Radio

Despite the talk about the demise of traditional commercial radio on blogs and other online chatter, radio continues to be a major influence on music discovery. Nielsen Audio, formerly Arbitron, provides radio audience measurement services for the broadcast and advertising industries, and in its 2014 report, “State of the Media: Audio Today 2014”, the company notes that 90% of people in the U.S. listen to radio every week (Radio Today, 2008). On average, these same consumers listen to 18 hours of radio each week with their time spent listening being down only 75 minutes over the previous six years; on a daily basis, they listen to one or more radio stations for more than two and one-half hours each day (Nielsen, 2014 B). Additionally, the Nielsen Music 360 Report (August 2012) finds that “radio is still the dominant way people discover music.” Forty-eight percent of music buyers learn about new music through radio, according to the report and among teens, radio is second only to You-Tube for music listening. With the growth of smartphone apps like the one for iHeartRadio, the lines between radio and the Internet have been erased.

Anyone in the business of selling recordings is making a mistake by underestimating the reach and impact that radio has with consumers. Labels understand this, and it is why they continue to put considerable resources into influencing decisions by radio programmers and other radio gatekeepers to get their new music on the airwaves. To demonstrate the point, here are weekly audience sizes counted by Broadcast Data Services (BDS) for the week of August 4, 2014:

Online and other viral promotion of recorded music are important elements of any marketing plan, but a competitive international plan with a goal of selling more than 200,000 units must include promotion to commercial radio as key element of its success.

Veterans of the recording industry estimate that as many as 70% of consumer decisions to purchase recorded music can be traced directly back to exposure to the music by commercial radio. As much as consumers complain about the large number of commercials and repeated playing of the same music, radio still is the most important vehicle the recording industry has to showcase its product to the public. And despite our wireless devices, MP3 players, GPS units, dashboard video players, and other distractions, we still spend over two and a half hours per day time listening to radio (Nielsen, 2013).

Given the role radio plays in promoting recordings to consumers, it’s important to have an understanding of radio and the people who make programming decisions at those stations. They are the gatekeepers to the radio station’s airwaves. When the marketing and promotion staff at the label understand what radio needs, it becomes easier for them to find a way to get their new music programmed.

The Business

One of the best adjectives to describe the relationship shared by the recording industry and commercial radio is “symbiotic.” Though it is a term most often used in science, it means the two industries share a mutual dependence on each other for a mutual benefit. Radio depends on the recording industry to provide elements of its entertainment programming for its listeners, and the recording industry depends on radio to expose its product to consumers. No two other industries share a relationship as unique as this. However, the nature of the businesses of a record company and a radio station are very different. For a record company, it’s easy to define the business: to sell recordings. Money moves from consumers to record companies when recordings are sold.

The business of radio is building an audience that it leases to advertisers. Radio uses music to attract listeners in order to attract advertising revenue. The larger the audience the station attracts, the more it can charge for its advertising. Radio, however, is not in the business of building recording careers, nor is it interested in selling recordings. The number of units that a recording is selling might be of interest to a radio programmer, but that information by itself does not necessarily affect programming decisions.

The Radio Broadcasting Industry

The traditional over-the-air radio broadcast industry in the United States began consolidating when the Telecommunications Act of 1996 was signed into law. Prior to the new law, radio broadcasting companies were limited in ownership to no more than 40 stations (20 AM and 20 FM) nationwide (Williams, 2007). The law now allows companies to own unlimited numbers of radio stations nationally, but no more than eight stations per market and no more than five in the same service (AM or FM). The numbers decrease on a sliding scale for smaller markets and in no case may one owner control more than 50% of the stations in a market (Oxenford, 2011; Federal Communications Commission, 2014).

The relaxing of the radio ownership rules has created some of the largest media companies ever. In the first seven years after passage of the act the number of radio station owners decreased by 35% and the largest ownership group swelled to over 1,200 stations. The biggest radio companies in America are:

Revenue for the industry declined steadily from 2005 to 2009, with annual earnings hitting a low of $13.3 billion in 2009, but in 2010, aided by a stronger economy and the additional revenue from advertising online, radio advertising rebounded and is expected to continue to grow through 2017 (marketingcharts.com).

