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Radio vs Music Players Competitive Arena

Radio vs Music Players Competitive Arena. June 25, 2013. Digital Listening Augments Broadcast Radio.

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Radio vs Music Players Competitive Arena

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  1. Radio vs Music Players Competitive Arena June 25, 2013

  2. Digital Listening Augments Broadcast Radio With the digital revolution’s impact on media, new forms of audio enter the marketplace regularly. Many think that these new digital audio platforms have hurt Broadcast Radio’s impact. As the Infinite Dial:2013 confirms, heavy usage of other media forms does not detract from use of Radio. 19 million new listeners (+8%) in the last decade Decade of growth of Broadcast Radio vs. Internet Radio # of users in millions Broadcast Radio Internet Radio 66 million new listeners (+330%) in the last decade 2013 Sources: Arbitron RADAR Winter/March reports M-Su 6A-Mid – (represents Jan – Dec of previous year) - note, methodology for RADAR changed in 2007 to include PPM market transitions so trends may not be consider completely comparable until 2011; Arbitron/Edison “Infinite Dial” Research for Internet/Online data; Weekly listeners for Broadcast Radio; Weekly listeners for Internet Radio

  3. Digital is a Small But Growing Portion of Total Hours Spent Listening to Radio Sources: 2010 Arbitron National Regional Database Spring 2010, Ando Media “Internet Audio Top 20 Ranked” Mar-Jun 2010, using total listening measured by Ando beyond top 20 2011 RADAR 112 Mar 2012 (January 6, 2011, to December 7, 2011 , Triton Digital Releases Monthly Internet Audio Top 20 Rankers and assumes they are 80% of total 2012 RADAR 116, (Jan – Dec 2012); Triton Digital Report. Assumes Top 20 = 80% of total (Jan 12 ‐ Dec 12)

  4. How Can Broadcast Radio and Music Players Co-Exist Without Cannibalizing One Another? Simple. There’s More Time to Share.Combined Time Spent per Day With Radio, TV, and Internet Gained More Than an Hour Since 2003 Self-Reported Average Time Spent per Day With Today’s Three Biggest Media: Radio, TV, Internet (Hours:Minutes) Base: Total Population 12+ Source: Arbitron Inc and Edison Research, Infinite Dial 2013

  5. Heavy Usage of One Medium Is NOT Necessarily Associated With Less Time With Other Media Self-Reported Average Time Spent per Day With Each Medium (Hours:Minutes) 3+ hours/day 5+ hours/day 4+ hours/day Source: Arbitron Inc and Edison Research, Infinite Dial 2013

  6. The Vast Majority Of Total Time Spent With Commercial Radio Is Done Listening To AM/FM Share of Daily Radio Minutes Adults 18-64 Note: AM/FM Radio includes radio station streams; Music Streaming Service includes iHeartRadio, Pandora, Rdio, Slacker, Spotify, etc. Source: USA TouchPoints 2013.1 6

  7. Even among young adults, AM/FM Radio comprises over 3/4 of the time they spend with total Radio Share of Daily Radio Minutes Adults 18-34 Note: AM/FM Radio includes radio station streams; Music Streaming Service includes iHeartRadio, Pandora, Rdio, Slacker, Spotify, etc. Source: 2013.1 USA TouchPoints

  8. Online Listening Currently Holds Little Threat to AM/FM Radio Note: AM/FM Radio includes radio station streams; Music Streaming Service includes iHeartRadio, Pandora, Rdio, Slacker, Spotify, etc. Source: 2013.1 USA TouchPoints

  9. Pandora Does Not Take From Radio Listening – Nearly All Pandora Users Listen to Radio Pandora users also over-index the population in being listeners to AM/FM radio Source: Scarborough Rel 1 2013 top 5 mkts NY, LA, Chi,SF, Phil markets avg

  10. In Fact, Pandora Listeners Report Spending 50% More Time Listening To AM/FM Radio Than Non-Pandora Listeners Average Tuning to Broadcast Radio = 50% more than non-Pandora listeners Don’t listen to Pandora Pandora Listeners Sources What Pandora Means for Radio, Vision Critical, November 2012; Base: American online adults, aged 18+ ; Sample: 1,017 American adults; of these, 323 identified themselves as Pandora users (used an Internet-only audio service in the past month; and at least sometimes use Pandora) 10

  11. Vast Majority of Weekly Online Radio1 Listeners Also Listen to Over-the-Air Radio % of Weekly Online Radio Listeners Who… 1 Online Radio = Listening to AM/FM radio stations online and/or listening to audio content available only on the Internet 6% of all Persons 12+ listened exclusively to Online Radio in the past week Base: Weekly Online Radio Listeners Source: Arbitron Inc and Edison Research, Infinite Dial 2013

