Michael Robertson On iTunes Radio: “Good For Pandora, Bad For AM/FM”
(UPDATED) Serial music tech founder Michael Robertson (MP3.com, MP3Tunes, Dar.fm) reacts to today's launch of Apple's iTunes Radio launch (full story)
Press speculation says Apple's forthcoming
iTunes Radio is bad for industry leader Pandora, but they're wrong. In spite of
Pandora's difficulties turning
a profit, they are firmly entrenched as the market leader with 8% of all
radio listening. iRadio is a frontal attack on FM radio and will
accelerate the deterioration in their business and pressure the $10/month
services to offer a free tier.
A
default free radio experience built into iPhone's and iPads will quickly
attract millions. The press will cover iRadio exhaustively plus the power of
Apple to pre-install upcoming iOS 7 this fall will lead to millions listening
to iRadio quickly after launch. 60-70% of online radio listening already
originates from a smartphone or tablet and that will accelerate with Apple's
push.
Yet iTunes Radio won't cannibalize Pandora. Pandora has loyal users, tremendous
awareness and a satisfying service. 70 million users a month are already in the
habit of clicking the P logo to hear tune and they won't change even for a
slightly richer service. In addition Pandora is built into hundreds of consumer
electronic devices and does not rely on any special Apple accommodations to get
their app onto devices so that will be unaffected.
Today only 10% of radio listening comes via net services. Thus 90% still use
AM/FM. 9 out of 10 people don't yet realize the huge benefit that net radio
offers compared to classic radio, but the press attention around iRadio will
help educate them. They'll learn that net radio offers virtually unlimited
station choices, ability to skip songs they don't like and ultimately puts them
in control of the audio bouncing off their ears instead of the broadcasters.
FM radio will free the brunt of iRadio's growth and it will only accelerate the
deterioration in their business. Radio is in the midst of a classic analog to
digital migration. (See newspaper, magazines, mail, etc) It is unstoppable
because it gives the consumer so much more control and choices. There's no
question that it will change from 10/90 (analog/digital) to 90/10 because FM
cannot compete with the benefits of internet delivered music. A new feature in
the new iOS which mirrors your iPhone display on a car's dashboard could have a
bigger impact on driving net radio adoption than a new copycat service from
Apple because it makes your smartphone a better car radio.
Others who will fall victim to iRadio's success are music services with no free
tier. Free is the most powerful marketing strategy of all time and that's
especially true with music. Apple's service improves on the free experience by
adding even more user control than Pandora. The hundreds of millions who have
yet to experience net radio will be lured to their free service or others and
never experience those which require a credit card: such as SiriusXM, Rdio,
Rhapsody, Google All Access, Sony Music Unlimited, and Deezer. The credit card
is an enormous barrier to explore. Some young people don't have a credit card
so they'll be forced to the free services and be oblivious to the paid options.
If you can't get a shopper into your store there's zero chance of them making a
purchase. There's unquestionably value in the $10/month services, but it will
be more challenging for those companies to attract initial interest since each
requires a credit card. Some number of those already paying $120/year for music
will reassess that financial commitment in the face of free alternatives.
There's still value in those offerings, but those providers will have to work
hard to keep delivering value.
iTunes
Radio's success as well as other net companies will come at the expense of the
expense of AM/FM station operators whose customers will are abandoning
their dumb car radios in place of the smartphone. Those that
don't offer a compelling free radio experience online will lose out. – Michael Robertson
There is a reason Safari is the most-used browser in mobile and it isn’t because it’s the best. It is what is pre-installed on the most devices (I believe Apple stated they’ve sold 600 million iOS devices).
iTunes Radio will likely create many new users – people that never used Pandora.
If someone has iTunes Match and they were using Pandora with ads I could see them switching.
“Free is the most powerful marketing strategy of all time”
Absolutely, but how well does it convert? Apple has the easiest path to conversion – if you like the song playing on the radio station you click one button and it’s yours.
This will be interesting to witness.
Good points.
My 16-year old son recently asked, about radio, “what is the point of ‘coverage’?” By that he meant range. Why was this a feature and not a bug?
Yesterday we drove from Boston to New York. We listened to his favorite show, All A Capella, on WERS, the Emerson College station, until the signal started to fail. So he fired up TuneIn on one of our iPhones, found the WERS stream, and we listened to the rest of the show until it ended, with the added benefit of data read-outs of the song titles, artist names and so on. Augmented audio. Bad news for signal-based radio.