The Radio Station Staffing

Typical Radio Station

Figure 12.1 Typical Radio Station Organizational Chart

In order to see how decisions are made about music choices at a radio station, it is important to understand the organization within the station. The general manager or someone with a similar title, is responsible for the business success of the station. Reporting to the general manager is a manager of administration who has responsibilities such as accounting, commercial scheduling, and keeping up with regulatory matters. The sales manager has a staff of people who sell available commercial time to advertisers. Promotions are contests and other sales-oriented activities that are often the collaborative work of the sales team as well as the programming department. Some stations have added the position of marketing manager or marketing and promotions manager. Marketing managers may oversee sponsorships, publicity, events and research in addition to promotion duties (Denton, 2014).

From a record marketing standpoint, the key positions at a radio station are the program director, and to a lesser degree, the music director. The program director (PD) is genuinely the gatekeeper. Without the “okay” of the programmer, there is no chance that a recording will get on the air at most large radio stations. The PD is directly responsible to the general manager for creating programming that will satisfy the target market and build the existing audience base. The programmer decides what music is played, which announcers are hired, which network services to use, how commercials are produced, and every other aspect of the image the station has within the community it serves.

Critics of radio often say program directors have too much power because they can decide whether a recording is ever exposed to listeners. Large radio chains have group programmers who play an even larger role as a gatekeeper, recommending which music is appropriate for similarly programmed stations owned by the company across the country. As group owners of stations seek economies within their companies, group programmers—rather than a local program director—play a larger role than ever in the decisions regarding which music is played for the station’s audience. Unknown to most of the radio audience, programming consultants armed with research about both the music and the local audience, assist the PD with decisions about music programming. To the record label, the consultant becomes another important gatekeeper.

Another criticism aimed at program directors is the decision to limit the size of their music playlists. Critics say that radio is serving as a filter for the massive amount of recorded music that is created every year and that they limit opportunities of newer artists. However, given the tens of thousands of new releases each year this may be more a case of sour grapes than fact. Theoretically, radio finds the most appropriate music for its audience and filters the music by choosing the best selections for the target audience. Program directors use advice, research, and their experience to find the best mix of music and information to retain and build their audiences for advertisers. Unfortunately, as the population ages, that mix has often included a larger proportion of sports and news, formats preferred by older males, and less music.

Radio Audiences

Nielsen Audio, the audience measurement company, publishes its annual “Radio Today” in which it provides an analysis of the makeup of audiences who use commercial radio in the U.S. The chart below is taken from their 2014 report, and shows the percentage of persons by age and gender who listen to radio during the average week. The dark column represents males and the light column represents females. Cume is a reference to the cumulative audience for the average week. For example, this charts shows that of people who are 12–17 years old (P12–17), 88.2% of males listen to radio each week whereas 92.4% of females listen to radio each week.

The size of the audience of a radio station is important to a label because it often determines how much time and other resources are put into promoting a song to the programming executive. Also important to the label is the time of day that the song is scheduled to be played. AQH is a reference to the numerical size of the audience during the average quarter hour within the timeframe measured by Nielsen Audio. As you can tell by the Hour-by-Hour Listening chart, audiences are considerably larger during the week and during morning and evening rush hours. Radio refers to rush hour programming as “drive time” not only because the time corresponds to our morning and afternoon commutes but because listenership during that time drives the revenues of the station.

Figure 12.2 Weekly Cume Rating (Source: Nielsen Audio Radio Today, 2014)

Radio listening peaks in the morning hours, known as morning drive time. Radio listening is divided into day parts of morning drive, midday, afternoon drive, evening, and overnight. From 6:00 a.m. until 9:00 a.m., listening is greatest as commuters wake-up to clock radios, and continue to listen as they drive to work. Listening picks up again around noon, declines slightly after lunch but remains relatively strong throughout the afternoon drive time, and then tapers off drastically throughout the evening and into the overnight period.

