Why Stations Drop Oldies

[job]

This is from the New York Daily News

________________________

If you wonder why radio formats like oldies and adult standards disappear even though they have large numbers of listeners, the main reason is simple.

Radio owners measure success less by listenership than by ad revenue, and if a big audience doesn't translate to big ad dollars, the format may be expendable.

That harsh truth is reflected in a new national survey by Miller Kaplan (MK) on radio's 2005 "Power Ratios" - how various formats convert listeners into ad dollars.

A "power ratio" of 1.0 means a format breaks even. It has, say, 5% of the audience and makes 5% of the revenue.

Below a 1.0 is not good. Adult standards, for instance, have 2.45% of the audience in the MK survey, but only 1.08% of the ad dollars, for a dismal "power ratio" of 0.44.

In other words, a station programming adult standards might well see a chance to make more money somewhere else. ...

(Also) doing less well are oldies, with a 0.97 "power ratio" that's been slipping the last few years. ...

http://www.nydailynews.com/entertainment/ent_radio/story/401463p-340065c.html

____________________________

 

[TheFonz]

> [This is from the New York Daily News
>
> ________________________
>
> If you wonder why radio formats like oldies and adult
> standards disappear even though they have large numbers of
> listeners, the main reason is simple.
>
> Radio owners measure success less by listenership than by ad
> revenue, and if a big audience doesn't translate to big ad
> dollars, the format may be expendable.]


Yup, I think that this has been discussed several times before on this board. And terrestrial radio will do just fine as long as it can continue to convince advertisers to pay more money for less listeners.

 

[job]

> And terrestrial radio will do just
> fine as long as it can continue to convince advertisers to
> pay more money for less listeners.
>

And advertisers will do just fine as long as they reach the listeners who will spend more money to buy their products.

 

[TheFonz]

> > [And terrestrial radio will do just
> > fine as long as it can continue to convince advertisers to
>
> > pay more money for less listeners.
> >
>
> And advertisers will do just fine as long as they reach the
> listeners who will spend more money to buy their products.]



But who will those listeners be 10 years from now? As the 55+ audience trickles out of the funnel, who will be filling it?

 

[OldiesCat]

Oldies

In theory, you are right. But they will still look for the biggest bang for their buck and, when it comes to 25-54 listeners, most Oldies stations will fall short.

>
> And advertisers will do just fine as long as they reach the
> listeners who will spend more money to buy their products.
>

 

[gr8oldies]

Contrary to popular belief on radio boards, people under 25 aren't leaving radio in droves. One study concluded that even heavy iPod users are spending on average 15 minutes less per week with radio than non-heavy users. The demo cell will be filled by those folks..and even the heavy iPod folks users are still going to want their weather and traffic on the way to work.<P ID="signature">______________
"Your right to know supersedes your right to exist"..Gary Burbank</P>

 

[TheFonz]

>

[Contrary to popular belief on radio boards, people under 25
> aren't leaving radio in droves. One study concluded that
> even heavy iPod users are spending on average 15 minutes
> less per week with radio than non-heavy users. The demo cell
> will be filled by those folks..and even the heavy iPod folks
> users are still going to want their weather and traffic on
> the way to work.]



The problem won't be with listeners LEAVING radio. Most of the listeners leaving will be the 55+ers, and radio doesn't want them anyway. Radio's problem will be getting NEW listeners to replace its current audience as it reaches 55. This audience has been listening to the radio for 30 or 40 years. No business can afford to lose that kind of customer base without replacing it.

 

[zoey]

>
>
> The problem won't be with listeners LEAVING radio. Most of
> the listeners leaving will be the 55+ers, and radio doesn't
> want them anyway. Radio's problem will be getting NEW
> listeners to replace its current audience as it reaches 55.
> This audience has been listening to the radio for 30 or 40
> years. No business can afford to lose that kind of customer
> base without replacing it.
>

Listeners are not the customers. Advertisers are.

Picture a treadmill. The Oldies format thrived from the early 70's to the early 00's. It thrived because during that period the audience it drew was in the money demos - the 25 to 54 year old segment advertisers want to reach.

From the 60's through the early 90's, the MOR/Standards format did well. Then their audience started sliding off the end of money demo treadmill.

