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The NPD Group: Internet Radio and On-Demand Music Services Rise, Putting Pressure on Traditional Forms of Music Listening

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NPD’s “Music Acquisition Monitor” tracks growing use of Pandora and other music services, as listening to CDs and digital music downloads declines.

PORT WASHINGTON, NEW YORK, November 8, 2012 – According to The NPD Group, a leading market research company, 50 percent of Internet users (96 million) listened to music on an Internet radio or on-demand music service in the past three months. More than one-third (37 percent) of U.S. Internet users listened to music on Pandora and other Internet radio services, while an equal percentage (36 percent) used an on-demand music service, like YouTube, VEVO, Spotify, MOG, Rhapsody, and Rdio.

The audience for Internet radio grew 27 percent year over year, as the on-demand music audience increased by 18 percent. As Internet radio and on-demand listening has risen, the number of consumers who reported listening to music on CDs dropped 16 percent, while the music audience for AM/FM radio fell 4 percent, and the number of consumers listening to digital downloads declined 2 percent. 

“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,” said Russ Crupnick, senior vice president of industry analysis at NPD. “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.”

NPD’s “Music Acquisition Monitor” revealed that since 2009 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 percent 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.

Although listening to music on YouTube and VEVO generally appeals to a younger audience, NPD noted similar changes in traditional patterns among these users, since 2009. Among YouTube and VEVO users, 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.

Consumers who listened to music on Pandora, VEVO, and YouTube also noted a significant positive effect on their overall discovery and rediscovery of music. In fact 64 percent of these services’ users reported rediscovering older music, and 51 percent 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; however, Pandora and other music services are an increasingly important part of the music-discovery process.”

Data note: The information in this press release is derived from NPD’s “Music Acquisition Monitor,” which is based on 14,000 outgoing surveys to NPD panelists yielding more than 4,000 survey completions each quarter. The report includes consumer data through June 2012. Data is weighted and projected to be representative of the U.S. Internet population (age 13 and older). Pandora, YouTube, and VEVO users frequently use other radio and on-demand services; changes in their habits, or discovery patterns often reflect the variety of services used to engage with music.

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Press Contact

Lee Graham
212-333-4983

@npdentertainment

The NPD Group, Inc.
900 West Shore Road
Port Washington, NY 11050

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