  12. Radio Connects Personally 82% A personal, para-social interaction with their favorite Radio personality 66% Say their Radio Station reflects who they are as a person* 72% Talk to their friends about their favorite personality or program content 70% Follow their favorite personality/Radio station on social media 70% Consider radio personalities to be a good or best friend or companion** This relationship carries over to advertisers who become a part of these “Virtual Neighborhoods”. Sources: USC, Annenberg School for Communication & Journalism, PSI Study released June 2012, Woodley, P. and Movius, L. People With a Favorite Radio Personality in Los Angeles; *Latitude Research, Open Mind Strategy May 2013 study of 1000+ participants; **Alan Burns “Here She Comes” 2012 online survey of 2,010 women 15-54 in May 2012

  13. There Is an Emotional Attachment to Radio 9 out of 10 people who use radio heavily would be somewhat or very disappointed if their favorite station were no longer on-air % who would be “very” or “somewhat” disappointed if the AM or FM Radio station they listen to most were no longer on-air Source: The Infinite Dial 2011

  14. People Are More Connected to Their Favorite Radio Station Than to Facebook Read: I would be very disappointed if… Left Column: My favorite radio station went away Right column: Facebook went away… Source: Alan Burns/Triton Digital “The Future of Radio” September 2012 National Consumer Database; 25,000,000 Panelists; August & September 2012;All Ages, Genders and Format Fans; Total Polled = 41,252; Roughly in Line with 2010 Census; Heavily Caucasian

  15. Radio Is One Of The Most Trustworthy Media On a scale of 1-10, 10 being highest, rate which media are trustworthy. Credibility is Contagious in an Emotionally Connected Environment % of Respondents Rating the Medium 7-10 Source: 2013 Nielsen National Cross-Media Engagement Study/Newspaper Association of America

  16. New Music & New Artist Discovery FM Radio is the first choice for new music and new artist discover – 15 times more than Pandora One choice only – among those interested in new music Source: Jacobs Media’s “Digital Generations” Techsurvey9; Based on 264 stations, 12 radio formats, 78,111 radio listeners gathered online from January 29-February 19, 2013.

  17. New Music & New Artist Discovery Even among very young Gen Z, FM radio is the #1 source of discovering new artists and music – 6 times greater than Pandora One choice only – among those interested in new music Source: Jacobs Media’s “Digital Generations” Techsurvey9; Based on 264 stations, 12 radio formats, 78,111 radio listeners gathered online from January 29-February 19, 2013.

  18. Competitors – Current and Potential Satellite Radio • Sirius/XM Music Players • Pandora • iHeartRadio • Spotify • TuneIn • Slacker • Grooveshark • Google All Access • Apple • iPods, CD players, Gaming systems, dozens more online music players • Invasion of auto dashboard

  19. Comparison of Radio vs Music Players in Top Markets Adults 18-34 Source: Scarborough Release 2 2012 12 month survey (Aug 2011 – Aug 2012) Adults 18-34 M-Su 6a-mid Metro Area

  20. Comparison of Radio vs Music Players in Top Markets Adults 25-54 Source: Scarborough Release 2 2012 12 month survey (Aug 2011 – Aug 2012) Adults 25-54 M-Su 6a-mid Metro Area

  21. Launched in 2001 • Achieved 10% penetration in 12 years • 20 million +/- Subscriptions, number continues to rise slowly – although they include newly sold and unsold cars • No free access (except during first 3 months of new car) • Less than 4% of revenue from advertising • Only local content is traffic (in 4 cities) and MLB teams in their cities • New Apple iRadio service will be integrated into some new cars which could cut into subscription totals for Sirius

  22. Over 10 years old, reformatted in 2008 • #1 online music player • Over 200 million “registrants” – info self reported, not verifiable, geographic data never updated • Only 65 to 70 million regular users per month (2/3 of their registrants do not regularly use the service) • Listening levels have dropped measurably since capping free listening at 40 hours/week in May 2013 • Developed ratings similar to Arbitron’s using Triton Digital but can’t verify that anyone is listening • Update age but does not update zip code, geography, employment • Gained access to ad agency software systems to enable inclusion in radio buys using Triton Digital data • Gained access to 23 brands’ in-car dash boards and 8 car stereo makers • In 2.5 million vehicles, expects to be in 5 million more in next 12 months¹ • 96% of monthly Pandora users listened to AM/FM radio in the past week² Source: 1 – Bloomberg News June 25, 2013 ; 2 -- Scarborough Release 2 2012 12 month survey (Aug 2011 – Aug 2012) Adults 25-54 M-Su 6a-mid Metro Area NY, LA, Chi, SF Phil avg

  23. Pandora’s Major Drawbacks 2013 2012 0% 10% 20% 30% 40% Among those who stream & use Pandora Source: Jacobs Media’s “Digital Generations” Techsurvey9; Based on 264 stations, 12 radio formats, 78,111 radio listeners gathered online from January 29-February 19, 2013.

