NYU Prof Offers Report On Radio's 'Dire' Digital Problem; NAB Begs To Differ

Report

Music industry pundit and MUSINOMICS blogger LARRY MILLER has issued a report warning of tough times ahead for terrestrial radio. MILLER, head of the STEINHARDT MUSIC BUSINESS PROGRAM at NEW YORK UNIVERSITY, released the 30-page "PARADIGM SHIFT: WHY RADIO MUST ADAPT TO THE RISE OF DIGITAL" TODAY (8/30). The report was backed by SOUNDEXCHANGE.

In the report, MILLER says that streaming music services like APPLE MUSIC, SPOTIFY, and PANDORA are "causing traditional radio listeners, particularly younger ones (12-24 years old), to flee terrestrial radio on a massive scale," leading to a "dire situation for radio where the format's long-held monopoly as the only audio choice behind the wheel is overthrown by new technology." The report marshals information from several other studies, including citations of online articles reporting on EDISON RESEARCH's "Share of Ear" report and Infinite Dial study and MUSIC WATCH's Music Monitor survey, and also cites reports on the "connected car" and percentage drops in terrestrial radio revenue and percentage gains by digital/mobile as evidence for his conclusion.

"Terrestrial radio is facing monumental challenges as streaming continues on its path to becoming the go-to place for current and future generations to enjoy and discover music," said MILLER. "The emergence of new platforms and the corresponding behaviors of Gen Z listeners have reduced radio's relevance to a very important and growing demographic. Advertisers are challenging radio's audience targeting and measurement methods as they seek ways of connecting directly with consumers via mobile telephones and other platforms. Radio is at a crossroads as an industry."

Read the report by clicking here.

NAB Response: Not So Fast, Professor

Meanwhile, the NAB responded with a release in which EVP DENNIS WHARTON offered what the NAB called "point-by-point nuggets that refute the claims made in the STEINHART report."

WHARTON said, “Since its inception, critics of broadcast radio have mistakenly forecast its demise. This silly STEINHART report – backed by SOUNDEXCHANGE (a group bankrolled in part by giant record labels pushing a radio ‘performance tax’) – continues that tradition. Contrary to the report’s conclusions, millennials are NOT abandoning local radio. According to NIELSEN, millennials are listening in greater numbers than ever before, not just to over-the-air programming, but also to local radio on digital platforms. Every week, 265 million Americans tune into hometown radio stations for their favorite songs, to discover new artists, and to hear legacy artists whose careers have been sustained by local radio airplay.

“Most importantly, radio’s unique role as a local medium allows stations to provide listeners with relevant news, community programming and lifeline emergency weather information – day in and day out. Radio stations are committed to providing consumers with our unique service wherever they are, whether online, on mobile devices, on smart speakers or in the connected car. Make no mistake – local radio will be powerful entertainment medium for decades to come.”

To the claim that Generation Z is "showing little interest in traditional media, including radio, having grown up in an on-demand digital environment," the NAB offers information from a report by iHEARTRADIO showing the opposite; to a claim that "AM/FM radio is in the midst of a massive drop off as a music discovery tool by younger generations," the NAB points to a NIELSEN study from 2015 showing that 59% of millennials picked AM/FM and satellite radio as their preferred choice for discovering new music, and that AM/FM radio reaches 87.9% of those 12-17 weekly, who spend nearly 10 hours a week with local radio; and to the claim that by 2020, 75% of new cars are expected to be "connected" and therefore breaking radio's monopoly on the car dashboard, the NAB contends that "broadcasters understand that the connected car, and self-driving cars, will offer challenges and opportunities for radio stations to retain our supremacy on the in-car dashboard" and notes that the dropping of AM radio from some electric cars drew a consumer backlash.

To the claim that radio advertising revenue dropped 4% year-to-year while digital/mobile spend was up 11%, the NAB responded that "radio revenues are cyclical and vary widely market-by-market... radio actually offers advertisers the highest return on investment out of any media platform. Factor in the controversy surrounding the waste, fraud and abuse in the online digital advertising space, radio has a unique opportunity in front of it. You now have execs at major advertisers expressing concern with fraudulent airplay, ads ending up on questionable websites, and consumers paying no attention to online ads. Advertisers will find none of that on broadcast radio." And to the claim that broadcast radio not paying a sound recording performance royalty to artists and rights owners represents a stalling out of innovation, the NAB points to the Local Radio Freedom Act's backing by 206 members of Congress and 23 Senators to date, and responds to the idea that radio's importance to the music industry is "rapidly diminishing" by retorting, "Apparently, no one told the record labels this. Radio continues to play an important role for the music industry in helping new artists get discovered and established artists remain in the limelight. Countless artists and record label executives have praised local broadcast radio for its role in exposing the public to new music, driving album and merchandise sales, and filling concert venues."

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