He doesn't mention Apple's iPod, iPod Touch, and iPad, but those devices also pose a challenge for traditional radio broadcasting. People can "…select music that suits their individual tastes and many have wider repositories of music in their own libraries" -- thanks to the iTunes and similar services -- than are offered on the playlists of radio broadcasters (Picard, p. 1).
Moreover, Satellite and Internet radio are offering "hundreds of choices of highly focused music formats," Picard continues, making radio "…a less relevant platform" for music and entertainment than it was previously (p. 1). Besides using Satellite radio -- and being willing to pay for a service that specializes in exactly the music genre listeners prefer -- users are downloading podcasts on a number of topics that interest them, Picard explains. The problems for radio resulting from these alternative audio choices are "compounded" in the United States due to the deregulation in the 1990s that ultimately led to the reduction of musical genres and other content on radio broadcasts, Picard continues.
On top of that, programming is much less local and "less relevant" because programming and content decisions are being made elsewhere, in many cases, by corporate ownership (Picard, p. 2). Among the biggest, most powerful corporate radio broadcast interests is Clear Channel, a corporation that owns an estimated 1,200 stations (including 140 stations in New Zealand and Australia) according to the Clear Channel Corporate Fact Sheet. The Clear Channel corporation brings in an estimated $6 billion annually and its broadcasts reach an estimated 238 million listeners a month, the company claims.
Picard asserts that radio advertising expenditures are down to about 10% -- from 13% in 2002 -- in the United States, and the price for radio stations on the market has seen "considerable weakening" in recent years (p. 2). Picard recommends that owners of radio stations need to "…start spending a good deal of time thinking about what is happening to their industry," and what they need to do to stay relevant and profitable; they will need to "reposition their functions" for both advertisers and audiences, Picard concludes (p. 2).
Prospects of Satellite Radio and Radio Online Streaming /
Transformation of Radio Broadcasting to the Digital Age
An article in Forbes (January, 2011) points out that while CBS Radio has 130 stations in the U.S., and those stations have been "profit drivers" for CBS, the company has lost market share in the last few years because it has sold off some of its stations in order to "focus its efforts on larger markets." CBS has lost market share (down from 11% in 2005 to 8% in 2009), but that's not its only problem, according to the Forbes' article. Pandora, an Internet radio service that is "pushing into the drive-time radio market," Forbes explains; hence it is challenging CBS and other traditional radio broadcasting interests. Pandora streams online and because millions of consumers now have smart phones (that pick up Internet signals), they can use Pandora instead of commercial radio stations. Moreover, Pandora allows the user to zero in on specific musical tastes and specific artists. For example, a jazz aficionado may establish a "Miles Davis Radio" channel on his or her Pandora link, and all the listener hears is Davis and other jazz artists in the same genre -- with no advertisements or drive-time hype to interfere with the music.
The Forbes article explains that Ford Motor Company will be launching new cars with "embedded software that will operate Pandora through voice controls" so that the driver doesn't have to look for a button to push or a knob to turn. Mercedes-Benz is currently promoting Pandora's radio service in its automobiles, as well. Obviously, digital formats are presenting a huge threat -- and a viable alternative -- to traditional broadcast radio in the U.S.
Blogger Rocco Pendola asserts that Pandora isn't the only challenge to traditional radio broadcasters. Pendola explains that "Clear Channel now plans its attack" based on the corporation's ability to promote digital radio to its already use audience (Pendola, 2011, p. 1). Only three percent of listeners, Pendola explains, have use of digital radio, but Clear Channel has seen the writing on the wall in radio, and hence it has innovated with its iHeart platform. The iHeart platform will allow listeners to "create playlists on your own musical tastes," as Pandora has done so successfully (Pendola, p. 1). The iHeart component of Clear Channel of course provides access to all of Clear Channel's offerings -- including far right wing conservative Rush Limbaugh's daily rantings along with Ryan Seacrest, Dr. Laura, and others -- not just music.
