STREAMING CONTINUES ITS SURGE: If there was ever any doubt about Streaming’s importance to the musical ecosystem, the following stats will seal the deal for you. According to the RIAA, an astounding 62% of the US Music Industry’s revenue came from streaming in the first half of 2017. What makes this number even more amazing is just one year ago streaming comprised 42% of the revenue pie – so that’s a 15% swing in just 12 months! In the attached article RAIN gets inside the numbers. Paid subscription revenue is driving the growth with $1.7B in revenue for the first half of the year compared to $1B in 2016. This comports with the fact that all streaming platforms besides Pandora are focused on subs as their primary revenue driver instead of ad-supported free listening. On the other side of the aisle ad-supported and blended paid products (like the mid-tier Pandora Plus) kicked off another $770M in rev. Regardless of which flavor of Streaming you choose, the importance of Streaming as a revenue source to the music industry cannot be overstated. Simply put, as Streaming goes so goes the entire US Music Industry.
STREAMING’S GAIN IS RADIO’S LOSS: The one thing you can count on in marketing is this fact – advertising dollars will inevitably follow time spent. So as listening migrates from AM/FM Radio to Streaming ad revenue is sure to follow. And predictably enough, it’s happening. According to Kagan Research in the attached Radio Ink link, Broadcast Radio will see a slight decrease (-.3%) in total revenue. But when you dig in a little deeper you’ll see a larger structural revenue problem for Radio. The majority of Radio’s rev is derived from on-air ads. But according to Kagan’s forecast, broadcasters will see a $100M decrease in on-air advertising from 2016 to 2017. To the broadcasters’ credit, they’re going the extra mile to make up the decrease with incremental digital and off-air sales. However these efforts don’t really make up the entire gap left by the on-air decrease. And to the question of where is Radio’s spot revenue fleeing to? Maybe reread the previous article for your answer.
RADIO.COM’S RELAUNCH IS A YAWN: Based on the numbers I’ve just shared, it should be no surprise that broadcasters are looking for ways to reclaim lost audience and revenue from the Streamers. To do this they’re trying to emulate the pureplays with their own streaming apps. The biggest of these, iHeart Radio, has been around for years. Now in the “also ran” department comes CBS Radio’s effort with the relaunch of Radio.com. As noted in the attached Radio Ink article, Radio.com will include a combination of on-demand music and podcast content as well as the live streams from CBS’s radio stations. (insert snore here) Besides that there’s not much innovation with this relaunch, making it a fairly blah copycat of existing streaming platforms. I’m guessing if you’re already listening to a CBS station you might shift over to this app. But I’m not seeing how this will draw new listeners to CBS.
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