora’s methods of calculating audience.

Rather than use Triton Digital, Pandora's own ratings provider, and the Media Rating Council (MRC) accredited leader in measuring audio streaming, the service hired a company without ratings experience.

Why didn’t Pandora use the leader in streaming measurement, especially after Triton announced that it would be offering its own local ratings?

On top of that, the company that produced the ratings used a method that is undocumented, and to our knowledge never tested against traditional measurement.

It is not used by Triton nor comScore, the two MRC accredited Internet measurement providers.

The data used to create the ratings came from music logs used by SoundExchange to determine Pandora’s royalty payments.

Perhaps this approach will ultimately prove to be an acceptable method of generating ratings, but what testing has been done? How has it been validated?

Rating providers go through a lengthy and laborious process to gain MRC accreditation. Just ask Arbitron.

The MRC checkmarks tell media buyers that they can trust the numbers media companies provide them.

Cavalierly releasing unaccredited ratings may have created great headlines for Pandora, but with so little known about the reliability and comparability of these ratings, the company has done a disservice to media buyers.

If Pandora is going to get into the home-grown ratings business, it needs to offer greater transparency about the reliability and validity of the numbers it releases.

Otherwise, it ought to leave the ratings business to Triton Digital, comScore, and the other experts.

Pandora Ratchets Up Assault: The Fix is In

2012-01-30T12:03:06-05:00

Pandora has a long history of confusing its aspirations with reality, presenting guesstimates as fact.

Two years ago we noted Tim Westergren’s seemingly pathological need to denigrate local radio using unsubstantiated unverifiable statistical factoids, confident that no one would question his numbers.

Since going public, Pandora executives have pursued the same wink-filled PR path, offering upbeat predictions backed by shaky statistics nearly always coupled with a solemn reference to broadcast radio’s imminent death.

The pitch of Pandora’s PR drone has recently kicked up a full octave, perhaps a consequence of Wall Street’s skeptical response to the service’s prediction of a bright future.

Pandora’s stock price is stuck below it’s June 15, 2011 debut, barely half of its first day’s high.

Over 40 million shares traded hands that grand day, and all those people who bought the future of radio at $26 can’t be too pleased seeing their investment chopped in half.

So Pandora’s PR machine has changed gears.

The service’s exponential growth in Triton Media ratings is old news. New month, new record numbers. The story has been told with numbing frequency.

Pandora is like the school yard bully that has already beaten up all the kids at school. The bully needs somebody bigger to beat up.

So Pandora has stopped picking on its weenie streaming competitors and instead is taking aim at someone considerably bigger: local broadcast radio.

In July the service released numbers it purported were AQH ratings, for the first time enabling the service to claim it is just as big as broadcast radio.

Pandora’s accomplis in this assault on local radio claimed, “this data demonstrates the significance and scope of Pandora’s audience.”

Like most of the other statistics Pandora releases, the AQH release had a thin shell of credibility.

Citing AQH invites, even begs one to compare Pandora’s numbers to Arbitron’s station ratings. And lest anyone miss the point, Pandora’s CRO John Trimble notes:

AQH is the industry standard for buying radio advertising and providing buyers with an apples-to-apples metric is just one of the things we do to help advertisers.

It didn’t help that Arbitron abetted the crime by allowing the release of broadcast station AQH ratings (KIIS 0.7 Pandora 0.9, WHTZ 0.6 Pandora 0.7, etc), a clear violation of the company’s “fair use” guidelines but then blocked our attempt to provide more meaningful comparisons.

With the duplicity of Pandora sycophants, the announcement and release ricocheted around mainstream media, radio trades, blogs, and then back to mainstream media so that today everyone just accepts the “fact” that Pandora is bigger than any local radio station.

If you Google Pandora beats local radio, you’ll find close to 11 million links. Yet Pandora's number-crunchers indignatly claim with a straight face that they had nothing to do with attempts to compare Pandora numbers to terrestrial radio stations.

Radio’s giant flywheel of a ratings service finally got around to releasing a well-written thinly veiled response to Pandora’s scribbles, but long after the damage was done.

Arbitron’s paper (PDF) should be required reading by pundits who gush over Pandora, but we doubt few will bother. The fix is in.

Radio, showing vigilance that would make the guardians of Troy blush has finally gotten indignant about Pandora’s made up numbers now that Pandora has announced 13-25% gains in their made-up ratings.

And radio’s slow-motion push-back led to some defensive back-peddling on the part of Pandora’s enablers, but too late.

There’s blood in the water. Pandora’s fix is in.

CRO Trimble once declared that, “accurately reflecting our audience listenership is critical to our clients,” but that isn't going to stop Pandora from continuing to release their home-brew ratings.

And we bet they will show dramatic growth.

Did we mention the service is now releasing cume numbers?

Next post we’ll look a little more closely at the back of the envelope Pandora uses to calculate their numbers.

We’ll also explain why radio’s response has so completely missed the mark.

Pandora vs. Local Radio: Second is the First Loser

2012-01-26T12:11:57-05:00

Have you seen research that says listeners love Pandora more than local radio?

It’s wrong.

Not the answer. The question is wrong–-and misleading.

It’s wrong because people don’t listen to local radio. They listen to local radio stations. The difference is critically important in how listeners answer the question.

If you want to know whether a person prefers Pandora to local radio stations, you have to ask the listener about the specific radio stations he or she listens to.

People only listen to a few local radio stations, and they feel most strongly about just one or two.

Listeners don’t think much of local radio because they don’t like most local radio stations. In fact, even before Pandora and on-line alternatives, listeners thought most local radio sucked.