A few years from now, the same thing will happen to Classic Rock.

Over 50 people may have more disposible income but they are not heavy spenders on the types of products advertised on radio. Several reasons are cited: As empty nesters, they don't use as much of consumer packaged goods. They already have stocked their households with durable goods. Their focus is on saving for retirement. They have developed strong product preferences and brand loyalty. And they have learned to be generally resistant to advertising.

Some of the same factors apply to classical music listeners. They are affluent. They also have a track record of being early adopters of new technology. They were among the first to embrace FM in the 50's and 60's (when FM was mostly classical and elavator music - or AM simulcasts). And they moved on to be among the first to embrace CD's, satellite and mp3 players. And, more than most people, they are strongly resistant to advertising. In addition, radio works best to influence simple purchase decisions and to remind people about things they buy frequently. Classical music radio, used to be filled with ads for Volvo dealers and stock brokers. Educated, affluent people don't just buy a $40k car or switch brokerages because they hear ads on the radio. Besides, those people just hate the thought of advertising. I was a volunteer at my local public radio station and we had a pledge drive right after they dropped classical music for news and information. A lot of the calls were classical fans (who tend NOT to pledge) calling to bitch. At the time, our market also had an excellent and long-standing commercial classical station, but these people were adamant about not wanting to hear any commercials - ever! (The commercial station never interrupted pieces for commercials, and their spots were very dignified and low-key.) The commercial station dropped classical, too. No surprise.

Radio is an advertising medium. Their business is selling ads. The music (or news, or talk shows) is their to get you to listen to the ads. Not because the owner likes it. Radio stations track which formats result in sales to advertisers. Advertisers track which formats result in sales of their product. Advertisers consider advertising an investment and the formats they buy are based on ROI (return on investment).

Yes, this has been discussed before because a lot of Oldies listeners just refuse to get it.

 

[AZJoe]

> >
> >
> > The problem won't be with listeners LEAVING radio. Most
> of
> > the listeners leaving will be the 55+ers, and radio
> doesn't
> > want them anyway. Radio's problem will be getting NEW
> > listeners to replace its current audience as it reaches
> 55.
> > This audience has been listening to the radio for 30 or 40
>
> > years. No business can afford to lose that kind of
> customer
> > base without replacing it.
> >
>
> Listeners are not the customers. Advertisers are.
>
> Picture a treadmill. The Oldies format thrived from the
> early 70's to the early 00's. It thrived because during
> that period the audience it drew was in the money demos -
> the 25 to 54 year old segment advertisers want to reach.
>
> From the 60's through the early 90's, the MOR/Standards
> format did well. Then their audience started sliding off
> the end of money demo treadmill.
>
> A few years from now, the same thing will happen to Classic
> Rock.
>
> Over 50 people may have more disposible income but they are
> not heavy spenders on the types of products advertised on
> radio. Several reasons are cited: As empty nesters, they
> don't use as much of consumer packaged goods. They already
> have stocked their households with durable goods. Their
> focus is on saving for retirement. They have developed
> strong product preferences and brand loyalty. And they have
> learned to be generally resistant to advertising.
>
> Some of the same factors apply to classical music listeners.
> They are affluent. They also have a track record of being
> early adopters of new technology. They were among the first
> to embrace FM in the 50's and 60's (when FM was mostly
> classical and elavator music - or AM simulcasts). And they
> moved on to be among the first to embrace CD's, satellite
> and mp3 players. And, more than most people, they are
> strongly resistant to advertising. In addition, radio works
> best to influence simple purchase decisions and to remind
> people about things they buy frequently. Classical music
> radio, used to be filled with ads for Volvo dealers and
> stock brokers. Educated, affluent people don't just buy a
> $40k car or switch brokerages because they hear ads on the
> radio. Besides, those people just hate the thought of
> advertising. I was a volunteer at my local public radio
> station and we had a pledge drive right after they dropped
> classical music for news and information. A lot of the
> calls were classical fans (who tend NOT to pledge) calling
> to bitch. At the time, our market also had an excellent and
> long-standing commercial classical station, but these people
> were adamant about not wanting to hear any commercials -
> ever! (The commercial station never interrupted pieces for
> commercials, and their spots were very dignified and
> low-key.) The commercial station dropped classical, too.
> No surprise.
>
> Radio is an advertising medium. Their business is selling
> ads. The music (or news, or talk shows) is their to get you
> to listen to the ads. Not because the owner likes it.
> Radio stations track which formats result in sales to
> advertisers. Advertisers track which formats result in
> sales of their product. Advertisers consider advertising an
> investment and the formats they buy are based on ROI (return
> on investment).
>
> Yes, this has been discussed before because a lot of Oldies
> listeners just refuse to get it.

