By Kyle Bylin, author of Promised Land: Youth Culture, Disruptive Startups, and the Social Music Revolution.
Edison Research, a New Jersey-based market research firm, introduced its “Share of Ear” study in June 2014, where it showed the share of everything in the audio space. For the first time, the amount of time that people spend listening to broadcast radio, streaming music services, and owned music, among other audio sources, could be compared side by side.
In January 2015, Edison Research announced an important finding from its latest “Share of Ear” study: American teens now spend more time with streaming music services, such as Pandora and Spotify, than they do with AM/FM radio. Larry Rosin, president and co-founder of Edison Research, said in a blog post that while AM/FM radio listening “leads by a significant margin among all other age groups,” the increasing amount of time that teens are spending with Pandora and Spotify “could be a lens into the future of audio usage.” What follows is a transcription of an Upward Spiral podcast interview with Larry Rosin.
Back in June of 2014, Edison Research published its first ever “Share of Ear” study. Billboard's Glenn Peoples reported that the study filled “a gap in understanding about American’s listening habits. No market research company had tracked the aggregate amount of audio consumers regularly consume.” When did the need to fill this gap become apparent to you, and how did you go about conducting that study?
Larry Rosin: The story is that for years, I would take a phone call where someone would say to me, "What is the share of everything in the audio space? How can one compare the size of broadcast radio to say, streaming audio—things like Pandora and Spotify, even to things like people's owned music files, SiriusXM, or any such thing—what is the size of each?" To my frustration, my answer was always, "I don't know the answer, and I don't think anybody knows the answer to that question."
It finally dawned on me after years of being asked this question, and not knowing the answer, that maybe I should do a study to answer this question. This is clearly the market saying, “There's an opportunity there.” We decided to put it out there and talk to some potential clients about it. I'm happy to say that so far, it's gone really well. There's a lot of client interest, and we're going to continue to carry on this research.
In terms of how we went about doing the study, we had a nationally representative sample of a little over 2,000 people, ages 13 and older, fill out a one-day, very comprehensive listening diary. People were assigned to a specific 24-hour period. A seventh of each of the sample were given each day of the week, so Monday got a seventh, Tuesday a seventh, etc. The people filled out a diary: Everything they listened to from 6:00 in the morning all the way around to 6:00 in the morning the next day. We broke the day up into 96 15-minute chunks and asked people to fill out what they listened to for all 96 of those chunks, if you will, in order to be considered a successful and complete interview. People would tell us what they listened to in terms of what the platform of audio was, and then they would also tell us what device they consumed it on, and what kind of content it was—was it music? Was it news? Was it sports? Was it talk?—and their location: Were they at home? Were they at work? Were they in their car? Or, were they somewhere else? They gave us a ton of information for each of the times that they listened. In total, we got an enormous amount of data, and it allowed us to show, on average, how Americans share their audio time.
What are some of the most important findings that emerged from the “Share of Ear” study?
Larry Rosin: The big findings related mostly to the platform of listening. What do people say that they listen to, in terms of the different platforms? What we found was that broadcast radio—AM/FM radio—remains the big major source of audio usage. More than half of all the listening that people did was to broadcast radio, AM/FM radio—a little over half, about 52%. After that, well behind broadcast radio was owned music. People spent about 20% of their time with music that they own. Then, streaming audio came in behind that, at 12%, and we also showed percentages for things like SiriusXM, TV music channels like Music Choice, podcasts, and a variety of other smaller platforms.
To me, one of the striking things about that study is how it runs in contrast to the narrative that you see written online about the music industry, which is that AM/FM radio is almost never discussed. It's almost perceived to be weak or dead. People always say, "No one listens to traditional radio anymore,” which clearly isn't true. It's almost like the evangelism for digital music services doesn't align with actual reality.
Larry Rosin: That's a regular theme in this world, where sort of the chattering classes are very different in behavior from real people, if you will. What those people are really saying when they say no one listens to the radio anymore is that they don't listen to the radio anymore. But, in fact, by far in terms of reach, in terms of the percentage of people who reported any listening time at all during their diary day—radio was miles ahead of anything else. Of course, there are some people who listen to very little radio or no radio at all. But still, radio is hardly dead yet. It is not the only game in town like it once was, but it's still formidable. There's a reason that everyone still wants to hear the records on the radio.
In your most recent “Share of Ear” report, your firm found that American teens now spend more time with streaming audio services, such as Pandora and Spotify, than they do with AM/FM radio. Why is this finding so significant?