But a person’s favorite local radio station isn’t like all the others he or she doesn’t listen to. It’s special–-and to that listener much better.

That’s the problem with research comparing local radio to Pandora.

Lump all of local radio together, and of course Pandora is going to look better.

A much fairer comparison is to ask a listener to compare his or her favorite local radio station to Pandora.

Harker Research recently did that, and Pandora didn’t look nearly as strong as the headlines suggest.

We found that listeners rate their favorite local radio station higher than Pandora. And more importantly, one’s favorite radio station would be harder to replace than Pandora.

But that only applies to a listener’s favorite station. While a person’s P-1 station is better than Pandora, Pandora beats a listener’s second favorite. And not by a little, but a lot.

A listener has one local radio station that he or she can't live without, but Pandora does a pretty good job of replacing the rest.

So the good news is that Pandora isn’t better than a person’s favorite local station. The bad news is that it is better than all the others.

There’s been a lot of talk about how PPM is all about cume, that being a listener’s P-1 is less important with PPM.

Even if that were true (and we don’t think it is), it clearly isn’t true if we factor in future competition from personalized Internet radio.

Pandora isn’t going to replace local broadcast radio, but it will make it harder to survive as a mediocre station.

Radio Alchemists, Butterflies, Pasteur, & Matt Damon

2011-11-29T16:39:13-05:00

Down deep programming people want to believe that there is some magic formula that guarantees ratings success.

We’d like to think that programming a radio station is like baking a pie. Use the right ingredients, mix and cook it properly, and the station will be a winner.

And not only that. Once we found the secret recipe, we’d hope that the recipe could be duplicated in market after market, a success in everyone of them.

Unfortunately, most efforts to replicate successful stations have failed.

Time and time again a format that succeeds in one market fails in others. Each time a radio group replicates a very successful station across other markets, the results are uneven at best.

But like the persistent efforts of medieval alchemists to turn lead into gold, the search continues for that elusive recipe.

Arbitron and Mediabase recently collaborated in an effort to understand what makes a music station successful.

They analyzed music station playlists in an effort to find a link between playlists and ratings success.

Surely there has to be some difference between the playlists of successful and unsuccessful music stations.

Actually no, it turns out there isn’t any:

The percentage of airplay devoted to the most played songs in individual formats is largely the same–whether a station is ranked first in its target demo or not.

Two stations can play the same music in the same rotations and yet one can be a winner and the other not.

You might be thinking that there must be some overlooked non-music explanation. Maybe the winner has a better morning show. Maybe they market themselves better.

Sorry to disappoint, but even if stations in two markets are identical in every respect, the two stations will not produce the same ratings, or even the same rank.

It’s the Butterfly Effect.

Radio markets are like snow flakes: Every market is unique.

A radio station’s share and rank are the consequence of a complex mix of historical and competitive factors.

Long forgotten historical facts (called initial conditions) like a very popular Top 40 or Rock station can tilt a market more pop or rock.

The strength of an Oldies station can have a big impact on a Jack station. A Jack station can have a big impact on a Classic Rock station. CHR can impact rhythmic formats, and rhythmic formats can impact CHR.

A music format does not have some intrinsic appeal that determines a radio station’s share.

Share is determined by music appeal tempered by market history, market characteristics, competitive pressures, and even where the station is on the dial. And a thousand other factors we can’t control.

The Butterfly Effect refers to the belief that the flapping of a butterfly’s wings can help create a hurricane weeks later.

Initial conditions, nearly undetectable earlier perturbations can dramatically change an outcome.

It’s the stuff of science fiction. It’s Matt Damon and The Adjustment Bureau.

But it’s true.

Many if not most of the reasons one station succeeds and a similar station fails is beyond our control.

Skill, ability, and experience still matter. Louis Pasteur captured this by declaring:

Chance favors only the prepared mind.

Chance will determine what rolls past you. It is your skill, ability, and experience that determines what you do about it.

So stop looking for secrets of ratings success. Stop thinking that if you just copy what some successful radio station is doing, you’ll be equally successful.

Winning begins with understanding the Butterfly Effect. Winning begins by understanding initial conditions, chance, and randomness.

And winning happens when you create the best damn radio station possible when you’re handed all these things.

Streaming Economics: Grow & Lose More Money

2011-11-28T10:58:22-05:00

Once again Pandora was bragging about its growth during the recent Investors meeting.

While user numbers and top line revenue figures paint a rather upbeat picture of the service’s future, the made-up metrics couldn't conceal the real story, the upside-down economics of streaming.

Business Insider recently looked beyond the hype and came to this conclusion about Pandora:

The more users it has, the more advertising it can sell against those pairs of ears. But at the same time, the more ears that listen and the longer they listen, the more songs they hear and the more Pandora must pay out in music license royalty fees.

The analysis includes a number of graphs that illustrate the point. Take a look at one example shown at left. Revenues and expenses are moving in lock-step.

Broadcast radio has efficiencies of scale. It costs the same to reach one listener or a million listeners. Compare that to streaming radio where costs rise with each additional listener.

Pandora’s revenues have doubled over the past year, yet royalties still consume 50% of Pandora’s revenue. On top of that, royalties are scheduled to increase another 37% by 2015.

Making matters worse, Pandora’s user growth seems to be slowing. According to Seeking Alpha, this quarter’s growth rate was the lowest in three years.

Add to that a reluctance for users to upgrade to the $36 Pandora One, and the service has even fewer options for breaking out of the vicious cycle of revenue and costs tracking each other.

Pandora has to raise its advertising rates, or it has to run more ads.