Figure 12.3 Hour-By-Hour Listening (Source: Nielsen Audio Radio Today, 2014)

Radio on the Go

About two-thirds of all radio listening happening away from home. Between 10:00 a.m. and 7:00 p.m. on weekdays, 72% of listening occurs outside the home. After 7:00 p.m. the majority of listening shifts to in-home.

Figure 12.4 (Source: Nielsen: State of the Media: Audio Today 2014)

Source: Nielsen National Regional Database, Spring 2013

Radio Formats

Station owners choose radio formats by finding an underserved audience that is attractive to advertisers. When the format is chosen and developed, a programmer and staff are hired, and the audience develops. The chart in Figure 12.5 shows the national radio audience sizes by format in 2014. The horizontal axis reflects the percentage of radio listeners who chose to listen to the radio formats represented in the chart.

Figure 12.5 Audience Format Trends Today (Source: Nielsen, 2014a)

The Nielsen Audio audience measurement service reports the national percentages of radio format shares in the chart. The top radio format is news/talk. This format has maintained its strength in recent years and continues to represent nearly eighteen per cent of all listeners.

Nielsen Audio is a subscription service, and is the only major company that measures the size and demographics of radio audiences. While the audience share chart shows the size of the national audience, Nielsen Audio measures the same information, radio market by radio market. The share and audience makeup of each individual commercial radio station is measured and reported to subscribing stations and advertising agencies. The size of the station’s radio audience is directly related to the amount of money the station can charge for its advertising. The more listeners (or the larger its audience share), the more the station charges companies to access their audience through advertising. Nielsen Audio charges its clients hundreds of thousands of dollars for its audience measurement services. Since college and other noncommercial stations do not use traditional advertising, and therefore, don’t have the revenues of the commercial stations, they are charged a greatly reduced fee (Buc, 2014).

With this in mind, a programmer is very careful in choosing music for airplay since the objective is to build its target audience. The program director is not inclined to experiment with an unproven recording that will turn an audience off. This will be discussed in more depth in a later chapter.

Targets of Radio Formats

The ability to obtain airplay can be a major factor in determining whether a recording will be released commercially. In order to be a commercial product, recorded music must find a target that is able and willing to buy it. Finding that target is the first step in the marketing process followed by the development of a strategy to reach the target. This table provides some broad definitions of music formats and their targets.

The target market of a particular radio format is the logical consumer target for commercial recordings. The 2010 Broadcasting & Cable Yearbook lists over 35 musical radio formats ranging from AAA (Adult Album Alternative) to CHR to Variety (Diven, 2010). Music marketers carefully study the listeners of each format so that they can pitch their artist to the stations that reach their target market.

Radio station group owners further refine their format audience by gender and age. For example, many country radio stations specifically target females 35–44, while stations with CHR/Rhythmic formats target 12–24 males.

One of the key components of most of these radio markets is the 18–34 year-old. Young adults are a big consumer, setting up new households and making substantial purchases like appliances, furniture, or that first new car. Women in this age group heavily influence or actually make the purchase decisions for households, and advertisers highly value this demographic as a target for their messages.

Figure 12.6

Programmers sometimes use a clock wheel to offer a visualization of how time is allotted to the various broadcast elements. It is a wheel indicating sequence or order of programming ingredients aired during one hour (Tarver, 2005). The clock face is divided into pie pieces, and each small section of time in an hour is prescribed a very specific item to be played on the air—from a song in a specific genre to a commercial, or news and weather. A sweep is a block of “non-stop” music, although station IDs and song introductions may be made. Notice that the sweeps in this clock all run through a quarter hour (15, 30, 45 minutes and the top of the hour). This is designed to improve the stations ratings in each quarter hour.

What is Important to Programmers?

Convincing radio to play new music is ‘‘selling’’ in every sense of the word. And in order to sell someone anything, you must know what is important to them and what their needs are. High on that list of important things to radio is Nielsen Audio’s measurement of radio audiences because it directly impacts the earnings of the station for its owners. Understanding concepts like this and their importance to programmers will help marketers of recorded music better relate to the needs of radio and its programming gatekeepers.

