Company News · March 27, 2012

A Dramatic Rise in Internet Radio Usage

By Tom Webster

On April 10th, Edison and Arbitron will debut the The Infinite Dial 2012: Navigating Digital Platforms, the latest in a research series which has now hit a remarkable milestone. This year’s report is our 20th study of America’s media and technology consumption habits, and represents the richest longitudinal mine of such data in the world. We’ve been tracking things like the usage of Internet radio for well over a decade – which makes this year’s jump in that particular behavior all the more remarkable.

This year, we are reporting that the weekly usage of Internet radio (which includes both the online streams of terrestrial broadcasters and streams from pure-play streamers such as Pandora) has increased from 22% of Americans 12+ in 2011 to 29% in 2012 – a jump of over 30%. This is a number that we are accustomed to seeing grow bit by bit each year, but this is the largest year-over-year increase we’ve seen since we began tracking this stat in 1998. It’s easy to say that this kind of discontinuous jump is due to the increased usage of Pandora or Slacker or iHeartRadio or other individual brands, but I think there is a different dynamic at play here, driven by another discontinuous jump.

We’ll reveal our number on April 10th, but let’s just say that the percentage of Americans – mainstream Americans – who now own smartphones is going to show some growth, to put it mildly. The success of some of today’s popular on-demand and streaming Internet audio services is partially of their own doing, but also partially a trailing variable of the rise in smartphones and mobile media consumption. True, we’ve been able to consume digital media on the go for over a decade, but there has always been some friction involved with this process. I don’t know the hard cap on the number of Americans who would program their own playlists by mood and music type and then upload that content to their phones and iPods, but I’m going to suggest that the number of Americans who now own smartphones has blown right by that hard cap.

The friction involved in mobile digital media consumption has now been removed for vast numbers of mainstream Americans who want someone else to program their content for them–and that’s what the mobile Internet has really enabled. In a sense, the continued penetration of smartphones is encouraging something of a radio renaissance, though it doesn’t look like your father’s Victrola. Mobile phones are increasingly providing the digital soundtrack to people’s lives on the go – just count the white earbuds, Beats, Boses and other headphones the next time you walk down Main Street. Previously those earbuds delivered mostly our own music files, but what our data shows is that there is pent-up demand for frictionless, mobile audio programming to provide that soundtrack for us, and smartphones are opening the floodgates.

Thanks to the myriad online music services available, music as “product’ has become an economic commodity, and the delivery of that commodity akin to trucking wheat. Since “cost” is not a competitive dimension, and everyone has access to the same product, how that product is packaged and delivered is all you have. Smartphones have changed the game here from music as active entertainment choice to music as the quite literal soundtrack to your life. And that’s the dimension many of these services are lacking.

Today, I have thousands of sources to hear a stream of great 80’s hits, or hair bands, or Bon Iver clones, or songs with guest raps by Pit Bull. The smart Internet audio providers of tomorrow will transcend the jukebox, and remember that “soundtrack of your life” concept. This means new opportunities for podcasters, personalities, local content, and most importantly curation.

The ability to pick songs is now an algorithm. The Internet radio services of tomorrow have to show me how that content matters, if they want to matter.

We’ll have much more data and the implications of that data on April 10th, when Edison and Arbitron present The Infinite Dial 2012. Register today!

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