Pandora users are already noticing the increased ads. One of the attractions of Pandora was the clean limited spot-load of the service. That image is already suffering with the increased load.

Loading up on spots will diminish it’s advantage over broadcast.

The only alternative is to raise rates.

The problem is that Pandora’s CPMs are already considerably higher than broadcast radio’s. The service’s ability to directly target users may be worth a premium, but there is a limit to what an advertiser is willing to pay.

While broadcasters can take some pleasure watching Pandora struggle, streaming’s perverse economics apply to broadcast streams as well.

Broadcast radio groups are essentially using broadcast profits to keep unprofitable streaming afloat.

If new-media pundits are right and ultimately most radio listening is done via streams, broadcast will see revenues decline and expenses increase.

Radio’s cost of doing business will look a lot more like Pandora’s.

That’s why it is important to continue to invest in broadcast. A dollar of revenue on the broadcast side is worth a whole lot more than a dollar on the streaming side.

Howard Stern Desperately Tries to Remain Relevant

2011-11-22T14:21:19-05:00

Radio and television remain powerful vehicles to launch and sustain entertainment careers, something that new media cannot do.

The drama playing out right now for Howard Stern is the latest illustration.

Remember Howard Stern?

You may have to glace at his Wikipedia bio to remember how successful and influential he was while he was on the radio.

TV shows, two books, two highly successful pay-per-view deals. Even three covers of Rolling Stone.

At one point his self-proclaimed status as “King of All Media” might have been true.

But no more.

Scroll down his Wiki entry to the brief Satellite radio section and you’ll see very little. No book deals, no TV, nothing but two channels on Sirius and a huge paycheck.

Stern’s move to satellite made him very rich but also an increasingly irrelevant talking head. Maybe that's why People declared Ryan Seacrest the new King of All Media a few years later.

So it shouldn’t be surprising that someone leaked that Stern was in negotiations with NBC to be Piers Morgan’s replacement on America’s Got Talent.

He’s floated plenty of deal rumors in the past, but this one is different. He really needs this job.

A chair at the judge’s table would give him the prime-time exposure he needs to rebuild his image as someone who still matters.

Because mass media still matters.

Satellite radio is a niche. Something like 95% of Americans don’t listen to satellite, and only a small proportion of the 5% listen to Howard Stern.

Satellite radio is great place to hide if you want to become obscure.

The only way Howard Stern could become even more obscure would be to move to digital media.

All the upbeat predictions about how new-media is replacing traditional media come from new-media stakeholders who pray it’s true.

How many entertainers have come from Social media or YouTube and gone on to become stars?

Yes, there are plenty of events and people that go viral. Singing cats and talking dogs can generate millions of views. But how many careers have been launched through digital media?

The Internet and social media create instant buzz that fades quickly.

Stern is not the only mainstream media star that has lost relevance by abandoning mainstream. Oprah is struggling with her OWN network. Both Keith Olbermann and Glenn Beck are off most people’s radar screens.

As the Wrap recently noted:

With Olbermann moving to Current TV and Beck leaving Fox for a subscription internet service, both have fallen out of the national conversation. The power of broadcast and cable has, in this case, trumped the power of their personal brands.

Howard Stern is a highly talented personality, the kind of personality that radio needs right now. But Stern needs radio as much as radio needs Stern--maybe even more.

People talked about Howard Stern because radio gave him reach and influence.

Let's hope he gets the America's Got Talent job, and then abandons satellite's obscurity for a real radio gig.

Riding Pandora's Coattails

2011-11-21T10:05:32-05:00

The continuous stream of Pandora stories and the repeated retelling of Pandora’s near death and phoenix-like rise to Internet radio preeminence has provided those in its shadow a free ride into mainstream consciousness.

Because of Pandora’s meteoric rise, everybody assumes Internet radio use is growing by leaps and bounds. Because of Pandora, everybody knows that broadcast radio’s days are numbered, that soon radios will go the way of typewriters.

And Triton Digital’s streaming ratings prove it. Or do they?

According to RAIN:

While listening to broadcast radio simulcast online is indeed growing, it’s the huge gains made by Pandora (and to a much lesser extent, other “pureplay” Internet radio outlets) that’s powering that growth.

Two years ago, 70% of online listening Triton measured was credited to simulcast streams of broadcast radio. As of September’s numbers, it’s online-only radio that accounts for 70%.

Sounds like Internet radio growth is really coming at broadcast’s expense. Right?

Let’s look at the facts and see what’s really going on.

Unlike Arbitron which measures radio listening to all stations regardless of whether they subscribe, Triton Media only measures streams of clients who pay Triton.

The analysis and story compares September 2009 to September 2011. Triton Digital (then Ando Media) had a lot going on.

Pandora had just become an Ando client. Desk-top listening was first measured in August 2009, but their mobile listeners weren’t measured until January 2010.

Slacker signed up much later. It’s audience wasn’t measured until July 2010. That means the Slacker audience wasn’t included in the September 2009 report.

Like Pandora, Slacker ratings initially included only desk-top listening. Their mobile listeners weren’t measured until December 2010.

These subscriber changes make trending Triton Media ratings extremely misleading.

The first period does not include Slacker at all and does not include Pandora mobile numbers. The second period includes both services and mobile listeners for both.

Just these measurement changes are going to give the illusion of growth. So should there be any surprise that the tables tilted towards pure-play during this time?

There’s genuine growth buried in there, but the growth is inflated.

And Triton Digital ratings raise questions about the assertion that broadcast’s 70% of streaming has fallen to 30%.

