February 17, 2015
Research seems to be a convenient scapegoat for those who complain about what radio is playing and those who complain about what radio isn't playing. Yet when it comes down to it, the research isn't really the problem; the parties who use it can be ... if they don't use - or interpret -- that research correctly. No one knows that better than Larry Rosin, who founded Edison Research 20 years ago, and who continues to examine the medium. Here, he offers his insight into what it takes to research what is essentially an art form.
Congrats on being in business for 20 years. Did you expect Edison Research to be as successful as it has been for this long?
I certainly hoped so. I started this with that goal in mind, but as I've told anybody, it has gone far beyond my wildest expectations. Maybe being in business for over 20 years is not so surprising, but how much fun it is has been, has been a surprise. And taking the company in different areas and expanding into the size we have grown into is perhaps the biggest surprise of all.
How has Edison Research changed from day one to today?
From day one, my goal has been to build a diversified market research company involved in many different areas. Using my background in radio, I started it solely as a radio research company. Naturally, my love of this medium has prompted me to always work in radio, but my goals included lots of other things as well. I'm proud to say that not only have we achieved a lot of interesting things in radio, we've done things that have gone well beyond that.
In your view, how has consolidation impacted the radio industry - and are you surprised at how it played out?
I'm not sure I remember all my thought processes in terms of how I thought things would play themselves out, and even now I'm not sure the legislation itself was the problem ... and I'm certainly not sure that consolidation is, in itself, a bad thing. The bad thing or the problem ... I blame Wall Street, where there's a heckuva lot more investors than radio people who don't understand the challenges we have, yet they convinced themselves and others that consolidation itself leads to growth.
Remember, in the early days people thought consolidated companies would have the resources to engage in approaches and explore different formats -- and everything from that perspective didn't come true. Why? Because Wall Street is about hitting targets each quarter and cutting as much fat as you can. In that light, of course Wall Street doesn't have radio employees or listeners in mind. It's not their job to do that; it's only their job to make their investors money, so it's not surprising at how things turned out.
Isn't another lesson from the consolidation/buyout craze is not to take on a lot of debt?
I don't follow the finance part. I have no idea about taking on debt or where radio sits in general vis-Ã -vis debt. I don't own radio stocks and I don't care about much about it. But even if I buy that argument, I think radio is doing better than you'd expect. Given all the options people have for using media today, it's not too strong to say that radio has been surprisingly resilient. Some people would even be in shock with the realization that radio's cume level has remained so high. Granted, TSL has been dipping but it hasn't gone off a cliff. Radio has a very positive story to tell, but you also have to acknowledge it can do a better job.
How does radio best compete against all the other offerings?
There are many options available from free radio to services that are paid for. Some people are attracted to certain options and some people prefer benefits or features in other options. It's just the nature of things. Radio kind of had a monopoly in being the main audio medium in people's lives. That's no longer the case, of course, but in general, radio has held up pretty well.
I'm always pushing for the radio people to define the category broadly. If I were king of the world, I'd allow Pandora to join the RAB, so the RAB could put out a press release about there being more money in audio space, and that we're growing even more.
Should SiriusXM be part of the RAB, too?
Yes, because they too are selling ads. It's not all subscriber revenue.
When it comes to research, are you ever concerned that it's being misused? Or that there's just too much of it?
There's certainly not too much of it - and I'm not saying this in a smart-alecky way, but in fact radio clearly does less research today than it once did. It's not the amount of research that's the problem.
My dad got involved in computers in the very early days ... and it was very common many years ago to say the computer made a mistake, blaming a "computer error" when, of course, the real problem was programmer error. It's the same thing with research. It's very easy to blame research, but not all research is equal. Anyone who says the problem with radio is research is probably doing the wrong research, or doing the research wrong.
What makes Edison Research different or unique?
To us, it's fun to research in an artistic area -- and radio is an art where you can't answer every question. The human element can't be entirely stripped away. The key is working with people who understand research as a tool and use it wisely.
How has the current digital revolution impacted your research and radio in general?
There's no one part of the digital revolution. There's online audio, which also lets radio interact with its listeners in such exciting, new ways, be it through social media or e-mail databases.
When it comes to radio optimizing digital, the tendency is that it's not a discussion at the station level. The real discussion happens in corporate suites. In many ways, radio is at a disadvantage for this because of the nature of our industry. It's far more regulated. Even after '96, there's only so much power any one entity can amass. Today, as big as iHeartRadio is, it's only a fraction of the total industry. There is only so much that people can work together legally.
Looking in hindsight, some of challenges radio now faces in digital are somewhat explainable, even justifiable, but I believe the biggest issue now is what I mentioned earlier - that Wall Street is more interested in how public companies perform quarter to quarter, and not plan for two, five or 10 years from now. It's hard to blame CEOs who have to focus on making their business more profitable today. Investors don't have the patience to evaluate long-range decisions.
