Online radio germany-webradio_monitor_2011_goldmedia

Online radio in Germany Web Radio Monitor 2011Commissioned by the Bavarian Regulatory Authority for Commercial Broadcasting – BLM July 2011 Goldmedia GmbH Strategy Consulting Dr. Klaus Goldhammer, Dr. Michael Schmid, Christine Link Oranienburger Str. 27, 10117 Berlin, Germany Tel. +49 30-246 266-0, Fax +49 30-246 266-66 info[at]Goldmedia.com

Web Radio Monitor 2011Contents1. Introduction2. The German online radio market3. Use and scope of online radios4. Mobile usage5. Social media6. Advertisement and marketing7. Trends and forecasts8. Executive summary(Please note: longer version in German includes more information on regulations, legal costs, advertisement, and marketing) 2

Web Radio Monitor 2010Research objectives and methodology Client and objectives Methodology Response ratesClient:  Project time frame: Goldmedia‟s study on the use of April to July 2011 + German online radio was  Primary data research produced for the second time through survey of all German 3,064 for the Bavarian Regulatory online radio providers Authority for Commercial (n=3,064 ) via online and Broadcasting (BLM) offline questionnairesStudy objectives:  Response: 791 completed Give overview of the German questionnaires (28%) online radio market  Survey period: May 23, 2011 Quantify online radio market in – June 28, 2011 Germany through survey of all  15 Interviews with industry providers experts and representatives 791 Provide market analyses and  Secondary data through forecasts for online radio in online desk research Germany  Forecasts via top-down and Categorisation of German bottom-up analyses sent responded online radio stations by genre  www.webradiomonitor.de Aussand Geantwortet and type of service Response Rates Web Radio Monitor 2011 3

Web Radio Monitor 2011Contents1. Introduction2. The German online radio market3. Use and scope of online radios4. Mobile usage5. Social media6. Advertisement and marketing7. Trends and forecasts8. Executive summary 4

Value chain for online radio in Germany:market players (examples) Value chain: online radio in Germany 2011 Licensing Content Aggregation Distribution Sales End device User  GEMA  FM Broadcasters  Online radio  Streaming  Radio  Smartphones  GVL  Online-only aggregators Provider marketers  Online radio stations  Webradio  Internet Service  Special receiver  Personalised Networks Provider marketers for  Computer services online radioSource: Goldmedia Web Radio Monitor 2011 5

About 3,100 German online radio stations in2011, rapid annual growth of 47% since 2006Online radios in Germany, 2006 to end of 2011 Summary3500 3,064 250  3,064 online radios in Germany (04/2011)3000 2,692 207% 2002500  Ø annual growth of 47% since 2006 1,914 1502000 1,600  Online-only stations make up 4/5 of total stations1500 1001000 41%  High churn rate – in both 2009 and 2010, about 450 521 20% 50 650 internet radio stations were discontinued 500 14% 0 16% 0  FM subbrands were also affected 2006 2007 2008 04/2009 04/2010 04/2011 number webradios Zahl der Webradios growth year on year Wachstum im Vergleich zum Vorjahr Source: Goldmedia Web Radio Monitor 2009 - 2011, ALM JahrbuchNumber of German online radios by service German online radios by type of provider type (04/2011) (04/2011) User 2,563 Generated Content 0,41% Online- Subbrands Online-Only FM Streams 5% 84% 342 150 9 Simulcast Streams Online Only Simulcast sub-brand personalized 11% Online-Only Simulcast Online-Submarke Personalis. online fm services/UGC UKW Dienste/UGC 6

Online radio offers great variety: more oldies, rock,dance, jazz, hip hop, and news Format comparison: commercial FM broadcasters and online radios in Germany (4/2011) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Online-only AC CHR Oldies Info Rock streams*(2,563 stations) 50% 17% 9% 5% 4% Online FM subbrands AC CHR Oldies Info Rock Other Jazz DanceBlack (150 stations) 20% 16% 13% 5% 15% 6% 8% 9% 6% Commercial FM radio AC CHR Oldies Rock Dance (342 stations) 44% 7% 18% 10% 12% AC AC CHR CHR Oldies/Schlager Oldies/Hits Informationen/Talk Information/Talk Rock Sonstiges Other MOR MOR Jazz Jazz Klassik Classical Dance Dance Black Music Black Music * Without aggregators and user generated content. Source: Goldmedia Web Radio Monitor 2011, n=3,064 7

