Radio Futures 2010 Report

RadioReportApril, 2010

Contents

Introduction 3

Key Findings 7

Changing Role of Broadcast Radio 11

Leading Web Radio/Streaming Services 17

What Kind of Web Radio/Streaming Service 21

Generates the Most Interest?

Going Mobile 23

Impact of HD Radio in the US 28

Implications 31

APPENDIX 33

The Online Consumer—Audio Profile

About the Study and Vision Critical

Introduction

It’s often said that research works better as a rear view window than as a

windshield. You gain insight into what’s happened, but you get precious

little on what will happen in the future.

Radio Futures 2010 is a modest attempt to change that.

To get a glimpse of the future, we surveyed a representative sample of

3,021 engaged online consumers from Vision Critical’s global panels in the

US, Canada and the UK.

Peeking Around the Corner...

By talking to consumers who

are one small step ahead in

their digital behaviour, we

can, if not exactly predict

the future, at least observe

change in progress.

Study Objectives

� Radio Futures 2010 provides a strategic overview of the evolving audio landscape for broadcasters, webcasters and other industry

stakeholders.

� This report looks at the following issues:

– the extent to which the role that broadcast radio plays in listeners’ lives

is changing

– the impact of new audio alternatives on this role

– the types of Internet-only audio services that are gaining traction

– the relative use of Internet-only and broadcast radio applications on the

mobile platform, and

– the impact of HD radio in the US

� By surveying online consumers in the US, Canada and the UK, the

study observes changes in the audio landscape through the lens of

different regulatory and competitive environments.

� Online survey

� Total sample: 3,021 online consumers, aged 18+

� US (n=1,007)

� C (n=1,001)

� UK (n=1,013)

� Email invitations were sent to members of Vision Critical’s

proprietary global panels—providing a representative sample of online

consumers in each country.

� Survey dates: February 26-March 8, 2010

� Final results weighted to represent the age, gender and regional

distribution of the online population of each country

� Developed in association with RAIN (Radio And Internet Newsletter)

How the Research was Conducted

Key Findings

Key Findings 1 of 3

� Reports of broadcast radio’s death are greatly exaggerated.

– On the whole, in the US and Canada, online consumers say that

broadcast radio plays the same role in their lives today that it did a

couple of years ago.

– In the UK, broadcast radio actually has modest momentum, with more

listeners saying that radio now plays a bigger rather than smaller role in

their lives.

� Audio alternatives are gaining significant momentum.

– In particular, many online consumers report that personalized audio

alternatives are playing a bigger role in their lives.

– Specifically:

� MP3 players

� Streaming services that offer songs on demand (e.g., Spotify)

� Podcasts

� Personalizable Web-only radio (e.g., Pandora)

� At this point, the growth of these new audio alternatives appears to be independent of and/or complementary to broadcast radio.

– Past week listeners to Web-only radio or streaming services, podcasts

and even mp3 players are as likely as other online consumers to say that

radio is playing a bigger as opposed to smaller role in their lives than it

was two years ago.

– American and Canadian listeners to SIRIUS/XM satellite radio are

however more likely to say that broadcast radio is now playing a smaller

role, suggesting that satellite radio is more of a displacement medium.

� Pandora is the dominant webcaster in the US, while Spotify leads UK online services.

– More than 1-in-4 listeners to Web-only radio/streaming services in the

US name Pandora as their favourite music service.

– Spotify has a somewhat narrower lead in the UK, with 11% naming it as

their favourite service.

– Canada, where neither service is legally available, is an underdeveloped

market with no dominant player.

Key Findings 2 of 3

� Listeners to Web-only services express a clear preference for personalized vs. one-way broadcast streams.

– Online consumers who have turned to a Web-only music or streaming

service in the past month show a particularly active interest in services

that offer some degree of control.

– This is consistent with the strength shown for Pandora, Spotify and

other personalizable web services.

� Reflecting Pandora’s early success with its iPhone apps, smartphone and iPod Touch users in the US are more likely to listen to apps for Web vs. broadcast radio services on their device.

– In Canada and the UK, smartphone and iPod Touch users are more likely

to use apps for broadcast radio than web-based radio.

� Five years after its launch, HD radio in the US has yet to make a significant impact.

– A little over one-quarter (26%) of online consumers show confirmed

awareness of HD Radio—and fewer than 1-in-10 (9%) know anyone who

has HD Radio.

Key Findings 3 of 3

Changing Role of Broadcast Radio

The role played by broadcast radio in the lives of engaged online consumers is largely holding steady.

