Two Iconic Business Models That Failed — 2
Arbitron Troubles in 2003
In his March 11, 2003, story in Forbes titled “Bad Ratings for Arbitron,” Seth Lubove wrote:
After randomly selecting thousands of households in a radio market and sending written notification, Arbitron (nyse: ARB), then calls each house to get consent before sending out diaries for each person over the age of 12. Presuming they agree, the diary keepers spend a week recording the radio stations they listen to and at what times. But fewer and fewer people are picking up the phone when Arbitron calls. That, in turn, means fewer diaries are filled out. Since peaking at 42.7% in 1995, response rates have fallen to 34.5% as of last fall. With fewer diaries backing up the ratings, the radio broadcasters who live or die on the ratings are wondering how good they are in the first place. “When response rates reach a lower level, you become concerned about how representative the sample is to the population, because you don’t know the listening patterns of those people they can’t reach,” says Charlotte Lawyer, director of sales research for Susquehanna Pfaltzgraff’s Susquehanna Radio division, a 31-station radio station chain. Lawyer is also the chairperson of the National Association of Broadcasters’ Committee on Local Radio Audience Measurement, an influential group of radio research executives who are airing their complaints about Arbitron in public. In January, Lawyer’s committee blasted Arbitron for its “alarming lack of aggressiveness in implementing measures to stem these declines.”
Enter Portable People Meters
This past year, Arbitron turned its business model—and the radio industry—upside down. Instead of sending out diaries, the company tested high-tech “Portable People Meters (PPMs)”—little electronic gizmos the size of a pager that will automatically record what is being listened to and for how long. The meters can clip on your belt and automatically record your listening experiences every 15 minutes, whether you are in the office or home or in the car. At night, it unobtrusively can rest next to your pillow speaker.