Very good summation Neil. I agree with you, and as I have posted on here before, oldies fans have to turn to other venues to get their oldies- whether it be i-pods, internet radio or satellite radio (XM and Sirius). Commercial radio wants the most bang for the buck for thier advertisers, and those in the know say going after the older demos isnt worth it. We all have heard of niche programming, but it would seem there is not too much in niche marketing anymore. Instead of beating your head against a wall, myself and others have found other methods to get our oldies fixes. They are out there, but not a whole lot of "regular" radio options for us. Thanks for the presentation, it does make a lot of sense, and puts it into a context most of us can now understand better.
>

 

[CTRadio]

The 55+ audience won't necessarily disappear from the ranks of radio listeners just because formats and advertisers aren't specifically targeting them. Brand loyalty among that group can mean they'll stay around even if nostalgia or oldies go the way of beautiful music. News talk is an option, as is country. AC plays remakes and even a "Brown Eyed Girl" once in awhile as that group (my group before long) still looks to radio for local information and even a friendly voice. Michael Buble sings "Save The Last Dance For Me" while Smashmouth does "I'm A Believer" to a receptive younger demo. I programmed an AM in the eighties and kept the music profile as much 25-54 as possible, but the heritrage 55+ crowd stuck around, even with a standards station moving into the market. The dropoff won't be dramatic. They won't be radio orphans, even if they're not superserved.
> > >
> > >
> > > The problem won't be with listeners LEAVING radio. Most
>
> > of
> > > the listeners leaving will be the 55+ers, and radio
> > doesn't
> > > want them anyway. Radio's problem will be getting NEW
> > > listeners to replace its current audience as it reaches
> > 55.
> > > This audience has been listening to the radio for 30 or
> 40
> >
> > > years. No business can afford to lose that kind of
> > customer
> > > base without replacing it.
> > >

 

[radioray]

This is a poorly worded article. It makes it seem like all that matters is power share when in fact overall ratings matter too, not just as part of the power share formula but also as the basis point for the revenue.

To use an extreme example, an Adult Standards station with a 75 share will make more than a Classic Rocker with a 2 share even if the Classic rocker has a terrific power share and the adult standards station doesnt.

Of course that's a silly example but you get the point. Oldies at 0.97 is frankly better than I thought they would be, they are basically matching their ratings. Not good, not bad, right down the middle. The highest I recall them ever being was at about a 1.2 share in the early 90's. A drop, sure, but not a disaster like some almost make it out to be.

 

[peppertree]

What you state is true in the corporate or business sense. But there may be people in radio, because they love radio or love music and it is a wonderful way to make a living.

These people were more numberous when many stations were indidually owned by them. Corporate ownership is ONLY about the bottom line, because stockholders are the owners and have a cold investment. They will have a single interst in the profit level. An invester can invest in a gold mine, airline, radio station or anything else and rate of return, growth potential and risk are the main factors of where the investment money will go.


> Radio is an advertising medium. Their business is selling
> ads. The music (or news, or talk shows) is their to get you
> to listen to the ads. Not because the owner likes it.
> Radio stations track which formats result in sales to
> advertisers. Advertisers track which formats result in
> sales of their product. Advertisers consider advertising an
> investment and the formats they buy are based on ROI (return
> on investment).
>
> Yes, this has been discussed before because a lot of Oldies
> listeners just refuse to get it.
>
<P ID="signature">______________
[email protected]</P>

 

[KMRichards]

> What you state is true in the corporate or business sense.
> But there may be people in radio, because they love radio or
> love music and it is a wonderful way to make a living.
>
> These people were more numberous when many stations were
> indidually owned by them. Corporate ownership is ONLY about
> the bottom line, because stockholders are the owners and
> have a cold investment. They will have a single interst in
> the profit level. An invester can invest in a gold mine,
> airline, radio station or anything else and rate of return,
> growth potential and risk are the main factors of where the
> investment money will go.

