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Digital Entertainment: Internet Radio - US - December 2009

Mintel’s report on this subject interprets the market from the perspective of the consumer, focusing on interaction with visual and audio advertisements, attitudes toward playlisting, usage data by type of service offered, the interaction between personal library building via paid and free/pirated downloads. The report further explores what advertising methods are being used, how home pages are being used to attract (or repel) potential users, the current and future role of monolith YouTube, as well as detailing activity for leading companies in the market.

Analysis and insights offered include:

  • Why some current leaders are poised for failure
  • The role of minorities and teens in propelling usage
  • Why teen boys are more desirable users than teen girls
  • Attitudes towards streaming vs. downloading music
  • Comparison of future potential of advertising model vs. subscription model, including current subscription data by demographic, clicking behavior and recollection of ads
  • Barriers to greater adoption of internet radio
  • Usage of internet radio for streaming comedy, live concerts and sports
  • Why internet radio is poised to continue gaining show from traditional radio
  • The development of in-car internet services
  • The decreasing size of personal music libraries
  • Usage via smartphones, measured in weekly hours of consumption
  • How the industry measures up with competition from other music sources, and insights from observation of players in competing industries

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Advertising Creative
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Internet radio faces competing markets
                      • Increasing access to PCs and smartphones drives market
                        • Piracy in decline
                          • YouTube, a video site, leads for music streaming
                            • Music leaders Pandora and Rhapsody highly vulnerable
                              • On-demand sites fail to attract large numbers of paying subscribers
                                • Information, sampling and radio portals
                                  • Innovators look to non-standard business models
                                    • Limited advertising stands on search
                                      • Traditional radio leads, followed by recommender and on-demand
                                        • Asians, Hispanics central to market
                                        • Insights and Opportunities

                                          • Satellite radio and Netflix as models
                                            • Dedicated handhelds
                                              • MRAV: Moving inside the living room (and kitchen and bathroom…)
                                                • Vertical integration
                                                  • Buy now, save later
                                                  • Insights and Opportunities: Opening the Car Door

                                                    • Massive amounts of time spent in-vehicle
                                                        • Figure 1: Weekly vehicle participation, by age, July 2009
                                                      • Drivers with higher household incomes spend more time in their cars
                                                          • Figure 2: Weekly vehicle participation, by household income, July 2009
                                                        • Competition well ahead in car installations
                                                          • Figure 3: In-car entertainment installation, July 2009
                                                        • Satellite radio popular among those who have it
                                                          • Figure 4: In-car entertainment frequency, July 2009
                                                        • Where satellite radio and MP3 goes, internet radio can follow
                                                          • Figure 5: In-car entertainment attitudes, by gender, July 2009
                                                          • Figure 6: In-car entertainment attitudes, by age, July 2009
                                                        • WiFi coming to many cars near you
                                                          • Singular domain will establish how automotive internet operates into future
                                                          • Inspire Insights

                                                            • No More Mainstream
                                                              • Developing indie music
                                                                • Sweepstakes for musicians offering gift experiences
                                                                  • Crowdfunding
                                                                    • Everything is Music
                                                                      • Tracking Our Location: Music as augmented reality via GPS
                                                                        • That’s (Home) Entertainment!
                                                                          • Moving into the living room with concerts and videos
                                                                          • Competitive Context

                                                                            • Traditional and satellite radio in decline, but still hold keys to car
                                                                              • Figure 7: Radio daily usage, May 2003-June 2008
                                                                              • Figure 8: Satellite and broadcast usage in hours per person per week, 2003-07
                                                                              • Figure 9: Weekly hours spent listening to audio, by medium, November 2008
                                                                              • Figure 10: Household ownership of satellite radio, June 2002-June 2009
                                                                            • The MP3 collection
                                                                              • Figure 11: Content storage on PC, by age, November 2008
                                                                            • Size of MP3 collections on the decline
                                                                              • Figure 12: Content storage on PC, by age, November 2009
                                                                            • Collectors don’t want to stream
                                                                              • Figure 13: Attitudes towards music collecting, by age, June 2009
                                                                            • High-income users may need a combo download/streaming model
                                                                              • Figure 14: Paid subscription to music collecting, by household income, June 2009
                                                                            • Streaming subs compete with downloading subs
                                                                              • Streaming YouTube audio via Muziic
                                                                                • Streaming new music via Facebook
                                                                                • Market Drivers