  24. The Reality of • Pandora claims that they reach 7+% of total audio listening ... ALL Internet Streaming accounts for only 5% of total radio listening including digital, broadcast and satellite. Their 7% share is an impossibility. Unsupported and unsupportable.¹ • Pandora claims that they have 75% of all Internet Listening ... In reality Pandora’s share of Internet listening is likely 1/3 smaller. It has a big share of a small universe. ² • Pandora does not replace radio. 96% of monthly Pandora users listened to Radio in the past week.³ • Pandora users listen to 50% more AM/FM radio than non-Pandora users. • Pandora claims its users spend 20 hours a month … Pandora includes overnight and Premium subscriber (no ads) listening. That is 40 minutes a day or less with an average of 3-4 ads an hour. Commercial Radio offers more than 4 times that. • Pandora claims that the reach of their network is as big or bigger than top rated local stations ... In reality they are combining all their individual channels togetherto compete against an individual broadcast radio stations with a methodology that does not match Arbitron ratings. • Pandora claims they can target geographically….In reality, Pandora doesn’t check to see if registrants have moved. Consider that 40% of 18-34 and 30% of total population move within 3 years.⁴ • Pandora has no personalities, no local presence, no community connections, offers none of the live opportunities Broadcast Radio does. BOTTOMLINE: Pandora can’t deliver what it says it does and Radio can. 24 Sources: 1 – USA Touchpoints 2013.1; 2 – Scarborough USA Plus Rel 2 2012; 3 – Scarborough Rel 1 2013 44 markets 4 – U.S. Census 2010

  25. iHeartRadio • Reached 40 million downloads faster than any other streaming site in history • Currently 2nd most downloaded online radio app (after Spotify) • Free service, registrations requested • Has nearly 30 million regular users • Created in 2008, capable of carrying commercials since 2012 • Carries access to over 1500 radio stations around the country (including Clear Channel, Cumulus, Univision and more) • Features include “perfect for” premade lists, ability to design custom list, pick premade “stations” that can then be personalized and more from a 15 million+ song library

  26. iHeart Radio Beats The Competition On Facebook Likes ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Source: Facebook (likes), Clear Channel Internal Data, Competitive Websites

  27. Offers on-demand albums, songs and artist playlists with social media integration • Recently developed “radio station” option that curates more content • Has 20x number of songs in its inventory as Pandora • No source of 3rd party ratings data to compete for advertising revenue • But, majority of users opt for ad-supported, free version

  28. Majority of Spotify Users On Ad-Supported Free Access Platform Note: Pandora, even at 1/3 the cost, has far fewer paid subscribers Pandora refuses to divulge the number of paid subscribers, but comments from Pandora and reporters place the number at 4% of their regular users, or around 3 million. Spotify charges $10/month while P runs $6/month. Chart from Paul Sloan on CNET.com March 12, 2013

  29. Spotify vs Pandora • Pandora claims about 65 to 70 million monthly users (paid and free) • Spotify claims about 24 million monthly users (paid and free) • Pandora has approximately 1 million songs in its catalog • Spotify has more than 20 million tracks in its catalog • Pandora will not play the exact song you request • Spotify can play the exact song you request • Pandora uses Triton Digital data to produce ratings that can be incorporated into Strata and Mediaocean radio buying software • Spotify has no third-party measurement sources • Pandora data available in Scarborough and The Media Audit • Scarborough and TMA have begun to ask about Spotify, but data not available until Fall 2013 • comScore reports Pandora with 66.7 million uniques but shows only 6.8 million uniques for Spotify Estimate based on Pew Research Center April 2013 “Report on Audio”; Pandora press releases in March and April 2013, comScore data from March 2013; /Net aricle about Spotify; comScore total internet media trend metrics April 2013 total users per month

  30. Capabilities Comparison of Broadcast Radio vs. Pandora And Spotify 30 Sources: Broadcast Radio includes Internet Streams