And that is the real world. Get over it.

We're not going to be able to go back to the days when stations were predominantly owned by individuals. Even when that was the case, if a format could not deliver enough revenue to stay afloat, formats changed.

I will give you an example of a mom-and-pop station, in Santa Paula, Calif. (Oxnard-Ventura market, just north of Los Angeles) that I worked at during its final years before selling out to a investment group in 1981.

In 1965, when they acquired the station as KSPA, it was running a Spanish language format that was failing because the market didn't have enough Spanish speakers to support both it and a stronger signal (KOXR in Oxnard) that had just flipped from MOR to Spanish ranchera. They changed the call letters to KQIQ and the format to Country.

In 1972, Top-40 KUDU changed its call letters to KBBQ and went Country. Again, competition from a stronger signal started luring the ad dollars away from KQIQ, which changed formats and call letters again, in 1974, to KAAP as Contemporary MOR.

Within a year, KVEN, the market's dominant MOR, went more contemporary, and (you guessed it) the ad dollars started moving away from KAAP again. When NBC launched the News and Information Service, KAAP went all-News. And was profitable because their only competition was out-of-market KNX in Los Angeles. They outpulled KNX in the ratings because they had the local news.

In 1976, they added automated KAAP-FM, running a Contemporary MOR, figuring they might still have a chance at taking on KVEN, which was an AM. The ad dollars didn't materialize, but the station was automated, so they left it alone.

In 1978, NBC pulled the plug on NIS and KAAP AM and FM simulcasted. Suddenly, that Contemporary MOR format was a liability again. I came on board in the summer of that year and went to a locally voicetracked Adult Contemporary format. And we started making money.

In 1981, the investment group bought the stations, and even though we were profitable as a mom-and-pop, they thought they could do better. They changed formats three times in as many years and ultimately went under.

I came back under the people who took over from the investment group. The AM was now Standards (automated) and the FM was AOR (live). By the time I left again, the AM was Oldies (still automated) and the FM was CHR (live). And they went under again, because the competition was too great.

Moral: Bottom line is everything. It always has been. It's just more critical with investors than with "passionate radio people".<P ID="signature">______________


</P>

 

[TheFonz]

> > [The problem won't be with listeners LEAVING radio. Most
>
> > of
> > > the listeners leaving will be the 55+ers, and radio
> > doesn't
> > > want them anyway. Radio's problem will be getting NEW
> > > listeners to replace its current audience as it reaches
> > 55.
> > > This audience has been listening to the radio for 30 or
> 40
> >
> > > years. No business can afford to lose that kind of
> > customer
> > > base without replacing it.]
> > >
> >
> > [Listeners are not the customers. Advertisers are.]



O.K. Let's try to simplify this a bit. (1) Advertisers don't want 55+. Therefore, 55+ music listeners are leaving terrestrial radio to get their music elsewhere. (2) Many of today's teens and twenty-somethings don't know that terrestrial radio exists. They have been getting their music elsewhere all along. (3) As the population ages, music radio audiences (by attrition) will disappear and music formats will die. (4) Stations all over the country will scramble to move into "other" formats. (5) Markets all over the country will be saturated with those "other" formats. (6) Many radio stations across the country will be converted to fast-food restaurants.
<P ID="edit"><FONT class="small">Edited by TheFonz on 03/23/06 01:57 AM.</FONT></P>

 

[KMRichards]

> O.K. Let's try to simplify this a bit. (1) Advertisers
> don't want 55+. Therefore, 55+ music listeners are leaving
> terrestrial radio to get their music elsewhere. (2) Many of
> today's teens and twenty-somethings don't know that
> terrestrial radio exists. They have been getting their
> music elsewhere all along. (3) As the population ages,
> music radio audiences (by attrition) will disappear and
> music formats will die. (4) Stations all over the country
> will scramble to move into "other" formats. (5) Markets all
> over the country will be saturated with those "other"
> formats. (6) Many radio stations across the country will
> die.