Web Radio Monitor 2011Contents1. Introduction2. The German online radio market3. Use and scope of online radios4. Mobile usage5. Social Media6. Advertisement and marketing7. Trends and forecasts8. Executive summary 8

Strong growth for maximum number of hits,only slight growth for average hits Maximum usage of selected online radios Ø Hits/Day 2010 vs. 2011 (daily Ø 2009-2011) 2010 2011 450.000 Ø : 7,800 Ø : 8,904 Hits/Day/Station Hits/Day/Station 400.000 350.000 Live Online-only 15,572 streaming services 300.000 13,502 250.000 9,419 200.000 8,150 140,000 6,464 150.000 100.000 2,007 50.000 20,000 10,000 0 Simulcast Online Online Only Simulcast Online Online Only Streams Subbrands FM Streams Streams Subbrands FM Streams April 2009 April 2010 April 2011 April 2010 April 2011Average daily hits per radio station according to their stations Source: Goldmedia Web Radio Monitor 2011, n=791,2010 n=609 and Web Radio Monitor 2009 n = 143, 9

Satisfaction with view numbers drop compared to2010, mainly disappointed FM web radio Webradio hits Conclusions “How satisfied are you with your online  52 percent of German webradio- radio access figures?” organizers are contented with the 52% 62% 51% hits(cp. 2010: 56 % - four percent) 18% 13% 18%  In comparison to 2010, fall of very dissatisfied Sehr unzufrieden satisfaction with FM radio and 34% 49% 33% Eher unzufrieden Online Only rather dissatisfied Neutral neutral  Particularly the group of in 2010 29% 30% “very satisfied” FM and Sub-brands 19% Eher zufrieden 13% rather satisfied providers greatly reduced with 17 16% 17% Sehr zufrieden very satisfied percent 1 2 3 Total FM Online only  Greater dissatisfaction as an indication of dissatisfaction with Comparison: “Satisfied”* with on call pay 2010 and the fact that the medium can 2011 achieve their own web radio in the 62 UKW FM differentiated universe difficult the 72 2011 desired attention 52 2010 Online OnlyOnline only 53*“Very satisfied“ and „rather satisfied“ with on call pay Source: Goldmedia Web Radio Monitor 2011, n=791, Web Radio Monitor 2010, n = 609 10

Germany vs. abroad: Only 12 percent of onlineradio hits come from abroad Use of German web radio stations by region (04/2011) Online Only Online Only 88.6% 11.4% UKW FM 81.0% 19.0% Total Gesamt 88.0% 12.0% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Abrufe aus Deutschland Hits from Germany Abrufe aus Ausland Hits from abroad Source: Goldmedia Web Radio Monitor 2011, n=791 11

Fathead market: 90% of the schedules are generatedby 5% of the online radios that responded! Relationship between the range and market share for a recorded day in April 2011 16.000.000 16 million Relation between online radios and hits 14 million 14.000.000 Online radios 2011 Hits 2011 OtherHits during one day in April 2011 12 million 12.000.000 responding online radios Other 10% 10 million 10.000.000 Top 41 Top 41 online responding online radios online radios radios 8.000.000 8 million 50% of 95% 5% 90% the market 6 million 6.000.000 4 million 4.000.000 90% of 2.000.000 2 million the market 0 0 1 51 101 151 After retrieving sorted streams Source: Goldmedia Web Radio Monitor 2011, n=791 12