Looking at Triton’s monthly rankers, broadcast streams made up about a third of Average Active Sessions (AAS) in their September 2009 report. The September 2011 report shows broadcast streams making up about 20%.

So the drop is much smaller, and Pandora is virtually the only reason broadcast dropped.

Over this period, Pandora increased their AAS by about 600,000, an increase of over 400%.

Yes, hats off to Pandora. That’s a tremendous growth story. But this is one tide that has raised a single boat.

When Slacker became a Triton client it added nearly 30,000 AAS to pure-play’s side of the ledger. Then a few months later when Triton started including their mobile audience, it increased Slacker’s apparent audience by 83.3% in just two months.

At first glance it would seem that Slacker took off just like Pandora, but that’s not the case.

Since Slacker has been consistently measured, its audience has barely grown, certainly nothing like Pandora’s. In the last nine months they’ve only added a little over three thousand listeners, a very modest 12.2% increase in AAS.

Hardly a rocket.

The story acknowledged that broadcast streams have also increased over the past two years, but the claimed 70/30 flip-flop seems to suggest that growth is sputtering.

It turns out that broadcast listening has increased nearly 50% over the period, not a bad performance given Pandora’s momentum.

Pandora is to pure-play streaming what Apple is to tablet computers. Each is not only the category leader, it is the category.

Slacker and other pure-play services are the HP Slate and Blackberry Playbook of streaming, also-rans riding the coattails of Pandora’s success.

They only wish a rising tide floats all boats.

Is a Hit Song Just an Algorithm?

2011-11-15T14:34:33-05:00

Is a hit song just an algorithm?

Is there a formula, some special combination of sound codes, that can tell us whether listeners will like a song?

Apparently some people think so. They feel humans are inferior to computers and artificial intelligence in determining what songs you should play.

There’s a tremendous effort going on to build large song databases, coding each tune with such things as tempo, key, and instrumentation.

Perhaps the best known is Pandora’s Music Genome Project (MGP). Musicologists coded Pandora’s 800,000 songs with up to 400 distinct characteristics, everything from chordal patterns to such things as instrumentation and even something called “motion inducing.”

At least Pandora enlisted the help of humans to build their database.

As we highlighted in Want to Build Your Own Pandora? the latest efforts eliminate human input altogether. Computers are replacing Pandora’s musicologists:

A new collaboration between Columbia University researchers and The Echo Nest, a company that tracks online music and delivers listening suggestions to users, hopes to take the human element out of Internet radio. One goal is to deliver better recommendations and more songs through improved artificial intelligence.

Leave it to computer geeks to conclude that the pesky “human element” is hampering song recommendations.

Echo Nest claims to have coded 30 million songs:

Echo Nest has some 5 billion data points for more than 30 million songs in its database, such as artist connections, song similarity, mood, style and acoustic attributes.

You may recall that Clear Channel hired Echo Nest to help create iHeartRadio’s personalizing feature, their version of Pandora.

So is curated radio dead? Will music directors be replaced by computers armed with 5 billion data points to decide what songs to play?

We don’t think so.

IBM’s Watson might be able to win at Jeopardy, a computer might even be able to compose bad poetry, but computers can only mimic. They still cannot create.

Creative music programming is an art, perhaps a dying art, but not a dead art.

The creative part of music programming is finding a balance between the predictable and familiar, with the unpredictable and unfamiliar.

One of the initial complaints with Pandora was that it was too predictable. Every song sounded like the songs that preceded it.

That shouldn’t have come as a surprise. Pandora’s MGP is all about finding songs that match the profile of the seed song.

Of course, the songs are going to sound similar. The very essence of Pandora was to offer up more of the same.

But a listener quickly becomes bored with a string of similarly sounding songs. She needs the right touch of variety. Something that surprises in a pleasant way.

That’s the art that every good music director, every good nightclub DJ understands.

So Pandora responded by adding variety, essentially de-tuning their algorithm.

But it still hasn’t solved the problem. Many Pandora users now just create a new channel every time they sign on in the hopes that the new channel won’t sound as boring as their old channels.

Will computers and artificial intelligence, outperform Pandora’s musicologists and radio’s best music directors?

Will the right algorithm make radio stations sound better?

More likely the opposite. It will make radio stations sound even more predictable and boring.

The trend towards homogenized national playlists has already made local radio stations sound predictable and boring. Layer on top of that an algorithm that makes sure all the songs sound the same.

That will make for some exciting radio.

Facebook versus Radio. Which is More Important?

2011-11-14T16:21:51-05:00

Which plays a greater importance in people’s lives: Facebook or local radio?

Must be Facebook, you’re thinking.

Everyone’s a member, it’s in the news all the time, and people seem to be obsessed with posting, playing games, or just finding out what friends are doing.

Facebook top line numbers are pretty impressive. Facebook claims something like 200 million active US members. ComScore says the monthly traffic for Facebook is a little over 150 million people.

That’s a lot of people, but radio “membership” is even higher. Arbitron says there are about 200 million people listening to local radio just in the 290 markets they survey. And that is just on radios.

We don’t have an accurate count of the number of people listening to broadcast streams, but according to Triton Digital, subscribing broadcast groups have over 150 million session starts each month and on average have over one-quarter million sessions going.

So we can’t be sure how many people listen to broadcast radio in a month, but it is well over the number of active Facebook members.

But what about time spent with each? Surely people must spend more time with Facebook. The company claims that people spend 6.8 hours on Facebook each month, about 1:35 a week. ComScore puts it at 1:24.

How much time do people spend with local radio stations?

