RAIN 11/8: Study finds growing usage of Net radio, on-demand streaming impacting more traditional music media

Paul Maloney
November 8, 2012 - 1:10pm

Market research company The NPD Group's new study shows people are using Internet radio and on-demand music services more, and that growth seems to be cutting into time spent listening to CDs, broadcast radio, and music downloads.

NPD says fully half of U.S. Internet users 13 and older -- 96 million people -- listened to music on a Net radio or on-demand music service within the past three months.

Internet radio's audience is up 27% year over year, NPD says, while the on-demand music audience is up 18%. This growth coincides with a drop in the number of consumers who listened to music on CDs (down 16%), music on AM/FM radio (down 4%), and downloads (down 2%).

"Although AM/FM radio remains America’s 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," said Russ Crupnick, senior vice president of industry analysis at NPD.

By the way, to the point of faster growth of Internet radio listening compared to on-demand serivces, remember that many of these services have been adding their own customizable radio features. Spotify, Xbox Music, MOG, Rdio (which just partnered with The Echo Nest on this) all offer "Pandora-style" custom streaming radio... and the industry awaits a rumored Apple entrance into the space.

NPD's findings come from its "Music Acquisition Monitor." They say 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." [See the chart. The lime-green line is AM/FM, CDs on a non-computer device is gold, and digital music files is the lighter blue.] 

Which stands to reason, as Internet radio usage continues to migrate away from being a "desktop-only" experience. NPD says, "34% 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."

And one final note -- and this goes to the heart of the question of whether Internet radio and similar services offer promotional benefit to artists and labels: These music streaming consumers "noted a significant positive effect on their overall discovery and rediscovery of music. In fact 64% of these services’ users reported rediscovering older music, and 51% were learning about new music."

This is important because as Pandora and the webcast community struggle with sound recording royalties amounting to most (or all) of their revenues, the rationale for broadcasters' immunity from these royalties has been the traditionally-accepted notion that radio play is "promotional" for labels and performers. The music industry -- the beneficiaries of net radio royalties -- have argued that streaming radio offers no promotional benefit. 

Crupnick adds, “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."

Of course, if time spent with Internet radio and on-demand services is truly cutting into time spent with more traditional modes of music listening, some will argue that people will begin purchasing less music. So, while the promotional power of newer services might not help record labels, keep in mind that record sales for all but the luckiest few of performers have never been a significant source of revenue. Newer online music services then could still offer promotional benefit to artists who earn money via touring, licensing, merchandise sales, and more.

Paul Maloney
November 8, 2012 - 1:10pm

Oregon Senator Ron Wyden (D), who introduced the Internet Radio Fairness Act (S.3609) in the Senate in September will keynote the Future of Music Summit this Tuesday (November 13) in Washington, D.C.

The Future of Music Coalition has also just announced the event will begin with Pandora founder Tim Westergren (replacing CEO Joe Kennedy) in a one-on-one with music journalist Greg Kot.

The sold-out Summit event will be webcast live by Backbone Networks (and available on TuneIn), and listeners will be able to submit questions for speakers via Twitter and Facebook. Backbone, in fact, has also set up a "preview station" using its OnAirStudio and OnAirDisplay software. The preview station is now available and features highlights from past FoMC Summits.

See the full event agenda here.  

The FoMC is a D.C.-based national nonprofit organization to represent musicians' interests. Read more about Tuesday's Summit event here.

Paul Maloney
November 8, 2012 - 1:10pm

On Monday, the day before Election Day, radio streaming aggregator and mobile service TuneIn made public a graphic showing "listener engagement" by political leaning across nine "toss-up" states during October.

Interestingly, (as Audio4Cast's Jennifer Lane points out today), the graphic is remarkable in that in all but two of the states won by President Obama, people spent more time, on average, listening to programming classified as "liberal" than to "conservative" programming. (Note, this assumes that Florida ends up in Obama's column.)

Only Nevada and New Hampshire saw slightly more conservative "engagement" (as TuneIn calls it) yet were captured by Obama. North Carolina, which went for Governor Romney (but Obama in 2008), had more listening to liberal programming.

Overall, average daily listening for the month tilted more towards liberal programming (that is, the chart uses the DNC symbol of the donkey, so we assume TuneIn means "liberal = Democratic"): 86 minutes per listener to 76 minutes per listener for conservatives/Republicans. Iowa and Florida, the states with the highest margin of "liberal" listening over "conservative" listening, also had the most overall listening (over 200 minutes daily per listener in Iowa's case).

Paul Maloney
November 8, 2012 - 1:10pm

Emmis Communications says it will introduce a smartphone app that enables listening to local analog FM and HD Radio stations on mobile devices, saving data consumption and battery life (as opposed to streaming).

The app, to launch next year, will be called NextRadio. Emmis Communications CTO Paul Brenner says the app combines "the efficiency and scalability of over-the-air radio" plus the ability to "deliver an interactive artist and advertiser experience" via the data channel, reports Radio World.

Emmis plans to add other features including "enhanced synchronous ad modes" (SMS integration and couponing), song tagging capabilities, and social media integration. Brenner and other broadcast industry executives hope that by building compelling apps centered on analog broadcast radio, device manufacturers will see the value of including FM (and HD) chips in more of their devices. 

Read more in Radio World here.