Guest Times: What will it take for audio streaming apps to catch up with FM radio in India?

FM radio in India has over 274 million cumulative weekly listeners with private FM radio contributing 145 million and the remaining 129 million, who listen to All India Radio (source IRS 2017).  FM radio in India is a Rs3100-crore industry, likely to grow at 10% yearly. Average EBIDTA margins are 20% plus. All India Radio news has now been allowed on FM radio.   Streaming apps need to understand the ‘audio’ consumer’s behaviour closely if they have to come anywhere close to even getting even 10% of the revenue share of the sector and that too ‘profitably’.

Primary differences between audio streaming and Live FM radio

1. Audio streaming apps are a replacement for the MP3 player or the pen drive on which you carried your playlist.  The content is largely music and there is no product differentiation whatsoever between one streaming app and the other. All apps offer the same music database with only differences in user interfacing and playlist creation. The music was created by the original artist and therefore a streaming app offers no ‘real value creation’ in content terms. Playlist fatigue is very quick in a music streaming app, meaning how long will a listener listen to the same 150 songs.  ‘App created playlists’ use some algorithms to automate ‘so called online radio stations’, which are nothing but ‘predictive music playlists’ that sometime get listener tastes right but again become victims of fatigue quickly. Non-music content in these apps is limited and does not have the power to pull in consistent listenership.
2. FM radio is a vibrant source of local city-based original content that goes beyond the music. Even with the music, content is created around songs to engage listeners with sparkling stories and anecdotes of listeners and creators. FM radio listeners largely tune in to know what is happening in their city and to listen to other listeners. There is no repetitiveness or fatigue here as content is ‘truly refreshed’ daily. Even if you hear a song you know well on the radio, the refreshed content around the song makes you turn the volume up. However on an app, the ‘fatigue’ value of a repeat song sets in really quick.  
3. Audio streaming apps do not create time-bound appointment listening as the same content is available at any time. This is the reason ‘time spent per listener’ is very low, averaging 11-14 minutes daily on streaming apps. It is just ‘convenience listening’.
4. FM radio has strong time-bound listenership in each day part and is very habit-forming, thanks to the sound of distinct time-based programming lead by talented RJs who possess strong ‘influence creating expertise’ honed over a significant period of time. This is the reason average time spent per listener in FM radio is over two hours daily with cities like Bangalore and Kolkata peaking at five hours daily.
5. In a nutshell, you cannot predict content on FM radio and that adds to a delight / surprise factor daily versus how you can surprise yourself with a playlist you only created on a streaming app.
6. FM radio is truly free for the listener and streaming apps contribute to data charges that are not free for the listener.
7. In moving vehicles, the FM radio experience is seamless and streaming audio is not due to inconsistent bandwidths of telecom service providers.

Business dynamics

1. FM radio generates revenue from advertising, integrated sponsored content and related revenue like activations and events. The ‘media buyer’ based on high reach coupled with ‘strong daily/, weekly listenership consistency on FM radio is able to generate promotional value for their brands. Also since every FM radio brand has multiple and unique ‘city feeds’, this allows revenues to be generated from both corporate and local retail businesses. Audio streaming apps do not allow for such huge numbers of reach, daily/weekly engagement and multiple city focussed feeds thereby not being able to satisfy the ‘hygiene matrices’ of a media buyer. Even if app downloads are high, this does not mean that there is guaranteed and consistent listenership demanded by the advertiser. Consumer data collected by such apps is not presented in the manner that a media buyer would find conducive to action.
2. FM radio was always meant to be free to the listener so it created strong revenue models for itself from advertisers. However, audio streaming platforms have to generate regular subscription revenue from the user. The number of subscription active users is always going to be a big challenge as listeners have multiple free apps to choose from. Most apps launch with a ‘free service’ to get listeners in but find it hard to then charge after the initial launch. The charge per se relates to ‘making playlists’ or ‘offline playout’ of songs which as mentioned are similar to what MP3 players did and result in quick listener fatigue.
3. FM radio companies that have already invested into online streaming platforms can cross pollinate easily by taking popular FM segments from their FM radio stations and making them available on their online apps. FM radio companies have also started to simulcast their stations online for higher reach in cities where they do not have a license. In converse, audio streaming apps have ‘unestablished content’ and can’t enter the ‘FM radio space’ as they are not licensed to do so. The free podcast space is also making things more diluted for audio streaming apps.
4. The huge opportunity that FM radio is sitting on is listener-to-listener conversations that can be monetised. While the broadcaster to listener connect is established and has huge momentum, this allows for listeners to connect with each other either on air or online on social media pages of FM radio stations. So the community talks to each other but through the radio station and this can make branded content super interesting for advertisers.  Audio streaming apps will find this hard to do as the listener listens to what they do in ‘isolation’, meaning you have no idea what the other person is listening to on their app and have really no means or desire to connect with other co-listeners.

Some questions for audio streaming companies to answer and find ways to succeed

1. Do you have a well-defined audience broken into well-understood sub-groups so you can find means and ways to super engage them better in a super consistent manner?
2. Do you worry more about app downloads and less about time spent per listener everyday on your app?
3. How will you ensure the content on your app ‘created by you’ is top notch, like say a Netflix that draws people away from TV and do you have the investment potential versus profitability calculations worked out for the same?
4. How are your target community seeding and building activities directly related to your ‘revenue strategy’ and ‘listenership engagement strategy’ and not seen as ‘marketing objectives’ only? And how does this result in active consistent subscribers?
5. How will you, therefore, truly distance yourself in offering from other such non differentiated apps?
6. What is the expertise you have that FM radio in India has that allows you to understand what the Indian audioscape is really looking for?
7. Finally what will it take to ensure you get to at least 10% of the FM radio revenue pie in India, in a profitable manner?

In summary, ‘digital’ only promises one thing — convenient access. The rest needs to be created in a manner such that it commands huge value and respect from listeners, advertisers and of course shareholders. And with established FM radio brands poised to go online in a big way, given that there are really no more city FM licenses, it is time for audio streaming apps to put on their serious thinking caps.(Disclaimer: The opinions expressed in this article are those of the author. The facts and opinions appearing in the article do not reflect the views of www.bestmediainfo.com and we do not assume any responsibility or liability for the same.)

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