There was a lot of talk about new competition for radio as Entercom CEO David Field appeared at the UBS 39th Annual Global Media and Communications Conference in New York. But Field insisted that radio’s listenership remains strong and said the new kid on the block, Pandora, faces a problem as it tries to become profitable.
“We live in a country where the shiny new toys get a tremendous amount of attention. A decade ago it was satellite, then it was the iPod – and again what we found with all these technologies was that at the end of the day they’re not substitutes [for radio],” Field said.
“Look at Pandora. For all the hype it has about a two and a half share of radio listening, if you believe their numbers, right? Again, we can argue whether that is radio, or whether that’s a substitute for a CD player or and iPod. For the context of this debate, let’s consider them to be radio,” Field said. “Local radio has 40 times more listening than Pandora.”
According to Field, Pandora has a fundamental business issue to deal with. “Right now they’re running, from what I’ve heard, about one 15-second commercial an hour. That’s about 2% of what we run. Do the math. That gives you about an $8 million per year revenue opportunity, which isn’t going to pay the bills for them. So they have the fundamental issue, in my estimation. They need to either figure out a way to dramatically increase the amount of commercial loads – and guess what? People don’t listen to Pandora to hear commercials, because it’s not radio and they’re not used to it. It’s a music playlist service and they don’t want commercial on their iPods, they don’t want commercials on their CD players and they’re not going to want commercials on Pandora and Slacker and so forth,” Field told the Wall Street gathering. “So our view is that if they increase the commercial load to make themselves more commercially viable they then have the problem with their listener appeal. On the other side of the coin, of course, if they don’t their opportunity is quite limited.”
RBR-TVBR observation: It seemed strange to us that the set-up for the question seemed to assume that the Pandora IPO was a rousing success. The stock went public less than a year ago at $16. In recent days it has been struggling to stay in double digits.