Closing out Tuesday’s panels at the New Music Seminar in New York, traditional radio formats were presented as a tool just as necessary as streaming and other online platforms for music discovery and marketing strategies. Rather than pitting terrestrial radio against streaming services, industry experts suggested that the two mediums work together in order to drive music discovery and growth. Even millenials, who have increasingly adopted streaming services, listen to the radio in large numbers: 65.2 million people in the U.S. 18 to 34 listen to traditional broadcast radio each week, according to a recent Nielsen survey.
In “Radio: The World’s Best Discovery Engine,” radio execs pointed to the format’s human, hyper-local element as the primary driver of its continued success. “When you land in L.A., you’re listening to [hip hop station] Power 106 because it’s embedded into the community,” explained Michael Martin, VP of Top 40 programming, CBS Radio. "It’s very different than the way that you listen to Spotify or even SiriusXM. It’s dictating what the kids are saying on the street."
By playing what’s hot on the street, radio can reinforce and develop rising acts in a way that streaming is still figuring out. “[Radio] knows what movies [the audience] sees, clubs they go to, songs that they listen to," he added. "If we can reflect that, [songs] can explode in a bigger way. Once it hits radio, you can see it travel from one circle of people to other circles of people.”
Since terrestrial radio ad revenue is directly tied to a station’s market share, and stations have few open slots to test new tracks, the decision to play a song on a station potentially has tens of thousands of ad dollars attached to it. In addition to Nielsen people trackers, program directors now rely heavily on social media metrics to develop programming and add new records. The panel's programmers specifically shouted-out Shazam as integral to their strategy, as it gives nearly real-time, location-specific data on "Shazam'ed" songs. Terrestrial radio is important in helping to break artists but hamstrung by tight programming regularly playing only 10 to 12 records at a time. “What these guys do is very important because if they’re not breaking new music, it’s very hard for a streaming service to [do well],” said Charlie Walk, EVP of Republic Records.
In comparison to terrestrial radio, the streaming music market is still in its early stages. Now at 28 million paid subscribers, according to IFPI's 2014 report, streaming services (and labels) recognize that the outlet has the ability to capture revenue on a per-unit basis better than a la carte buying. But the future is largely uncharted territory.
In “Subscription Music: The Music Business’s Bright Future,” moderator and Mobilium Group CEO Ralph Simon led an entertaining panel in which he quizzed streaming service execs and labels on their growth strategy.
The streaming sector is a splintered field. Spotify leads but competes with Google Play Music, Rhapsody and Deezer for market share. Simon highlighted the service’s different strengths: for Deezer, it’s the fact that the service is in 180 countries (“How do you do it? Special French sauce? That’s what it sounds like to me”); for Google Play, it’s tying the service underneath the ubiquitous Google banner (“So, your world domination plan continues in your particular field?”). Humor aside, the execs’ responses pointed to a business still in its infancy that is experimenting with different models.
Rhapsody, the veteran Seattle-based streaming service which has 1.7 million users globally (but 63% year-over-year growth), focuses their energy on dedicated music listeners and does not use advertisements. “We are not a freemium model -- we just represent something very different,” said Ethan Rudin, CFO of Rhapsody. "We believe music isn’t something that should be disrupted. We don’t feel like it’s an opportunity for Doritos to get involved, if you get my drift. We’re here for the fans and the geeks in the room."
The panel presented a cautiously optimistic view on streaming’s future. In such a volatile market, labels are open to any and all streaming options. “We’re in a time in the market where we don’t know where it’ll end up. We know subscription will overtake ala carte, but we don’t know to what extent it will exist,” said Mark Piibe, EVP, global business development & digital strategy, Sony Music. “Some people will still want to own content, [such as] super high def content which lives on a hard drive . . . There are different courses for different horses. Right now, we’re supportive of any model which is helping develop the market.”
Though not mentioned on stage, the elephant topic in the room was what Apple's $3 billion purchase of Beats could mean for streaming. Afterwards we caught up with panelist Stephen Bryan, Warner Music's EVP of digital strategy and business development, who gave a a rather optimistic appraisal: "The massive reinvestment in music demonstrates how critical music is to Apple’s ecosystem and to the wider tech industry. It's a very complementary deal – across hardware, services and executive talent – as well as the collaboration between Apple and Beats that will bring about as yet unthought-of innovation."