SNL Kagan Touts 'The Future Of Online Radio Revenue'

Findings From Webinar

SNL KAGAN hosted a webinar YESTERDAY (7/21) to discuss "The Future of Online Radio Revenue." The panel included SNL KAGAN Sr. Analyst JUSTIN NIELSON (moderator), SL KAGAN Associate Dir. ROBIN FLYNN (co-moderator), CBS RADIO VP/National Digital Sales ADAM GOLDMAN, PANDORA Dir./Audio Sales LES HOLLANDER and KATZ 360 SALES VP/Manager TOM PERRY.

Digital & The Internet: Emerging Trends

* Internet/Streaming: Digital ad revenues (including Internet, mobile and interactive) are growing quickly, but still small percentage of total radio revenues. Streaming and mobile applications, however, are considered essential for radio broadcasters' future growth.

* Internet Radio: PANDORA and other Internet radio providers are breaking new ground -- profitability without heavy capital structure model -- despite streaming music fees.

* Streaming Royalties: SOUNDEXCHANGE's new streaming radio royalty agreement was big news in JULY 2009. The per-performance fee for larger pure-play webcasters is 0.097 cents per streamed song in 2010 and climbs to 0.14 cents per song in 2015.

* Mobile Technologies: Radio operators are still trying to get these business models off the ground. iPODS and smartphones with unlimited music choices threaten radio's listener base, but mobileis  seen as one of radio’s greatest digital opportunities for generating non-traditional revenue.

* HD Radio: HD-ready stations are growing. although revenue opportunities are disappointing.

The panel sees radio’s digital revenue to double -- from $552 million this year to $1 billion in 2015. That would make it account for 5.3% of radio's total revenue, up from 3.2% this year.

Mobile Media Has A Strong Future

* According to COMSCORE, 49.1 million people in the U.S.-owned smartphones during the three months ending in MAY 2010, up 8.1% from the corresponding FEBRUARY period.

* Mobile content usage was up as well in the same period, with 65.2% who had sent a text message, 31.9% who had used the browser, 30% who had downloaded apps, 22.5% who play games, 20.8% who accessed a social networking site, and 14.3% whohad played music on their phone (up from 13.1% in FEBRUARY).

* Half of PANDORA and SLACKER's registered users are now streaming radio content from their phones.

Smartphone owners are projected to reach 221 million by 2015.

What are some major trends according to the panel?

#1: Improved Targetability. "The more intel we have about our consumer," said CBS RADIO VP/National Digital Sales ADAM GOLDMAN, "the better we can get. But the more you drill down, the smaller the audience gets."

#2: Internet radio is becoming more of a "lean-in" experience. PANDORA has what they call, a "guaranteed view" ad policy. It makes sure display ads show during "lean-in moments," which is when users are actually looking at the screen.

#3: Breaking Down Ad Agency Silos. KATZ says there's a "big education process" needed, as close to 90% of digital radio dollars are placed by agency audio departments.

« see more Net News