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Internet radio is running on terrestrial radio’s coattails, according to a report by market research company The NPD Group. The Q4 2012 study, which surveyed US consumers ages 13 to 35, found that AM/FM radio is still the primary method for music listening, cited by 24% of respondents. However, internet radio is just behind with a 23% share. CDs fell to account for a lowly 9% of music listening, and satellite only accounted for 5%.
Of the streaming services used by US music listeners, Pandora’s free service dominated, in use by 39% of respondents. Pandora was trailed by iHeartRadio, Spotify’s free version and Grooveshark.
NPD made note of the rising impact of mobile on music listening. In another study released in February 2013, the research firm found that already 56% of US smartphone owners used their smartphone for listening to music. And of that group, 65% used internet radio apps like Pandora, above the 60% who listened to their own music catalogs and 30% who used on-demand services like Spotify.
What’s more, 39% of those listeners plugged in to smartphones to listen at least once per day. And 54% reported spending more time using their smartphone to listen to music than did so a year ago.
Interestingly, NPD found that among the 13-to-35 age group, the car is still where the majority of respondents did most of their music listening. This draws attention to in-car infotainment systems, many of which now integrate digital music services like Pandora. Additionally, a common practice is to plug in a smartphone while in the car, and to stream music content through the phone.
According to the Recording Industry Association of America (RIAA), industry revenues from digital music formats grew 14% in 2012 from the prior year. RIAA notes that the bulk of digital revenue came from access models—services in which users have access to a music library catalog, rather than purchase individual songs or albums. Access models include paid subscription services and non-subscription streaming services.
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