In an unexpected follow-up to my piece on podcasting going mainstream, I am indebted to Anna Washenko. She drew on the updated Autumn Edition of Edison Research’s ‘Share of Ear’. The study reveals that podcast listeners spend six hours and eight minutes each day (on average) consuming audio, much more than the four hours of listening among non-users of podcasts – radio listeners. These may be US figures but when America sneezes the rest of the world catches a cold. It’s coming.
A shift is in listening behavior is occurring. Podcast listeners are moving away from AM/FM. Listeners spend 30% of their time with podcasts in contrast to 21% in AM/FM listening. (In the last Edison report, the balance was 26% listening to podcasts; 28 listening to AM/FM.)
Edison’s conclusion is that ‘While some of the shift in podcast listening has come from other forms of media (in particular, AM/FM Radio,) much of it is simply new listening, as podcast consumers continue to bring their podcasts with them into environments and settings where they previously might not have consumed audio.’
This is good news for traditional broadcasters so long as they are willing to accept that the market is changing and that they need to change with the market. As listeners shift to new sources of audio, the entire listening pie is growing. There is tremendous opportunity.
Podcasting has been around for some years now but has, until recently, failed to break through to the mainstream. Well that is about to change. Ongoing developments in technology and the creation of more engaging content is creating real opportunities for TV, print and online publishers as well as non-media businesses to get into the audio content marketplace – a marketplace that was the traditional preserve of radio. What is increasingly attractive is that podcasting can deliver significant audience and revenue at a relatively low cost. The challenge, for companies with no audio heritage, is to produce compelling audio. This spells opportunity and yet more competition for radio.
Here are 7 reasons why podcasting is experiencing a boom:
Media of all shapes and sizes, but particularly radio, can benefit financially from podcasting. Radio doesn’t face the same challenges that print media did when it attempted to monetize its products online. The problem for them was that their advertising model was not directly transferable to the Internet space. OK, it didn’t help that competition from the likes of Google and Facebook was formidable.
Luckily for radio, Google and Facebook are not competing for audio advertising (yet). And unlike print, advertising formats for podcasts are broadly similar to that of traditional radio broadcasts. But that’s only the starting place. In this post-advertising age, the move to content marketing could be a revenue model that suits podcasting. The challenge for radio is to step outside the mindset of an industry rooted in linear broadcast and interruption marketing - to develop creative and compelling audio content that engages audience and advertisers.
So, what might the future look like? Well, in the next few years I will have my connected-car. On its audio dashboard will be a podcasting app and with a simple touch or voice command I’m connected to my podcast stream over the Internet. It will be that quick and easy. It will learn what I like and offer me similar content that I might enjoy.
At the moment, radio broadcasters are in a prime position to capitalize on this. Someone recently described it to me as ‘radio is dead, long live radio 2.0’. Let’s hope traditional radio broadcasters get it. If they do, both listeners and their station owners will benefit.
David Duffy is a Partner at The Radio People
It took almost 9 months but finally the Department for Culture, Media and Sport’s Community Radio Consultation is published and here is our take on the recommendations:
The government has removed the ‘absolute rule’ restriction. This prohibited some stations from taking any income from on-air advertising or sponsorship, if they overlapped with a commercial radio licensee whose coverage area included 150,000 adults or fewer.
The ‘absolute rule’ was always overly restrictive and it’s good to see it abolished, albeit with conditions. Why this wasn’t included in the Community Radio (Amendment) Order 2010 I’m not sure. What’s worrying is that the underlying principle of applying funding restrictions to community radio was, to use the government’s own words, ‘to provide an appropriate level of protection to existing small commercial radio stations at a time when the impact of community radio stations could not be quantified’. Does this mean that the government is now able to quantify the impact of community on commercial and that impact is minimal? Should that be taken as a comment on the strength of small-scale commercial stations or the commercial-weakness of community radio? I’m not sure.
With the abolition of the ‘absolute’ rule the government has also said that Ofcom ‘may want to consider’ whether there is scope for the impact assessments on commercial radio to be carried out on a lighter touch basis. That will please the over worked and under resourced regulator I’m sure. But Radio Centre members are clearly unimpressed.
The government also asked if there should be a ‘relaxation’ of the restriction preventing stations from taking more than 50% of their income from on-air advertising and sponsorship.
Not surprisingly, the response from commercial radio was to oppose any increase in the 50% limit. The Radio Centre said that increasing the proportion of income a community station could take from commercial sources would alter the nature of community radio. Amongst community stations there was a clear consensus for introducing a Fixed Revenue Allowance (FRA) before applying the 50% rule. This was a classic ‘alternative close’ by the DCMS. By only putting two options on the table they predetermined the outcome. A ‘schoolboy error’ by community radio stations accepting one of these and not choosing the third option that the DCMS didn’t even put on the table.
Nevertheless, the DCMS report goes on to say ‘Having considered the representations made by commercial stations, the Government believes the fixed allowance should be set at £15,000 per year’. So that’s where the £15k has come from! It equates to around 25% of the mean average income reported by community radio stations in 2013.
We believe that the FRA and the £15,000 allowance are both problematic, but first the context of that 50% rule.
The legislators introduced the ’50% rule' in an attempt to ensure that community stations don’t become commercialised. At the same time, there are already a number of statutory mechanisms in place to regulate this. In fact, there are still areas of ownership, accountability and governance that need strengthening. So don’t be under any illusion, even with the Fixed Revenue Allowance, keeping the 50% rule is still a serious threat to community radio’s survival.
The Fixed Revenue Allowance introduces an income tax threshold-like system with a ‘tax-free allowance’ of £15,000 and a flat 50% rate immediately thereafter. It introduces a new layer of reporting for stations and compliance monitoring for Ofcom. Not that Ofcom’s compliance monitoring is fool proof. We all know of community stations that regularly and routinely apportion the income from mixed media campaigns — advertising, sponsorship, outside broadcasts, web advertising, etc. — in such a way that they don’t infringe the ’50% rule’. That doesn’t mean that less than 50% of their income is from advertising & sponsorship. It just means they are ‘smart’ when it comes to creating campaigns and invoicing funders. This Fixed Revenue Allowance will just give them a greater margin to play with.
And as for that figure of £15,000 - if it grows at the same rate that the community radio fund has grown over the last 12 years then it will be less meaningful with every year.
The unique nature of community radio is how it is expressed on air and how the listener experiences it. The focus should be on creating a distinctive sound for the sector not jeopardising its financial sustainability with increased levels of regulation and financial control.
Maybe it’s time for another Consultation?
David Duffy is a Partner at The Radio People