Streaming Digital Music Services to Compete for Growing Audience, Ad Dollars

Does ad-​supported digital-​music streaming radio pose a threat to traditional networks? It’s worth considering headphonesthis question as more competitors crowd the field. Pandora, Spotify, iTunes Radio and iHeartRadio are all courting audiences and marketers. Their move to grab local revenue could change the radio industry.

Edison Research reports these services are finding an audience. About 53% of consumers listen to streaming radio. And, 32% say they’ve increased the amount of listening they’re doing. This increased listening time, for 26%, is ‘new time’ while 44% say they’re cutting back on their AM/​FM listening time. The most popular places for listening to Internet radio are at home (42%), at work (23%) and while walking around (24%). Most listeners are tuning in via their computers (78%). A key benefit for many of these listeners is the discovery of new music and musicians. About half of listeners like the wider variety of songs they can access versus AM/​FM. At least 44% say the format has fewer ads than AM/​FM.

That reality is likely to change as service providers look for ways to increase revenue and operators like Pandora concede that 80% of revenue will come from advertising. The radio ad market is valued at around $15 billion in the U.S. and nearly ¾ of the money comes from local businesses. Pandora has already started using reps in some local markets to promote itself to small businesses.  The company is also offering detailed consumer data for targeting purposes from its registration information.

What we don’t know yet is how many of these services will be able to build an infrastructure that works at both the national and local level and how consumers will react as the number of ads begin to increase on their music services.

To learn more about Internet radio listeners, check out the AudienceSCAN report available on the Research Store at ad​-ology​.com.

[Sources: Webster, Tom. New Mainstream 2013: Streaming Audio. Edison Research. 27 Sep. 2013. Web. 11 Oct. 2013; Peterson, Tim. Pandora, Others Try for Bite Out of Radio Ad Dollar. Adage​.com. 30 Sep. 2013. Web. 11 Oct. 2013] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.