The Difference Between Radio and Pandora

Radio and Pandora are Not the Same

P a n d o r a i s N o t a R a d i o S t a t i o nPandora misrepresents itself as “radio” in its sales presentations.

“Radio”, in the English language, means three things. Here are the first two:

1) The transmission of signals by modulation of electromagnetic waves with frequencies below those of visible light

And now, here’s the third:

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Pandora is a music jukebox. A b l o o d y g o o d o n e .

James Cridland, Radio FuturistIt is not radio.

Pandora is a respectable digital service that provides individuals with audio personalization, but it should not sell itself as radio.

2) A receiver (which can be battery-powered, mains-powered or self-powered) that allows you to listen to radio broadcasts.

Normally broadcast in a linear form, “radio” is a mixture of audio programs which contain individual pieces of content, assembled in a way to sound attractive to a listener. A fundamental building-block of good “radio” is an element of news: whether formal news in the style of a bulletin, informal news that’s closer to a gossip with a friend, or news of interest to a particular community, like a newly released music track, or a new opinion, story, joke, or viewpoint. An element of curation and editorial is also required to produce great radio: whether carefully-researched music playlists or unusual wry observations.

“Radio” is a shared experience, one that has the capacity to surprise and engage, entertain and inform. Part of the enjoyment of radio is that others are listening to the same thing as you: but part of the enjoyment of the medium is that radio continually does something unexpected and uncontrolled. Full personalization has no place in the world of radio, since it removes the shared experience, uncontrollability and element of surprise: the very thing that makes radio successful and powerful. (Cridland, 2013)

“Radio” is a human communication and connection medium

Ad Environments Make a Difference

Radio: Built for the AdvertiserListeners expect AM/FM radio to deliver an alive, kinetic, dynamic, community and personal experience. They expect advertising. Radio cultivates a legacy of over 8 decades of generations expecting businesses to entice them with emotion and opportunity. And in 2013, Bridge Ratings confirm that commercial awareness for AM/FM radio ranks consistently around 90%.

Pre-produced/live commercials, spot length flexibility, personalities, local events, bumpers, transmedia channels, experiential brand events and promotional street teams put the advertiser emotionally closer to their audience and in control of their messaging.

Pandora: Not Built for the AdvertiserPandora is online and mobile subscriber based music player that offers users up to 100 individualized playlists and music streams. It’s original “Freemium Model” was not designed for advertising or connection. Pandora was designed to entice people to buy a premium subscription for a custom listening experience.

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0-3mos.

4-7mos.

8-12mos.

15-16mos.

17-24mos.

25+mos.

“Commercial awareness drops the longer one subscribes bottoming out at 20% after 19 months of use.”

Subscribers don’t want advertising on Pandora because they were trained not to expect it. Their new ad model disrupts the core “no ads” expectation of their audiences. “Just you and your music” has been Pandora’s position and still is on Pandora One. Bridge ratings confirm the jukebox service is a non-receptive ad environment. “Commercial awareness drops the longer one subscribes, bottoming out at 20% after 19 months of use. The number one reason for dissatisfaction is “commercial interruptions spoil the mood.”

Pandora at best offers pre-produced audio messages. It cannot and doesn’t offer a menu of connection, appointment or contextual advertising choices.

90% Commercial Awareness for Advertisers on AM/FM Radio Bridge Ratings, 2012

Facts to Consider: Radio vs. Pandora

The free market has no mercy for ineffective business models. Radio has proven its sustainability and advertiser success for over eight decades. Pandora has not. In fact, their listenership and revenue is already showing a decline.

Radio is the strongest medium to influence consumers the half hour before they buy. It is the number one media consumed out of home.

95% of the population still make radio apart of their lives weekly and 60% daily.

Radio listening is consistent at 14.6 billion hours per month.

Pandora counts a “subscriber” as anyone who has played a song over the past 12 years. Meaning their ‘subscriber’ numbers most likely don’t reflect verifiable and actual real-time active users.

Pandora listeners become less satisfied over time. (Bridge Ratings, 2012)

Radio provides a rich transmedia opportunity from on-air, to websites, to newsletters, to mobile, to streaming. Pandora does not.

Radio allows advertisers to pick their radio community and choose ad times. Pandora advertisers cannot control or anticipate ad environment.

Radio has a clear methodology for discovering reach and frequency. Based on reported usage and the way commercials are run on Pandora, it’s impossible to create and control workable reach and frequency.

Multiple studies show that Pandora listeners are radio listeners. Close to 90% of Pandora listeners can be reached on radio each week. (USA Touchpoints, 2012)

Pandora listeners report spending 50% more time listening to AM/FM radio than non-Pandora listeners. (Vision Critical Study, November 2012)

75% of local radio’s total weekly 25-49 listeners use radio on a typical day.

