Radio has a more certain future than the music industry

Richard Marks of Research the Media argues that BBC’s Playlister service reflects the blurring of the lines between radio and music streaming services – but these do not have as defined a role as radio or even a successful commercial model…

Earlier this year BBC Radio launched its Playlister service and I’m hooked. For the uninitiated, whilst listening online to BBC stations you can now flag any track being played, save it to your own online playlist and then export that playlist into Spotify, Deezer or YouTube.

It is absolutely brilliant, something that my fifteen year old self would have found a thing of wonder as I instead attempted to record ‘Hit Me With Your Rhythm Stick‘ by holding a dictaphone to the left-hand speaker and praying my Dad wouldn’t come in and add his voice to Ian Dury’s by enquiring ‘what’s this racket?’.

Playlister still has a few minor frustrations, such as not being able to share your Playlists with friends other than via a PDF and some limitations in the tablet version, but it’s a great start and already this year I have a playlist of 60+ shiny new tracks.

Playlister’s bridge into the Spotify and Deezer streaming services is particularly fascinating in the context of the future of radio. There has always been a vital relationship between radio’s ability to promote artists and record companies. The music industry needs radio to promote its artists, but equally, without a healthy music industry, radio would suffer.

It’s a synergistic relationship and Playlister represents the most direct relationship yet between a play on the radio and a call to commercial action. However, it also highlights a systemic problem.

Just this week the Guardian reported on the fight between the artists and record companies about how revenue from streaming music services should be shared, compared to that from digital downloads and physical sales. It’s a critical battle as services like BBC Playlister will only serve to further increase people’s inclination to stream as opposed to ‘own’ music.

Peter Gabriel once referred to the music industry as the ‘canary in the coalmine‘ in terms of how digital would impact television and that proved true, with television able to learn from the music industry’s early digital mistakes.

However, when it comes to clear and successful business models for streaming, it could be argued that TV is actually running ahead of music now. The rise of broadcaster players and Netflix heralds a shift in video from an ownership to an access culture.

The music industry has successfully moved from a physical to a paid download model, but it still has ownership at its heart and the viability of a streaming future is unclear. Spotify doesn’t make money and for a songwriter to earn just $90 they will allegedly need one million streams on the service. How will a streaming future actually work in terms of artists, record companies and the services themselves?

The future is far clearer for TV than it is for music and a crisis is brewing as, for the first time since iTunes was invented, revenue from paid music downloads fell last year.

So what implications does the rise of streaming services have for the radio industry itself? Certainly it can be argued that the BBC Playlister blurs the lines between radio and streaming and raises the issue of what exactly is the competitive set for radio.

Recently the media industry has seen radio as a comparatively stable medium. Next week (15 May) sees the release of the Q1 2014 RAJAR figures. No doubt we will see headlines about breakfast shows battling it out for ascendancy, but few will be expecting any major changes in fortune for radio as a whole.

By way of illustration, in Q4 2013 radio reached 90.9% of the UK population each week, compared to 90.4% in Q4 2006. BBC accounts for 55.2% of all listening compared to 54.4% in 2006.

The main trend beneath the surface, however, is the fall in average hours spent with the medium across that same period – from 23.5 hours per listener to 21.3 hours. That’s a -9% fall in volume of consumption, and no surprise that it’s the 15-34s driving that fall (from 20.3 to 16.4 hours).

In an age of rapid digital change, radio has remained stable, arguably because it is the ultimate multi-tasking medium, keeping your ears entertained whilst your eyes and fingers work or consume other media simultaneously.

However, most normal humans can only listen to one audio source at the same time, so it could be argued that radio is battling for share of time with other audio sources – such as streaming services or listeners’ own downloaded music collections – that also accompany multi-tasking.

To help understand these trends, RAJAR has added to its arsenal a periodic survey with IPSOS Mori called MIDAS (Measurement of Internet Delivered Audio Services). It’s conducted from a re-contactable pool of respondents to extend insight into new listening behaviours.

Meanwhile, whilst it may appear that things are calmer on the research methodology front since the days of portable meter testing and Kelvin MacKenzie’s rival research panel, development work is underway to extend RAJAR’s online data capture to smartphone and tablet diary formats. This raises the intriguing possibility of RAJAR also capturing passive data from those same devices – much as TouchPoints did on its most recent wave – placing radio in this wider audio context.

So is Playlister potentially dangerous for radio? Will people now be too busy listening to their BBC 6 Music Playlist on Spotify to actually listen to 6 Music itself? I would argue not, because there are key characteristics that make radio unique as an ‘audio’ service; basic needs that it fulfils that not only help to explain the medium’s enduring stability but position it well for the future.

Radio is primarily consumed live. MIDAS reveals that, in contrast to television, 97.3% of all radio listening is live. This is because people value the medium as a real time companion, a link to the outside world. In an increasingly isolated society, with home working on the increase and communities increasingly virtual as opposed to geographic, radio provides that feeling of belonging.

Radio isn’t just about background; on air talent is vital to its future. Around the time that iPods were the big new shiny thing, the reaction from some music radio stations at the time was to attempt to pack in as much music as possible, to trumpet ‘ten songs in a row’. XFM even abandoned DJs during daytime for a period.

However, all this was lunacy. The average music player owner can carry more tracks in their pocket than the entire weekly playlist of a commercial station, so if they just wanted back to back music with no interruption they could listen to that without the risk of accidentally hearing Celine Dion.

What makes radio unique are the so-called ‘interruptions’, the presenters themselves, the news and the sense of community, knowing that others are listening at the same time. So ironically the future of radio lies not in wall-to-wall uninterrupted music but in the talent itself.

Another trend under the surface of RAJAR over the last few years has been that speech-only programming has actually overperformed relative to music. Analysis by radio consultants Hallett Arendt reveals that in 1999 speech format stations attracted 33% of radio listeners and 17.5% of hours. By 2012 this had grown to 38% of listeners and 21% of hours.

Even with music formats, people want companionship and curation: the delight of a DJ playing your favourite current track or hearing something new to add to your Playlister.

So without radio stations in the first place, my Playlister would be pretty empty and without BBC 6 Music to listen to whilst writing this article, my life would feel a bit emptier too. Meanwhile, radio’s funding model (licence fee or advertising) seems a lot clearer than that of the music streaming services.

That is a massive concern. New music is the lifeblood of radio itself, but the current streaming revenue distribution model for the recording artists – whose income will increasingly come from those services – endangers the very future of music.

Richard Marks is the director of Research the Media. Find out more here.

Twitter: @RichardMlive.