BTW, have you noticed how awful AM receivers are in cars, and the low quality of both AM and FM on home radios and other receivers? Even if they work well, their UIs suck (as do many in cars). Those developments have been screwing AM and FM for years in any case.
In areas not covered by cellular data connections, of course, it will be different. I expect we’ll see the big regional stations persisting for some time. But most listening will go to online. How much will be Apple vs. Pandora I dunno.
Still, I am sure that exclusive inhabitants of the old AM and FM bands will be hurt, for the simple reason that the envelope of innovation is so fixed, small and old.
Exactly why does anyone even pay attention to what Robertson has to say anymore? He’s had nothing but one failure after another since he got lucky with MP3.com (and that was largely because he got lucky obtaining the domain name).
If you want to know what those who KNOW Michael Robertson have to say about him, visit http://freespire.com.
Robertons has had Steve Jobs envy for years. I guess even with Jobs having passed on, Robertson’s envy lives on.
You say yourself “a compelling radio experience”! I don’t see how this anything other than a streaming music service. This misses a large amount of what radio is. Where is the news, the expert knowledgeable and friendly curators. Where is the crafted features, documentary, discussion, comedy, cabaret. The in depth analysis. The simple companionship of a presenter, talking just to you, as you drive or are cooking the kids dinner.
Pandora may not rely on any special Apple accommodations but this doesn’t change the fact that millions of listeners use an Apple device to listen to Pandora. They certainly will be effected, it’s just a question of how much.
Even if Pandora starts a clever mass marketing campaign and cools it on the ads for awhile, it’s still safe to assume that Pandora’s stations and what they play based on the artist station will not be as accurate as Apple’s version because of the huge “Recommended For You” database Apple has accrued over the years via iTunes sales. The real music lover wants to be blown away with new finds on a regular basic, like some spoiled druggie. It’s only a matter of time before Pandora follows suit on those more accurate suggestions but by then the market share is already being, well, shared.
The real killer of AM / FM here is simply the awareness of internet radio that iRadio will bring. This will also be fueled with the more widespread accessibility of internet radio straight from the car in the super near future. Which won’t impact REAL terrestrial radio that’s spent the last decade+ focussing on community and local content and has a loyal and engaged listener base versus let’s say the major Top 40 automated Clear Channel garbage that has inevitably become a dime a dozen.
It’s surprising to see that Apple’s taken this long and I’m sure it will be nothing short of amazing, but in the future there’s going to be an absurd amount of players and the differences in listens will be more apparent than ever. Bottom line: the most engaging, groundbreaking content survives and a database, regardless of how large, can only go so far before it exhausts itself.
Ha! Robertson also predicted the failure of the iPhone and that Nokia was the cell company of the future. Oops.
http://www.michaelrobertson.com/archive.php?minute_id=240
Read his blog. He has a pretty lousy track record in predicting tech trends.
@Scott–I also just read the http://freespire.com you pointed us too. Robertson appears to be a real dirt-bag even to his family members.
“There’s no question that it will change from 10/90 (analog/digital) to 90/10 because FM cannot compete with the benefits of internet delivered music”
LOL. Sure. If I had a dollar for every time some tech geek made a similar prediction I’d be rich. And yet Terrestrial radio remains–thru napster, itunes, pandora, spotify and the rest–as not only the #1 choice of listeners during drive time, but reaching more than all of those other services combined.
I agree with others here. Stop listening to Michael Robertson and calling him a “serial music tech founder”. Name one successful business that he created that is still around. The answer is: there are none. He tanked MP3.com. He made off with millions while the rest of the shareholders got left holding the bag. He sold his SIP company to Google. But, they just wanted the engineers. There is no more SIP Phone. MP3tunes crashed and burned. Linspire died. For a “serial entrepreneur” his record is like 0 for 7. If you want to talk to someone relevant, interview Tim Cook, Jim Cady, Jamie Rosenberg, John Donham or someone who is actually doing something in the industry.
reminds me of some of the delusional overblown statements you’d hear from some online companies before the .com bubble burst. remember when an online tv service told the president of nbc that they’d be taking away their television viewers? anyone remember the name of that company? i didn’t think so.
even with itunes match i am very disappointed with iradio. the service has been clitchy and i have returned to my free pandora even with its annoying ads for a better selection of music. further there are just some dumb built in failures of iradio. cant mix stations, cant go back and rate tunes after i get to where i am going, no lyrics (duh),