From the launch of television in the 1940s through the advent of MTV in 1981 and multiple threats from shiny new technologies, radio has survived many challenges to its business. But can the medium navigate competition from streaming? In an era when streams account for 85% of U.S. labels’ music revenue and other, newer media is finding favor with consumers, a reckoning is taking place as music executives evaluate traditional radio’s place in the pecking order.
Make no mistake, AM/FM radio still owns the largest piece of America’s audio pie, according to Edison Research. Its 2020 “Share of Ear” report says terrestrial radio accounts for 39% of audio consumption among those 13 and older, compared to 18% clocked by streaming services, second among all audio segments, including podcasts, satellite radio and owned music.
However, a MarketWatch report that focuses solely on music listening — excluding time spent listening to news/talk radio, podcasts and other non-music fare — found that streaming led all sectors in the fourth quarter of 2020 with a 33.2% share, compared to traditional radio, which ranked second with a 15.9% share. In fact, MusicWatch market research shows streaming outperforming radio in each of the last five years.
At the same time, labels have been quietly thinning the ranks of their promotion teams, although a recent, relatively high-profile executive shuffle at RCA Records saw label co-president and longtime promotion influencer Joe Riccitelli exiting the company. In the press release announcing the move, chairman/CEO Peter Edge said, “Over the past decade, there has been a genre shift in consumer demand and streaming has revolutionized every aspect of our business, so we must constantly adapt and iterate on our successes.”
While most executives are reluctant to speak on the record about a shift away from radio promotion, one senior executive at major label says, “Radio has morphed and changed to the point where you ask, ‘Where is consumption happening?’ It’s happening at the streaming partners. You think about where that listener is, where they’re leaning in, and you say to yourself, ‘Where do I put the resources?’ Radio still has value for sure — it’s just at the tail end of the consumption curve, not at the beginning.”
Veteran Motley Crue manager and Better Noise label head Allen Kovac adds, “Radio is all about the passive audience, the one that commutes and is in their car two or three hours a day. And who knows how long that will last, as we work more and more from our homes?”
Indeed, the pandemic has exacerbated the change. “Before, we were like, ‘Wow, if we could hit 30 million in radio audience, that would be outstanding’,” says one sales and marketing executive. “During COVID, some of these superstar releases at Top 40 or wherever else might only hit 15 to 18 million in audience, and you’re still getting high fives. It just takes so much longer.”
During the many decades when physical sales drove the music business, radio promotion was crucial — and accounted for a huge percentage of major label budgets. While the rise of social media and satellite radio led some label CFOs to scrutinize promotional spending even before the shift to streaming began, now senior executives from two of the three majors say the chairs of their parent companies are urging their labels to reduce it.
Radio networks have been trimming costs as well. “Between Entercom and iHeart, there’s thousands of people over the last 18 months who no longer have jobs,” says one radio expert. Townsquare and Beasley are among the radio broadcasters who have also significantly reduced their ranks.
“Where there might have been 60 or 80 programmers across the country that were making these decisions, that’s going to whittle down to somewhere between 20 and 30,” says a long-time promotion exec. “I think it’s going to shrink even more as a couple of the other chains consolidate. Instead of doing it on a local level, they’ll do it on a national level.”
Consequently, while the senior ranks of promotion departments remain amply staffed, there’s less need for local and regional reps in a business where more and more programming decisions happen higher up the radio food chain. One promotion veteran estimates that labels employ 20% fewer promotion heads than they did five years ago, and are down 40%-50% from where staffing stood 10 years ago.
“I’ve seen an exodus of promotion people over the past few years as labels concentrate more on streaming,” says one industry observer. “And, after iHeart and other consolidations, there are indeed fewer decision-makers to talk to, plus fewer slots to work. Spotify’s Today’s Top Hits turns over 40 songs relatively quickly; Top 40 radio plays 18 currents at a time and holds the Weeknd’s ‘Blinding Lights’ in power rotation for a year.”
The industry’s shift away from sales began in earnest when Spotify launched in the U.S. in 2011. While that transition could have enhanced the status of promotion departments, instead labels debated whether streaming services should fall under the purview of promotion or sales teams, with most opting for the latter, even though the process of persuading a playlist editor to add a song might be similar to courting airplay from radio.
