Pando

91% of Americans still listen to AM/FM radio. Slacker wants to bring these listening hours online

By David Holmes , written on December 10, 2014

From The News Desk

Here's a statistic that may surprise you: In 2013, 91 percent of Americans aged 12 and over listened to terrestrial radio -- meaning AM/FM -- on a weekly basis. And while that number is down from 96 percent in 2001, that's still an enormous chunk of the population -- higher than the number of Americans who use Facebook. And these weekly listeners don't just hear a song or two. The share of total hours Americans spend listening to terrestrial radio is a whopping 81 percent. Meanwhile Internet radio's share is only 11 percent and satellite radio's share is 8 percent.

What explains radio's surprising resistance to digital trends? Why has it been slower than television and newspapers to fall to the consumption whims of the Web? Automobile listening certainly plays a big role -- while Internet-connected cars are on the rise, they still represent less than half the market of new vehicles.

But the executives at the Internet radio app Slacker argue that there's much more driving terrestrial radio's popularity than the mere fact that it's easy to listen to in cars -- It's the personalities, the pundits, the storytelling, and other elements missing from Pandora and Spotify. And with a new redesign and new partnerships announced today, Slacker will look to bring some of that magic to the digital space.

Starting this month, Slacker will host dedicated stations run by popular Internet personalities, in addition to its Pandora-style radio stations and its Spotify-style treaming features. Two of the most high-profile celebrity DJs include Tyler Oakley, a wildly popular YouTube star, and Chris Hardwick, who's been the host of a variety of digital and cable television programs including the Nerdist podcast and AMC's Talking Dead.

Duncan Orell-Jones, who came over from Nintendo to became Slacker's new CEO last January, explains the potential audiences these human DJs bring to the table.

"Morning Edition on public radio, Hannity, This American Life... these shows have between 10 and 14 million listeners per week. That’s right there in the same range as the Voice and American Idol." For Oakley's part, he has nearly 6 million subscribers on YouTube.

Along with the addition of celebrity DJs, Slacker has redesigned its website and iOS app to push these human-curated stations to the forefront. And while Slacker's platform is currently only open to personalities with whom the company has struck a specific partnership, eventually the platform will be completely open to anybody who wants to provide on-air talent for their own station. And that includes brands.

"Hey if you’re out there and you’ve got content that really works with audio," Orell-Jones says, "send an email at [email protected] We’ll work with you."

In a way, Slacker's choice to produce original content is not unlike Netflix's. Imagine if Slacker obtained the rights to a thrilling series like "Serial." With little to differentiate most streaming services in terms of price or functionality, compelling original content that you can't hear anywhere else could be a huge advantage.

Slacker has three subscription tiers -- a free, ad-supported offering with limited skips, a $3.99 a month version that is ad-free and includes more personalization options (for example, the ESPN station could be personalized to your favorite teams), and a $9.99 a month option that includes all features, plus unlimited on-demand streaming like Spotify.

Unlike Spotify and Pandora, the two most popular streaming services in the US, Slacker doesn't reveal how many subscribers it has. That said, by focusing on product and monetization before user acquisition, Orell-Jones says that next year it's on track to do what few streaming music services have done: Become profitable.

"There’s no hiding from the fact that the economics around these services are challenging," Orell-Jones says. Slacker has been able to improve those margins, he says, by licensing its technology to other radio services. "Samsung's Milk Music is powered by Slacker, and prior to that we’d been powering AOL's radio." Slacker will also be "the streaming interactive radio service for Tesla."

With Pandora and Spotify already possessing a huge head start in terms of users, and Apple and YouTube preparing a big push for their streaming services, it won't be easy for Slacker to catch up. But while many competitors merely offer esoteric design-based improvements over the large incumbents, Slacker offers something truly unique: Original content. And more importantly, it's something that's already worked in the terrestrial radio space and the streaming video space.

In this respect, Slacker doesn't have to steal many listening hours away from Pandora and Spotify. It just needs to steal them away from terrestrial radio which, nostalgia be damned, isn't going to last forever.

[Photo by Alan Levine]