In this part of the series, we briefly outline the three main competitors of terrestrial radio.
The first internet radio website, known as Pandora, came online in 2000 and surprisingly is alive and kicking today. This is no doubt due to their ambitious “Music Genome Project,”1 which attempts to tabulate different types of music and what listeners do and don’t like about it. Interestingly, this process is (they claim) not automated at all, and is completely dependent on human input and tweaks. Regardless of how they do it, Pandora is fairly successful in their endeavor to bring relevant music to its listeners. This mission is aided by the fact that users can make stations that correspond to anything as broad as a genre to as specific as a single artist. What’s important to note about this model is that the user directly plays a part in the deejay process, an entirely new development in the radio industry. This is one of the key distinctions in online radio and terrestrial radio:
If I don’t like a terrestrial radio station, I switch to another station. This means that, for the time being, I’m leaving the first station’s audience and switching to the next. I miss all the commercials on the first station, which makes me a non-factor in the advertiser’s attempts to reach me. Advertisers, knowing that terrestrial radio audiences are fickle, are now more wary than ever of trying to advertise through those stations.
In contrast, the chances of me not liking what’s being played on a Pandora station are slim. Sure I might not like one song, but I’ll probably like the majority, since I get a significant personal say in the channel’s content. This means that I’m likely to stay on the station for a while, which advertisers like very much. Additionally, if I don’t like the channel and switch to another, I’m still in Pandora’s audience. As a result of this, advertisers can still reach me until I switch Pandora off. This is huge. Pandora is a much more viable platform for advertisers than any single terrestrial radio station. In fact, the only reason I would use terrestrial over internet radio is if I’m a local business, because I can be sure that I’m advertising to the correct geographical audience.
Speaking of location, where can you listen to terrestrial radio? Your car, and anywhere else you happen to have a transistor radio, which leaves you with a rather limited set of options. On the other hand, listeners can use Pandora pretty much anywhere they want! People almost always have either a laptop or smartphone on them, so you can listen to Pandora inside or outside of a car. Pandora is even trying to get integrated into dashboard computers, which would essentially destroy any possible desire for terrestrial radio.
It’s worth noting that there are other online radio services, one of the obvious ones being Spotify’s radio feature. However, Pandora is the preeminent online radio site, most likely due to their seniority and absolute focus on radio.
Music streaming sites
Did somebody say Spotify? It’s the most well-known music streaming service on the web as of right now. The main difference between a “streaming” site and online radio isn’t streaming; in fact, they both stream music. Semantics aside, the technical difference is that streaming sites allow on-demand listening. Spotify has gained a lot of ground on Pandora because it gives listeners direct access to the music they want, rather than indirect access through radio channels. It’s worth noting that Spotify isn’t the most-used streaming service. It is (wait for it) YOUTUBE! While not explicitly or exclusively a music streaming service, it functions as one, as many users create playlists of “videos” that are really just songs accompanied by pictures and/or lyrics.
The third dark horse candidate with a stake in this contest. The only satellite radio service as of right now is SiriusXM, the result of a merger between the two previously separate services, Sirius and XM. Satellite radio is superior to terrestrial in three regards:
- It has superior range
- Its music channel are commercial-free
- Its deejays are essentially better selectors of music
You may challenge the validity of the third point, but ask any subscriber and they’ll agree. This is because satellite radio channels are much more specific in what they play than terrestrial radio stations. They play to the concept of a niche audience, which tends to be more successful in holding people’s attention than mass-market, so long as the audience is self-selecting.
In order to help keep listeners’ attention, SiriusXM offers over 100 channels, each with a different style of content. This content goes even beyond music and into talk radio, family entertainment, comedy shows… the list goes on. Regardless, the main attraction is clearly the superior musical selection.
As of right now, these three are slowly drawing terrestrial radio’s audience away, which is reducing its appeal to marketers. This is the main reason that terrestrial radio will soon be a defunct institution.