NPD

Can iTunes Radio be a "Pandora-Killer?" Look to the comments section!

Tuesday, September 10, 2013 - 11:10am

Great wisdom and insight often comes from your readers (we're reminded of that almost daily). Today, a Digital Music News commenter very nicely summarized and aggregated seven advantages pundits believe the new Apple iTunes Radio service has over what will likely be its nearest competitor, Pandora.

The comment was posted to the news source's coverage of NPD Group consultant Russ Crupnik's own seven reasons why the new service may truly be a "Pandora-killer." Using the handle "Here Let Me Research It For Yo," the commenter (after a quick shot about "lazy insights") made good on her/his moniker, and offered relevant bits from sources like the Huffington Post, Rolling Stone, Evolver.fm, The Wall Street Journal, and Apple itself.

Most of the points seem to involve how well the service should be integrated within the Apple ecosystem and customer base, but does include a point that "Pandora hasn't continued to innovate..."

See this commenter's round up of "7 Reasons Why Apple's 'Pandora Killer' May Actually Be a 'Pandora Killer'" here.

Industry expert suggests iRadio streaming service will come to protect iTunes download business

Thursday, April 18, 2013 - 1:05pm

A recent piece in GigaOm suggests Apple will launch an Internet radio service not to compete with Pandora, but to bolster its music sales business against competition from on-demand services like Spotify.

As NPD Group's Russ Crupnick explained to the RAIN Summit West audience in Las Vegas, his company's data shows 38% of American consumers still think it's important to "own" music (as opposed to accessing it via on-demand streams). But for users of Pandora and other webcasters, that number rises to 41%. What's more, many of these respondents said they've purchased more new music because of what they hear on these services.

It's logical to assume, as GigaOm contributor Janko Roettgers, that partisans of on-demand services -- since they basically have any music at their fingertips at any time -- aren't nearly as compelled to purchase music downloads.

So, while the Spotify-type services, since they replace music ownership, compete with iTunes download sales, Pandora actually encourages music sales.

Apple's move would simply keep that stream listening "in-house" (and perhaps they can sell some ads) and make it ever-so-slightly easier and quicker to sell a download.

Not that this will be easy. An article from The Street (in MSN Money) reminds observers that even a titan like Apple "cannot overcome Pandora's enormous first-mover advantage."

Two major points here: (1) Pandora has created an extensive sales structure with the goal of capturing traditional radio ad spending. Apple is far behind in this respect; (2) Apple "simply will not be able to do personalization and discovery -- two key components that set Pandora apart from its competition -- at the level necessary to match the quality of Pandora's offering as push-a-button-and-li​sten-wherever-you-ar​e radio." writes The Street.

Regardless, as the NPD data also shows, Apple's share of the download market (while still as dominant 63% in 2012) has been falling in recent years (from 68% in 2011, 69% in 2009).

Roettgers concludes, "That’s why it’s smart for Apple to invest in iRadio. The goal is not to kill Pandora, but to actually bring that type of radio service to more users, and keep them from switching to a full-blown access model."

Read the GigaOm piece here; Reuters on more NPD data here; and The Street in MSN Money here. Finally, listen to NPD Group's Russ Crupnick's presentation from RAIN Summit West here on SoundCloud (press the orange "Play" button when the page loads).

Net radio matches AM/FM for music listening among 13-35 crowd, says NPD study

Wednesday, April 3, 2013 - 12:50pm

The NPD Group looked at music listening in a younger (13-35) age range and found "Internet radio services accounted for nearly one-quarter (23%) of the average weekly music listening time," up from 17% a year ago. This nearly matches the 24% that AM/FM attracts for music listening among this age group.

NPD's Music Acquisition Monitor study ran during the fourth quarter of 2012.

More than half of Pandora and iHeartRadio listeners regularly use their mobile phone to listen, and about 20% of those listen in the car.

Not surprisingly, Pandora is winning the race among services. 39% of the 13-35 set regularly listen to Pandora's free streams (2% subscribe to Pandora's premium service). IHeartRadio attracts 11%, Spotify's free radio service 9% (no other competitor hit higher than the 3% mark).

Net radio accounted for just 13% of music listening in the 36-and-older set in the study.

"Driven by mobility and connectivity, music-streaming services are rapidly growing their share of the music listening experience for teens and young adults, at the expense of traditional music listening methods," said NPD SVP/Industry Analysis Russ Crupnick.

Crupnick will present his company's research this Sunday at RAIN Summit West in Las Vegas. NPD Group's Music Acquisition Monitor study is available here.

NPD Group says mobile and in-car availability of streaming services accelerating decline of CD, radio listening

Thursday, 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.

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