Internet radio closing in on CD, radio listening

According to The NPD Group, a whopping 96 million people, about 50% of the U.S. Internet population 13+, listened to an Internet radio or on-demand music service in the past three months, according to new data. More than one-third (37%) of U.S. Internet users listened to music on Pandora and other Internet radio services, while an equal percentage (36%) used an on-demand music service, like YouTube, VEVO, Spotify, MOG, Rhapsody, and Rdio.

The audience for Internet radio grew 27% YOY and the on-demand music audience increased by 18%. As Internet radio and on-demand listening has risen, the number of consumers who reported listening to music on CDs dropped 16%, while the music audience for AM/FM radio fell 4%, and the number of consumers listening to digital downloads declined 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,” said Russ Crupnick, SVP/industry analysis at NPD. “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’s “Music Acquisition Monitor” 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.

The decline in radio and CD listening can partially be attributed to the fact that 34% of Pandora users now listen to the service in their cars–either connecting through an in-car appliance, or listening via car-stereo-connected smartphones or other personal listening devices, NPD said.

Although listening to music on YouTube and VEVO generally appeals to a younger audience, NPD noted similar changes in traditional patterns among these users, since 2009. Among YouTube and VEVO users, CD listening on players and in cars dropped 22 percentage points, listening to digital files on portable players declined 17 points, and listening to AM/FM radio fell 12 points.

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% of these services’ users reported rediscovering older music, and 51% 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,” Crupnick said.

RBR-TVBR observation: Frankly, these numbers aren’t that frightening. The 4% loss of terrestrial AM-FM listening according to the report is likely lower than that, as many are transitioning their terrestrial listening to the new transistor radio–smartphones. It is interesting, though, to see how Pandora listeners are tending to stick more with Pandora and let other listening fall by the wayside. But since 2009, AM-FM listening took the least hit by far of all media erosion from those listeners.