One exception is Warner Music Nashville, where separate teams of radio and streaming specialists are parked in the same department. At Sony Music’s labels, relationships with the streaming services are centralized through the sales and global digital business team.
“Most labels have the playlist streaming team housed in that commerce team because it’s attached to a commercialized account,“ says John Fleckenstein, COO at Sony-owned RCA. “But, as playlists get more and more developed, there’s a promotional aspect. What we have found is that it’s wrong to apply our structure to the world. As playlisting and curation evolves on these platforms, so will our teams.”
With streams becoming a label’s main revenue source, the increasingly outdated word “sales” is being replaced by such descriptors and “revenue” or “commerce.” More significantly, those units now lead the charge, rather than waiting for radio to create awareness.
“In the past, promo ran the business at labels; sales was always looked at as second fiddle,” says a senior sales and marketing executive at one of the major labels. “Now it feels very equal. Where promo or radio used to start the fire and we would try to fan the flames, it’s now reversed.”
With the exception of top-level artists, radio is very rarely the place to start any fire, especially with new acts. “With our superstar acts who are vying for a No. 1, top five or top 10 debut, our radio promotion team is hand in hand with us,” the executive continues. “But on the developing-artist side, it’s very much streaming first to see if we can build pools of listeners and spread it to some sort of scale where radio picks up on it.”
Instead, radio has become a way to extend the life of a project. “Look at every major artist that comes out, like a Selena Gomez or a Dua Lipa: The biggest week for streaming is the first week, and then it’s a slow decay from there,” says the commerce chief at another large major. “Even though it’s hit or miss, you hope that radio helps extend the life of the streaming.”
Adds Charles D’Atri, partner of management and marketing company Best Quality, who previously held marketing titles at Disney Music Group and Columbia Records, “You’re still getting your mass audience at broadcast radio today, the repeated exposure, the passive audience. The problem is, they lost their [active listeners]. Labels used to focus on certain radio stations at certain [times of day], where the actives were, because those are the people who are going to buy into your new music. Now those listeners are online.”
The chart-topping hit by singer/actress Olivia Rodrigo illustrates D’Atri’s point. When “Drivers License” bowed at No. 1 on Billboard’s Hot 100 — which determines songs’ popularity based on a combination of sales, radio play and digital streams — it drew 8.1 million radio audience impressions, not bad for a song that’s new to the market. But that’s a drop in the bucket compared to the 76.1 million streams the song clocked in that same week.
Sean Ross, VP of music & programming for Edison Research, cites Rodrigo’s song as proof that labels still value terrestrial radio.
“In 2010, ‘Forget You’ by Cee-Lo became instantly phenomenal and Atlantic spent the better part of a year working it to radio,” he says. “In 2013, Psy’s ‘Gangnam Style’ broke without radio, and the label still cared enough to take it to radio. So, it’s telling that Interscope still saw radio as a next level for a song as phenomenal as ‘Drivers License.’”
And despite shifts in the business, radio does remain an important way for many people to discover new music. In Edison Research’s 2020 Infinite Dial report, 46% of consumers 12 and up who consider finding new music important say that radio is one of the channels where they discover fresh tunes, although it’s not the most important one. In the multi-answer question, YouTube was the most frequently cited source for music discovery at 68%, with “friends and family” at 47% and Spotify close behind radio at 42%.
Indeed, while it might no longer be the loudest voice in the conference room, “We are still very much in the radio promotion game,” Fleckenstein says. “We’re absolutely competitive in that area and will remain to be such in the simplest terms possible.” In the wake of Riccitelli’s departure, RCA has refocused its radio approach, elevating Sam Selolwane and Keith Rothschild to co-heads of the label’s promotion teams, with the former overseeing R&B and hip-hop formats while the latter guides pop and rock.
A streaming VP from another major says that even with shifts in the business, radio remains a priority for his label’s top acts. “When we sit down with artists and managers, as much as they want streaming and they want the big debuts, they want to own the Billboard 200 and the Hot 100 charts. We’ve sat down with some really big names and they told me flat out, ‘Yeah, I’d love to say I have a billion streams, but I’d also love to say I have a No. 1 record at Top 40.”
Still, although radio isn’t going away any time soon, there’s little question that streaming has gone a long way toward leveling the playing field. “Things are a lot different these days,” Kovac concludes. “Being on a major label or played on the radio aren’t the only ways to succeed.”
Additional reporting by Roy Trakin.