Jazz Odyssey

Bridge Ratings & Research has been tracking radio listening behavior for years, and their most recent study shows that terrestrial radio’s audience is on the decline in a big way, with podcasting and MP3 players having an impact on radio listening time, particularly among younger listeners. According toBridge Ratings head honcho Dave Van Dyke “By 2010, today’s 94% penetration for terrestrial radio will have sunk to 85%.”

Terrestrial radio isn’t alone–the study also shows some reduction in listening time among satellite radio subscribers who have had their devices longer than 6 months.

Of course, erosion in a entertainment format doesn’t necessarily equate with an erosion in the consumption of entertainment. Changes in the consumption patterns are inevitable…years ago, in the pre-broadband universe when home PCs were a rarity, game consoles were penetrating the mass market but were still considered “niche” entertainment, and sell-through VHS was just achieving critical mass, CDs were the primary take-home entertainment format. MTV as a cultural force was still focused on music, and the release of a new CD by a superstar artist was an EVENT. Artists like Pearl Jam and Garth Brooks were posting first week Soundscan numbers north of 1 million units, and the H.O.R.D.E. and Lollapalooza festivals were national touring sensations with huge ticket sales.

Fast forward to now, where the number of entertainment delivery formats is bordering on infinite (given the number of hours in the day is limited, but I understand that Microsoft is working on a patch for that). MTV is more of a lifestyle channel than a music video channel. Video games are big business, and the demographic playing them has expanded well beyond young teen males. Sell-through DVDs have exploded, broadband has brought music and video-on-demand to the computer desktop and the release of a new CD by even the biggest of acts is far less of an event than it used to be, with a big debut week at Soundscan rarely reaching beyond 300,000 units. The lines between Silicon Valley, Hollywood and the music industry continue to blur–the entertainment pie has an increasing number of slices, but the pie itself isn’t getting smaller.

So back to this notion that the iPod is starting to eat radio’s lunch…we can analyze the numbers to death but the folks over at Playlist have given a tongue-in-cheek interpretation that bears repeating:

And why does radio fare so badly when compared to the competition?

* Youth’s disapproval of radio is exceeded only by the Cranky Demographic — 35 – 64 year olds — 31% of which claim “that gol-durned radio hasn’t played anything worth a spit since Toto broke up.”

The iPod’s form factor, convenience and flexibility has clear appeal–you need only to look at the number of iPods being sold to ratify that statement. For a percentage of the population, the ability to essentially create your own, private radio station that never, ever plays a song that you think sucks is simply a better way to spend time hearing music than terrestrial radio. Or, the limited playlists present on most commercial radio stations aren’t satisfying to a slice of society and they are choosing another mode of consumption. If this makes radio nervous and forces them to figure out ways to improve and remain compelling, this is a good thing. At the end of the day, there will always be an audience of people who love the radio format and are content to have their playlists determined by someone else, or simply don’t want to be bothered with creating their own.

Over the years, we’ve seen many shifts in entertainment formats and consumption preferences, from the era where families gathered around the radio to the cutting edge in current technologies where multiple TiVos in networked home entertainment centers time shift a wide variety of content to portable media players. A constant has remained however…content remains king. How the content gets to the consumer, how the consumer makes use of it and how the content creators get paid will remain in flux until entertainment hardware, software and services are calibrated to mass market consumption standards. As long as content owners and hardware manufacturers battle internally and with each other over standards, DRM and payment methodology, the marketplace will remain fractured. This issue which has been the theme of many pontifications here will come to a head sooner than many are comfortable with. As the younger, more tech-savvy audience grows up and acquire more purchasing power, their awareness of their ability to consume content when, where and how they see fit will force interoperability. This generation has the experience and skills that will make them unwilling to jump through any content consumption hoops when the alternative of more flexible and convenient methods of acquiring that content (P2P) are a few keystrokes away.

At the end of the day, no one should get hung up on the erosion of one particular medium or format….all signs point towards more entertainment being consumed than ever before, and consumer preferences that drive the ebb and flow of formats is nothing but digital Darwinism pushing us all towards the day when the standards settle and the digital entertainment businesses can move forward at full speed.