Apple’s Internet radio service will have a large and growing U.S. market awaiting its arrival later this year. Personalized online radio services have become a popular way for people to experience music on mobile devices and personal computers.
The number of Americans who listen to Internet radio has risen steadily through the years. In early 2013 the monthly audience was 120 million people age 12 and older, according to Arbitron’s “Infinite Dial 2013” report. That works out to 45% of people surveyed, up from 39% a year earlier and more than double the 21% of total listeners five years earlier. There were 86 million people, or 33% of those surveyed, that listened to Internet radio in the previous week.
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Time spent listening has consistently risen, too. In early 2013 the average person listened to nearly 12 hours of Internet radio each week, up from nine hours and 46 minutes a year earlier and six hours and 13 minutes in 2008. A large number of them listened only to Internet radio. Of people who listened in just the last week, 18% shunned AM/FM radio and listened exclusively to Internet radio.
Apple will find a growing audience in the automobile, too. Arbitron has found that 21% of mobile phone owners have streamed music from a device connected to a car stereo. That’s up 250% from the 6% who did so in 2010. Apple already has a number of automobile partners, from BMW to Toyota, that have integrated or plan to integrate Apple’s Siri voice-control technology to allow drivers to stream music and perform other hands-free functions.
These trends help explain why Apple would enter the Internet radio business. Pandora, which has more than 200 million registered users and 70 million monthly active users, has already proved Internet radio’s mainstream appeal. Arbitron found that 27% of people surveyed had listened to Pandora in the previous month, up from 22% a year earlier. There’s revenue potential, too. Pandora generated revenue of $427 million, mostly from advertising sales, in its fiscal year ended Jan. 31.
But Apple will enter an increasingly crowded marketplace filled with specialists. Aside from Pandora, Clear Channel’s iHeartRadio, TuneIn, Slacker and Spotify are among the many services that offer non-interactive radio. SiriusXM Satellite Radio, which just launched a personalization feature for its online service called MySXM (see story, page 13), has 24 million subscribers.