Usage during the day: Online radio ismainly listened in the evening Use of FM radio and online radio during the day (04/2011) 35.000 35% 31.176 Example: 31% of all daily online radio station hits take 30% 30.000 place between 18:00 and 30% 27.791 21:00. 25.054 24.090 24% 25.000 25% 21.93421.56322.294 Share of coverage in percent 20.930 20.011 19.831 19.001 18.199Coverage (ma) 20.000 20% 21% 16% 16% 15.000 14% 17% 15% 16% 13.685 10% 9.121 10.000 10% 11% 6.811 9% wide-reaching promotional support Werbeträger-Reichweite (ma Radio)* 3.464 5.000 5% 6% FM radio stations UKW-Webradiosender 2.183 1.690 5% 1.079 Online Radio Online Only 0 0% 05.00-06.00 07.00-08.00 09.00-10.00 11.00-12.00 13.00-14.00 15.00-16.00 17.00-18.00 19.00-20.00 21.00-22.00 23.00-24.00 Uhr Uhr Uhr Uhr Uhr Uhr Uhr Uhr Uhr Uhr* ma 2011 Radio I, figures in thousandsSource: ma 2011 Radio I, Goldmedia Web Radio Monitor 2011, n=791, 13

Alternative retrieval routes to gain importance:social media and aggregators are the driversVarious access channels’ shares of hits from 2010 to 2013 Key facts(percentage of hits)  Currently, almost three Open internet 62.2% quarters of the hits on Aggregators 15.0% iRadio services are made 2013 Social media 16.0% on their own Other routes 7.2% homepages  In the coming years, the Open internet 64.2% importance of social Aggregators 14.3% media will increase. 2012 Social media 15.4%  Advantage of Other routes 6.6% aggregators: their simplified overview and Open internet 68.3% structure help users 2011 Aggregators 13.2% with selection in an Social media 13.0% increasingly Other routes 5.8% differentiated market Webradio Open internet 72.3% It‟s important for Aggregators 12.6% 2010 broadcasters to be Social media 9.5% Other routes 5.4% accessible via all channelsSource: Goldmedia Web Radio Monitor 2011, n=791 14

Web Radio Monitor 2011Contents1. Introduction2. The German online radio market3. Use and scope of online radios4. Mobile usage5. Social Media6. Advertisement and marketing7. Trends and forecasts8. Executive summary 15

Three quarters of online radio broadcasters believe “Online radio willthat mobile broadcasting will grow more important be able to establish Assessment of mobile usageon itself Industry assessment of mobile online radio mobile end devices in  72 percent of broadcasters surveyed particular expect to see mobile radio become more (e.g. popular, especially on mobile devices (4 72% 88% 71% iPhone).” perc. point increase compared to 68% in 2% 0% 3% 2% 12% 2% 2010) 23% 25% not applicable trifft überhaupt nicht  Radio broadcasters are offering more and zu 32% sometimes inaccurate more iPhone online radio applications. trifft eher nicht zu 35% 35%  BUT: So far, mobile ranges are only 12% neutral neutral of total usage partially accurate trifft eher zu  FM broadcasters are very optimistic 56% 37% 36% regarding mobile usage. 88% believe fully applicable trifft voll zu mobile online radio holds potential Total FM Online only  Online-only providers are more optimistic Gesamt UKW Online Only regarding the potential of mobile than Comparison 2010 and 2011 they were in 2010 trifft eher Partially accurate2011 35% 37% 72%zu  UMTS successor LTE technology allows2010 data rates of 150 Mbit/s or more, which 34% 34% Fully voll zu trifft applicable 68% will benefit applications such as online radioSource: Goldmedia Web Radio Monitor 2011, n=791 16

2011: Mobile usage at 12% - providers andexperts expect to rise 50% in 2015 Proportion of total use of mobile usage / month in% (2011) 15 14.0% UKW & UKW FM & FM Sub- 14 Submarken Brands 13.0% 13 12.4% 12 Online Only Online Only 10.5% 12.2% 11Percent 9.8% 10 10.1% Gesamt Total 9 7.5% 7.6% 8 7 6.9% 7.3% 6 6.7% 5 Jan 10 Apr 10 Jul 10 Oct 10 Okt 10 Jan 11 Apr 11Source: Goldmedia Web Radio Monitor 2011, n=791 Key facts  Experts believe mobile usage will increase by at least 50% over the next five years. Some providers have achieved an increase of this magnitude in 2011.  The primary reasons are greater smartphone penetration, increasing bandwidth, decreasing costs, and development efforts in the automotive industry. 17

