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CMU says: Radio needs to regroup to fight new on-demand streaming competitors
By Chris Cooke | Published on Monday 30 November 2009
While the record industry held off licensing uber-user-friendly on-demand music services like Spotify for years, fearing the impact they might have on record sales (both traditional CD sales and the emerging a-la-carte download market led by iTunes), a number of commentators have remarked that the phenomenal rise of properly on-demand and fully playlistable streaming music services in 2009 is actually a much bigger threat to the already struggling radio industry.
I was reminded of this on Saturday as I quickly switched off 6Music as Liz Kershaw came on after Adam & Joe. Even though I quite rate the playlist of the BBC digital station, without Adam Buxton and Joe Cornish’s humorous banterings, frankly, what’s the point? If all a DJ is going to do is introduce the records and read out dedications, I’d rather play my own playlist on Spotify or similar.
Anyway, I’m pondering this today because new research from law firm Olswang has confirmed that young consumers are shunning traditional radio stations in favour of Pandora and Spotify style services, or, simply, their own MP3 collections which are, of course, much easier to playlist than a CD collection.
According to the law firm’s survey, 61% of thirteen to seventeen year olds access online streaming services, compared to 38% of those over seventeen. Just under half of the kids would listen to their own playlisted music collection on a long car journey, while just over a quarter would listen to the radio.
One of the report’s authors, John Enser, comments: “Across all media, convergence is primarily about people taking control over what content they consume and when. That doesn’t sit well with traditional radio, where the broadcaster sets the agenda. Today’s kids are reacting to that”.
He continues: “Traditional broadcasters must look to turn themselves into trusted guides to music in the new world. When users are faced with the choice of what to listen to from a catalogue of millions of tracks, broadcasters can hold onto a taste-making role. We are already seeing radio stations, music magazines and other taste-makers offering their own playlists for others to access. However, at the moment, none of these people are making any money out of this – which will be the challenge for the future”.
Of course the commercial radio sector has been even slower than the music industry to respond to the internet, perhaps because the consequences of the net on their low-cost high-profit 1990s business model were not so immediate. The problem facing the sector, though, is that most commercial stations have fired anyone with taste-making musical knowledge, or interesting things to say, and replaced them with bargain basement button pressers.
But to succeed that low-cost model relied on all commercial radio players doing the same – which they did – and a highly-regulated FM network, access to which, for new broadcasters, was very limited, blocking newer more sprightly competitors from coming to market. But just like with music, the net changes everything. And now the commercial radio firms are suffering, and are set to suffer even more in the coming years as more and more people seeking “more music” services opt for on-demand web-based music systems, more so if the mobile internet extends and in-car web-radio becomes a reality.
But, as Enser says, there is still an appetite for taste-makers directing people to good new music. And there’s also still an appetite for intelligent witty banter. The good news is that some of the commercial radio industry’s button pressers have the potential to be both these things. And some commercial stations are still broadcasting engaging new music shows, albeit usually in late night slots. The idiots running the sector really should figure out who those people are, or they’ll find it increasingly hard to compete with the Spotifys of this world.
The music industry has a vested interest in all of this, of course. I suspect that record companies and music publishers will find that it’s not a-la-carte download sales that are seriously hit by the new generation of on-demand streaming services, but their radio royalty revenues.