Oversimplification due to incorrect presumption in (2).
<P ID="signature">______________


</P>

 

[zoey]

Amen. I bet even "passionate radio people" change their tune when they invest their money (except for those with enough surplus money to treat radio as a hobby). I wonder if radio people hold to the same management standards when it's their bank, their mutual fund or a company in which they bought stock that they are talking about.

People who listen to radio, which they don't pay for, can get very generous with other people's money. So can people who work in radio, who have not "bet the farm" on the enterprise.

>
> Moral: Bottom line is everything. It always has been.
> It's just more critical with investors than with "passionate
> radio people".
>

 

[gr8oldies]

There isn't anybody who mortgages their house to play groovy music. Well, nearly no one.<P ID="signature">______________
"Your right to know supersedes your right to exist"..Gary Burbank</P>

 

[KenClark]

Hello!

A few points of order:

> Picture a treadmill. The Oldies format thrived from the
> early 70's to the early 00's.

We'll have to check, but I'm not at all sure that "Oldies" as a 24/7 format existed in the early 70s. Certainly no one station in the markets where I lived was making a full-time living at it. As I recall from my "salad days," "Oldies" were a couple of slots in the hourly music clock, as many of the songs that we now consider "Oldies" were currents and recurrents in the early 70s! I would strongly consider moving the low end up to around 1980, but that's just me.

> Over 50 people may have more disposible income but they are
> not heavy spenders on the types of products advertised on
> radio.

This may be nit-picky, but I don't think it's quite correct to say that this group has more "disposable income." That would suggest actual larger piles of money.

For some this may be true, but the more average picture is that the *ratio of discretionary income to total assets* is larger. That is to say, the percentage of disposable income may be larger percentage-wise, but probably represents *smaller* piles of money. Younger people may make more per annum, but are mortgaged more heavily, so their ratio is smaller.

Sleight-of-hand with numbers, it is true, but it's a crucial distinction that some seem to miss!

Finally, an observation that I made on another board: formats as we know them continue to evolve. Certainly today's "Oldies" stations don't sound like WLS did "back in the day." "Music Of Your Life" is a "best-of" MOR presentation, not what such a station really sounded like back then.

If you're watching closely today, you're seeing (1) 20-somethings falling in love with The Beatles, Simon and Garfunkel, and Classic Rock. (2) 30-something females are going for Rhythmic CHR. (3) The "generation gap" between "Oldies" and "Standards" is dissolving daily. The audiences are becoming more cosmopolitan in their tastes and wants.

The Standards format isn't dead...it just has to reinvent itself. It's doing that now! Why are so many pop artists cutting Standards? Oldies aren't dead either, but like Standards, the format can't expect to survive based on what it *used* to be. There is little room for the "purists" these days!

It was asked elsewhere where the audience for Oldies will come from. Well, that's up to YOU, isn't it? They're out there! Are you going to market to them, or insist on doing it the "old" way? Just something to think about!

Regards,
Ken Clark

 

[bigwoody]

> This is a poorly worded article. It makes it seem like all
> that matters is power share when in fact overall ratings
> matter too, not just as part of the power share formula but
> also as the basis point for the revenue.
>
> To use an extreme example, an Adult Standards station with a
> 75 share will make more than a Classic Rocker with a 2 share
> even if the Classic rocker has a terrific power share and
> the adult standards station doesnt.
>
> Of course that's a silly example but you get the point.
> Oldies at 0.97 is frankly better than I thought they would
> be, they are basically matching their ratings. Not good, not
> bad, right down the middle. The highest I recall them ever
> being was at about a 1.2 share in the early 90's. A drop,
> sure, but not a disaster like some almost make it out to be.
>


Per the article Urbans have a power ratio below a 1.0, as do oldies. Therefore, why aren't Urbans being flipped? CHR/R are below a 1.0 power ratio, again, why aren't they being flipped to HAC? Power ratio is a poor parameter.<P ID="signature">______________
www.OhioRadio.net

</P>

 

[OldiesCat]

Drop Oldies

Because urban stations' demos aren't 55+, that's why.


> Per the article Urbans have a power ratio below a 1.0, as do
> oldies. Therefore, why aren't Urbans being flipped? CHR/R
> are below a 1.0 power ratio, again, why aren't they being
> flipped to HAC? Power ratio is a poor parameter.
>