Internet Music Does a Number on Traditional Listening Habits

Changing trends in music listening habits favor Internet radio and on-demand music services.
Changing trends in music listening habits finds Internet radio and on-demand music services growing at the expense of CDs and AM/FM radio.  Pandora radio users reflect the broader trend.

I’ve suspected for some time that the rise in popularity of on-demand music services as well as Internet radio are fundamentally changing how consumers consume music.

And now we have quantification showing the extent of those changes.

Marketing research firm NPD Group has just released results from a survey it conducted among American Internet users age 13 and older. It found that half of Internet users have listened to music on Internet radio or an on-demand music service at least once over the past three months.

User activity is split equally between Internet radio services such as Pandora, and on-demand services like Spotify and Rhapsody (about 37% each).

Internet radio appears to be growing in popularity significantly faster than the on-demand music audience. Internet radio audience increased ~27% over the past year, while the on-demand music audience grew by just ~18%.

By contrast, the audience fell in other categories – most dramatically in listening to CDs:

• Digital downloads: ~2% decline
• AM/FM radio: ~4% decline
• Music CDs: ~16% decline

Since finally breaking into the mainstream about three years ago, the Pandora Internet radio service has really taken a bite out of the conventional ways of listening to music. Moreover, about one-third of all Pandora users are now listening to music via the service in their cars. As a result, since 2009 the percentage of Pandora users who also listen to AM/FM radio has declined by ~10%. Even more dramatic has been the drop in Pandora users also listening to CDs on non-computer devices and/or on portable music players (-21%).

An intriguing  finding of the survey is that using Internet radio and on-demand music services has increased audience engagement with new music:  More than half of the respondents reported that these services have aided in their discovery of music that is new to them. 

Clearly, innovations such as Pandora’s “music genome” have made it easier and more fulfilling for listeners to broaden their musical horizons, branching out from musical styles that are familiar and most pleasing to them.

But an even more interesting finding may be this one: Two-thirds of respondents have used these services to rediscover older music – the music of their youth.

In this case at least, “what’s old is new again.”

2 thoughts on “Internet Music Does a Number on Traditional Listening Habits

  1. This is all very interesting. And it’s not just the music that’s new again; it’s older radio formats that will necessarily revert to more of an eclectic pre-1970s model.

    Speaking as someone who earned his college spending money on the radio, it’s clear to me that the prevailing (music) radio paradigm is on its way out. Back in the ’70s, consultants advised stations to cut the chatter and adopt tighter rotations—play the same best-selling hits over and over. Too, stations became much more “format specific”: Station X played ONLY Top-40 hits while station Y played ONLY country hits, and station Z played ONLY rock album tracks. The theory was that people wanted to listen to non-stop, predictable music gleaned from various Billboard/ R&R top-20 charts.

    Well, to the extent that’s true, Pandora, internet radio, and the iPod are now unassailable. They can serve up non-stop hits better than any radio station can — and without commercial interruption if subscribers so choose.

    Increasingly, broadcasters have to assume that people don’t have a radio on in the background anymore. Practically all listeners these days are in their cars or involved in some other transportation activity (actually engaged with the content) and looking for an iPod alternative — bite-sized information (particularly local information), ideas, and musical “surprises.”

    Whereas in the past, programmers sought predictability, now they have to differentiate themselves by exploiting interest in the unexpected. Stations will thus become more like audio magazines looking to serve various consumption communities, swapping a conventional musical identity for a more vibrant lifestyle “brand.”

  2. Nice post, Phillip.

    I am an avid music listener, collector and concert attendee – 500+ vinyl albums (that very rarely get played), 200 cassettes (that never get played), 800+ CD’s (that are being played less and less), 3,000+ songs downloaded to date – of which, 95% of them are individual songs (not full albums), and 3-5 live music shows/concerts a year (down from 6-10 a year) for the last 25+ years. Music is an enormous love of my life.

    Pandora and Palladia (1080i HD music TV via my cable subscription) have fundamentally changed the way I listen to, collect, view and attend music shows. This change has also greated impacted how I spend money on music. Simply put, I rarely buy CD’s any more. I buy and/or download songs.

    I play Pandora “all day, every day” while working, through my computer and hooked up to amazing sounding speakers in my office. I play Pandora through my iPhone in my car (2008 Honda Civic Si with a killer sound system) and through my Bose docking station at home. (I move the Bose system all over the house and on my patio – and, mind you, I have an in-house speaker system that can play the radio in every room.)

    Palladia is absolutely amazing: concerts that are filmed and recorded in 1080i HD and played through my 58″ HD TV with a home stereo hooked up. I watch/listen to that channel every day … seriously.!/profile/jeffreymiller03

    What does this all mean?

    First of all, I gleefully pay Pandora $36 per YEAR for commercial free music.

    (Are you kidding me? $36 per year?! Easiest purchase ever. That in itself changes the game.)

    My Pandora profile shows how diverse my listening is. I have created nine different “stations” that are roughly sorted by genere. I play whatever station I am in the mood for. For example, I like background music while working (it’s on as I type this) and have three stations that I (and Pandora’s music genome project) have built.

    This is sooo frickin’ cool – I am introduced daily to new music that I can “like”, “dislike” or “share”. And, I can comment on a song, artist or station and share (or not). I trade music with my close friends and with people I have never met (nor ever will, probably) all over the world. Sharing (social media) is good and I would have never, ever been introduced to artists such as Mose Allison (my current “new” favorite artist) if not for Pandora.

    Palladia is different in that I don’t control what is played or have the opportunity to “like”, etc. I vote with my remote control; if I like what they’re playing – I stay on the channel. If not – I don’t. The quality of the sound and film is outstanding, and I have access to shows like Live from Darryl’s House (a fantastic show hosted by Darryl Hall and featuring a different music guest each episode), Later with Jools Holland (artists I never would have been introduced to) and Story Tellers (artists I am aware of, but would never had imagined that I would be entertained by – examples: Pink, Taylor Swift).

    Net affect: Pandora has almost eliminated my purchasing of CDs. With Palladia, I am not compelled to purchase live concert tickets as much as I have in the past. I get to listen to and view festivals that I would have attended in the past (Lallapolloza) and never would have attended (Motorhead live in Berlin).

    Think about this from a high-end consumer point-of-view. I haven’t taken time to calculate how much “less” I spend on music per year … but I imagine it is 25% of what it once was, and the vast majority of what remains goes to iTunes.

    Combine this with the only radio I listen to anymore (AM sports talk radio, FM NPR talk radio and, occasionally, the blues program on Saturdays) and the economics of music/radio/TV and advertising is skewed beyond imagination. Intertesting stuff, eh?

    In summary: Pandora and Palladia RULE. I love them both, and my wife has been totally sucked into the vortex of my change in habits too (although she still listens to the radio via our house system and in her car — no smart phone for her!).

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