Listeners spend 15:45 a week listening to local radio on the radio. In other words, not counting streams, people spend 10 times as much time listening to broadcast than reading their Facebook page.

Maybe reach and TSL aren’t the best metrics to judge how important a service is. Maybe Facebook is more important to people than the numbers suggest.

Or maybe the significance of Facebook has been inflated by stakeholders dreaming of a billion dollar IPO, pundits who are riding Facebook’s coattails, and a naive press that uncritically believes every new-media press release that shows up in their email.

What About Sports-Talk Radio? How’s That Doing?

2011-11-08T15:21:23-05:00

Sports-Talk radio along with the rest of Spoken Word has been in the news quite a bit lately.

More and more Sports-Talk stations are migrating from AM to FM with Clear Channel's KJR and Entercom's WEEI just the latest in an accelerating trend.

What impact is FM having on Sports-Talk? So far, in a positive way but less than you might think.

There are a total of 51 AM and FM Sports stations now measured by PPM, eleven more than a year ago. Of those, nearly two-thirds (61%) are still on AM.

The median share for all Sports-Talk stations is 2.1. Half of Sports stations have a share higher than this, while half have a lower share. (This is based on stations in all markets now measured by PPM that have at least a one share in the latest three months.)

This places Sports-Talk dead last of the formats we’ve looked at so far. Click on chart at left.

Perhaps even more interesting is that FM Sports stations are not out-performing their AM brethren by much. Median share for FM Sports stations is 2.2 compared to AM’s 2.1.

New PPM markets coming on-line make it difficult to compare current median shares to last year’s numbers because the newest markets tend to be smaller than the first PPM markets.

To look at median share trends, we calculate median shares for just the stations that have been in the format and measured by PPM for at least a year.

Looking at just these stations, AM shares are steady at 2.2, while the median share for FM stations has gone from 1.8 to 2.3.

That means all of Sport radio’s growth has come from the FM side. This is clear if we look at format momentum.

If you’ve read our other format analyses, you know that we calculate momentum by comparing each station’s share today to what it was last year at this time, using a three month average.

Positive format momentum means that more stations are higher today than they were a year ago.

Momentum for the format is slightly positive at 52.5%, but this over-all performance conceals considerable differences between AM and FM stations in the format.

Fewer than half (46.2%) of AM Sports stations in the format are up over their 2010 numbers. In contrast, nearly two-thirds (64.3%) of FM Sports stations are higher today than comparable months in 2010.

Keep in mind that there were only 14 FM Sports-Talk stations in PPM markets last year, so FM’s positive momentum is based on a limited number of stations.

That said, the modest gains thus far may just be a hint of why lies ahead as more stations make the switch. Stay tuned.

How Are Gold Formats Doing?

2011-11-03T14:39:35-04:00

Format labels are slippery things. We all understand a format label like Country. Country is County.

With a format like Adult Contemporary things get a little more complicated with the lines between Mainstream, Hot, and Modern AC somewhat blurred, but reasonably differentiated.

In the case of Gold-based formats, labels confuse as much as they clarify.

There was a time when there was one Oldies format, and stations were proud to call themselves Oldies. More recently, however, many gold-based stations have embraced the term Classic Hits or Adult Hits in an effort to distance themselves from Doo-Wop based Oldies.

While Classic Hit stations are generally a little more contemporary than stations still calling themselves Oldies, the dividing line is rather arbitrary.

There are 89 Gold-based general market stations in PPM markets. Seventy of those, nearly 80%, call themselves Classic Hits.

With so few stations still embracing the Oldies label, we’ve combined Oldies with the larger number of Classic Hits stations into a single category called Gold.

Gold stations have a median 6+ share of 4.1 in PPM markets. This ties the format with Country and Hot AC for fourth place among the formats examined thus far.

You can get more background on the other formats we’ve examined by clicking on one of these format links: AC CHR Rock Country Talk.

As an aside, Classic Rock and Classic Hits have an identical median share of 4.2 suggesting that the two formats are more fraternal twins than two separate formats.

While the median share tells us how popular a format is, a more useful metric for indicating the future prospects of a format is momentum, comparing past performance to the present.

Gold is essentially holding its own. Shares are pretty much flat compared to 2010, with as many stations ahead as behind last year’s numbers. This puts the format fourth of the ten formats analyzed so far. See second graph at left.

Interestingly, the few remaining Oldies stations actually have more positive momentum than their Classic Hit brethren. While only 45.8% of Classic Hit stations are higher than last year, 71% of Oldies are up.

All the caveats we’ve offered in earlier rating analyses apply here. PPM is still very new and we still don’t have a year’s worth of numbers for many stations. The coming months will tell us much more about the direction of formats with PPM.

How's News-Talk Doing?

2011-10-26T14:51:28-04:00

Of the many formats we track, analyzing News-Talk presents the greatest challenge.

News-Talk is slowly migrating to FM. While most News-Talk stations are still AM only, there are a growing number of FM stand-alones as well as AM-FM simulcasts.

This transition has the potential to impact ratings in unpredictable ways. An AM station that adds an FM simulcast may get a bounce just due to the initial novelty. Stations that migrate from AM to FM may temporarily lose listeners.

Because these transitory changes may create misleading patterns, we’ve decided during this transition period when not all PPM markets have a full year of data to analyze AM Talk stations seperately from FM and simulcast stations.

We’ll first analyze AM stations. We’ll explore FM talk in a later post.

News-Talk has the distinction of being one of the worst performing format we’ve examined thus far. The median share for News-Talk is 3.1. This places the format next to last among the formats we’ve analyzed, just ahead of Alternative Rock.