Ratings Research and Terminology

The term P-1 listeners represents one of the prized numbers of radio programming. As Mike McVay with McVay Media puts it, “These first preference listeners … referred to in radio station boardrooms, focus groups, and inside the headquarters of Arbitron doing diary reviews,” are “the most loyal of radio listeners,” and every radio programmer courts this primary core of their radio audiences (www.mcvaymedia.com). The terms P-2 and P-3 refer to listeners with a lesser degree of connection and loyalty to a particular radio station.

Cume is the total number of unduplicated persons included in the audience of a station over a specified time period. This programming term that comes from the word cumulative, and it refers to the total of all different listeners who tune into a particular radio station, measured by Nielsen Audio in quarter-hour segments.

AQH, or average quarter-hour, refers to the number of people listening to a radio station for at least five minutes during a 15-minute period.

TSL means “time spent listening.” It is an estimate of the amount of time the average listener spent listening to a station (or all stations) during a particular daypart. TSL is calculated by the following formula.

A radio station’s share refers to the percentage of persons tuned to a station out of all the people listening to radio at the time.

Rating refers to the percentage of persons tuned to a station out of the total market population.

A complete list of radio rating terms and their definitions can be downloaded from http://www.arbitron.com/downloads/terms_brochure.pdf.

Figure 12.7 Personal People Meter (Courtesy of Nielsen Audio)

Nielsen Audio manually measures and rates radio listener habits in about 290 markets in the US. Ratings are measured using the diary method in all but the top fifty-two markets. These latter markets, with the exception of Puerto Rico and the Hudson Valley metro area, are measured using electronic devices called the Portable People Meter shown in Figure 12.7 (“Market Survey,” 2013).

For the diary method of tracking listening, Nielsen Audio selects households at random, and asks members’ age 12 and above to carry the diary for one week and record their radio listening. Potential diary keepers are first contacted by telephone, and then diaries are sent to the household. Completed diaries are returned to Nielsen Audio and the data are entered into computers and analyzed on the following characteristics:

• Geographic survey area (metro or total survey area)
• Demographic group
• Daypart
• Each station’s AQH: the estimated number of persons listening
• Each station’s rating: the percent of listeners in the area of study during
• the daypart
• Each station’s share: the percent of one station’s total daypart estimated
• listening audience
• Cume: the total unduplicated audience during the daypart for an average week

For those using the Portable People Meter (PPM), it “is a unique audience measurement system that tracks what consumers listen to on the radio, and what consumers watch on broadcast television, cable and satellite TV. The portable People Meter is a pager-sized device that consumers wear throughout the day. It works by detecting identification codes that can be embedded in the audio portion of any transmission.’’ (Arbitron, 2009) The meter is about the size of a pager, and is worn at all times during the day. At night, the People Meter is placed into a base unit and information is uploaded to a central database. Whereas the diary method of tracking radio listenership uses diaries targeted to a balanced yet random population sample, the PPM enlists families of people, pays them a fee, and seeks a two-year commitment for them to be part of the program.

Each Nielsen Audio Radio Market Report covers a 12-week period for the specified market and contains numerous pages like the example in Figure 12.8. At the top of each page, the target demographic is listed. Beneath that, the dayparts are laid out in columns. Then for each daypart, the AQH, the Cume, the AQH rating and AQH share are listed for each radio station in the area (listed in the left-hand column).

A station’s ratings determine its advertising rates, and the example of a Nielsen Audio report of the Atlanta radio market makes the point that ratings mean money. The chart in Appendix A shows the call letters, the station format, the owner, and the percentage of listeners in the Atlanta market who choose each station. The table of ratings is shown beginning with the fall of 2003 as an indication of the trends of the ratings for each station in the Atlanta market. The column on the far right is the station rating for fall 2004. The station showing 9.7% of the market’s radio audience can charge more for advertising than the station with only 0.4% of the audience because it has more listeners. Nielsen Audio rating points are the targets of the audience-building efforts of a radio programmer. For example, each one-tenth of a rating point, or 0.1%, is worth $1 million in advertising rates to radio stations in the Los Angeles radio market.