Larry Rosin: There’s a variety of things going on here. Of course, today's teenagers are true “digital natives,” as they're called. They're young people who can't comment about before the Internet, what life was like before the Internet, or in many cases, even before smartphones came along. They have had access to newer technologies their whole lives. They live lives that are entirely submerged in digital options, and it makes sense that they would gravitate toward many of these new delivery forms for audio. By the same token—and something that I wrote about recently—very, very few radio stations actually directly target teenagers. While plenty of radio stations get a lot of listening by teenagers—Top 40 radio stations all over the country, and country music stations, and others—virtually none of them actually target teenagers as a sales target or marketing target. Part of this is just you reap what you sow. If you're not trying to get teenagers, it would make sense that you don't do so well in getting teenagers. That's clearly a factor.
I found that to be an interesting part of your blog post. You stated that virtually no radio stations do research into the teen audience, and so few of them—especially in the US—are trying to target that market with their marketing efforts. Where you kind of grew skeptical is this idea that these teens would magically grow into radio as they aged and pursued further education or started their careers. I believe you characterize this as the greatest challenge that radio stations may ever face.
Larry Rosin: It is hardly impossible to imagine that teens will grow into AM/FM radio, but not without the radio business trying to get them to do so. They won't just magically start tuning to the radio after a lifetime, up to that point of listening, to so much less radio or no radio at all. When radio managers sit around and strategize, that's kind of a more global effort than they're typically taking on. Radio does have some really big companies within it, obviously the former Clear Channel, which is now called iHeart, and Cumulus, CBS, and others. Anyone of them individually, or the medium working together in the ways that they legally can, could engage in various marketing efforts. But I wouldn't count on it. I doubt that that would become a major effort on their part, even though it should.
Another interesting thing you said in that press release is that this could be “a lens into the future of audio usage.” Can you expand on that?
Larry Rosin: I’m just saying, per what we were just discussing, that it's questionable whether people will age into radio over time. If you look at our data, teenagers are the only group where the AM/FM is not the biggest area of listening. Even just going to adjacent 18–24-year-olds, you'll see that radio was way out ahead of streaming audio. But with every successive age group, radio gets higher and higher listening. While 18–24-year-olds are a lot higher than teenagers for radio, 25–34s are higher than the 18–24-year-olds, and 35–44s are higher than the 25–34-years-olds, and on and on. Radio does better and better as people get older and older. I do not think this is a function of people liking radio more as they age. I think this is a function of the younger you are, the more likely you are to have explored other options for the audio consumption. If this group is listening to much less radio now, it's not unlikely that as they age, they'll continue to listen to less radio. Every day, a teenager becomes a young adult, and we're going to presumably see a lot of those things carry forward. It's just not that long ago where the options for audio consumption were basically radio and owned music, largely on CDs, or before that, on vinyl. Now, there's just so many more options, right? You can listen to streaming audio. You can access SiriusXM. You can bring in music channels through your television on things like Music Choice through cable systems or satellite. You can download digital speech-based files, like podcasts. You can listen to audio books. You can do so many more things with audio than you used to be able to do, and naturally, that's going to squeeze down some of the time that was spent with the incumbents. Now, all that said, on top of that is evidence that people are spending more time with audio, period—that having all these options is bringing audio to more parts of their day. It's a dynamic space here that people are changing within, in terms of the choices they're making. They're simply spending more time with audio because technology is bringing audio into more places in their lives.
Do you think audio is at the forefront of the experience or a background to an activity that they're currently doing?
Larry Rosin: Traditionally, the overwhelming majority of audio usage—whether it was from radio or your owned music, or nowadays with newer technologies—is that there's always been, and it is still the case, that the overwhelming majority of audio usage is done while doing something else; whether it's walking the dog, exercising, gardening, driving, or working, or any of a million other things. Most audio usage is background usage. Obviously, the days of people staring at the radio to listen to a show or listen to content like they did in the 1940s or early 1950s are long since gone. Even when people are listening to podcasts—which one might surmise would be a very involving behavior—even, in that case, we find that most people are doing something else at the same time. Whether it's, like I said, driving, or taking a shower, or who knows what they're doing. Now, that is the nature of audio—it's something that fills in the gaps in people's lives and makes their lives more fulfilling and more pleasurable. But it's seldom the primary activity to the exclusion of anything else.
That's interesting that you characterize that as the nature of audio—that it's rarely the primary activity. Only recently, in recent years, did Songza, the curated playlist startup, really tap into this idea that at different times of day, people might be looking for different kinds of music. If you make it really simple to bring up that curated playlist for that activity or mood, people will find a lot of delight in that experience.
