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Online Listening Exploding. Is it at the Expense of Radio?


On the heels of our stories from yesterday about how online political advertising revenue surpassed radio in 2012 and how Q3 radio revenue has been soft despite easy 2011 comps, comes a new study about what consumers are listening to. The NPD Group says results from its latest survey show Internet listening is up 27% year over year. And while AM/FM remains strong, listening declined 4%, according to NPD.

The study also backs Pandora CEO Joe Kennedy's consistent claim that Pandora is gaining market share from radio. Those gains are attributed to the Digital Dashboard. As Pandora continues to connect in the car, consumers are using the service more and radio less, according to NPD.

Radio executives are quick to harken back to the days when 8-tracks, cassette's, CD's and Satellite were going to replace radio, stating we've been challenged before and "we're still here." And, this Internet listening thing could be just another one of those challenges that crashes and burns. Or it could be the combination of consumer control and radio's programming cuts and move away from local is a perfect storm that will produce major audio listening changes. While Arbitron and radio executives consistently cite 90% listening numbers, those numbers have not translated into more for the overall revenue pie, which seems stuck in the single digits.

Senior VP of Industry Analysis at NPD, Russ Crupnick says, Although AM/FM radio remains Americas favorite music-listening choice, the basket of Internet radio and streaming services that are available today have, on the whole, replaced CDs for second place. We expect this pattern to continue, as consumers become more comfortable with ownership defined as a playlist, rather than as a physical CD or digital file.

NPD says its study showed that 50 percent of Internet users (96 million) listened to music on an Internet radio or on-demand music service in the past three months. More than one-third (37 percent) of U.S. Internet users listened to music on Pandora and other Internet radio services, while an equal percentage (36 percent) used an on-demand music service, like YouTube, VEVO, Spotify, MOG, Rhapsody, and Rdio.

NPDs says its study revealed that since 2009 the percentage of Pandora users who also listened to AM/FM radio declined by 10 percentage points, those listening to CDs on a non-computer device fell 21 percentage points, and listening to digital music files on portable music players also dropped 21 points. Part of these declines can be attributed to the fact that 34 percent of Pandora users are now listening to music on the service in their cars -- either connecting through an in-car appliance, or listening via car-stereo-connected smartphones or other personal listening devices.

Consumers who listened to music on Pandora, VEVO, and YouTube also noted a significant positive effect on their overall discovery and rediscovery of music. In fact 64 percent of these services users reported rediscovering older music, and 51 percent were learning about new music. AM/FM radio has traditionally played a significant role in helping consumers learn about new music from well known artists, as well as finding new ones; however, Pandora and other music services are an increasingly important part of the music-discovery process.

Read more about the NPD research HERE
NPD data is derived from NPDs Music Acquisition Monitor, which is based on 14,000 outgoing surveys to NPD panelists yielding more than 4,000 survey completions each quarter. The report includes consumer data through June 2012. Data is weighted and projected to be representative of the U.S. Internet population (age 13 and older). Pandora, YouTube, and VEVO users frequently use other radio and on-demand services; changes in their habits, or discovery patterns often reflect the variety of services used to engage with music.


Check out the (PDF's) NPD Listening Charts/Graphs HERE

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