NPD: Net Radio, Music Stream Services Grow At Expense Of CDs, Radio, mp3s

Changing Paradigm?

The NPD GROUP has released a new study that showed increased public usage of Internet radio and on-demand music services -- at the expense of CD and terrestrial radio listening. The audience for Internet radio grew 27% year over year and on-demand music audience increased by 18%. Conversely,, the number of consumers listening to music on CDs dropped 16%; the music audience for AM/FM radio fell 4%, and those who listened 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," NPD SVP/Industry Analysis RUSS CRUPNICK said. "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."

Overall, the survey found that 50% of Internet users -- 96 million people -- listened to music on an Internet radio or on-demand music service in the past three months. 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 on-demand music services such as YOUTUBE, VEVO, SPOTIFY, MOG, RHAPSODY and RDIO.

Radio's hold on its in-car audience may also be loosening, as 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. Part of these declines can be attributed to the fact that 34%  of PANDORA users are now listening to music on the service in their cars -- either connecting through an in-car appliance, or listening via car-stereo-connected smartphones or other personal listening devices.

Among YOUTUBE and VEVO users -- a younger audience --  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.

Labels could be heartened by data showing that listening to music on PANDORA, VEVO, and YOUTUBE had significant positive effect on consumers' 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," CRUPNICK noted. "However, PANDORA and other music services are an increasingly important part of the music-discovery process."

Read the entire report here.

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