                                                                                  • Increasing access to PCs
                                                                                    • Figure 15: Ownership of PCs and office use of PCs, June 2002-May 2003, May 2004-May 2005, May 2006-June 2007, November 2008-June 2009
                                                                                  • Smartphone uptake
                                                                                    • Downloads vs. physical discs
                                                                                      • Figure 16: Number of CDs and music downloads purchased in last 12 months, January 2005-May 2005, January 2007-June 2007, November 2008-June 2009
                                                                                    • Diversity of musical interest
                                                                                      • Figure 17: Music genres purchased in past year, April 2008-June 2009
                                                                                    • Piracy on the decline—good for labels, bad for internet radio
                                                                                      • Figure 18: Number of free and paid song downloaded in last month, October 2008 and November 2009
                                                                                      • Figure 19: Number of free and paid songs downloaded in last month, by age, November 2009
                                                                                  • Leading Companies

                                                                                    • YouTube more accessed for audio than music leader Pandora
                                                                                      • Figure 20: Streaming music site or program visited in past week, November 2009
                                                                                    • Leading company usage positions static across age groups
                                                                                      • Figure 21: Streaming music site or program visited in past week, by age, November 2009
                                                                                    • Pandora and YouTube as feeder sites
                                                                                      • Figure 22: Streaming music site or program visited in past week, by site visited in last week, November 2009
                                                                                    • Round-up of recommender sites
                                                                                      • Figure 23: Web usage and business models of top recommender services, October 2009*
                                                                                    • Pandora
                                                                                      • Last.fm
                                                                                        • Jango
                                                                                          • Grooveshark
                                                                                            • On-demand services
                                                                                              • Figure 24: Web usage and business models of top on-demand streaming services, October 2009
                                                                                            • MySpace Music
                                                                                              • imeem
                                                                                                • Rhapsody
                                                                                                  • Napster
                                                                                                    • Zune Marketplace
                                                                                                      • myplay.com
                                                                                                        • Kazaa
                                                                                                          • Information, sampling, and radio portals
                                                                                                            • iTunes Radio
                                                                                                              • Yahoo! Music
                                                                                                                • AOL Music
                                                                                                                  • MSN Music
                                                                                                                    • playlist.com
                                                                                                                    • Innovations and Innovators

                                                                                                                      • Letting artists pay for airplay
                                                                                                                        • Streaming to the living room
                                                                                                                          • Google makes legal music easier to find on the web
                                                                                                                            • A la carte streaming
                                                                                                                              • Last.fm’s expansion into terrestrial radio
                                                                                                                                • Up and coming
                                                                                                                                • Advertising and Promotion

                                                                                                                                  • Search engine advertising and partnership
                                                                                                                                    • Going viral
                                                                                                                                      • Site marketing
                                                                                                                                        • Rockin’ the home page
                                                                                                                                          • Par for the course
                                                                                                                                            • Are we open for business or not?
                                                                                                                                              • Rhapsody’s television spots
                                                                                                                                                • Figure 25: Rhapsody Green Day television ad, 2009
                                                                                                                                                • Figure 26: Rhapsody Rob Thomas television ad, 2009
                                                                                                                                                • Figure 27: Rhapsody Colbie Caillat television ad, 2009
                                                                                                                                                • Figure 28: Rhapsody Reba McEntire television ad, 2009
                                                                                                                                                • Figure 29: Rhapsody Jay-Z television ad, 2009
                                                                                                                                            • Usage

