Pandora Digital Audio Summit

November 13, 2014

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I had the privilege of being asked by Pandora to be a guest panelist at their Digital Audio Summit last week in Cambridge. The event was well attended, despite the rain, the guests included a range of direct advertisers, as well as media/advertising professionals. The agenda was threefold: an update on Pandora, review of Edison Research’s brand new Share of Ear study and a panel discussion.

Some good information was shared around Pandora and the shift in listening:

• 19% and 26% of all internet listening against P12+ and A18-34 is new time to audio listening, this continues the trend of fragmentation yet increased overall media exposure.1

• As a Boston specific example: Pandora has significant reach to 862K average monthly un-duplicated listeners, which equates to a 41% reach in the market and over 11MM weekly listening hours, according to Pandora internal metrics released Sept 2014.

The Edison Research study Share of Ear surveyed a national sample of nearly 2,100 persons 13+ that each recorded all of their listening for a given 24 hour period. The goal of the study was to understand the full audio eco-system and how people are engaging across all platforms. Here are some highlights:

• All audio TSL (Time Spent Listening), here’s how it breaks out:
o 52% AM/FM Radio
o 20% Owned Music (individual music collection iPod, etc)
o 12% Streaming Audio
o 8% SiriusXM
o 8% other

• Share of radio only
o 75% AM/FM Radio
o 11% SiriusXM
o 9% Pandora
o 4% other internet radio

Without going into full detail, here are a few key points that I found particularly interesting:

• AM/FM while experiencing some declines continues to be over 50% of total audio listening

• AM/FM is 75% of listening within terrestrial, satellite, and internet radio. What I find more interesting is that looking at the younger cells, AM/FM is 64% of teen listening (P13-17) and 73% of A18-34. There has been much discussion and debate that youngest demos are abandoning terrestrial radio, and while it’s lower because they’ve grown up with different kids of sources, they continue to engage with traditional radio two-thirds to almost 75% of the time. That’s pretty good news for broadcasters.

• Internet radio and specifically Pandora, has a lot to be happy about claiming 18%-35% of audio listening and Pandora within that owns 60-75% of internet listening.

As a panel we discussed how we’ve evolved with our clients as Pandora has evolved as a platform. Jokingly, I said that when I started working with Pandora it was 90% desktop and 10% mobile (it was before iPhones) and now it’s the complete converse. Of course, as listeners habits evolve with technology, it’s our responsibility while crafting media strategies that we account for those shifts and include Pandora and others in the mix to be representative of that shift. We also discussed the forward-thinking over the past few years of Pandora playing across channels (digital, streaming audio, local radio, video, custom solutions and SMB audience segmentation). They’ve been quite adept at thinking about all of the opportunities and evolving their model to address.

Seth Godin recently blogged on November 11th, “that, just as newspapers fell of a cliff, radio is about to follow.” While I appreciate his bold statement, the current data doesn’t support his position. Sure, there have been declines in radio, as there have been across all traditional channels, but it doesn’t mean TV is dead either. What is overlooked in his commentary is that the radio model and the newspaper model are entirely different, and more importantly, what the listener wants from radio is to be entertained, often by local talent not always homogenized content. It’s not always about their own music, podcasts or their own playlists. There seems to be thinking that one medium must fail for another to succeed, while in fact they’re just at different life cycles for their respective products and models. There is no reason why Pandora, podcasts, satellite, Spotify and terrestrial radio all can’t survive as different consumer options, albeit with smaller individual pieces of the pie. We all are deciding everyday what kind of audio content we want and how we want to receive it.

I do strongly believe that a real game-changer in the audio space has yet to occur in a meaningful way and the first step in the that direction is Apple’s CarPlay. The car and commutes are the life-blood of radio and audio in general. Until we have a real technology shift that makes it really easy to access content behind the wheel that doesn’t crush your data plan and cost a small fortune, I don’t believe the landscape while dramatically shift from where it is now. We all know getting change to happen in the automotive world can take a decade or more. How many cars on the road today have Pandora as OEM? Think about how long it took to get SiriusXM in cars and how many still don’t have them, or what about HD Radio. Any seismic shift in consumer’s consumption of audio will follow the seismic shift in automotive…whenever that is.

– Greg

  1. Edison Research, The New Mainstream, Sept 2013