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Monday, May 8, 2017

Radio’s Value Proposition – It’s Good To Be Free




May 8, 2017 · Fred Jacobs

A big topic in media and technology these days is cord-cutting.  That’s the practice of cancelling a subscription to Pay TV (cable and satellite), a practice that is undergoing a growth spurt.

A new article in Fast Company talks about a new study by MoffettNathanson showing that in Q1 of this year, cord-cutting exploded – shooting up five times compared to the same period in 2016.

That looks like the same trend we’re seeing in the newly released Techsurvey13.  This year, we included a first-ever question about cord-cutting.  And we learned that across our entire mega-sample of more than 51,000 people across North America, 12% say they’ve cut the cord, ending their relationship with cable or satellite television.

But a deeper look at the metrics reveals that cord-cutting is especially prevalent among Millennials, more than one-fifth of whom have made the move:

So, what is driving this fast growing trend, especially among younger people?  Part of it may be due to their desire to shape and personalize their content.  If you look near the bottom of the chart, you’ll note that frequent podcast listeners are also more likely to be cord-cutters.  And that supports the customization argument.
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But there is probably another explanation based on economics.  Pay TV has become expensive, especially as channel and content “bundles” of services have expanded and have become bloated.  Consumers often find themselves paying for channels they rarely if ever watch.

And while they enjoy entertainment and information options, at a certain point, money matters.  And to test that out, we added a new option to our “Why Radio?” series in TS13.  This is the question that asks respondents to identify us the main reasons why they enjoy listening to broadcast radio from a long list.

Typically, favorite songs and DJs/personalities are the top two responses.  But this year, “It’s free” debuted in the second slot, mentioned by nearly six in ten respondents (57%) as a key driver why they listen to AM/FM radio. That tells you that while content is critically important, the ability to listen to radio without the burden of a subscription payment moves the needle.

And when we look at the respondents especially appreciative of radio being a free source of entertainment and information, check out what we learned:

Yes, the generational group that puts the highest value on radio being “fee free” is once again those Millennials.  While they are especially willing to pay for services like Netflix and Spotify, when something comes along that provides solid content at no cost, it’s a distinct advantage.  Interestingly, Millennials are the consumers most driven by radio’s lack of monthly fee.

Now of course radio comes with costs.  And when we also looked at the respondents in TS13 who are spending less time with broadcast radio, too many commercials and repetitive music topped that list.  But that value proposition – that radio is free, albeit with regularly commercial breaks – turns out to be one of radio’s clear advantages over its digital competition.

In our recently completed “Millennial Research Project” in partnership with PRPD, a focus on expenses and financial reality is something mentioned by a number of our Millennial public radio respondents.  Most are just getting started, often in their first or second job.  And while Netflix, Spotify, and even supporting their local public radio station were popular media expenditures, cable and satellite television were not.  In fact, several indicated they had cut the cord, and were more selective about the content they’re willing to pay for.

In my travels around the country, I typically hear radio stations brag about their music specialties, as well as features like commercial-free music blocks and “traffic and weather on the 8s.”  But rarely do I hear positioning statements that extol the virtues of being “free” in a subscription-heavy media world.

At a time when radio needs to take advantage of each and every one of its assets, this is most-assuredly one of them.

Free is good.

Thanks to Seth Resler for the inspiration for this post.  For a free slide deck from Techsurvey13, click here.