Figure 12.8 Example Nielsen Audio Book

Source: Nielsen Audio 2014b

Radio Programming Research

Knowing how radio researches its audience can be helpful to marketers to understand how programmers define benchmarks for their decisions to add or remove music from their playlists, or increase or decrease the frequency songs are played. The key research tools used by programmers are discussed in the next chapter in the section on charts.

Many stations use panels of listeners for programming research. The panel method is a research technique in which the same people are studied at different points in time. Members of the panel are selected to reflect a representative sample of a station or format’s listenership, and are periodically surveyed on their opinions of music and programming. The panel members are contacted either by telephone or email and asked to respond to song hooks played either over the phone or through the Internet. The programmer then analyzes the listener response to make decisions about the continued use of the song on the air and how frequently it will be played.

A second method for collecting listener responses to music is the auditorium test. As the name implies, listeners are brought together in a single place, most often a hotel ballroom, and asked to listen to and rate the music at the same time. The biggest advantage of the auditorium test is control, but improved sound quality is another major plus. Invited listeners record their responses either on paper or using a WiFi monitored dial and the researchers compile the data for the radio station.

Another tool being used by programmers is called MScore, which uses the audience preference tracking of the Portable People Meter to judge whether listeners switch stations while a song is playing. For programmers, it is useful feedback about the music they program; for record labels, the information is useful to continuously monitor a song in the marketplace and modify promotional strategy (Albright, 2009; mediamonitors.com).

The Changing Face of Radio

The first commercial radio stations, all thirty of them, were licensed by the U.S. government in 1922, twelve years before the FCC was established. The following year, in 1923, there were 556 commercial radio stations, all of them broadcasting on AM frequencies. The technology didn’t change much until the 1960s when the FCC approved a new band of radio frequencies for commercial broadcasters—FM. FM promised better sound quality and fewer commercials (6 minutes per hours instead of the 18 to 20 minutes typical at the time) to gain market share.

Satellite Radio

XM Satellite Radio was founded in 1992, and launched on September 25, 2001. The next year, Sirius Satellite Radio was launched. In 2008 the two companies merged. Sirius XM offers an array of music and other entertainment channels which are fed to proprietary radio receivers, meaning you must own a special receiver in order to access programming. The subscriber to Sirius XM pays a monthly fee for basic services and a higher fee for additional services, much like a satellite television service. The music channels are commercial free other than promotions for upcoming shows and other Sirius XM channels.

The opportunities for marketers of recordings with satellite radio is that the company has longer playlists within each genre of music, so there are more opportunities for new music to be played. This is, in part, because the individual channels are not ranked like a terrestrial radio station and they are not dependent upon advertising revenue. Another plus for the label is that every song that is played displays the artist and song title to the listener on the faceplate of their receiver.

As a viable service, satellite radio was slow to be adopted by consumers in part because of the cost of buying special receiving equipment for a vehicle or a home audio system, and because of the monthly fees associated with the services. The company has been profitable since 2009, and now has nearly 27 million subscribers (Sirius XM, 2014). The company appears to be well positioned to survive both HD radio and Internet radio.

HD Radio

Opportunities for marketers of recorded music have improved with the addition of new technology for the radio broadcast industry. Commercial stations are in the process of converting their AM and FM stations to HD radio, greatly improving the quality of the signals for both. (HD does not mean “high definition.” It is a term used to brand the new service.) What this means to music marketers is that songs played on the radio will deliver near-CD quality audio, and have the ability to display the artist’s name and the song title on the radio receiver, just like satellite radio. Radio announcers rarely provide artist or song information to listeners, and this new technology will help consumers of recorded music to identify artists and songs. As radio stations convert to digital broadcasting, they are also given up to two additional signals that are adjacent to their primary broadcast frequency. These new “stations” give the station owners opportunities to explore experimental programming and to broaden their listener bases. An element of a lawsuit settlement with the New York attorney general in 2005 requires several major broadcast companies to give new artists not associated with major labels the opportunity to have their music heard. It often is the HD channels that are used to allow these artists be heard on commercial radio.

