Marketing of a radio station's stream vs its OTA signal

I constantly read about all of the problems AM (and some FM) stations are facing with dwindling listeners, lack of younger listeners tuning in, formats that attract too much of the +55 demo, etc. etc. I think we've all heard the stories. Since radio station streaming listenership is dramatically growing every minute (I will post a link if I need to), would it start making more sense to begin marketing a radio station's stream, more than their OTA signal (not that many radio stations market their OTA signal right now to begin with)? I have yet to hear of anyone using this philosophy, but I'm thinking that the idea of doing this, might not be too far off.

They already are! That's the point of IHeartRadio, Rdio, Radio.com, and all the other streaming sites owned by radio companies.

The catch in all this is: 1) Streams are subject to the digital music royalty, which can be extremely costly. Consider that Pandora pays over half its revenue in music royalty. And 2) Ad rates for streaming is about 1/10th the price of broadcasting. So it costs more to stream, and the revenue is much less. Other than that, it's great.

Here's the link I was referring to:

The Infinite Dial 2015 - Edison Research

http://www.edisonresearch.com/the-infinite-dial-2015/

I may not have been clear in trying to make my point. If an AM station is craving listeners, would it make more sense to change the format to one which would appeal to a younger demo, while giving the station's stream top priority (and marketing the stream), and almost ignoring (when marketing, or even imaging) the OTA signal?

frankberry said:

Please do provide a link which reports that "radio station streaming listenership is dramatically growing every minute."
As I understand the facts, streaming for most stations does not bring in revenue. Streaming actually costs more than their streaming Ads can generate.
As more and more people listen to the streams, the streaming costs go up.
That is why a number of stations limit (listener via streaming) connections to the station's coverage area.

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Alternatively, when I listen to out of area CBS stations, I hear local spots (sometimes hyper-local spots). A number of stations may be streaming and limiting access but they are still thinking mid-20th Century.

Brian Bowers said:

I may not have been clear in trying to make my point. If an AM station is craving listeners, would it make more sense to change the format to one which would appeal to a younger demo, while giving the station's stream top priority (and marketing the stream), and almost ignoring (when marketing, or even imaging) the OTA signal?

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What your survey doesn't show is that it's not strictly a one-or-the-other thing. A percentage of people use online, but not as traditional radio. They're using online as a replacement for buying albums, cassettes, and CDs. Meanwhile twice as many people listen to broadcast radio, quite often in addition to online. And they listen to it in places where they can't use online services, or where broadcast is more efficient (inexpensive).

The other thing your study points out is while large numbers of people may be using online as a platform, they aren't drawn to any specific station in large numbers. Pandora isn't a station, but a platform that has millions of stations. How do you market that to anyone? That's not comparable to the station model. Online is one-to-one, while broadcast is one-to-many. Easier to sell to advertisers.

So a station that operates strictly as an online station has no way to drive listeners to that particular station. Just because they're in the neighborhood doesn't mean they'll actually shop at your store.

"Alternatively, when I listen to out of area CBS stations, I hear local spots (sometimes hyper-local spots). A number of stations may be streaming and limiting access but they are still thinking mid-20th Century. "

They are reducing the streaming costs. Many stations lose money on their streams. Apparently, you don't understand that nobody has figured out HOW to make money on the radio station streams.

One example I'll give is a college sold it's broadcast FM station, claiming its students no longer listened to broadcasting. They instead set up an online radio station, expecting listenership to stay about the same. They went from a station that had thousands of listeners to less than a hundred. Broadcasting is still more efficient in reaching large numbers of people, if that's your goal.

So while the survey says 100 million people listen to some form of online radio, they're listening to millions of individual stations. Meanwhile the 249 million who listen to broadcast radio only listen to about 8,000 stations. The percentages are different.

landtuna said:

Are we talking about USA listeners or world wide?

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Clink on the link. It says:

"This new national survey from Edison Research and Triton Digital found that 53 percent of Americans age 12 and older listen to online radio monthly and 44 percent, or 119 million people, listen on a weekly basis."

So it's USA listeners. It says "online radio," not "foreign streams."

frankberry said:

"Alternatively, when I listen to out of area CBS stations, I hear local spots (sometimes hyper-local spots). A number of stations may be streaming and limiting access but they are still thinking mid-20th Century. "

They are reducing the streaming costs. Many stations lose money on their streams. Apparently, you don't understand that nobody has figured out HOW to make money on the radio station streams.

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Streaming by individual stations is a tough row. Mass streaming by large assortments of stations - with ad sales for the assortment and targeted advertising to the individual listener - regardless of the channel/station/stream they select at the moment - is another matter.