This also all comes back to the classic business tale when railroads, during their heyday, didn't understand the potential of transportation and didn't invest in newer modes of transportation, such as trucking companies. Radio companies didn't fully appreciate the potential breadth of the digital audio business. Many groups had the chance invest in online properties early on, but passed on them. Now I assume they wish they had gone through with some of that. You'd have to talk to the leaders of those groups about their thinking when they had those opportunities. Even on a digital platform, I think the consumers' first expectation would be to check out radio's offerings. Since they used to rely on it, radio would be the first place they'd go to in online environment as well. Or maybe it was very hard for radio people to provide that kind of innovation.
Recently, there was a kerfuffle between you and iHeartMedia when you asked why there seemed to be a lack of audience growth in iHeartRadio - which they publicly disputed. What do you make of it now?
I just threw that question out there to create some discussion on why that is. I very purposely didn't say why it is. I just wanted some input in the discussion; I didn't want to hypothesize reasons. Reasons are tough; this was an interesting factoid and I asked what's up with that. I listen to a lot of radio, including iHeart stations in the New York metro area, and when I go traveling, they're talking about it all the time. They even changed the name of the company to iHeart; the company is now the same as the name of the app. I found it fascinating that since May 2013, its audience had peaked and it has yet to exceed that level. I simply asked the industry why that it is.
And just to be clear, the data I used came from Triton, which is widely believed to have accurate data. I was surprised at how touchy iHeart was about what I brought up.
Allow me to play devil's advocate here: Maybe iHeart's audience has plateaued because listening online or via mobile is a second choice for many who normally listen in their cars. Nowhere near as many people can listen to Pandora in their cars; they have to listen online, hence their continued growth.
You can throw out that theory. I'm sure there are others as well. The point is, according to Triton, you can't deny that listening has leveled off.
Another data point that some studies have shown is that the teens are listening to music on digital platforms more often than terrestrial radio. How should radio respond to that?
There are very few radio stations in the U.S. whose main or direct target is teenagers, that specifically do research among teens and who sell teens. There are probably some stations that do that, but they're certainly few and far between. That's not to say radio stations don't do well with teens. Many Top 40s do really, really well with teens, even though they don't target them.
On one level, it shouldn't be overly surprising that teens have a natural interest in all things digital since they were introduced to it at a younger age than most adults. Combining that with having virtually no radio stations targeting them directly, they exhibit these different listening habits.
In years past, the common assumption would be that teens would "grow into" radio listening. Now, considering all these high-tech alternatives, can radio afford to assume that will continue to happen?
That's a huge question; I can't predict or answer that. It's still fully plausible that as today's teens get older, go through high school years and college, they will grow into radio as they get their first jobs and perhaps drive or commute to work. That's plausible, but of course it's equally possible that they won't as Wi-Fi and digital become commonplace in cars. So that's a burden on radio, to make sure they - and I assume and hope they will -- do everything they can to attract teens.
Bear in mind, most kids today are buying used cars that probably won't have the more up-to-date gadgets and gizmos. Even if those cars are equipped, radio presumably will always be there and available, so at worst radio starts on an equal footing with the other options. They have to be prepared to compete; it's just matter providing compelling programming.
But are they?
It's easy for them to say they are, but I certainly wish there was a lot more experimentation formatically. There are some really cool things being done and being tried out there; I just wish there was even more of it -- but that's easy for me to say. I'm fully aware what kind of pressure sits on the shoulders local market managers around the country, who believe that taking one step back in order to possibly take two steps forward is a risk not worth taking. Yet there are still a few truly experimental ideas bring tried ... some really cool things that seem to be working and unfortunately, aren't getting enough credit, frankly, for the progress they're making
Which formats do you consider to be experiments?
The experiments are not much about the musical mixes; I'm referring to experiments such as offering a "two-minute guarantee." The End in Seattle is running spotsets no longer than two minutes at a time. That's really meeting the world of online radio head on. Of course, the challenge is to generate the same amount revenue from far fewer spots, but that Seattle station seems to be doing it, which is encouraging other stations to try similar things. Achieving revenue goals with fewer spots makes radio far more competitive with online competitors today. It's a great experiment in creativity, to generate revenue without running 14-16 minutes of spots an hour.
Finally, what do you see for the future of Edison Research and radio in general?
I often remark that I'm more of a "presentist" than a "futurist." I avoid predictions. I'd much rather look at the success rate of what's happening now and take action than do something based on what's predicted for the future. Good research documents the present, not predict the future.
Regarding my feelings for the future of radio, I think it depends on the definition of optimistic. In many ways, I'm very optimistic on the future of broadcast radio and that it will always be an important of media mix, but of course we live in time where the consumer has so many more options. The only correct prediction to make is that things will continue to change. Radio will continue to succeed if they use the research that documents those changes and take positive actions.