Mobile apps are widespread: almost 80% of FMsimulcast stations offer apps Share of radio stations with mobile apps (2011) Industry assessment of apps 0% 50% 100% „In the future, mobile apps will be of increasing importance for online Total Total Total + 2% radio providers." Gesamt 31.4% 68.6% 74% 89% 72% 4% 3% 4% 9% not applicable trifft überhaupt + 5.3% 22% 23% nicht zu UKW FM sub-brands & Submarken 77.4% 22.6% 40% sometimesnicht trifft eher inaccurate zu 34% 33% + 3% neutral neutral Online Only Online only 28.8% 71.2% 49% partially accurate trifft eher zu 40% 39% App vorhanden App available keine App vorhanden App not available fully applicable trifft voll zuSource: Goldmedia Web Radio Monitor 2011, n=791, 1 Total 2 FM Online only 3increase compared to Web Radio Monitor 2010, n=609 Key facts Importance of mobile apps from nearly four-fifths of the FM providers implemented Apps are becoming more important for online-only providers too. (Compared to 2010: a total of 68% of online-only providers attributed increasing importance to apps.) Experts also see significant growth potential for web radio in the area of mobile apps 18

Webradio apps in 2011: operators are active inall operating systems and end devices Online-radio supported operating Webradio supported end devices for systems for apps in 2011 apps in 2011 Blackberry/ RIM Nokia; 7.9% 12.5% Palm 3.6% Android Apple iOS Sony 23.2% Ericsson 35.0% Apple 22.5% 9.6% Samsung Symbian 12.9% 13.0% Sonstiges Other HTC LG Sonstiges Other 2,9% 12.1% 7.9% Windows 2.9 % 5,1% 5.1 % 23.7% Motorola 8.2% Source: Goldmedia Web Radio Monitor 2011, n=791 Key facts 2011 saw more than a third (35%) of internet radio apps on Apple, and just under a quarter on both Windows and Android (23.7 and 23.2 percent, respectively) Apple is the leader in terms of end devices too. In 2011, 22.5% of apps were made for the iPhone, iPad, and other Apple devices, with Samsung, Nokia, and HTC following 19

Market overview for smartphones and tablets:approximately 10 million smartphones will be sold in 2011 Sales of smart phones and tablets in Germany Market breakdown by numbers 2009-2012 in millions in 2010 Netbooks 20 17.6 54 8% 16 +76% % Tablets 10 % Turnover: 12 10 2011: 0.8 billion 28 8 7.2 +39% % 2012:1 billion 5.4 Desktop +34% Notebooks PCs 4 +72% 2.2 0.8 1.5 Source: BITKOM 2011, EITO +47% 0 +88% Smartphone sales in Germany 2009 2010 2011* 2012** 2009-2011 in billions of euros Smartphones Tablets 2,5 2,2 Growth trend in the smartphone segment remains unchanged. In 2011, 2 1,6 +35% sales increased by 39% to 10 million units sold 1,3 1,5 In 2012, one in four Germans will have a smartphone +27% 1 +81% Tablet market continues to grow - notebooks and netbooks have lost market 0,5 share* Forecast BITKOM 0** Forecast TNS Infratest Source: BITKOM 2011 after EITO, IDATE and TNS Infratest Go Smart 2012 Study Both forecasts 2009 2010 2011are based on the population of people in Germany Source: BITKOM 2011, EITO, IDATE 20

Social media strategy for communication andimage necessary even for online radio stations Assessment Social Media Findings“A social media strategy is essential to the success of  About 60 percent of online radiosonline radio offerings.” believe that presence on social 59% 66% 58% media is essential 2% 6% 2%  Social networks are mainly used to 7% 6% relay program info and various 11% activities / competitions for specific 32% 17% 34% trifft überhaupt programs. “If you aren„t on social not applicable nicht zu networks, you don„t exist!” trifft eherinaccurate  Radio use on Facebook or other sometimes nicht zu networking apps remains weak. 30% 43% 28% Potential for "social radio" is neutral neutral currently considered rather moderate by service providers and trifft eher zu partially accurate experts 29% 30% 23%  Nevertheless, FM stations in trifftapplicable fully voll zu particular are planning to increase their presence and add a player on 1 2 Gesamt UKW Online3Only FacebookSource: Goldmedia Web Radio Monitor 2011, n=791

