Internet Radio Audience Grows; Less Listen to Music on CDs

November 9, 2012

This article is included in these additional categories:

Digital | Media & Entertainment

37% of US internet users responding to a survey from The NPD Group said they listened to music on an internet radio service in the 3 months prior to the survey, according to a new report. That represents 27% year-over-year growth, and is good news for marketers, as research has shown these listeners to be highly receptive to advertising. But while the audiences for internet radio and on-demand listening (+18%, to 36%) are on the rise, the outlook isn’t good for CD sales. The number of consumers listening to music on CDs has plummeted by 16%.

The NPD Group concludes that “the basket of internet radio and streaming services that are available today have, on the whole, replaced CDs for second place,” among music-listeners, behind only AM/FM radio, which saw a 4% decline in internet user audience size. Consumers’ move to digital forms of music-listening, including on mobile devices, means that while online and mobile music revenues are expected to show strong growth rates in the US this year, physical music sales are projected to be down by 9%, per a Strategy Analytics forecast released in August 2012.

Pandora Listeners Turn Away From Other Listening Forms

Further details from The NPD Group survey show that Pandora users are becoming less and less likely to listen to music in other ways. Since 2009, the percentage listening to AM/FM radio has dropped by 10% points (from 79% to 69%), and the percentage listening to CDs on a non-computer device (-21% points) and listening to digital music files on portable music players (-21% points) have also seen significant decreases. The researchers suggest that these drops are at least partly attributable to there now being about one-third of Pandora users who listen to the service in their cars.

Similar patterns are evident among YouTube and VEVO users, who have seen a marked drop in audience size for CD listening on non-computer devices (-22% points), listening to digital files on portable players (-17% points), and listening to AM/FM radio (-12% points).

Newer Music Services Used For Discovery

While AM/FM radio is still the primary source for new music, it seems that users of the newer digital services are leveraging them for music discovery, too. Among those who listen to music on Pandora, VEVO, and YouTube, 64% reported rediscovering old music, and 51% new music, according to The NPD Group.

About the Data: The data is derived from NPD’s “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 US internet population (age 13 and older).


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