28%

22%

32%

45%

54%

47%

28%

24%

22%

US

Canada

UK

Bigger role in my life Same Smaller role in my lifeNet Momentum % bigger — % smaller

even

-2%

+10%

How Role of Broadcast Radio Has Changed Over the Past 2 Years

Qa4 Thinking back over the past couple of years, how has the role that [(AM/FM (AM/FM/DAB in the UK)] radio plays in your life changed?Base: Online consumers, age 18+,in each country—has listened to AM/FM (AM/FM/DAB in the UK)

Momentum for broadcast radio shows different age splits, by country.

Net Momentum: % saying broadcast radio plays bigger role in life in past couple of years minus % saying smaller role

Qa4 Thinking back over the past couple of years, how has the role that each of the following play in your life changed?Base: Online consumers, age 18+, in the US, Canada and the UK - has listened to AM/FM (AM/FM/DAB in the UK)

Total even -2% +10%

Male +1% -3% +10%

Female even -2% +10%

Age 18-44 +5% -8% +9%

Age 45+ -5% +4% +11%

Most non-broadcast audio alternatives are gaining momentum.

56%

41%

39%

42%

36%

31%

30%

18%

30%

40%

43%

36%

44%

48%

47%

36%

14%

19%

17%

22%

20%

22%

23%

46%

Bigger role in my life Same Smaller role in my life

MP3s or digital music files on

mp3 player/mobile device

Online service that lets you

stream songs on demand

Podcasts—audio programs

downloaded or streamed

MP3s or CDs through

your computer

Internet-only radio

Audio-only music channels

w/ digital/satellite TV*

SIRIUS/XM satellite radio*

CDs on your stereo

or portable player

Net Momentum % bigger — % smaller

+42%

+22%

+22%

+20%

+16%

+9%

+7%

-28%

How Role of Each Medium Has Changed Over the Past 2 Years (3-country average)

Qa4 Thinking back over the past couple of years, how has the role that each of the following play in your life changed?Base: Online consumers, age 18+,in the US, Canada, and UK; has listened to audio medium

* Asked in US and Canada only

MP3s or digital music files on your

mp3 player/mobile device+36% +46% +44%

Online services that let you

stream songs on demand+16% +7% +36%

Podcasts—audio programs

downloaded or streamed+17% +28% +20%

MP3s or CDs through your

computer+18% +16% +25%

Internet-only radio +22% +11% +13%

Audio-only music channels

w/ digital/satellite TV*+7% +10% n/a

SIRIUS/XM satellite radio* +4% +10% n/a

CDs on your stereo or

portable player-19% -28% -35%

Momentum of audio alternatives largely similar by country—except Web-only and streaming services

Qa4 Thinking back over the past couple of years, how has the role that each of the following play in your life changed?Base: Online consumers, age 18+, in the US, Canada and the UK - has listened to each audio medium

The only

jurisdiction

where

Spotify is

legally

available

The only

jurisdiction

where

Pandora is

legally

available

Net Momentum: % saying medium plays “bigger role” in life in past couple of years minus % saying “smaller role”

* Asked in US and Canada only

Satellite radio is the only clear displacement medium for broadcast radio.

Qa4 Thinking back over the past couple of years, how has the role that each of the following play in your life changed?Base: Online consumers, age 18+, in the US, Canada and the UK - has listened to AM/FM (AM/FM/DAB in the UK)

* Asked in US and Canada only

+10%

+7%

+5%

-15%

-1%

0

+2%

Among Past Week Listeners to... Net Momentum for Broadcast Radio

Net Momentum (3-country average): % saying broadcast radio plays bigger role in life in past couple of years minus % saying smaller role

SIRIUS/XM satellite radio*

MP3s or digital music files on mp3 player/mobile

device

MP3s or CDs through

your computer

Podcasts—audio programs downloaded or streamed

Internet-only radio or streaming services

CDs on your stereo

or portable player

Audio-only music channels

w/ digital/satellite TV*

Leading Web Radio/Streaming Services

42%

6%

5%

5%

4%

4%

3%

3%

3%

2%

27%

2%

3%

2%

3%

1%

2%

1%

1%

1%

Listened in past year

Favourite service

Leading mentions (unaided)—among past month listeners to Web-only radio/ music services

QD1. Which online radio stations or music streaming services do you remember listening to in the past year? QD2. And which one would you say is your favourite—the one you listen to most often?Base: Online Consumers in the US, age 18+; listened to online-only radio/ streaming in past month & named a service listened to.

In the US, Pandora dominates.

QD1. Which online radio stations or music streaming services do you remember listening to in the past year? QD2. And which one would you say is your favourite—the one you listen to most often?Base: Online Consumers in the UK, age 18+; listened to online-only radio/ streaming in past month & named a service listened to.