Just looking at the Edison Research though, radio on-line listening is quickly increasing. Where will that number be 5 years from now? I guess my initial post really dealt with a barely surviving typical 250 watt non-DA AM station, or any AM station that is barely hanging on. As a last ditch effort for that AM, you wouldn't give priority to the stream over the OTA signal huh? Truthfully, I'm not sure I would either, but I think I would give it some serious thought, if I were the one making the decision, if looking for a new format. I don't know all of the fees and regulations that go into streaming, so without that knowledge, I'm not sure I could make a rational decision. I bring this up, because there a few FM translators in my area, that are simulcasting the AM signal. Immediately when they went to air, the imaging completely changed. No longer was there any mention of the station's AM frequency (except for Legal ID's), when it came to imaging. It was all about the FM, and the imaging and positioners now reflected that. I do understand a lot of the logic that is mentioned here - radio still appeals to a large mass audience, but if you have a small low power AM station, what's wrong with imaging the station with the stream as the main focus - actually pushing the listener to listen via the higher audio quality stream (hopefully you are providing that), instead of the OTA signal? For example, all imaging and positioners would specify something like AM1250.com, where rock lives? Or something like that. I was wondering if music could once again be a viable format on AM, looking at it with a high quality audio stream. Just kind of thinking out loud here.

Brian Bowers said:

I was wondering if music could once again be a viable format on AM, looking at it with a high quality audio stream. Just kind of thinking out loud here.

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If it's all about the stream, why spend the money on transmitters and towers? Plus the money on the lawyers and engineers. Run it as a stream from your spare bedroom.

landtuna said:

That is the folly of statistics. You have to measure quality, not occurrences.

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From another point of view, the songwriters get paid for a spin whether you listen or not. So their income isn't measured in quality. That's a hard cost. Same with Muzak or the background music in stores or restaurants. The copyright holders are getting paid by the radio station for every spin.

Some interesting observations and good thoughts.

AM, as we will mostly agree, is the band with the fewest percentage of listeners. I cannot say it is programming choices that keep listenership so low but rather the interference from so many devices and things that prevent a clean signal. Nothing beats a more distant AM as you listen along a highway with power lines. At any rate, AM is hurting and the FM translator has really proven in many cases to be more valuable than the AM signal itself.

That leads us to the online stream. I think we agree an online presence is a requirement and streaming your signal is not far behind in priority. Granted it is a losing proposition to stream your signal unless you have a very well kept secret for monetizing it.

The stream alone is even worse than AM. We have yet to figure out a way to promote internet only radio and actually reach the people we want. Sure there might be ways but I suspect those options are beyond the financial abilities of the online streamer.

The best bet is a radio station, even an AM, to act as a venue to market the online stream. The point is a radio station reaches so many of the right people, it is a great tool to build awareness for the online stream. My point is, radio will get you so much farther down the line toward drawing a decent online audience that it becomes an invaluable marketing tool that keeps you top of mind. And this goes without saying: that stream needs to be what you are not broadcasting because if they can get it on the radio just fine, why use minutes/data or hassle with going online when they're already listening via radio without a bill coming in the mail for listening.

There are so many streaming stations and no centralized database. The number of streams is such that very few can win and those that do have the resources to do so.

On a smaller scale, a friend working at a cable TV company in a small town was talking to me about how 'nobody sees' the local ads. They are placed on a few of the cable networks and on two community channels. In his town of about 500, about 2/3rds of the homes subscribe to cable TV. That is about 135 homes. The cable system offers 195 channels although not all subscribers get all of these.

They sell ads on some of the cable networks and have the two community channels. To advertise on the community channels it is $7 a week or $25 a month. Wow is that cheap I thought. After all the spot plays about every 15 minutes around the clock. My cable TV friend tells me to do the math: 135 homes, 195 choices or almost 1.5 choices per home reached. How many actually see that message channel.

Now multiple by 100 or is that 1,000 or more. There is no channel guide that really lists it all. Now, find that station. Who really knows the number of stations there are streaming.

Maybe this is why internet radio while touting exceptional numbers is in reality miserable numbers for the station streaming. A college station I know with 12,000 students, only gets 1,000 hits a month. That is not listens. That is not exclusive visitors but ALL visitors. Sadly the station promotes like crazy at the college. So, even when done right, it is very difficult to get listeners..

landtuna said:

For example, saying "300 million people listen to the radio each week" means very little unless you also know whether they are in your target demo, whether they listen for 10 minutes or an hour (and hear your ad), whether it is background or intentional listening etc. The night watchman might have his radio on his whole shift five nights per week but is he worth bragging about? That's all I'm saying.

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I don't disagree...that's why there are many other ways to count audience. If Nielsen doesn't do it, there are lots of other research companies that do.

But for this discussion, the OP used a very general statistic of 106 million people who listen to streaming radio. That sounds like a lot, but if those 106 million people are listening to a million different streams, than it's only 100 people per stream. And then when you take that number apart, you examine demographics, and foreground vs. background listening, and it's not as impressive as the original number indicates, nor is it much of an improvement over what the 250 watt AM station is getting from its broadcast signal.

TheBigA said:

If it's all about the stream, why spend the money on transmitters and towers? Plus the money on the lawyers and engineers. Run it as a stream from your spare bedroom.

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Online radio stations have to pay per subscriber. I was under the impression that actual radio stations didn't have to, for their online stream.