From time to time Ando Media publishes Internet streaming ratings. Each release incites a riot of stories about how big Pandora is, how much of a lead it has over all the other services, and how anemic the broadcast stream numbers are.
Now with Pandora’s IPO announcment, all those pundits who swoon over each new achievement have the company’s S-1 registration to tout. The announcement alone has generated over 700 Pandora news stories and blog posts.
The lock-stepped narrative of Pandora's near death and phoenix-like recovery to unstoppable dominance could have come from Joseph Goebbels' typewriter. In the midst of all the celebration, most writers missed the bigger story, the continued strength of broadcast radio, and the strength of broadcast streaming.
You’ve heard all the Pandora numbers before: 80 million registered users, growing by one per second. Over 1.4 billion stations, and over two billion listener-hours in 2010.
Pandora may have 80 million registered users, but how many regularly use the service? Now we know. According to Pandora, about 30 million users listen at least once per month. Apparently, listening to the service as little as once a month is considered regular.
Over a month’s time, something like 50 million users never log in. So much for loyalty.The users that do listen spend about nine hours a week with the service.
The numbers sound impressive, but without context they don’t mean a lot. Since Pandora claims to be redefining radio, we have to examine the numbers in the context of radio as it is.
There are about 10,000 commercial broadcast radio stations in the US. Each week over 240 million people listen to these commercial broadcast radio stations, and they listen for fifteen and a half hours.
Perhaps they got the idea from Radio Insights after we introduced the metric last June. (We call it Hours-Tuned.) The advantage of using hours-tuned is that it enables us to compare Internet services to broadcast radio.The graph at the left puts Pandora's strength into perspective.
The most striking feature is the strength of commercial broadcast radio. Over 3.7 billion listener hours goes to commercial radio each week. In an average week commercial radio has twice the listener-hours that Pandora generated in all of 2010.
The broadcast listening-hours for just 187 New York, Los Angeles, and Chicago stations equals 284 million listener-hours, a little more than Pandora’s weekly national count.
So only 187 broadcast stations generate as much radio consumption as Pandora’s 1.8 million stations.
Perhaps the most under-appreciated showing is for the top broadcast streams. The 14 top broadcast streams total more than 100 million listener-hours per week, excluding CBS. (We didn’t add in CBS because its 60 million listener-hours include AOL Radio and Yahoo.)
The streams add about 3% to broadcast’s total, and that’s just the 14 top groups subscribing to Ando Media. Add CBS along with non-subscribing broadcast stations and streaming could total nearly 10% additional broadcast radio listening.
Of course the total is small compared to Pandora, but these hours are what Wall Street calls accretive, growth from the outside.
The bottom line is that broadcast streams should be judged in the context of the enormous size of broadcast numbers. The broadcast streaming audience is growing, and it is enlarging the total broadcast audience–-even as Pandora grows bigger.