  31. Capabilities Comparison of Broadcast Radio vs. Pandora and Spotify Sources: Broadcast Radio includes Internet Streams * Can pull zips, gender and age but not eliminate coverage of each – which is value added ^ Doesn’t update zips, 88% of people online use false or incomplete data per Blue Inc 2012; *Infinite Dial 2012; ^^USA Touchpoints 2013.1; **Bridge Ratings March 2012 31

  32. AllAccess • Available now – subscription only • $9.99 $7.99/monthSign up before 6/30 • Locker and Store -Free • Unlimited listening to millions of songs • Create personalized radio from any song or artist • Listen with unlimited skips • Get smart recommendations based on your tastes • Store up to 20,000 of your own songs in your locker • Access your music anywhere without syncing • Experience music without ads • Buy new music on Google Play (18M+ songs)

  33. Apple iTunesRadio Music Streaming • Apple just introduced iTunes Radio. • Will be built into iOS7 and will be ad supported • Commercial-free to subscribers for $24.99/year • 500 million people worldwide are iTunes users • Targeting Pandora and Spotify to “build into a $1 billion business over the next five years."

  34. Competitive Revenue Projections

  35. Invasion of Dashboard • Several music players, including iHeartRadio and Pandora especially, have negotiated for places on “connected” dashboards • The reality of the threat is that few cars are sold each year with these new dashboards • 6% say they have in-dash info/entertainment systems • 20% say they use Bluetooth connections to listen to music apps • Reality: • 245+ million cars currently registered in the US • Auto sales average 13 to 16 million per year • Average car ownership is 11 years • AT&T expects 20 million cars on road between 2015 and 2018 to have interactive dashboard¹ • Radio is #1 most required in-car entertainment device² The reign of radio as dominant source of audio entertainment in the car is unlikely to be significantly challenged for decades to come. Source: 1 -- Pittsburgh Post-Gazette April 7, 2013 2 -- Presslaff Interactive Report May 2013

  36. In-Dash Information and Entertainment Systems Still in Their Infancy % With an In-Dash Information/Entertainment System in Primary Car Base: Driven/Ridden in Car in Last Month, age 18+ Source: Arbitron Inc and Edison Research, Infinite Dial 2013

  37. One in Five Have Used Their Cell Phone to Listen to Online Radio in a Car % of Cell Phone Owners Who Have Ever Listened to Online Radio in a Car by Listening to the Stream From a Cell Phone Connected to a Car Stereo Source: Arbitron Inc and Edison Research, Infinite Dial 2013 Base: Own a Cell Phone

  38. Don’t Touch That Dial

  39. No Radio, No Sale The ability to access audio content via the Internet from mobile devices is not viewed by consumers as a substitute for the easy, ubiquitous, dependable radios in their dashboard.  It’s viewed as a complement – a new platform for new choices – not an invitation to limit choice to the mobile device-only.

  40. Radio Remains The In-Car Must Have Which in-car dashboard options are a must-have in any new vehicle you may buy/lease? Based on online survey of 28,753 respondents from 20 broadcast groups and over 200 individual stations conducted March 12 to April 2, 2013.

  41. Regardless of Age, Radio Listening In-Car Ranks Highest When driving, are you most likely to be…? Based on online survey of 28,753 respondents from 20 broadcast groups and over 200 individual stations conducted March 12 to April 2, 2013.

  42. AM/FM Radio is the King of In-Car Media % Who Currently Ever Use in Primary Car Base: Driven/Ridden in Car in Last Month, age 18+; 87% of 18+ Population Source: Arbitron Inc and Edison Research, Infinite Dial 2013

  43. AM/FM Radio Has Far More FrequentUsers Than Other In-Car Audio Options % Using “Almost All of the Times” or “Most of the Times” in the Car Base: Driven/Ridden in Car in Last Month, age 18+ Source: Arbitron Inc and Edison Research, Infinite Dial 2013

  44. Beware Irrational Exuberance About Digital • Today’s average consumer is far less technically savvy than some in the industry and media might hope • Based on feedback from a 1.2 million plus global panel of music lovers, we think streaming and other new dynamics have huge potential, but it’s still very early. • Two-thirds of music revenue worldwide is still based on physical sales, and…[broadcast] radio is still by far the way the vast majority of people discover new music. • “If you leave not understanding that [broadcast] radio is really important, then you’ve missed something.” • Chris Carey • Universal EMI’s Global Insights • March 2013 SXSW Panel

  45. Until internet access is free and ubiquitous Until music players are able to deliver the same live, local, emotionally connected entertainment as Broadcast Radio Until people stop wanting to be entertained by people, not just music -- Broadcast Radio rules and will continue to rule consumer listening

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