Digital radio availability is growing as major broadcast companies convert stations to digital broadcast signals; however, stations and listeners have been slow to adopt the new technology. Upgrading station transmitters and licensing the technology in a time of declining listenership is an expensive investment (Buc, 2014). In 2012, only about two percent of radio listeners were tuned into HD radio at any given time, according to Pew Project for Excellence in Journalism’s State of the News Media 2012 (Mook, 2012). Consumer adoption was slowed by the initial high cost of after market receivers and the economic recession which slowed the sale of new cars already equipped with HD receivers, but as more HD stations came available (over 2200 as of August 2014) and new car sales rebounded, usage has reached 3.8 billion annualized listening hours (Ibiquity Digital, 2014). Now the biggest threat to the adoption of HD radio comes from Internet radio services like iHeartRadio and Internet ready in-dash receivers.

Internet Radio

In an interview with Radio World, James Cridland, managing director of Media UK, said, “There’s terrible confusion between a ‘radio’ station—something with a human connection and a shared experience—and the likes of Pandora, Slacker, iTunes Radio and music subscription services. I find it very unhelpful that the radio industry has let folks like Pandora and Apple steal the ‘radio’ brand, and use it to describe a poorer music jukebox experience. They are not comparable” (Careless, 2014). There are two kinds of radio on the Internet: simulcast streaming of the programming of terrestrial radio stations and non-interactive streaming services like Spotify and Apple’s iTunes Radio. Services like Last.fm.com and Pandora.com offer some of the features of traditional radio while giving the listener a unique listening experience they can tailor to their specific music tastes. With the expanding availability of WiFi service, and the power of 4G networks, streaming radio-like music services over wireless devices, including in-dash receivers in cars, brings music closer to specific consumer interests and poses a competitive challenge for traditional commercial radio. An additional advantage of Internet radio is that the song information is displayed on the device’s screen as the song is played, often with a link to an online retail store to facilitate the impulse purchase.

Internet radio was hailed as a boon for the independent label and the unsigned artist because of their willingness to add “anything” to their database of music, but the reality may be something less spectacular. Hypebot.com estimated in 2013 that 4 million tracks available on Spotify had never been streamed—not once (Houghton, 2013). For artists that do get played they are paid between $0.0005 and $0.0069 per stream. Microsoft’s Xbox Music Service pays $0.035 per stream (Dredge, 2013).

Getting Airplay

It is the job of the record promoter to get airplay on commercial radio stations. This has become more difficult with the consolidation of radio because there are fewer music programmers, and competition for getting added to the playlist is fierce. The process of record promotion is outlined in the following chapter on promotion, airplay and charts.

Appendix

Station Ownership Data Sources for Table 12.2

ABC—merged with Citadel in 2007—www.thewaltdisneycompany.com

CBS/Infinity Broadcasting—126 www.cbsradio.com

iHeart Media—850 www.clearchannel.com

COX—57 www.coxmediagroup.com

Cumulus Radio—525 Cumulus bought citadel in 2011 www.bizjournal.com

Entercom—106 www.entercom.com

Glossary

Add date —This is the day the label is asking that the record be added to the station’s playlist.

Average quarter-hour (AQH) —The number of people listening to a radio station during a 15-minute period as measured by Nielsen Audio is called the AQH.

Cume —The total of all different listeners who tune into a particular radio station is its cume.

Format —The kind of programming used by a radio station to entertain its audience is the format.

Heavy rotation —These recordings are among the most popular songs played on a radio station.

Light rotation —These are recordings that are played fewer times on a radio station than songs in heavy rotation.

Playlist —The list of songs currently being played by a radio station makes up a playlist.

P-1 —The primary core of listeners to a specific radio station are P-1s.

Program director (PD) —This is an employee of a radio station or a group of radio stations who has authority over everything that goes over the air.

Share —A share is the radio audience of a specific station measured as a percentage of the total available audience in the market.

TSL —This means ‘‘time spent listening’’ by radio station listeners at particular times of the day.