One in four internet radio operators is satisfiedwith the profitability of its service -- still? Online radio profitability in 2011 Conclusion “How satisfied are you with your online radio’s  A total of 25 percent of web radio stations access figures?” are satisfied with profitability of their service 25% 16% 27%  FM broadcasters‟ satisfaction with 9% 8% 17% Sehr unzufrieden profitability decreased significantly 18% 17% Very satisfied compared to 2010, to only 16 percent (see 25% Eher unzufrieden Rather saitsfied 2009: 28 percent). For online-only 48% 48% Neutral services, the satisfaction rate by 3 Neutral 42% percentage points Eher zufrieden Rather dissatisfied 16% 17%  There was a slight, overall decrease in 12% Sehr zufrieden 9% 4% 10% Very dissatisfied satisfaction from 2010 to 2011, in contrast Total Gesamt FM UKW OnlineOnly Online only to the period from 2009 to 2010, which saw and increase in the satisfaction rate Comparison 2010 and 2011 from 19% to 27% 2011 16% 9% 25%  That does not mean that the operators are generally dissatisfied in 2011: Rather, the 2010 17% 10% 27% proportion of "neutral" respondents ranged Rather satisfied eher zufrieden from 42% to 48% – especially for FM 2009 7% 12% 19% operators (2010: 26%, 2011: 42%) Very zufrieden sehr satisfiedSource: Goldmedia Web Radio Monitor 2011, n=791 24

Market volume is mainly generated by traditional(display) online advertisement by FM brands Share of online advertising revenue according to ad format and service type (2010) By advertising format By channel type Stations/ platforms not including FM Spot broadcasters advertising Classical / 31%Other online FM radioadvertising stations 69% 71% Base: 10.3 mil. euros turnover (netto) 2010 Source: Goldmedia Web Radio Monitor 2011 Conclusions About three-quarters of revenues are now generated through traditional online advertising (including display / banner ads). Spot advertising remains underdeveloped Advertising on homepages is the greatest contributor to revenues To date, FM stations‟ ad services have dominated. Among the online-only services, portals and online radio aggregators are particularly strong 25

Importance of display advertising is declining, but sponsor-ship & spot advertising are becoming more important Forms of advertising available among web radio providers Conclusion surveyed (2011) 60.2%  Display Displaywerbung Display advertising 64.5% advertisement is still 60.6% the most important 43.3% Sponsoring 53.6% ad form for online Sponsorship 42.3% radios (60.2 %) Online- 37.7% Online advertising spot 40.7%  Comparison: in Spotwerbung 38.8% 2010, 74% of onlineSuchwortvermarkt 33.9% Search term marketing 20.8% radio providers used ung 35.5% Gesamt Total + display advertising 28.6%Affiliate Marketing Affiliate marketing 37.0%  Sponsorship (43.3%), 29.7% UKW & FM subbrands audio spots (37.7%), 20.9% Submarken and SEO (33.9%) are Pre-roll spot Pre-Roll-Spot 36.0% 20.1% Onlineonly the next most Online Only 19.7% common forms of In-Text-Werbung 12.5% In-text ads advertising on online 20.1% 15.4% radios Online-Video-Online video advertising 32.0% Werbung 14.7% Source: Goldmedia Web Radio Monitor 2011, n=791 26

Three fifths of online radio providers see greatpotential for spot marketing Commercial marketing for online radio Industry estimates " There is still considerable growth potential in the ad market for pure online radio offerings ."  70% of online radio operators see significant growth potential for the online-only spot market 70% 76% 70%  At 76%, FM radio providers are 4% 3% 4% 3% 6% 3% trifft überhaupt Strongly agree 15% nicht zu significantly more optimistic 22% 22% trifft eher nicht zu Agree than online only providers – 24% 70% of online-only providers 27% 28% neutral Neutral see considerable growth potential in commercial trifft eher zu 52% Disagree somewhat marketing 43% 42% trifft voll zu Strongly disagree  Opportunities for innovative radio / online combinations Total FM Online only Gesamt UKW Online Only have increased further Comparison of 2010 und 2011  Spot advertising will 2011 27% 43% 70% increasingly be used in trifft eher zu More accurate combination with other trifftapplicable Fully voll zu advertising media such as 2010 23% 42% 65% display advertising, etc.Source: Goldmedia Web Radio Monitor 2011, n=791 27

