Radio Life Alert

Help! Radio is falling and can’t catch up.

Radio Life Alert

AM/FM radio has never had more competition than it does today. Music streaming, connected cars, home speakers and smart phones are causing entire generations to tune out terrestrial radio in favor of digital alternatives.

Digital is here, and it’s here to stay. It’s time for terrestrial radio to embrace this reality and transition to digital in order to preserve—let alone save—radio as a viable medium of the future.

Consider the facts:

  • Streaming is rapidly displacing radio for music fans’ attention.
    • On-demand audio streams have reached more than 184 billion so far in 2017, a 62% increase over the same period in 2016. Source: Nielsen
    • The percentage of Americans 12 years of age or older who have listened to online radio continues to grow – rising from 53% in 2015 to 57% in 2016. That’s double the percentage of Americans who had done so in 2010 (27%). Source: Pew Research Center
    • Among 18-24-year-olds—the second-largest generation group in the U.S.—streaming is beating out radio as the top source of listening. Source: Nieman Lab
    • They Said It: “The rapid adoption of streaming platforms by consumers has generated engagement with music on a scale that we’ve never seen before.” – Dave Bakula, SVP Insights, Nielsen Music. Source: Nielsen
  • Smartphones, connected cars and smart speakers—not radio— currently represent music’s future.
    • The percentage of Americans that didn’t own a radio was 4% in 2008. Today it is more than 20 percent. Thirty-three percent of adults ages 18-34 don’t own a radio. Source: Edison Research
    • Smartphone ownership has grown from 10% of U.S. population in 2009 to 81% in 2017. Source: Edison Research
    • With 35 million smart speaker devices already in use, the market for the devices will hit sales of over 100 million units by 2024. Sources: eMarketer, Global Market Insights
    • Ninety percent of smart speaker owners said they purchased the device to listen to music, and 62% also said they purchased a smart speaker to hear better music than what is played on AM/FM radio. Source: Edison Research
  • Streaming and the digital dashboard threaten radio’s last stronghold: the car.
    • More than 1/3 of U.S. adult cell phone owners (37%) have listened to streaming audio in their car, 6 times the number that did so in 2010. Source: Pew Research Center
    • Most auto manufacturers already offer Wi-Fi integration. By 2020, 75% of new cars will be connected, bringing the total to a quarter billion connected vehicles on the road. Sources: Jacobs Media Strategies, Gartner
    • They Said It: “To ignore dashboard technology or to hope that consumers will simply love your content so much they’ll work harder to find it when they’re using Apple CarPlay or Android Auto is naïve. If you take the time to drive a vehicle with one of these systems (and I strongly recommend you do), you’ll quickly learn that radio simply becomes harder to access when you simply can’t see it on the touchscreen.” – Fred Jacobs, “You’d Better Worry About Connected Cars,” August 29, 2016. Source: Jacobs Media Strategies
  • Advertising during radio broadcast—radio’s main revenue source—is on the decline.
    • AM/FM’s revenue from “spot” advertising, its main revenue source, declined 3% in 2015. Source: Pew Research Center
    • Revenue from digital and off-air advertising both posted gains, however digital and off-air went up only about 18% of total advertising dollars in 2015. Source: Pew Research Center
    • Radio has fallen out of the top five in media spending, replaced by mobile. Source: BIA/Kelsey
    • The radio industry no longer even publishes advertising revenue numbers. Source: Radio World

“There aren’t a lot of good examples of media in secular decline suddenly growing again.” – Brian Wieser, Pivotal Research Source: Hollywood Reporter

If you’d like to know more about radio’s challenges and need to make the transition to digital, check out this white paper from Larry Miller at Musonomics

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