Spotify has made a big impact in the UK, though not on the scale of Pandora in the US.

20%

9%

6%

3%

2%

2%

2%

2%

11%

3%

3%

1%

1%

1%

1%

2%

Listened in past year

Favourite service

Leading mentions (unaided)—among past month listeners to Web-only radio/ music services

QD1. Which online radio stations or music streaming services do you remember listening to in the past year? QD2. And which one would you say is your favourite—the one you listen to most often?Base: Online Consumers in Canada, age 18+; listened to online-only radio/ streaming in past month & named a service listened to.

Canada, where neither Pandora nor Spotify is available, has no dominant Web radio/music service.

9%

4%

4%

3%

3%

3%

2%

2%

2%

2%

2%

2%

7%

2%

3%

1%

2%

1%

1%

2%

1%

1%

1%

2%

Listened in past year

Favourite service

Leading mentions (unaided)—among past month listeners to Web-only radio/ music services

What Kind of Web Radio/Music Service Generates the Most Interest?

Active interest is highest for Web music services that offer customization.

% Very interested (3-Country average)—among past month listeners to Web-only radio/ music services

53%

37%

34%

33%

26%

24%

Streaming where you can play songs on demand

Radio that offers a wide range of channels you can customize by promoting or deselecting artists

Radio that plays recommendations based on your preferences & others like you

Radio that plays recommendations from music experts based on your preferences

Radio that plays recommendations based on your preferences using computer algorithms

Radio that plays music mixes designed by music experts

Scheduled

Personalized

Q3a-D3f How interested are you in each of the following types of Internet-only radio and music streaming services?Base: Online Consumers, age 18+, in the US, Canada, and UK; listened to online-only radio or streaming services in past month

Going Mobile

32%

29%

32%

Qc1/c2 Do you currently use any of the following for any purpose?/Do you currently have access to the Web on the [smartphone / mobile phone / either the smartphone or mobile phone] that you use?

Base: Online consumers, age 18+, in the US, Canada and the UK

Just under one-third of online consumers use a smartphone or iPod Touch.

Use a smartphone or iPod Touch for any purpose

29%

10%

21%

12%

27%

12%

Use

smartphone

Use iPod

Touch

Qc1/c2 Do you currently use any of the following for any purpose?/ Do you currently have access to the Web on the [smartphone / mobile phone / either the smartphone or mobile phone] that you use?

Base: Online consumers, age 18+, in the US, Canada and the UK

Smartphone platform varies by country—Blackberry leads in North America, iPhone in the UK.

Use BlackBerry 11% 12% 6%

Use iPhone 8% 6% 13%

Use another type

of smartphone10% 3% 11%

US

Canada

UK

33%

24%

48%43%

20%

37%

US Canada UK

Has broadcast radio app

Has web-only radio/streaming service app

Qc4 Do you have any of the following types of applications on your smartphone or iPod Touch?Base: Online consumers, age 18+, in the US, Canada and the UK

Reflecting Pandora’s impact, US smartphone/iPod Touch users are more likely to have apps for Web-only services than for broadcast radio.

19%

14%

31%31%

7%

21%

US Canada UK

Listened to broadcast app / past week

Listened to web-only service app / past week

Qc4 Do you have any of the following types of applications on your smartphone or iPod Touch?Base: Online consumers, age 18+, in the US, Canada and the UK

More US smartphone/iPod Touch users stream Web-based radio than broadcast radio on their apps.

Impact of HD Radio in the US

Half of all online consumers in the US claim to have heard of HD, but just 1-in-4 can state the benefits.

Qb1a/b Have you ever seen, read or heard about 'HD Radio'?/Based on what you've heard about HD Radio, what would you say are the main benefits to potential listeners? Please be as specific as possible.

Base: Online consumers, age 18+, in the US

26%

24%

50%

67%

28%

9%

7%

5%

5%

4%

7%

Better, cleaner

sound quality

More stations

It's better/quality

(general)

It's free/

no monthly fees

Less talk, fewer commercials

High definition/like HD TV

(benefit unspecified)

Better music/variety

Other

Have heard of HD Radio; can't name benefits; not clear on what it is

Have never heard of HD Radio

Benefits stated (unaided)

Have heard of HD Radio; can state benefits

Under 10% of online consumers have an HD radio in their household, or know anyone who has one.

Qb1c Do you, does someone in your household, and/or does someone you know have an HD Radio?Base: Online consumers, age 18+, in the US

2%

6%

91%

Have an HD Radio

No one I know has one

Someone else in HH has one

Someone else I know has one

1%

Implications

Implications

� The research indicates an ongoing role for traditional broadcast radio

in the digital future.