A year ago News-Talk’s median share was 3.6. That translates into a 14% decline.

More telling is the high proportion of News-Talk stations that have lost ground over the past year. Of the 52 AM News-Talk stations in the format at least a year, 61.5% have declined.

That’s one of the steepest declines we’ve seen in any format.

As we mentioned in earlier format analyses, PPM is still relatively new. Seventeen additional News-Talk stations don’t yet have even one year’s worth of trends, so we have to be cautious about over-analyzing PPM trends this early in the game.

Perhaps News-Talk has reached a ratings inflection point. Perhaps the normal random bounces we see all bounced against the format.

Whatever is behind this trend, we’ll be watching News-Talk closely in the coming months.

Arbitron Rating Analysis Face-Plant

2011-10-24T16:50:01-04:00

As if on cue, in the midst of our ratings analysis, the “most trusted news in radio” inadvertently illustrated why analyzing Arbitron numbers can be so treacherous.

And how even a leading trade publication can get things so wrong.

Each year Arbitron releases Radio Today, a look at how the top formats are doing across Arbitron’s 290 markets. This is an analysis that only Arbitron can do because it is like running the Programmer’s Package combining every market in the country.

Because shares differ between PPM and diary markets, Arbitron now releases two estimates for each format, one showing how the format is doing in PPM markets, and a second for the format in diary markets.

Devoting the entire front page to Country’s performance,“the most trusted news in radio” declared:

The format ranked first among all formats in diary markets with a 14.5 but finished fourth in PPM markets with a 7.1. Put another way, Country’s average diary share is more than double its PPM share.

The statement is factually accurate, the ciphering flawless, but in the end meaningless.

A few lines later we learn the purpose of this expose' when the author asks rhetorically, “Why do some formats perform better under one ratings system than under another?”

It's perhaps a fair question, but using Radio Today Country numbers suggests that the author really doesn't understand how to go about answering the question.

Radio Today shares are calculated just like you’d do for a single market. Share is just a format’s AQH divided by the market’s AQH. To calculate a national format share, add the AQH of all the stations, then divide by the total AQH of all the markets.

Simple, right?

But what happens when there’s no full market Country station in New York or Los Angeles? The two largest markets in the country don’t contribute any AQH to the format tally. Consequently, the format's share is much lower.

Radio Today is not designed to compare formats the way the author has tried to do.

Compounding the problems of the wayward analysis is its conclusion:

One reason why Country comes up short in PPM markets is that it often lags in cume compared to other major formats.

The analysis ignores the fact that one of radio's biggest cuming formats, CHR, also does better in diary markets. There goes that theory.

The Radio Insights analysis of Country showed that the median share for Country in PPM markets was 4.1, behind only AC and Classic Rock. More importantly, Country is one of the few formats showing significant growth.

Two-thirds of Country stations in PPM markets are ahead of where they were last year.

The bottom-line is that Country is doing quite well in PPM markets, just the opposite of what the front page story suggests.

The subtitle of Radio Today is “How America Listens to Radio.” It’s an important distinction that the author of the front page story failed to understand.

Radio Today is not a measure of the success of formats. It is a measure of what Americans are listening to.

Admittedly, ratings analysis is not easy. Most published conclusions about ratings are misleading for one reason or another. For more on the subject, check out our discussion on how to analyze ratings here.

How's Contemporary Hits Doing?

2011-10-18T15:19:25-04:00

Radio Insights analysis of PPM format performances has looked at AC, Country, and Rock so far. Today we turn our attention to Contemporary Hit Radio.

To assess the health of each format we look at two key metrics, median station performance and momentum.

The median station is the one in the middle. Half of the stations in the format have a larger share, half have a smaller share.

The median tells us how the format is trending. If we see the median rising, it means mid-pack stations, the majority in the format, are gaining share.

Tracking the median station is more useful than calculating an average share because averages can be distorted by what are called outliers, stations that dramatically outperform other stations in the format.

WPRO-FM had an eleven share in August, yet few CHR stations can crack a six share. Using median rather than average takes that into account in determining the over-all health of a format.

Momentum measures where the format is headed. We look at a station’s latest three months and compare the average share for those months to how the station was doing those same months the previous year.

If more stations are growing than declining, the format has positive momentum.

We found that only 46% of Classic Rock stations are ahead of their last year numbers, but 51% of Alternative stations have grown. In contrast, 52% of Mainstream AC stations are ahead of last year, while only 44% of Hot AC stations have advanced.

The big winner so far has been Country. Nearly two-thirds (63.3%) of Country stations are ahead of last year.

So how’s CHR doing?

Of the 62 CHR stations now in PPM markets, about two-thirds have a year’s worth of numbers. The other one-third rolled out PPM towards the end of 2010.

The median 6+ share for all PPM CHR stations is 4.7, narrowly edging out Mainstream AC for top honors. See the format ranker above. Click to enlarge.

Momentum for CHR is slightly negative, with only 46.5% of CHR stations ahead of where they were last year.

As we pointed out in a 2010 post called Arbitron PPM Trends vs. a Coin Toss, most of the month to month movement of PPM is random. Stations go up and down for no other reason than luck of the draw:

Share estimates always have two components. The first is the actual number, the share you would find if you could ask everybody what they were listening to, instead of just a small number of panelists.

The second component is statistical noise. It is interference like static drowning out the signal from a distant AM station.

The noise is completely random and unpredictable. Sometimes it adds to the actual share, inflating it. Sometimes it subtracts from the actual share, deflating it.

