Triton released its March 2016 Webcast Metrics Top 20 Ranker which showed a continued rise in Internet radio listening. This also represented the first month that Triton proactively broke out Average Active Session (AAS) growth rates for pure play and broadcast Internet radio and streaming services. While both showed strong year-over-year growth, broadcast showed a small decline since the beginning of 2016.
Should this decline concern terrestrial broadcasters? Yes and no. We have seen the rapid rise of Internet radio over the past decade and while the phenomenon has yielded net new listening, it is increasingly displacing traditional broadcast radio listening time by consumers. A XAPPmedia analysis in 2015 revealed that listening time on Internet radio not only represented all of the gain for the industry, but that broadcast listening time had declined. eMarketer data show that daily broadcast radio consumption fell 7.4% between 2011 and 2015 (see full analysis here: 4 Charts Show Radio’s Future is on Mobile).
The XAPPmedia analysis of Triton’s 2015 full year numbers showed that broadcasters were starting to make up a little ground on pure plays. The data revealed broadcaster share of Internet radio listening hours climbing from 13% in 2014 to 14% in 2015. Now three months into 2016, that trend has continued despite the relative drop in Average Active Sessions (AAS). Triton numbers show that pure plays commanded 15% of Internet radio listening hours with broadcasters’ share falling to 85%.
How can this be? Well is comes down to two factors. First, the average listening session time for Internet radio streams from broadcasters is 43 minutes versus 32 minutes for pure plays. In March, broadcast was the same as year end 2015, but pure plays dropped by two minutes. Second, Idobi Internet Radio was removed from the list and is no longer tracked. Each factor accounts for half of the 1% gain by broadcasters. When it comes to time spent listening and the statistical variability based on changing the sample set, it is essentially no change.
Broadcasters are holding steady, but not gaining any ground on the pure plays in terms of commanding listener attention. Since the pure plays dominate listening market share today and Internet radio listening is growing at least in part at the expense of terrestrial radio, broadcasters need to grow faster just to maintain their Share of Ear.
Time Spent Listening is Now Key Metric
The shift in time spent listening (TSL) to audio through Internet streaming is an important trend for broadcasters. This Internet-based consumption is increasingly crowding out time that historically went to broadcast radio. The good news for broadcasters is that they can and do play in the space. iHeart Radio ranks number three behind only Pandora and Spotify in terms of total listening in the March period and over the past year. And, all but three of the Top 20 entries are now broadcasters since Slacker and Idobi dropped the Webmetrics tracking service.
The 18% trailing twelve-month growth in Average Active Sessions (AAS) for broadcast radio is good news but the key will be for them to maintain these gains and TSL in the face of expansion efforts by pure play giants Pandora and Spotify.
TSL is so important because it represents the monetization opportunity for broadcasters. Broadcasters want to maintain a high average TSL (aTSL) and grow their gross TSL (gTSL) because these listening hours determine ad inventory. This in turn represents revenue since broadcasters rely solely on advertising revenue for their Internet radio streams whereas pure plays can mix in subscription revenue to augment advertising.
The key opportunity for broadcasters to grow gTSL is to capture an increasing percentage of TSL from active Internet radio listeners and to capture a higher rate of TSL from new listeners as Internet radio grows its audience from 57% of the U.S. population today to close in on broadcast radio’s 90%+ in future years.
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