Larry Rosin: But even then, I would bet if you talk to the people at Songza, or now Google, their research would show that while they are doing that very interesting activity of trying to match playlist to your mood or to what you are doing, it's still overwhelmingly being used in conjunction or as background to some other behaviors. In fact, most of the playlists do speak to that other behavior: while working out, or while getting work done, or while grading papers, or while whatever it is. Sometimes, it's just purely mood—I want to be happier or I'm in a bad mood. Sometimes, it's a purely mood service, but many of their playlists refer to the other activity.
That’s what I meant in what I was saying, was that they were the first company to really tap into that. Certainly, we can say that people use some Pandora stations for one thing and another Pandora station for another, and that's just their natural inclination toward the service—this is what I listen to when I'm working, this is what I listen to while I'm working out. But Songza really went ahead and made that an entire part of their user experience and really influenced the way that Beats Music, Slacker Radio, and a number of services changed their experience.
Larry Rosin: iHeartRadio has their “Perfect For,” which is the same thing as well. Yeah, I mean, this speaks back to what I was saying earlier about it's just an exciting time in audio. There's experimentation. There are new ideas. There are new ways to think of all kinds of audio, music in particular, and ways to organize it. I think when people talk about Pandora and the wild success of Pandora, they mention a lot of things, but I think what is really under-appreciated is how clever it was to define radio stations around individual artists or individual songs. The normal rubric would have been radio's rubric: the country station, the rock station, and the Top 40 station. Pandora was started by a musician, and the fact that he looked at it in a completely different way, I think is an under-appreciated aspect of its success as well. But he said, “Let’s not just have traditional radio stations traditionally defined. Let’s allow people to define these stations the way they want to.” That’s another example of the different ways that the people are organizing things. There's a reason why there's interest in, say our “Share Of Ear” study—why you are on the phone with us—because there's just a lot of fun, amazing things going on, and the consumers are getting the benefit of all the new ways that exist to think about consumer audio.
Does the “Share of Ear” study reveal anything about how Pandora is perceived amongst listeners?
Larry Rosin: Our study really isn't about perceptions; some are just purely about behavior. We don't ask attitudinal questions—what's your attitude about these things? The “Share of Ear” study is a purely behavioral study. What are you doing? When are you doing it? On what device are you doing it? Where are you? Etc. The short answer is “no.”
Okay, fair enough. The recent report also stated that American teens spend an average of 4 hours and 2 minutes each day consuming audio. What are the other types of audio that are being listened to, and which are they, and the sort of order of significance?
Larry Rosin: American teens do spend a lot of time with owned music. We didn't get into the how they got their hands on the music, the provenance of that music. Did they pay for it? Are they file sharing? Did they rip CDs? What are they listening on? How did they buy that music? But the owned music is a little overwhelmingly on digital files; a small percentage is on CDs. American teens very much listened to a lot of owned music as well. The overwhelming majority of audio time for American teens is taken up by those three: streaming audio, owned music, and broadcast radio. Again, broadcast radio is not hardly a zero. It's a significant chunk of listening for teenagers, especially in cars, but it's very rapidly changing. Teens, as you might guess, or wouldn't be surprised to learn, spend a lot less time with things like SiriusXM and podcasts, which really tend to be targeted for a little bit older people.
Given the predominance of owned music, as it relates to “Share of Ear,” where do you think things are in terms of the long-heralded shift from ownership to accessed music?
Larry Rosin: I wish every day that I had done the study 10 years ago or 15 or 20 years ago, so I could compare the changes over time. Our plan is very much to keep tracking it going forward. Like I said earlier, there's a lot of client interest, so we'll be certainly tracking through 2015. I'm left to guess or speculate what the same graph would have looked like 10 years ago or 15 or 20 years ago, and there's no doubt that some of that is going on. That shift from owned music to particularly Spotify or streaming music services that give you sort of the benefits of owned music without actually having to drop your money on specific CDs or even specific digital files, etc. But I don't really have the tracking on that. That's the plan for going forward. We can see if that shift continues to happen, we can see how quickly it's happening, among whom is it happening. But we can't really look backward on that. I think it is a good guess that the trend to acquire less music than to own will continue. But again, our study is more to chronicle that than it is to predict that into the future.
The Upward Spiral Podcast
Kyle Bylin is a user researcher at SoundHound and author of Promised Land: Youth Culture, Disruptive Startups, and the Social Music Revolution.