Both monthly PPM share estimates and quarterly diary share estimates have so much statistical noise in them that it drowns out genuine changes in month to month ratings.

This is why we average three months.

Even with a three month average most formats hover around the 50% positive momentum mark, which means most stations in all formats are essentially churning, neither growing, nor declining.

That’s why it is important to watch momentum over time. Formats that are really growing show positive momentum month after month. Next up, Spoken Word.

How's Country Doing?

2011-10-14T12:08:32-04:00

So far we've looked at the PPM performances of Rock and Adult Contemporary. We found that the more contemporary side of Rock is out-pacing Classic Rock, while the opposite is true of AC.

Now, we turn our attention to Country.

There are 90 Country stations in PPM markets, but only 60 have a full 12 months of PPM numbers, so like the other formats, it will take several more months before we know how the entire stable of Country stations are doing.

That said, PPM appears to have been very kind to Country. Nearly two-thirds (63.3%) are higher today than they were a year ago. Country has the highest percentage of gainers of any format we’ve looked at.

The median Country station has a 4.1 share 6+, a tie with Hot AC for third among the formats we’ve discussed so far. (Click to enlarge.)

The big difference between Country and Hot AC is that Country has positive momentum while Hot AC is stalled, so in this tie we give the nod to Country.

Next we’ll turn our attention to CHR. It’s the one format that is going to shake up our rankers.

TV Viewers Multitask. What About Radio Listeners?

2011-10-13T16:46:02-04:00

Nielsen has just released a new study documenting Americans’ simultaneous consumption of old and new media.

As reported at nielsenwire, 70% of tablet users and 64% of smartphone users use their devices at least several times a week while watching television. A large number (42% and 40% respectively) do it everyday.

The majority of people use their smarthphone or tablet to check their email, but large numbers also use them to kill time during commercial breaks.

The fact that people read their emails while watching television shouldn’t come as a surprise. This is just the latest in a long series of studies that confirm that media consumption is not a zero-sum game.

New-media growth does not have to come from cannibalizing old media. In fact, some studies have shown that new-media can drive increased interest in traditional media.

A 2009 Radio Insights post highlighted an earlier Nielsen study showing that new-media does not take away from traditional media.

Nielsen’s Susan Whiting noted that:

Another misconception among some in the industry is that media consumption is a zero-sum game--with television the potential loser. Yet recent research...confirms what we at Nielsen continue to find: that people keep adding more media to their lives without abandoning their TVs.

This was before the release of the iPad and when feature phones out-numbered smartphones. Now two years later Nielsen finds little has changed. New-media consumption continues to grow while people continue to consume traditional media.

So is that true with radio? Are people using their smartphones and tablets while listening to radio?

It’s a good question, but one that remains unanswered. In a 2009 post we lamented the fact that no similar research had been done looking at radio.

In 2010 we pointed out that while Nielsen continues to fund studies demonstrating the continued strength of television, Arbitron, which makes nearly all its revenue from radio, had yet to conduct similar research for radio.

Arbitron still hasn’t shown any interest in studying the relationship between radio and new media consumption.

The company spent its time on this year’s Radio Show main stage telling us such things as there’s been tremendous growth in car GPS units, and that drivers would love a system that helped them recover their stolen car. Wow.

Now that’s the kind of information every radio station can benefit from.

How's Adult Contemporary Doing?

2011-10-12T17:25:45-04:00

A recent post explored the thorny issue of assessing the health of Rock. It’s not as easy as you might think.

If you didn’t read the first post, you might want to read it first for background.

Compounding the challenge is Arbitron’s transition to PPM.

Arbitron admits that there are significant differences between ratings produced from diaries and ratings produced by meters. As a result, we can only trend ratings from the same methodology.

We can trend diary measured stations. We can trend PPM measured stations, but we can’t compare the two. And even more importantly, we can’t trend stations in markets that have only recently switched to PPM measurement.

So we’ve been looking at stations in large markets that have had PPM for at least a year to see how they are doing one year later.

Having looked at Rock’s health in the first post, we turn our attention to Adult Contemporary.

In the case of AC, only two-thirds of the ACs in PPM markets have a year’s worth of ratings. As a result, we won’t have a complete picture of how AC is doing until early next year.

And if PPM’s performance to date is any indication, we’ll have to wait even longer for the newest markets’ panels to stabilize.

With that said, what do we know about the health of AC?

Mainstream AC is doing fine while Modern and Hot AC are slipping a little.

Looking at all flavors of AC, the format is behind where it was a year ago. Only 46.3% of Adult Contemporary stations are ahead of where they were.

It turns out, however, that the over-all negative trend is driven by Hot AC and Modern AC stations. Both formats are down while Mainstream is up.

By a slim margin, a majority of Mainstream AC stations are higher than they were a year ago. Fifty-two percent are higher, while 48.0% are lower. (Click on graphs to enlarge.)

In contrast, a majority of Hot AC stations are lower. Only 44.4% of Hot AC stations are higher than a year ago.

Modern AC stations make up a very small proportion of AC stations in PPM markets, but they too are down. Only one third (33.3%) are ahead of their 2010 numbers.

If you recall from the earlier post, we calculated the median share for all Rock stations at 3.6, ranging from 4.2 for Classic Rock to 2.9 for Alternative.

Adult Contemporary stations have a median share of 4.3, easily outperforming all flavors of Rock. As the nearby graph illustrates, Mainstream has the highest share at 4.6, followed by Hot AC at 4.1 and Modern AC at 3.5.

It is interesting to note that Modern AC while a distant third up against its AC brethren, handily outperforms Alternative, its Rock relative.

