Is Pandora Killing Local Radio? If not now… when?

I grew up with radio.  It was how I heard the newest records.  Yes, I’m “old.”  Just ask my kids.  But being a baby-boomer  doesn’t mean I have given up my love for music discovery.  It’s the reason I do The Colorado Sound – it’s that insane sense of discovering new music, and new artists from here in Colorado.  I’m very happy that there are five terrestrial radio signals in the state that broadcast my show today … and as far as internet goes?  It’s still too expensive for me to launch – royalties and all you know.

The past decade I’ve touted the internet as the new radio – one that opens up the playbook and has allowed us all to discover music that many in radio just “knew” would have people turning the dial away from new and onto nostalgia.  That’s how radio got safe.

Research dictated that the older a person became the more likely they would stick with the music of their high school and college days – music that recalled what it felt like to be young .. music that gave us an escape from the pressures of responsible adulthood.  And for the most part the research is true.

As I sit watching the audiences at the live shows I do sound for – I recognize that nostalgia pays off.  Funk bands playing the hits of Parliament and/or the Funkadelics get people from 21-60+ on the dance-floor.  Classic (pre 1980) country bands today appeal to those longing for a return to the past, as well as those searching for the purity / the origins of more modern sounding music.

But, is radio dead or dying as some would believe?  All the current research shows that 86% of people still get connected to new music via broadcast radio. Local public radio stations like KRFC Fort Collins and Colorado Public Radio’s “Open Air 1340” have made strong statements supporting locally and regionally produced music.  Or, is the internet destroying local radio, as my friend Pete Simon expresses in this view?

WHY PANDORA IS KILLING RADIO
Just throwing out this question:  Across the stretches of the Front Range, and through mountain hamlets — some with a community radio station nearby —  isn’t there SOMETHING about “localism” that will save the day for radio in Colorado?

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Pandora has been hit with a lot bad news lately, but I can cheer them up.

The radio industry never misses an opportunity to denigrate a competitor that goes on to kick their ass.

Terrestrial radio did it with satellite radio.

They are doing it with the mobile Internet that the next generation loves and radio thinks is an add-on.

And radio is doing it again right now to Pandora.

Look, any company that attracts over a 100 million subscribers – the vast majority of whom absolutely love the service is a better business than radio which is no longer local and run by a bunch of Wall Street thieves.

Yes, I am a Pandora shareholder. I always like to tell you that so you can take what I say with a grain of salt.  And I have lost half the value of my Pandora stock and I’m holding it just in case you don’t want to take what I have to say with a grain of salt.

Pandora is going to kill local radio.

Even in spite of the draconian music royalty fees they must pay the record labels to use music.

Even in spite of the fact that they don’t have a tower and transmitter in every city. Of course, radio consolidators do and they are falling all over themselves to do remote radio far away from the local market.

Radio’s Pandora problem is going to bite the industry in the butt.

Let me tell you the ways:

1. More and more former radio listeners are opting for Pandora and their many competitors like Spotify to give them a more customized experience. Pandora gets bigger every month and their listeners think it is cool. Radio gets smaller every month bolstered only by drive-by PPM ratings that aren’t real.

2. Even as I write this, Pandora is aggressively hiring great radio people away from the top broadcast groups. Three stolen from Clear Channel in New York and one big seller from another operator in Detroit within the past few weeks. The arrogance of consolidators to think their best sales people will continue to put up with poor treatment. Consolidators are making it easier to hire away their people as they do less local programming. Pandora is poaching your best assets! Ignore this at your own peril.

3. Pandora is coming up with a better ratings system. Radio has Arbitron’s PPM and Edison is doing some great and credible radio-type research for Pandora. While Clear Channel and a few other consolidators prop up their custom ratings company, Pandora is inventing a better way to show its growing reach. Radio has never been an industry to want competition in ratings so they are in Arbitron’s hands all the way down.

4. Pandora will not die from this disease called record industry greed because if Pandora goes under, the record industry loses its number one source of music royalty income stream. So the labels will have to relent over time and give Pandora more reasonable rates. Radio on the other hand is facing a new performance royalty that their own NAB CEO is pushing so while Pandora is likely to get royalty relief down the road, radio is about to get saddled with more royalty fees. Bet on it.

5. Pandora has picked up on the music discovery passion former radio listeners have even as radio stations continue to offer bland, corporate playlists. And radio has fired the personalities and music experts who curated local music for listeners. No wonder Pandora is so popular. Pandora is about music discovery and radio is about repetition.

There is an air of arrogance in the radio industry again perhaps fueled by the moneylenders who think they are such a big deal.

But as I always say, follow the consumer and you will never go wrong.

Consumers prefer Pandora-type customizable music discovery “radio” over the real deal because ironically enough radio is no longer the “real deal”.

If this article hits a note with you, please feel free to it with your friends

4 thoughts on “Is Pandora Killing Local Radio? If not now… when?”

  1. Localism is critical for radio. It’s the only differentiator they have.

    I’ve had the opportunity this last couple of years to perform music out of town for many months. My new winter ‘home’ has some excellent NPR stations and I do listen to them from time to time for local news and national event news. It does help you feel more connected to a region. Their jazz mix is a nice background for me in the car late at night coming home from shows. But I don’t listen that often.

    Perhaps I’m a corner-case, but I really don’t listen to music that often on the radio, or Pandora. I listen to my iPod 🙂 As a professional entertainer, my need for finding music is satisfied by iTunes, friends recommendations, and YouTube. Most of the time I’m looking for specific songs to give me ideas for arrangements. I appreciate all types of music but my favorites are out of the main-stream. I listen to Hawaiian Rainbow on internet radio if I listen to any ‘background’ music at all. That’s one of the things Pandora does well – they can ‘narrowcast’ to a persons likes. (their Hawaiian sucks) So as people find Pandora, and find the tunes they enjoy – they are hooked. Why listen to radio?

    When not in Colorado, I don’t listen to KRFC on the internet. No time.

    Pandora indeed has the potential to kill regular radio. Especially if they can localize it.

  2. Loved this blog Chris.

    While I disagree with your view that internet royalties are draconian (indy artists are actually being paid, rather than receiving no royalties from radio play) , I do agree that Pandora is killing “radio.”

    Pandora’s model is revolutionary and innovative. Radio’s failure to change with the times will be its own undoing. I used to listen to a local radio station and would occasionally call up to request a local act I wanted to hear. The last time I made a request the DJ scolded me as being part of a conspiracy to get a local artist played because I, apparently was the third person that week to request the same local artist. I switched off my radio, tuned in Pandora, created a channel for my favorite Colorado bands and haven’t been back to the local station since.

    Pandora plays what I want, when I want it and doesn’t talk down to me.

    1. I don’t view Internet royalties as being draconian. I think that belief is held by whomever the writer of the original blog post is. I hold the view that broadcast media is getting away with murder while Internet radio is carrying the burden of a performance royalty. Thanks for posting Charles 🙂

  3. Thanks for the post. Extraordinarily helpful in making sense of the current music landscape, and understanding how the “old” model for radio is getting a second life. Long live “discovery.”

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