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.”

Radio audiences: “Stickier” than you might think.

Radio audiences:  Stickier than you might realize.It’s a pretty common belief that when commercial breaks come on the radio, the audience scatters to the four winds.

And that view isn’t just held by laymen … those in the broadcast industry itself tend to believe that.

A study conducted by Arbitron, Media Monitors and Coleman Insights, released about six months ago, discovered that ad agency personnel believe that the typical radio audience is one-third lower during commercial breaks than during the lead-in.

Among radio industry personnel, those feelings are only slightlycloser to reality; they believe that the radio audience is about one-fourth lower during commercial breaks than during the lead-in.

In fact, a parallel study conducted by the same researchers found that these industry perceptions are way wide of the mark. Their evaluation, which covered nearly 18 million commercial breaks and ~62 million minutes of ads airing over a 12-month span on ~865 radio stations, revealed these interesting findings:

  • The average radio station aired 2.6 commercial breaks comprising nearly 9.0 minutes of advertising per hour.
  • The average break was ~3.5 minutes in duration.
  • On average, more than 93% of the lead-in audience stuck with the station during commercial breaks.
  • Longer spot breaks (4 to 6 minutes) still delivered ~90% of the lead-in radio audience.

These figures are significantly higher than the perception of industry observers. But one perception did turn out to comport with reality – the fact that older radio listeners are more apt to stay listening through the commercials than are younger listeners (~98% versus ~90%).

The study also determined that listening behaviors don’t differ at all between the different seasons of the year. But the audience for music stations is somewhat more prone to “wander off the reservation” compared to listeners of radio stations with spoken-word formats:  Fully 99% of the news-format radio audience stays on the station during commercials, while only ~88% of music format station listeners have the patience to stick around through the advertising.

The bottom line on the study’s findings is that radio is delivering audiences for commercials at levels that far exceed advertisers’ expectations.

So, the radio industry’s job is two-fold: Change the erroneous perceptions about audience levels … and also convince advertisers that the audience is actually listening and learning during the advertising breaks, not tuning out. 

This last bit may well be a lot harder to accomplish!

You can read more findings from the radio audience research here.

Radio Revolution: Pandora’s Box of Musical Delights

Pandora Internet RadioPandora® Internet radio is one of the more interesting concepts to hit the web. Built on a powerful music recommendation engine known as the Music Genome Project®, it enables a listener to hear streaming music selections chosen on the basis of the musical styles of their favorite bands, performers or songwriters.

If you enjoy the jazz piano style of Marian McPartland, for example, Pandora will stream performances in a similar vein – such as the songs of Beegie Adair and Joe Bushkin. And you can create numerous personalized channels (also called “custom radio stations”) focusing on different styles of music to suit whatever mood or occasion you wish.

It’s an approach to listening remindful of Tom Hanks’ famous quote about that box of chocolates in the movie Forrest Gump: “You never know what you’re going to get.”

… Except with Pandora, you do “kinda-sorta” know what you’re going to get. I’ve been a Pandora listener for over a year now, and I’ve been introduced to musical artists I didn’t know before and probably wouldn’t have stumbled upon otherwise … and I’m the richer for it.

Pandora may be an Internet star today, but it sure didn’t start out that way. The brainchild of Tim Westergren, Pandora labored under difficult circumstances for the better part of a decade. The Music Genome Project took years to build and calibrate, during which time Pandora’s yeomen developers were obliged to work for large stretches at a time without pay.

Also, as with many Internet sites, figuring out an effective business model was challenging — and a barrier to obtaining funding.

Then in 2007, just as Pandora seemed on the verge of breaking out, an action by the Copyright Royalty Board raised Internet radio royalty fees to prohibitive heights, resulting in a court action that was finally settled in July 2009 in a compromise ruling.

Through it all, Pandora managed to survive, and now is close to having 60 million registered users. The Internet site is attracting sufficient advertising dollars to bring in profitable quarters. Revenues topped $50 million in 2009 (~60% goes to paying music royalties), and revenues are on track to double this year.

Always innovating, Pandora is now expanding into TV sets and automobiles as well, although the majority of activity currently comes from computers and a significant minority from mobile phones.

Long-term, Pandora believes the biggest potential rests in automotive. Consider this: Once listeners realize they can simply skip over a song on Pandora they don’t like, it should change forever the way people interact with radio.

What are the very latest trends in media usage?

TargetCast TCM logoWith all of the rapid changes occurring in the media world today, it’s hard to know just what kind of impact they’re having on the media usage patterns of consumers. Now a just-released report by TargetCast Total Communications Media based on a September ’09 survey of ~900 American adults age 18-64 is providing some interesting clues as to what’s going on out there.

The report provides a host of interesting statistical figures, but I find a couple broad conclusions from the report more interesting:

 Men and women are consuming media differently. Men are more likely to adapt their usage habits to incorporate more digital and online platforms, while women are more apt to stick with traditional media forms.

 Radio, which surprised many by successfully surviving the challenges of broadcast TV in the 1940s, cable in the 1970s and the Internet in the 1990s, may finally have met its match. As a “passive” media, it’s being tuned out in large degree by a younger generation of people far more attracted to programmable MP3 players, iPods and interactive multimedia devices.

 Newspapers continue to be respected for their role in covering major news events, but they’re losing ground in the face of increasing digital and mobile news media use. What’s more, nearly three-fourths of the respondents in the survey expect their online news to be available for free. (Rupert Murdoch, are you listening?)

So overall, what media has become less popular with consumers? Answer: Newspapers and magazines, with around one-third of the TargetCast TCM survey respondents indicating they’re using these media less than one year ago. Conversely, ~40% reported higher usage of the Internet for informational purposes … and ~28% higher Internet usage for entertainment.

These findings help explain why print magazine advertising is still in the doldrums. In fact, Media Industry Newsletter reports that November 2009 ad pages are down nearly 20% from November 2008. This comes as a surprise for some people because the full brunt of the economic crisis had already hit the media by November of last year. But instead of showing flat performance or maybe even a slight rise in ad pages, the numbers tanked yet again this year – making the two-year drop-off between 2007 and 2009 a whopping 35%.

Sure, some of the blame for the sorry ad numbers can go to the continuing economic downturn. But the rest is due to the fundamental change in media consumption habits that are continuing to happen – as cleanly illustrated in the TargetCast TCM report.