Radio is losing out to Pandora and Spotify

Radio has survived the digital age of music so far with listeners still coming to terrestrial stations first, but it’s the brands who are abandoning ship.

A study earlier this month found that Americans are listening to more than 2 hours of music a day on average. What was most interesting was that, despite the massive rise in music streaming and other digital music services, radio is still the number one destination for listening to tunes.

Whilst traditional radio might still be the source of choice for the American public, it looks as though brands are moving away from the medium and looking to digital. New figures from Standard Media Index show that Pandora’s advertising revenue in the US grew by 45% year-on-year in the first 8 months of 2018. Spotify also saw 36% of growth in advertising revenue for the same period, but for terrestrial radio their revenues dropped by 1% as advertisers look elsewhere to push their products.

It may only be a small dip for radio but considering streaming services’ immense upward projection there is clearly a shift in the industry. The trends will also be changing as the study earlier in the month showed that whilst radio is still very popular, the younger generations are adopting streaming far more than they are listening to radio. Whilst only 8% of those surveyed above 65 listen to streaming services, a massive 60% of those aged 16-19 get the majority of their music listening from services like Spotify and Pandora.

Spotify’s CFO, Barry McCarthy, spoke on how he feels streaming will eventually take over radio at the recent Communacopia conference. McCarthy said: “The 20-year trend here is linear dies, everything on-demand wins. Instead of free / paid, it’s paid plus free, and free eats broadcast radio. I don’t know what happens to news and I don’t know what happens to sports, but for sure, the combination of your phone plus a voice-activated interface enables the car, and the car is the principal user experience for broadcast radio. Broadcast radio, SiriusXM are extremely threatened by the growth and evolution of streaming services.”

Funnily enough, only earlier this week SiriusXM announced their acquisition of Pandora and its streaming services. Digital music is definitely taking over the industry and surpassing traditional methods but radio still has life in it left. We will have to see how long that life lasts.

Head of Social Media and Marketing, RouteNote

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