The boss of radio giant iHeartMedia, Bob Pittman, came out swinging in the company’s Q2 earnings call with analysts today. In his sights: the digital giants who are so regularly assumed to dominate our modern media consumption habits.
Take, for example, this killer stat from Pittman, who inked a new four-year deal as CEO of iHeart in January: “Radio already has the greatest number of reception devices of any media [in the world]: 1 billion radios as compared to 229 million smartphones and 144 million laptops and netbooks. And now we have the addition of new devices like smart speakers in the home, Alexa and Google Home, which increased listening opportunities for all of our audio properties.”
Pittman’s confidence was partly driven by iHeart’s Q2 results, which saw the US-based company post quarterly revenues of $913.3 million, up 2.4% year-over-year. In the first six months of 2019, those revenues hit $1.71bn, up 2.7% year-over-year.
Quarterly digital revenue increased 32.8% year-over-year at iHeart in Q2. The company says that it now reaches 275 million Americans monthly – more than the top two closest broadcast radio competitors combined. (275 million is also, as pointed out by Pittman, “a greater monthly reach in the U.S. than even Google and Facebook”.)
Pittman told investors that iHeart’s stations had a big role to play in terms of “companionship” to listeners, talking “to them while they’re cooking or when they’re brushing their teeth in the morning”.
But he also noted that iHeart had a secondary purpose which was, in his words, to “have a synergistic relationship with music collection”.
“75% of iHeartMedia’s listening comes from 34% of our audience, that’s the radio experience… In contrast, 73% of Spotify’s listening comes from just 3% of their audience and 72% of Pandora’s listening comes from just 5% of their audience.”
Bob Pittman, iHeartMedia (pictured)
“Eighty percent of consumers say the main way that they discover new music is via FM radio – and that applies to Spotify users as well,” said Pittman, talking up radio’s contribution to artist and music discovery amongst consumers.
This wouldn’t be the last time Pittman would mention Daniel Ek’s streaming company.
At another point in today’s earnings call, Pittman said: “We have a well-distributed listener base and it represents another illustration of the fundamental difference between the radio companionship segment and the music collection me-time segment of the audio marketplace. 75% of iHeartMedia’s listening comes from 34% of our audience, that’s the radio experience: always there, always available, something everyone can use when they wanted.”
He then added: “In contrast, 73% of Spotify’s listening comes from just 3% of their audience and 72% of Pandora’s listening comes from just 5% of their audience. That’s the music collection experience.
“That kind of concentrated usage by a small consumer segment is exactly what happened to the brick-and-mortar music space, whereas radio’s reach and usage is well distributed and as you can imagine that resonates with our advertisers.”
In a rare public statement, Spotify founder and CEO, Daniel Ek, subsequently took to Twitter to rubbish Pittman’s stat.
Responding to media analyst Rich Greenfield, who flagged Pittman’s “73% of Spotify’s listening comes from just 3% of their audience” comment, Ek posted: “Not sure where that data is from, but it’s far from true.”
“Not sure where [Bob Pittman’s] data is from, but it’s far from true.”
Daniel Ek, Spotify
Running Spotify’s own numbers through his abacus, Greenfield noted that SPOT counted 232m monthly active users in Q2 this year, who listened to a total of 17 billion hours of content between them.
That works out to 49 minutes of consumption per user per day, he said.
“If 3% [of Spotify users therefore] listened to 73% as iHeartMedia said it implies 3% of Spotify users listen to ~20 hours/user/day with remaining 97% at just 14 mins/user/day,” pointed out Greenfield – a numerical suggestion, he noted, which doesn’t sound grounded in reality.
As for Bob Pittman, he had another (rather more undeniable) takedown of Spotify’s business model vs. iHeart’s up his sleeve on the earnings call.
“Years ago a consumer would listen to a song on the radio and then they might purchase a CD,” he said. “Today, they listen to a song they like on the radio and they put it on their playlist.
“When you look at the big services on the music collection side, it’s primarily Apple Music, Spotify, and Pandora, they’re the consumer-facing retailers, but the big economics actually flow to the music companies powering them; Warner Music, Universal Music, Sony, primarily.
“On the radio side, you have AM/FM, radio satellite, radio digital streaming radio, and podcasts.
“They’re providing companionship, keeping people company and engaged. Here we are both consumer-facing… and we receive the economics.”
iHeartMedia runs 850 live broadcast stations.
Its iHeartRadio service is available across more than 250 platforms and 2,000 devices including smart speakers, smartphones, TVs and gaming consoles.Music Business Worldwide