Forecast for 2012: in addition to advertising revenue,increased funding through alternative revenue streams Share of online radio revenues in total sales 2010-2012 (all providers) * 0.9% 2012 57.4% 41.7% 1.9% 2011 60.9% 37.2% 2.8% 2010 61.8% 35.3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Netto-Werbeerlöse Net advertising revenues Kostenpflichtige Paid services Dienste Sonstige Erlöse Other revenues*Values are averages, percentages of the responding stations without weighting by sales, with other smaller providers, so that lower sales are over-represented.Source: Goldmedia Web Radio Monitor 2011, n = 791 Conclusion  Particularly for small online radio stations, alternative forms of revenue such as donations and sponsors are important  Major online-only players are successful in marketing their own players or other individual business models / customer relationships  A look at just FM providers reveals that ads currently provide 100% of financing, so paid content isn‟t a feasible alternative to ad revenue, even in the coming years 29

Online advertising revenues in 2010: EUR 10.3million (display, commercial, sponsoring, ...) Advertising revenue (net) for all German online radio Assumptions / Background services in Germany up to 2015 CAGR: 40  Basis: Webradiomonitor 10-15 37.2 Mio. euro 2010/2011, forecast for broadband development 29% according to BNetzA, trend 30 Case Best case extrapolation / proceduralNet revenue in millions of € Szenario scenario analogy, and expert interviews 25.9 mil. 20%  Growth over the previous euros Worst case year was 20% 20 Trend  To date, FM broadcasters‟ Szenario scenario platforms have generated the 21.6 mil. euros 16% most sales Trend Case Worst  Online-only broadcasters 10 Szenario scenario and aggregators have 10.3 mil. driven sales growth most euros  Growth for online radio should 0 be significant; we forcast Forecast growth of 16-29% per year, 2010 2011 2012 2013 2014 2015 depending on the scenarioSource: Goldmedia forecast Web Radio Monitor 2011, CAGR = Compound Annual Growth Rate 30

Web Radio Monitor 2011Executive summaryOnline radio  Germany has a total of 3,064 web radio stations (04/2011)market in  Four-fifths of services are online-only channels (2009: ¾)Germany  Since 2006, services grew by 47%; a more moderate 14% since 2010Use  Average of 8,904 hits per stream per day (maximum 500,000) (FM stations alone Ø 15,572, online-only channels alone Ø only 8,150 hits)  Average hits increased by 14 percent since 2010  Use: online-only stations are used most often in the evening, FM subbrands‟ usage reflects traditional radio use more closely  Web radio is often used in parallel to surf the InternetAdvertising /  Online advertising revenue for all German online radio stations in 2010 totaled 10.3 million euros (including display advertising, commercials, etc.)Marketing  Display advertising is still the most important form of advertising for online radio after sponsorship, spot ads, and search term marketing  Advertising on FM stations‟ and online portals‟ homepages is the biggest source of revenue  Two thirds of web radio providers say that audio spots have the highest growth potential in the coming years 33

Web Radio Monitor 2011Executive summary  Of all services, 31% could be used via mobile apps Mobile  Proportion of total mobile use Ø 12.4 percent  Almost 80% of FM stations & nearly 30% of online-only stations have their own apps  Market outlook: mobile will be one of the strongest growth driversSocial media  Nearly two-thirds of all web radio providers believe a social media strategy is essential, because providers get additional hits from social networks and aggregators. Direct visits to the homepage are relatively insignificant  Social Web has great potential for commercialization and providers, because the fixed costs are relatively low compared to above the line and attention can be generated for freeOther trends /proceeds  About half of online radio providers believe pay radio is infeasible  Paid content only conceivable as part of premium services, ad-free streaming, and exclusive information services  Alternative sources of revenue are becoming more important, like the sale of software, players, and on-demand music streaming services 34

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Online radio germany-webradio_monitor_2011_goldmedia

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