Next post we’ll look at how Country is doing. (Hint: very well.)

Note: To minimize month to month wobbles, we average the last three published 6+ monthly shares for each station and compare it to the same months one year ago. Only stations that were in the format last year and this year are counted towards the gains and losses. All stations currently in the format are included in median calculations.

An Open Letter to Ford

2011-10-05T17:43:45-04:00

In a recent open letter to radio Jim Buczkowski, a Ford Research and Innovation director, accused broadcasters of dragging their feet regarding HD Radio, declaring:

HD Radio technology can provide this look and feel (of dashboard consistency), but analog radio cannot.

Perhaps the Ford Research and Innovation department should worry more about the dangers of their MyFord Touch system rather than condescendingly complain about analog radio.

In January we reported that Ford buyers were so confused by the system that dealers were putting on 45 minute sessions to explain how to operate MyFord Touch.

Now Consumer Union takes Ford and the other manufacturers to task in Connected Cars: A New Risk. Devoting five pages of their annual car issue to the subject, they declared:

The control systems in many models–-the way you operate the audio, climate, navigation, and other systems–-are becoming needlessly complicated.

Consumer Reports concluded that:

Any system that requires drivers to take their eyes off the road for too long or engage in unnecessary distractions can be dangerous.

And voice recognition systems don’t seem to be the answer. University of Utah researchers found that even systems using speech increased driver reaction time by 30 percent.

In a side-bar called Controls Gone Wild, Consumer Union points out that for a parked Ford Focus it took a trained human-factors engineer six steps and 11 seconds to just launch an iPod.

On a BMW it took the engineer six steps and 10 seconds to manually tune the radio.

On a Hyundai Equus it took the engineer only five steps and 5 seconds to choose a radio station preset. (Click on box at left.)

In other words, the safest audio task you can do with these complicated infotainment centers is tune to one of your regular analog radio stations.

And of course its safer, takes even fewer steps, and less than 2 seconds to do the same thing on a regular radio, a point made by Consumer Reports.

Maybe instead of complaining about analog radio, Ford ought to redesign their Touch system so that it’s as easy as changing your (analog) station. Now that would be innovation.

Think Streaming will Replace Radio? Think Again.

2011-09-22T17:49:40-04:00

Do you think soon streaming on a smartphone will be the primary way people listen to radio?

A lot of broadcasters at the recently concluded Radio Show thought so. Before you agree, better look at how much a listener is going to pay.

A story in this month’s PC World points out how quickly a smartphone can run up against data plan limits.

According to the author, streaming Pandora consumes about 24MB an hour.

If you’ve got AT&T’s $15 200MB plan and you’ve maxed out your plan watching Hulu or YouTube, uploading pictures to your Facebook account, or sending emails with your latest Hipstamatic creation, listening to Pandora is going to cost you $1.80 an hour, a little less if you use their lower quality settings.

Smartphone radio listening during the daily commute could cost more than the Starbuck’s Iced Latte you picked up on the way.

When Pandora recently eliminated the 40 hour per month limit on free listening, many users cheered, but they must not have been 3G listeners. Now Pandora will allow you to spend up to $320 on their "free" plan.

If your boss won’t let you use the company WiFi to listen during the day (many companies are starting to ban Pandora in the office because it chokes networks), you could rack up $200 a month using your smartphone at work.

If you’re smart and sign up for the $45 4GB plan and watch no videos, upload no pictures, and otherwise minimize your data consumption, you’ll be able to listen to streamed radio up to 140 hours a month and not incur any data overage costs. That's not much more than four hours a day.

That’s more than the typical person listens to radio now, but who can resist the occasional YouTube or Hulu video? Who can resist the occasional download or email attachment?

If the smartphone does become the Swiss Army knife of information and entertainment, are people really going to spend their bytes on radio when they can get it for free?

AT&T provides a useful online tool to estimate how much data you are going to consume. Give it a try and see what you come up with.

The notion that soon we’ll all be watching Netflix movies, playing games, listening to the radio, and placing video calls from our smartphones assumes that data rates are going to go down, but the opposite is happening.

One by one, the carriers are eliminating unlimited plans. Most people are going to have to budget their data and watch their consumption.

The bottom line is that the belief that most listeners will switch from broadcast to streaming is a pipe dream. But AT&T, Verizon, and Sprint hope you’re right.

Did Radio Get Its Mojo Back?

2011-09-19T15:12:04-04:00

Last week’s RAB/NAB Radio Show could well be remembered as the moment that radio got it’s mojo back.

The mood at this year's convention was several notches above the apocalyptic doom of the last few years. Determination and steely resolve have replaced fear and anxiety of the recent past.

RAB President Jeff Haley's upbeat keynote address set the tone, and that tone echoed throughout the meetings that followed.

The previous fatalistic attitude regarding the threat of new-media was replaced with an upbeat assessment of broadcast’s ability to match and even better the digital initiatives of digital pure-plays.

Broadcasters seem to have found a mental sweet spot rejecting both a nostalgic hope that the happy days of the past will return, and the belief that radio’s digital evolution will be pain-free.

Discussions focused less on the threat of digital, and more on practical ways to exploit digital.

The zealous new-media true-believer panelists of previous conventions were replaced by more practical realists willing to acknowledge new-media’s challenges and limitations.

In past broadcast gatherings, any talk about radio’s ability to survive digital's onslaught was met with skepticism and derision. This Radio Show showed more balance, without either pollyannasim or chicken-littleism regarding broadcast radio’s future.

It was refreshing to see the industry emerge from the bunker. Looks like broadcast radio has its mojo back.