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 to 13% range for the past three years, weekly online listening now reaches 17% of the population, according to Arbitron and Edison Research, which released their 17th annual Infinite Dial study Thursday (April 16).

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

The Arbitron/Edison survey, conducted this year Jan. 16 to Feb.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% 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%, it rose sharply among older demos: from 51% to 64% among the 18-24 demo; from 48% to 55% among 25-34 demo; 46% to 52% among 35-44; 31% to 34% among 45-54; and 15% to 24% among 55-64. Across all demos, more than four in 10 own an iPod or MP3 player, up from 25% in 2005.

While broadcasters can take some comfort in that only 14% report less radio listening due to time spent with their iPod (up from 10% last year), that number masks alarming youth audience erosion. A full 32% among the 12-17 and 18-24 age groups say iPod usage has cut into their radio listening time, up from 22% and 17%, 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 and 15% of station audiences.

Advertising dollars have followed. According to a number of sources, online radio revenue accounts for between 5 and 8% of a group's total revenue. For example, estimates put Clear Channel's online advertising, including in-stream spots, account for close to 5% 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% of survey respondents saying they watch it on a weekly basis in January 2008 to 27%, or roughly 69 million, this year.

Other results from the Arbitron/Edison Research study include satellite radio awareness, which grew to 65% this year. It was approximately 60% for both Sirius and XM last year. In addition, persons 12+ that have listened to a podcast in the past month increased from 9% in '08 to 11% (or 27 million) in '09. And HD Radio awareness -- those that have heard or read anything about it -- went from 24% last year to 29% in 2009.

Meanwhile, in the red-hot social networking category, 34% said they have a personal profile page on social networking Web sites such as Facebook, MySpace and Linkedin. Fifty-four percent of weekly online radio listeners also have a personal profile page, while 34% of persons 12+ have one too.

Read more about the surge in online radio listening and revenue, including additional findings from the Arbitron/Edison study, in the April 17 issue of R&R. Get your copy now by calling 800-562-2706 or 818-487-4582 between 5 a.m. and 5 p.m. Pacific Time, or e-mail: radioandrecords@pubservice.com.

-- Additional reporting by Katy Bachman, Mediaweek and Mike Boyle

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