"Clear channel is finally doing what radio companies should have started doing years ago," Pendola continues (p. 2); "…they are innovating or at least following the innovators with aggression, as opposed to sitting back licking their wounds."
The iHeart application is designed to be used with smartphones, and Clear Channel is making sure that ample publicity will be used to promote its innovation. In September, 2011, Clear Channel sponsored a series of high-profile concerts at the MGM Grand in Las Vegas (with names like Lady Gaga, Alicia Keys, Coldplay, Kenny Chesney, Jennifer Lopez, Usher, Sting, Jay-Z among many others) in order to launch iHeart to the world, according to the Los Angeles Times Music Blog, Pop & Hiss.
Author Michael C. Keith writes that when digital technologies became available to the consumer, broadcasters viewed it (DAB, or HD) "as a threat" (Keith, 2009, p. 23). The executive vice president of the National Association of Broadcasters (NAB), John Abel, is quoted by Keith saying that "… DAB is a threat to anyone who plans to stay in business for awhile" in 1990. Of course that was an exaggeration of the issue, but the fact is that digital terrestrial radio means that those with analog receivers are out of date and out of luck. Still, digital converters are now offered at fairly low prices, and because digital radio can do several other things -- like transmitting data into smart phones -- it means profitability for station owners, Keith explains on page 23.
It's very simple, Keith explains: Americans demand the best quality sound available, and they are not going to get that sound on analog receivers, because analog receivers pick up interference and digital is generally considered to be "interference-free" (24). The advantages that come with digital broadcasting -- according to Jeff Tellis, former president of Integrated Broadcast Service (IBS) -- include the following: a) "significantly improved coverage" with less power needed; b) much-improved broadcast signal; c) "more precise coverage control" through the use of "multiple transmitters"; d) no channel interference with adjacent channels; e) booster capabilities to avoid using separate frequencies to beef up same signal; f) easy transmission of auxiliary services; and g) the sharing of transmitting facilities with a "common transmitter and antenna" (Keith, p. 24).
As for satellite radio, an article in PR Newswire references an Arbitron study of listeners, which reports that as of October and November, 2009, exactly two years ago, there were "…more than 35 million total adult listeners" tuning in to SIRIUS XM per week (PR Newswire, 2010). Not surprisingly, the study showed that listeners prefer satellite radio over "other audio options available to them," and that of the broadcast options available, listeners typically listen to SIRIUS XM 62% of the time, they listen to AM/FM radio 16% of the time, about 4% of the time they listen to streaming music on the Internet and 10% of the time they use smartphones and other mobile devices (PR Newswire, p. 1).
The Arbitron survey found that on a typical day SIRIUS XM listeners spend two hours and forty-five minutes in their automobiles; those listeners tune in to SIRIUS XM 71% of the time in their cars, and tune into AM/FM 17% of the time, and 5% of their time in the car they use smartphones or other mobile devices. The survey by Arbitron showed that 56% of SIRIUS XM listeners "graduated from college or have advanced degrees" while just 24% of AM/FM radio listeners and 25% of the "general population" have degrees from colleges or universities (PR Newswire).
Satellite radio subscribers are -- no surprise here -- more affluent than AM/FM radio listeners, according to PR Newswire. Twenty-four percent of SIRIUS XM subscribers have household incomes of $150,000 or more; just 9% of AM/FM listeners have incomes in that category and only 9% of the general public enjoys substantial incomes such as $150,000. An interesting side note to the Arbitron survey shows that when it comes to listeners changing channels during commercials, "SIRIUS XM listeners are 61% more likely to stay with a commercial on satellite radio than with those that air on AM/FM radio stations" (PR Newswire).
The PR Newswire story mentions a few of the high-visibility personalities and artists, whose presence and star-power clearly helps get consumers interested in signing on; they include Oprah Winfrey, Barbara Walters, Bob Dylan,…