About 25% of Pandora’s 25-49 year old registrants use the online music service on a typical day.

90% of all adults have listened to radio in the past week and only 10% of all adults 18+ have visited Pandora.com in the past month. Even in the course of a month, the entire Pandora audience can’t compare with radio’s weekly reach.

Pandora is really a companion to radio, not a replacement.Doug Sterne, Director of Audio Sales for Pandora

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Measurement Matters: All Ratings are Not Equal

In sales presentations, Pandora has been known to show their network as the number one “station” on a manufactured ranker (not Arbitron) and then they’ll persuade you to believe their numbers out perform any market’s highest ranked radio station: An impossible assertion.

Radio stations use Arbitron an accredited rating service to measure their ratings. Pandora doesn’t have an accredi ted measurement service. Therefore an “apples to apples” comparison to radio does not exist. There is no credible way to compare the services because at basic levels they are entirely different.

Arbitron urges those reviewing audience estimates from Internet music services not to make direct comparisons to Arbitron audience estimates in any market. We advise clients to avoid comparing self-reported audience estimates from Internet music services to Arbitron radio audience estimates given the following:

One to Many vs. One to OneSome Internet music services are using the traditional radio audience metrics of average quarter-hour(AQH) and Cume. To date, these metrics have only been applied to “one-to-many” curated broadcast stations, which then can be aggregated to create combinations of stations. AQH and Cume estimates historically have been subject to minimum reporting standards limiting the number of stations that are reported in any individual market.

The listening model for most Internet music services is “one to one.” As an example, a user of an Internet music service may not be served an ad until being signed on for a specified amount of t ime. The l istening model for broadcast radio is “one to many;” specifically, listeners are exposed to the same commercials at the same time and without regard to how long they have been listening to the station.

How Estimates are CalculatedArbitron audience estimates are subject to limitations explicitly cited in our reports, and Arbitron publishes a Description of Methodology that explains in full detail the methods employed in developing our audience estimates. Arbitron believes that unless a user of Internet music service audience est imates has direct ly comparable descriptions of how each of the estimates is derived, the estimates should not be considered equivalent to Arbitron audience estimates.

Arbitron in the “Thoughts on Comparing Audience Estimates” explains,

The difference between “one-to-many” broadcast stations and “one-to-one” Internet music services.

The differences between Arbitron’s published methodology and calculations for its audience estimates and the estimates used by Internet music services.

The ability of the provider to determine if a person is completing the survey task and should be counted as “exposed” to the content.

The reliability of self-reported demographic data and the steps taken to validate the information.

Is Anybody Listening?

Radio’s Arbitron PPM methodology employs to indicate what persons are exposed to and the duration of the exposure. To date, Internet music channels simply indicate that a session started. There appears to be no way of confirming if anyone is on the other end throughout the session.

Radio’s PPM service requires that panelists keep the device with them and in motion. If the minimum requirement for motion is not met in a day, then the panelist will not be counted.

Users of audience estimates from Internet music services should consider that while these services may use a “time out” or similar function to determine if someone is listening, this is not equivalent to the Diary and PPM compliance requirements, and that non-equivalency may result in editing rules that impact the audience estimate.

Also, since Pandora listeners are identified by IP addresses listener’s can be counted twice if the tune in on a computer and mobile phone. And if a listeners logs in from a corporation the IP address are sourced to that organizations headquarters. This retards the ability for advertisers to get accurate target and listening information.

Validation of Self-Reported Demographic/Geographic Data

Advertisers of Internet music services should consider whether the service’s self-reported registration data are reliable and that users do not have multiple accounts or have provided inaccurate information about their gender, age, or location. As part of Arbitron’s services, participating households are directly contacted to ensure that household composition data are correct. (Arbitron, 2011)

Bridge Ratings: “Pandora user Satisfaction Study” conducted between January 3, 2012 and March 15, 2012 among 4,399 Pandora Users. “Thought on Comparing Audience Estimates” Arbitron Inc. 2011MBI TouchpointsScarborough Release 2 2012 12 month survey (Aug 2011 – Aug 2012) Adults 18+ M-Su 6a-mid Metro AreaArbitron 2013 Infinite Dial StudyHarker Research January 2013Source: Scarborough Release 2 2012 12 month survey (Aug 2011 – Aug 2012) Adults 18+ M-Su 6a-mid Metro Area; USA source is Scarborough USA Plus Release 1 2012USC, Annenberg School for Communication & Journalism, PSI Study published June 2012, Woodley, P. and Movius, L., People With a Favorite Radio Personality in Los Angeles MediaLifeMagazine.com January 7, 2010Cridland, J.James Cridland’s Blog. Retrieved, April 16, 2-23 from http://www.jamescridland.net

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