The humble old FM radio may not be out of fashion yet. It still possesses the advantage of offering a complete package of music and non-music content with a significant amount of loyalty attributed to the brand personas/RJs. However, there’s the persistent threat of modern-day music streaming players ramping up their offerings beyond music, by incorporating talk shows and podcasts. With a significant overlap in target group as well as a huge reach thanks to cheap data prices, are music streaming apps eating into the market share of radio?
“As audio OTT proliferates, there will be an impact on radio. FM radio still has limited penetration,” says Jehil Thakkar, partner, Deloitte. “Part 1 of phase 3 radio licensing didn’t cover all the small towns and cities. The coverage in those areas will come from audio OTT apps, thanks to declining data prices.” In fact, Prashan Agarwal, CEO, Gaana, says a lot of content similar to radio is finding place in music streaming, too. “There is a decent overlap between radio and music streaming apps. Consumers are switching between different mediums from video to audio to radio,” he adds. This could explain the increasing trend of radio players going beyond traditional radio programming and having offerings like digital channels and videos.
For example, Radio City has 52 web radio stations across 11 languages. It also offers music and non-music content via the Radio City App. “When compared to an online streaming app, we are similar, yet so different. As part of our digital strategy, we offer select terrestrial shows, along with exclusive digital content,” shares Rachna Kanwar, COO, digital media, Jagran Prakashan, adding, “For example, one of our online properties, Radio City Joke Studio, became a national show across all Hindi speaking markets.”
While audio OTT players have only just begun offering non-music content, for radio players it has been a key source of consumer engagement. For Radio Mirchi, it is all about content whether it is for radio, social media or investing in original shows. “Music streaming is a very small part of a digital user’s usage. Digital users are mostly into videos and social media,” says Prashant Panday, MD and CEO, Radio Mirchi. Radio Mirchi’s offering beyond radio include a proactive play in social media, as well as digital videos including original content. For example, its original series Jalsa Party with Dhvanit has pulled in more than 2.5 million views organically.
Media plans also reflect the changing digital landscape in radio. The local flavour of radio that advertisers were so used to, is being replaced. Global brands can now take advantage of radio channels available on platforms like Soundcloud, Spotify, Saavn, and others. In fact, every media brand has transcended from traditional air time selling to a more integrated solution-oriented approach. In fact, new business offerings like concerts, activations, digital communities and music streaming can collectively constitute upto 20% of overall revenues of FM radio players, says Ashish Pherwani, partner and M&E leader, EY India.
Another player, RED FM, has also diversified in event IPs, activations, mall radio and digital. “The radio space has become competitive considering the rate at which digital ad spend is growing. With airtime inventory being fixed and limited, RED FM is developing new revenue streams,” says Nisha Narayanan, COO, RED FM. Clearly digital is changing the content and format of radio channels and thus revenue opportunities. “New revenue streams for radio include subscription models and app-based services,” says Nishad Ramachandran, chief digital officer, Hansa Cequity. Vineet Singh Hukmani, MD and CEO, 94.3 Radio One India, said that “streaming apps need to understand the ‘audio’ consumer’s behaviour closely if they have to come anywhere close to even getting 10% of the revenue share of the sector.”
Advantage of Indian FM radio
- Audio streaming apps are a replacement for the MP3 player or the pen drive on which you carried your playlist. The content is largely music and there is no product differentiation whatsoever between one streaming app and the other. All apps offer the same music database with only differences in user interfacing and playlist creation. The music was created by the original artist and therefore a streaming app offers no ‘real value creation’ in content terms. Playlist fatigue is very quick in a music streaming app, meaning how long will a listener listen to the same 150 songs. ‘App created playlists’ use some algorithms to automate ‘so called online radio stations’, which are nothing but ‘predictive music playlists’ that sometime get listener tastes right but again become victims of fatigue quickly. Non-music content in these apps is limited and does not have the power to pull in consistent listenership.
- FM radio is a vibrant source of local city-based original content that goes beyond the music. Even with the music, content is created around songs to engage listeners with sparkling stories and anecdotes of listeners and creators. FM radio listeners largely tune in to know what is happening in their city and to listen to other listeners. There is no repetitiveness or fatigue here as content is ‘truly refreshed’ daily. Even if you hear a song you know well on the radio, the refreshed content around the song makes you turn the volume up. However on an app, the ‘fatigue’ value of a repeat song sets in really quick.
- Audio streaming apps do not create time-bound appointment listening as the same content is available at any time. This is the reason ‘time spent per listener’ is very low, averaging 11-14 minutes daily on streaming apps. It is just ‘convenience listening’. FM radio has strong time-bound listenership in each day part and is very habit-forming, thanks to the sound of distinct time-based programming lead by talented RJs who possess strong ‘influence creating expertise’ honed over a significant period of time. This is the reason average time spent per listener in FM radio is over two hours daily with cities like Bangalore and Kolkata peaking at five hours daily.
- In a nutshell, you cannot predict content on FM radio and that adds to a delight / surprise factor daily versus how you can surprise yourself with a playlist you only created on a streaming app.
- FM radio is truly free for the listener and streaming apps contribute to data charges that are not free for the listener.
- In moving vehicles, the FM radio experience is seamless and streaming audio is not due to inconsistent bandwidths of telecom service providers.
FM high & Streaming apps low revenue
- FM radio generates revenue from advertising, integrated sponsored content and related revenue like activations and events. The ‘media buyer’ based on high reach coupled with ‘strong daily/, weekly listenership consistency on FM radio is able to generate promotional value for their brands. Also since every FM radio brand has multiple and unique ‘city feeds’, this allows revenues to be generated from both corporate and local retail businesses. Audio streaming apps do not allow for such huge numbers of reach, daily/weekly engagement and multiple city focussed feeds thereby not being able to satisfy the ‘hygiene matrices’ of a media buyer. Even if app downloads are high, this does not mean that there is guaranteed and consistent listenership demanded by the advertiser. Consumer data collected by such apps is not presented in the manner that a media buyer would find conducive to action.
- FM radio was always meant to be free to the listener so it created strong revenue models for itself from advertisers. However, audio streaming platforms have to generate regular subscription revenue from the user. The number of subscription active users is always going to be a big challenge as listeners have multiple free apps to choose from. Most apps launch with a ‘free service’ to get listeners in but find it hard to then charge after the initial launch. The charge per se relates to ‘making playlists’ or ‘offline playout’ of songs which as mentioned are similar to what MP3 players did and result in quick listener fatigue.
- FM radio companies that have already invested into online streaming platforms can cross pollinate easily by taking popular FM segments from their FM radio stations and making them available on their online apps. FM radio companies have also started to simulcast their stations online for higher reach in cities where they do not have a license. In converse, audio streaming apps have ‘unestablished content’ and can’t enter the ‘FM radio space’ as they are not licensed to do so. The free podcast space is also making things more diluted for audio streaming apps.
- The huge opportunity that FM radio is sitting on is listener-to-listener conversations that can be monetised. While the broadcaster to listener connect is established and has huge momentum, this allows for listeners to connect with each other either on air or online on social media pages of FM radio stations. So the community talks to each other but through the radio station and this can make branded content super interesting for advertisers. Audio streaming apps will find this hard to do as the listener listens to what they do in ‘isolation’, meaning you have no idea what the other person is listening to on their app and have really no means or desire to connect with other co-listeners.
In summary, ‘digital’ only promises one thing — convenient access. The rest needs to be created in a manner such that it commands huge value and respect from listeners, advertisers and of course shareholders. And with established FM radio brands poised to go online in a big way, given that there are really no more city FM licenses, it is time for audio streaming apps to put on their serious thinking caps.