Borrell Study Says Radio Is "Treading Water"
January 8, 2014

Borrell Associates has released an extensive new study, titled "The Future of Legacy Media:  With 5 Years of Digital Disruption Ahead, What Happens Next?" The chapter on radio is titled "treading water," though the study has a number of positive takeaways.

First off, Borrell says that "There’s no demand for vehicles without radios. As long as that’s the case – and as long as cars on the road have radios in their dashboards – AM and FM stations will be around." Citing Arbitron (now Nielsen Audio) data, the study notes that "there’s been little fluctuation in the number of radio listeners in the past 13 years. It has drifted downward by less than 4 percent. At the same time, however, radio ad spending has dropped by almost a third." Borrell says that this decline can mostly be attributed to the recession, though the data started trending downward in 2006, and current forecasts "show only minimal gains during the next five years."

The study cites "the burgeoning popularity of online radio, especially among younger listeners," as a factor in radio ad sales falling. Borrell says that "online radio penetration by services like Pandora and Apple reach almost a third of all adults under 30, and more than a quarter of all adults under 40. The market concentration has not been lost to advertisers. Pandora singlehandedly controls more than four-fifths of online radio listenership. Its ad revenue has doubled in the past two years, expected to reach a half-billion dollars by the end of 2013. It is now half the size of radio giant Cumulus, roughly the same size as Cox Radio and Radio One, and twice the size of Beasley, Emmis and Salem Communications."

Borrell predicts that "traditional radio ad spending will continue to tread water, remaining largely unchanged while growth moves online – especially among national advertisers. Detroit is already equipping some new cars with Pandora service, so even that industry sinecure may have been breached. Losses – where they occur – will be most felt in the larger metros, while suburban and rural areas will still depend on the local flavor of stations that have been good friends to their fathers and grandfathers."

However, the study concludes that radio isn't going anywhere as "Old habits die hard, and radio serves a useful purpose. Ask big-city commuters, and anyone whose community suffers a major weather tragedy, like Hurricane Sandy."




 
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Def Jam Recordings

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