                                                                                                                                              • Terrestrial radio still king, even online
                                                                                                                                                • Figure 30: Type of internet radio used in last month, November 2009
                                                                                                                                              • Different internet radio needs for those under, over 25
                                                                                                                                                • Figure 31: Type of internet radio used in last month, by age, November 2009
                                                                                                                                              • Education equates to heightened usage of internet radio
                                                                                                                                                • Figure 32: Type of internet radio used in last month, by educational attainment, November 2009
                                                                                                                                              • Average respondent logging 4.3 hours of usage per week
                                                                                                                                                • Figure 33: Hours spent with internet radio in past week, PC vs. cellphone, November 2009
                                                                                                                                            • Beyond Music

                                                                                                                                              • Potential in other arenas
                                                                                                                                                • Figure 34: Non-music programming listened to via internet radio, by gender, November 2009
                                                                                                                                              • Beyond music: Age-based results
                                                                                                                                                • Figure 35: Non-music programming listened to via internet radio, by age, November 2009
                                                                                                                                              • Educated respondents listen to a variety of content
                                                                                                                                                • Figure 36: Non-music programming listened to via internet radio, by educational attainment, November 2009
                                                                                                                                            • Subscriptions vs. Ad Revenue

                                                                                                                                              • Subscription models yet to catch on
                                                                                                                                                • Figure 37: Paid subscription to internet radio services, by age, November 2009
                                                                                                                                                • Figure 38: Paid subscription to internet radio services, by household income, November 2009
                                                                                                                                              • Ads at least tolerated
                                                                                                                                                • Men more receptive to internet radio ads
                                                                                                                                                  • Figure 39: Attitudes towards advertising on internet radio, by gender, November 2009
                                                                                                                                                • Under-35s don’t want to pay for music
                                                                                                                                                  • Figure 40: Attitudes towards advertising on internet radio, by age, November 2009
                                                                                                                                              • Asian and Hispanic Central Demographics

                                                                                                                                                • Hispanics pay for music
                                                                                                                                                  • Figure 41: Number of free and paid song downloads in the last month, by race/Hispanic origin, November 2009
                                                                                                                                                • Majority of minorities streamed audio in the last month
                                                                                                                                                  • Figure 42: Type of internet radio listened to in the last month, by race/Hispanic origin, June 2009
                                                                                                                                                • Exclusivity a potential driver for Asians, Hispanics
                                                                                                                                                  • Figure 43: Type of programming listened to via internet radio, by race/Hispanic origin, June 2009
                                                                                                                                                • Asians, Hispanics notice ads
                                                                                                                                                  • Figure 44: Attitudes towards advertising on internet radio, by race/Hispanic origin, June 2009
                                                                                                                                                • Asians three times more likely to subscribe to Rhapsody, eMusic
                                                                                                                                                  • Figure 45: Paid subscription to internet radio services, by race/Hispanic origin, June 2009
                                                                                                                                                • Asians want it done for them
                                                                                                                                                  • Figure 46: Attitudes towards internet radio services, by race/Hispanic origin June 2009
                                                                                                                                                • Minorities looking to cloud options
                                                                                                                                                  • Figure 47: Attitudes towards music collecting, by race/Hispanic origin, June 2009
                                                                                                                                                • Hispanics listen to a wide variety of streaming sites
                                                                                                                                                  • Figure 48: Streaming music site or program visited in past week, by race/Hispanic origin, November 2009
                                                                                                                                              • Cluster Analysis

