Study: Online Radio Gaining in Popularity

There is good news in the radio industry: online radio is gaining in popularity. The number of Americans that tune in weekly to online radio grew to 42 million, up from 33 million in 2008. Stuck in the 11 percent to 13 percent range for the past three years, weekly online listening now reaches 17 percent of the population, according to Arbitron and Edison Research, which released their 17th annual Infinity Dial study Thursday (April 16).

The number of monthly online listeners is 69 million or 27 percent of the population. And nearly half of the population, or 49 percent, an astounding 125 million, have ever listened to online radio.

The Arbitron/Edison survey, conducted this year from January 16 to February 15 with 1,858 participants, also showed the demographics of online radio listeners don’t skew as young as they once did, more closely resembling the audience composition of traditional radio. Twenty percent of adults 25-54 said they listened to Web radio in the last week, up from 15 percent  a year earlier.

“The sharp growth in weekly usage of online radio in this year’s study provides compelling evidence that radio’s digital platforms may be reaching critical mass,” said Bill Rose, senior vp of marketing for Arbitron. “The growth of online radio is reinforced with what we are seeing in the portable people meter. We are beginning to see encoded streams of AM/FM broadcasts with significant audience in local markets.”

Still, iPod usage is cutting into the time people spend with radio. While the penetration of iPod or MP3 player ownership plateaued among 12- to 17-year-olds at 71 percent, it rose sharply among older demos: from 51 percent to 64 percent among the 18-24 demo; from 48 percent to 55 percent among 25-34 demo; 46 percent to 52 percent among 35-44; 31 percent to 34 percent among 45-54; and 15 percent to 24 percent among 55-64. Across all demos, more than four in 10 own an iPod or MP3 player, up from 25 percent in 2005.


While broadcasters can take some comfort in the fact that only 14 percent of listeners report less radio listening due to time spent with their iPod (up from 10 percent last year), that number masks alarming youth audience erosion. A full 32 percent among the 12-17 and 18-24 age groups say iPod usage has cut into their radio listening time, up from 22 percent and 17 percent, respectively, in 2008.

The new figures parallel incremental increases in online audiences reported by radio companies, which are betting that online radio develops into a lucrative revenue stream. Clear Channel, which has been developing its online presence for more than four years, has seen streaming comprise between 10 percent and 15 percent of station audiences.

Advertising dollars have followed. According to a number of sources, online radio revenue accounts for between 5 percent and 8 percent of a group’s total revenue. For example, estimates put Clear Channel’s online advertising, including in-stream spots, account for close to 5 percent of the company’s total $3.3 billion in radio revenue.

“Web radio is one of the bright spots; dollars are migrating there,” said Brad Adgate, senior vp and director of corporate research for Horizon Media. “The future for Internet radio is perhaps brighter than over-the-air radio.”

A cross-current of factors is driving the spike in Web radio listening. For one, the availability of high-quality, professionally produced online video has consumers spending more time in front of their computer screens. Internet video consumption solidly increased last year, from 18 percent of survey respondents saying they watch it on a weekly basis in January 2008 to 27 percent, or roughly 69 million, this year.

–with additional reporting by Katy Bachman