Reports from industry groups and record labels have indicated the ever-growing popularity of music streaming services from a music sales standpoint, with the IFPI’s Digital Music Report showing that the likes of Spotify and Deezer help contribute to an upswing in global music sales, while the RIAA’s own recent report demonstrates the same services – which it labels ‘access models’ accounted for over $1 billion in music sales in 2012 and a 15% share.
Now a new report from statistical analysts, the NPD Group, has demonstrated the consumer side of the music streaming boom in a survey demonstrating that digital music services, led by internet radio site Pandora, are fast becoming a major source of music consumption for US listeners under the age of 35.
The results of the NPD Group survey demonstrate that subscription-based models, as well as free internet radio services, accounted for nearly a quarter of listening by users in the fourth quarter of 2012, accounting for 23% of the average weekly listening of consumers between the ages of 13 to 35, an increase from 17% for the same timeframe the previous year.
The figures also demonstrate listeners moving away from traditional AM/FM radio and towards internet radio services, bringing traditional radio broadcast listening down to just 24%, which essentially means that streaming is almost on par in popularity as radio in the United States.
The older demographic is still comfortably in favour of traditional AM/FM radio however, with a 41% share tuning in, while just 13% turned to internet radio and streaming for their music listening.
Speaking of the new figures, NPD Group Vice President Russ Crupnick remarked, “Driven by mobility and connectivity, music-streaming services are rapidly growing their share of the music listening experience for teens and young adults, at the expense of traditional music listening methods.”
As demonstrated in a previous NPD Group report on listening habits, much of the increasing popularity of music streaming is thanks to mobile, with a previous survey demonstrating that more than half (56%) of smartphone and tablet users were using their devices to listen to music, with 65% of that figure tuning in to internet radio apps, like Pandora, while a further 30% were employing premium subscription services like Spotify and Deezer. “Music streaming services are rapidly growing their share of the music listening experience for teens and young adults, at the expense of traditional music listening methods.” – Russ Crupnick, NPD Group VP
The increase of smartphone and mobile use also reflects a decline in consumers using traditional methods like CDs and even digital downloads. The statistics show that 1 in 5 Pandora and iHeartRadio users were connecting to those services through heir mobile devices in their cars, which is seen as the traditional space of the AM/FM listener. In fact, 51% of the 7,600 sampled reported that they did most of their music listening in their cars.
“Whether it’s listening to AM/FM radio or Pandora, music continues to be an integral element in the American driving and commuting experience,” said Russ Crupnick of the survey results.
As for the services that are drawing in the influx of listeners under the age of 35, Pandora is the clear leader in the 13-35 bracket, making up 39% of music streaming usage, trouncing second place service iHeartRadio which claims just 11%. Despite its perception as a market leader with 6 million paying subscribers, Spotify accounted for just 9% of listening in third place.
Filling out the streaming music table are less-than-legitimate service Grooveshark, with a 3% share, and an even 2% each for Slacker, Tune In, Last.fm, Pandora’s ad-free service Pandora One, and Microsoft’s XBox Music service.
The NPD Group survey demonstrates that, among US music listeners at least, that mobile streaming is the key growing demographic, something that many of the new proposed services are no doubt taking note of as they lay out their plans to enter a particularly crowded and competitive market.
Considering Pandora’s striking lead in the latest results, it’s no wonder that Apple are modelling their own music service, called iRadio, after the internet radio service; with industry sources recently noting that iRadio is “definitely coming” despite setbacks with record companies over licensing rates in America.
Apple isn’t the only company looking to get in on the action though, with online retailer Amazon apparently in talks with US labels to launch its own subscription based service, as are Google who have hinted at plans to announce their own music service despite ongoing criticisms from label over their search engine’s ability to access pirated content. Social media are also getting in on the act, with Twitter looking to launch its own music service in the very near future.
Most interesting of all, especially for music fans, is the model proposed by Beats Electronics that recently received $60 million in funding from investors – including Aussie media mogul James Packer – to make their music service, codenamed ‘Daisy’, its own standalone company, with Nine Inch Nails/How To Destroy Angels frontman Trent Reznor at the creative helm; looking to do for the streaming service boom what the iPod did for the mp3 last generation.