– As many online consumers say that radio is playing a bigger role in their

lives over the past couple of years as say that it is playing a smaller role.

� But the greatest growth opportunities are most likely to come from

other audio platforms and services.

� Design of new products and services should focus on delivering those

benefits possible via IP, as opposed to traditional broadcast

technology.

– Specific areas most likely to meet with consumer acceptance:

� Personalizable music streaming

� On-demand functionality (e.g., podcasts or streamed programs)

� Compelling, interactive mobile apps

APPENDIXOnline Consumers—Audio Profile

33

Base: Online Consumers, age 18+, in the US, Canada and the UK

Past week listening to broadcast radio*

* Defined for respondents as "AM/FM radio" in US and Canada; as "AM/FM/DAB" in the UK** Asked only in the UK

AN AM, FM OR DAB RADIO STATION (TOTAL) 86% 91% 77%

An AM or FM radio station over

a traditional radio83% 85% 68%

An AM or FM radio station streamed over your

computer26% 23% 24%

An AM or FM radio station on your

mobile phone or smartphone10% 4% 14%

An AM or FM radio station on your

iPod or mp3 player17% 10% 12%

An AM, FM or DAB radio station

via Sky/ Freesat**n/a n/a 21%

Base: Online Consumers, age 18+, in the US, Canada and the UK

Past week listening to Web-only radio or music streaming services

MUSIC STREAMING OR WEB-ONLY RADIO (TOTAL) 32% 16% 32%

An online service that lets you stream specific songs on demand (total)

22% 11% 25%

Online service that streams songs on

demand over computer18% 8% 20%

Online service that streams songs on demand

on mobile phone or smartphone10% 2% 10%

An Internet radio station, available only online (total)

26% 10% 18%

An Internet-only radio station over your

computer20% 7% 13%

An Internet-only radio station on your

mobile phone or smartphone10% 2% 7%

Base: Online Consumers, age 18+, in the US and Canada

Past week listening to Sirius/XM satellite radio*

* Asked only in the US and Canada

SIRIUS/XM SATELLITE RADIO (TOTAL) 17% 12%

Sirius/XM satellite radio over a

regular satellite radio14% 10%

Sirius/XM satellite radio streamed

over your computer6% 3%

Sirius/XM satellite radio on your

mobile phone or smartphone4% 1%

Past week listening to other forms of audio

CDs on your stereo or portable CD player 52% 49% 53%

MP3s or CDs through your computer 46% 51% 50%

MP3s or other digital music files on your iPod on

mp3 player/mobile device45% 47% 50%

YouTube music videos 36% 38% 37%

Audio-only music channels w/ digital/satellite TV* 30% 25% n/a

Podcasts—audio programs downloaded or streamed 19% 17% 21%

HD Radio** 3% n/a n/a

Base: Online Consumers, age 18+, in the US, Canada and the UK

* Asked only in the US and Canada** Asked only in the US

APPENDIXAbout the Study and Vision Critical

About the Study

� Radio Futures 2010 is funded independently by Vision Critical to share insights with broadcasters, webcasters and other industry

stakeholders.

� Key findings were presented at RAIN Summit conferences in Toronto

and Las Vegas in March and April, 2010.

� The survey sample was randomly drawn from members of Vision

Critical’s global panels in the US, Canada and the UK.

– The rigorous recruiting practices used for these online panels ensure

representation across a wide range of demographic and psychographic

segments. Panel members pass through screening and a double opt-in

process to ensure motivated and responsive panelists.

– The margin of error—measuring sampling variability—on this study is ±

3.1% for samples drawn from each of the three country panels. Sampling

variability would be higher on smaller subsamples.

About Vision Critical

� Vision Critical is a strategic interactive research company combining

technology, researchers and global panels. We help companies reduce

research costs while generating engaging and insightful relationships

with their consumers.

� Vision Critical uses a visual approach, panel technology and our own

global panels to embrace markets with the click of a mouse.

� The company has offices across North America, Europe and Australia.

www.visioncritical.com

About the Vision Critical Radio Practice

� Vision Critical provides a new generation of radio research services

designed to meet changing times.

� We combine cost effective, sound research practices with pioneering

online research technology and panel expertise.

� The result is a new way of understanding why, in the face of so much

change, so many people continue to listen to radio and what makes

them choose one station over the other.

� You can find out more about our comprehensive range of research tools

for radio at: www.visioncritical.com/radio

Jeff Vidler

Senior VP & Managing Director, Radio

[email protected]

Corina Death

Senior Research Manager, Radio

[email protected]

Contact: