share of ear

AM/FM radio:the centerpiece of

American audioFeaturing data from Edison’s Share of Ear Q4 2016

The gap between the perception and reality of audio listening among advertisers has never been greater. The truth is, AM/FM radio is bigger than ever.

This report examines Edison Research’s Share of Ear data to explore:

• The size and strength of AM/FM radio

• Emerging audio trends

The key takeaway: AM/FM radio dominates the audio landscape with mass reach and significant time spent.

The data: about Edison’s Share of Ear

“Share of Ear” is the authoritative and definitive view of how Americans consume audio content. Edison reports share of audio time spent and percentage of Americans who use each content source.

Edison Research conducts a quarterly study to track consumer use of audio. Each quarter, 2,000 respondents keep a 24-hour diary to record audio usage. Each released study reflects 8,000 respondents, representing a rolling four-quarter average.

Edison is a leading provider of AM/FM radio research, with more than 20 years experience. They also conduct exit polling for all national elections for America’s television networks.

Perception: AM/FM radio and streaming are nearly equal in the eyes of advertisers

Source: Advertiser Perceptions, May 2015, 327 advertisers and agencies

According to Advertiser Perceptions, advertisers and agencies think the share of

audio time spent with AM/FM radio is nearly the same as streaming

55%

45%

AM/FM radio

Spotify Pandora

Reality: AM/FM radio is the centerpiece of audio

Source: Edison Research, “Share of Ear,” Q1-Q4 2016. Persons 18+

SiriusXM: Ad-Supported: Spoken Word. Ad-Free: MusicPercentages may not add up to 100 due to rounding

Share of audio time spent among persons 18+

1%

1%

1%

2%

2%

2%

4%

5%

5%

6%

7%

12%

52%

Ad-supported SiriusXM

Ad-free Spotify

Ad-free Pandora

Podcasts

Other

Ad-supported Spotify

Other streaming audio

TV music channels

Ad-supported Pandora

Ad-free SiriusXM

Music videos on YouTube

Owned music

AM/FM radio

The size and strength of AM/FM radio

52%

6%3%

AM/FM radio Pandora Spotify

People spend a much higher percentage of time with AM/FM radio than digital audio

Share of audio time spent persons 18+

18AM/FM radio is

times bigger than Spotify

8AM/FM radio is

times bigger than Pandora



People spend more time each day with AM/FM radio than digital audio


Average daily minutes listened among persons 18+

15 minutes7 minutes


2 hours10 minutes


AM/FM radio reaches significantly morepeople than digital audio


% of persons 18+ who listen daily

72%

14%7%


10

AM/FMradio has

times the daily reach of Spotify

5

AM/FMradio has

times the daily reach of

Pandora


Two-thirds of AM/FM radio listening is out of home

Source: AM/FM location of listening: Nielsen RADAR 131, December 2016; All Radio Stations Persons 12+, AQH M-SU

6AM-MID; Streaming Location: Edison Research, “Share of Ear,” Q1-Q4 2016. Persons 18+

67%of AM/FM

listening is away from home

36%of streaming audio

listening is away from home


AM/FM radio allows you to reach consumers close to the point of purchase

Only

Most listeners to other audio sources also listen to AM/FM radio


71%of Pandora

listeners also

listen to AM/FM

radio

57%of Spotify

listeners also

listen to AM/FM

radio

57%of SiriusXM

listeners also

listen to AM/FM

radio


Advertising on AM/FM radio also reaches a digital and satellite audience

Most Pandora listening comes from 5% of the U.S. – to reach everyone else, use AM/FM radio

% of daily total Pandora usage contributed by the 40% heaviest users

Source: Edison Research, “Share of Ear,” Q1-Q4 2016. Persons 18+The heaviest users represent listeners who have consumed 90+ minutes of Pandora per day

5%of Americans

represent

73%of Pandora listening


2%of Americans

represent

74%of Spotify listening

Source: Edison Research, “Share of Ear,” Q1-Q4 2016. Persons 18+The heaviest users represent listeners who have consumed 105+ minutes of Spotify per day

% of daily total Spotify usage contributed by the 40% heaviest users

Most Spotify listening comes from 2% of the U.S. –to reach everyone else, use AM/FM radio


Listening in the car

“The biggest risk for radio is the26-year-old planner who lives in New York

or Chicago and does not commute by car and does not listen to radio and thus does

not think anyone else listens to radio.”Colin Kinsella, CEO Havas Media, North America

November 16, 2016, Radio Ink Forecast Conference

AM/FM radio dominates audio in the car

0.1%

0.3%

0.4%

1%

1%

1%

1%

1%

3%

9%

12%

71%

Ad-free Pandora

Ad-free Spotify

Music videos on YouTube

Podcasts

Other streaming audio

Other

Ad-supported Spotify

Ad-supported Pandora

Ad-supported SiriusXM

Owned music

Ad-free SiriusXM

AM/FM radio

Share of audio time spent in-car among persons 18+

Source: Edison Research, “Share of Ear,” Q1-Q4 2016. Persons 18+, in-carSiriusXM: Ad-supported: Spoken Word. Ad-free: MusicPercentages may not add up to 100 due to rounding

The size and strength of AM/FM radio in car

5%Public

transportation

9%Other

86%Drive in a car

or truck

Of the 146 million Americans commuting to work daily,the majority drive in a car or truck

Source: U.S. Census Bureau, 2014 American Community Study

% of commuting by method

89% of car commuters

drive alone


In New York, the capital of media planning and buying, only 25% of people commute by car

Source: U.S. Census Bureau, 2014, American Community Survey, 1 year estimates. Means of transportation to work. American fact finder

City% that commute by car

or truck

% that commute by public

transportation

New York City 25% 57%

Los Angeles 84% 6%

Chicago 79% 12%

San Francisco 69% 17%

Dallas 91% 2%

Houston 91% 2%

Washington DC 76% 14%

Atlanta 88% 3%

Philadelphia 81% 10%

Boston 74% 13%

Total U.S.A. 86% 5%


Commuting habits of media buyers and plannersinfluence how they buy radio

Source: NuVoodoo Study of 423 advertising decision makers, media planners, and buyers, Fall 2015

Media buyers and

planners who

commute by car are

75%more likely to advertise

on AM/FM radio16%

28%Commute by car

Commute by mass transit

% of media buyers and planners who advertise on the radio


“Of all of the listening that’s done in the car, radio really owns that space,” said Diana Anderson, SVP of network audio activation at Carat. “We spend about 85% on terrestrial AM/FM radio and 15% at the high end on digital audio.”AdExchanger 2017

• Centerpiece of audio: 52% of all audio time spent goes to AM/FM radio

• AM/FM radio dominates digital audio: AM/FM radio share is 8x greater than

Pandora and 18x larger than Spotify

• Massive reach: AM/FM radio reaches 72% of Americans daily, significantly more

than digital audio

• On-the-go audience: two-thirds of all AM/FM radio listening takes place out of

home, close to the point of purchase; most streaming listening occurs at home

• Highest share for in-car audio: 71% of audio time spent in the car goes to

AM/FM radio

• Duplicated audience: most of the Pandora, Spotify, and SiriusXM audiences

also listen to AM/FM radio

Key findings: AM/FM radio

Emerging audio trends

Source: “Pandora’s Plan to Stay Independent Means Push Beyond Radio,” Bloomberg Business, March 7, 2016

“Pandora pioneered something really interesting, really special with their free ad-based streaming music

service … [but now] the early adopters are moving

to on-demand, & mainstream America is still in love with AM/FM radio.”Barton Crockett, FBR Capital Markets Analyst

Time spent with streaming grows at the expense of owned music – not AM/FM radio

Streaming 51%

Streaming 50%

Streaming 49%

Streaming 48%

Streaming 48%

Streaming 46%

Streaming 46%

Streaming 42%

Streaming 40%

Owned music 49%

Owned music 50%

Owned music 51%

Owned music 52%

Owned music 52%

Owned music 54%

Owned music 54%

Owned music 58%

Owned music 60%

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Source: Edison Research, “Share of Ear,” Persons 13+. Q4 2014 – Q4 2016

Share of audio time spent between streaming and owned music


AM/FM radio’s share remains steady

Source: Edison Research, “Share of Ear,” Q3 2015 – Q4 2016; Persons 18+

54% 52% 52% 52% 52% 52%

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016


Share of audio time spent among persons 18+

Pandora stalls while Spotify grows


15.5% 15.2% 14.9% 14.6% 14.4%

5.8%7.0% 7.4% 7.8% 8.4%

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016


% of persons 13+ who listen daily

Audience Share Trends by Audio Source


Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q4 2015 vs. Q4 2016:

year over year %

change

Takeaway

Owned music 15.1 14.8 15.3 14.8 13.8 13.2 -10.8Americans now

rent their content

YouTube music

videos5.9 6.2 6.2 6.7 7.6 8.1 +30.6

YouTube unseats

Pandora

Pandora 6.4 6.6 6.4 6.6 6.3 6.1 -7.6Growth stalls as

consumers shift to

on-demand

Spotify 2.5 2.8 3.5 3.6 3.7 3.9 +39.3Stunning growth

moderates

Apple Music 1.1 1.0 0.8 0.7 0.6 0.6 -40.0Apple is not a

media company

How to read: As of Q4 2016, Americans spend 13.2% of their audio time with owned music.

Spotlight on Millennials

Among 18-24s, owned music loses share and YouTube’s growth stabilizes

Source: Edison Research, “Share of Ear,” Fall 2015 – Fall 2016; Persons 18-24


Share of audio time spent

20.5% 21.2% 20.4%18.9% 18.8%

15.5%14.2%

16.9%

19.5%17.9%

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Among 18-24s, Spotify beats Pandora

Source: Edison Research, “Share of Ear,” Fall 2015 – Fall 2016; Persons 18-24



9.9% 10.2% 9.8%9.0%

8.4% 8.2%

10.6%9.4%

8.3% 8.7%

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Millennials 18-24 now spend more time with YouTube than Pandora and Spotify combined


15.5%

Source: Edison Research “Share of Ear” Fall 2015 vs. Fall 2016; Persons 18-24; % of time spent

18.1%17.1%

Pandora

YouTube

Pandora

YouTube

Fall 2015 Fall 2016


Spotify Spotify

YouTube rises

at the

expense of

Pandora and

Spotify 17.9%

4.84.4 4.3 4.1 3.9

3.02.4

2.0

Men 18-34 Men 25-34 Persons 18-24 Hispanics

18-34

Persons 18-34 Women

18-34

African

Americans

18-34

Persons 13+

Podcasting resonates with MillennialsEmerging audio trends


Source: Edison Research, “Share of Ear,” Q1-Q4 2016

• Time spent with streaming grows at the expense of owned music – not AM/FM radio

• Pandora stalls while Spotify grows

• Among 18-24 Millennials, YouTube has greater share than Pandora and Spotify combined

• Podcasting resonates with Millennials

Trends

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