                                                                                                                                                  • Music Enthusiasts
                                                                                                                                                    • The Mainstream
                                                                                                                                                      • Ads? What ads?
                                                                                                                                                        • Characteristic tables
                                                                                                                                                          • Figure 49: Internet radio clusters, November 2009
                                                                                                                                                          • Figure 50: Type of internet radio used in past month, by internet radio clusters, November 2009
                                                                                                                                                          • Figure 51: Attitudes towards internet radio advertising, by internet radio clusters, November 2009
                                                                                                                                                          • Figure 52: Attitudes towards music collecting and internet radio, by internet radio clusters, November 2009
                                                                                                                                                          • Figure 53: Free and paid downloads, by internet radio clusters, November 2009
                                                                                                                                                          • Figure 54: Internet radio sites used in past week, by internet radio clusters, Month 2009
                                                                                                                                                        • Demographic tables
                                                                                                                                                          • Figure 55: Internet radio clusters, by gender, November 2009
                                                                                                                                                          • Figure 56: Internet radio clusters, by age group, November 2009
                                                                                                                                                          • Figure 57: Internet radio clusters, by income group, November 2009
                                                                                                                                                          • Figure 58: Internet radio clusters, by race/Hispanic origin, November 2009
                                                                                                                                                        • Cluster methodology
                                                                                                                                                        • Custom Consumer Groups

                                                                                                                                                          • Teens
                                                                                                                                                            • Figure 59: Type of internet radio listened to in the last month, by gender and age among teens, November 2009
                                                                                                                                                          • Internet radio to reach teen boys
                                                                                                                                                            • Figure 60: Attitudes towards advertising on internet radio, by gender and age among teens, November 2009
                                                                                                                                                          • Teens are collectors and streamers
                                                                                                                                                            • Figure 61: Attitudes towards music collecting, by gender and age among teens, June 2009
                                                                                                                                                          • P2P music sharing prevalent among teens
                                                                                                                                                            • Figure 62: Number of paid and free song downloads in the last month, by gender and age among teens, November 2009
                                                                                                                                                        • Appendix: Other Useful Consumer Tables

                                                                                                                                                          • CD and music download purchase by age
                                                                                                                                                            • Figure 63: Number of CDs and downloads purchased in last 12 months, November 2008-June 2009
                                                                                                                                                          • Aversion to creating playlists limited
                                                                                                                                                            • Figure 64: Attitudes towards internet radio services, by age, November 2009
                                                                                                                                                          • Income has limited impact on piracy
                                                                                                                                                            • Figure 65: Number of song downloads purchased and downloaded for free in the last month, by household income, November 2009
                                                                                                                                                            • Figure 66: Number of song downloads purchased and downloaded for free in last month, by gender, November 2009
                                                                                                                                                          • Internet radio sites used by household income
                                                                                                                                                            • Figure 67: Streaming music site or program visited in past week, by household income, November 2009
                                                                                                                                                          • Satisfied with on-demand selection
                                                                                                                                                            • Figure 68: Attitudes towards internet radio services, by age, November 2009
                                                                                                                                                        • Appendix: Trade Associations

                                                                                                                                                          Companies Covered

                                                                                                                                                          • Consumer Electronics Association
                                                                                                                                                          • Digital Media Association (DiMA)
                                                                                                                                                          • Entertainment Merchants Association
                                                                                                                                                          • Facebook, Inc.
                                                                                                                                                          • Google, Inc.
                                                                                                                                                          • Greenfield Online
                                                                                                                                                          • imeem, Inc.
                                                                                                                                                          • Interactive Entertainment Merchants Association
                                                                                                                                                          • Logitech Inc.
                                                                                                                                                          • Microsoft USA
                                                                                                                                                          • MySpace.com
                                                                                                                                                          • Napster Inc.
                                                                                                                                                          • Netflix, Inc.
                                                                                                                                                          • Research In Motion (USA)
                                                                                                                                                          • Samsung Electronics (USA)
                                                                                                                                                          • U.S. Bureau of Labor Statistics
                                                                                                                                                          • Video Software Dealers Association
                                                                                                                                                          • Walmart Stores (USA)
                                                                                                                                                          • Yahoo! Inc
                                                                                                                                                          • YouTube, Inc.

                                                                                                                                                          Digital Entertainment: Internet Radio - US - December 2009

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