Report on Changing Audio Landscape

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

Peeking Around the Corner...

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.

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.

How the Research was Conducted

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)

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)

Key Findings 2 of 3

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 3 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.

Changing Role of Broadcast Radio

The role played by broadcast radio in the lives of
engaged online consumers is largely holding steady.
How Role of Broadcast Radio Has Changed Over the Past 2 Years

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

US 28% 45% 28% even

Canada 22% 54% 24% -2%

UK 32% 47% 22% +10%

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

Total even -2% +10%

Male +1% -3% +10%

Female even -2% +10%

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

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

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)

Most non-broadcast audio alternatives are gaining
momentum.

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

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

MP3s or digital music files on
mp3 player/mobile device 56% 30% 14% +42%

Online service that lets you
41% 40% 19% +22%
stream songs on demand
Podcasts—audio programs +22%
downloaded or streamed
39% 43% 17%
MP3s or CDs through +20%
your computer
42% 36% 22%

Internet-only radio 36% 44% 20% +16%

Audio-only music channels +9%
w/ digital/satellite TV* 31% 48% 22%

SIRIUS/XM satellite radio* 30% 47% 23% +7%

CDs on your stereo -28%
or portable player 18% 36% 46%

* Asked in US and Canada only
Base: Online consumers, age 18+,in the US, Canada, and UK; has listened to audio medium

Momentum of audio alternatives largely similar by
country—except Web-only and streaming services
Net Momentum:
% saying medium plays “bigger role” in life in past couple of years minus % saying “smaller role”

The only
jurisdiction
where
MP3s or digital music files on your
+36% +46% +44% Spotify is
mp3 player/mobile device legally
Online services that let you available
+16% +7% +36%
stream songs on demand
Podcasts—audio programs
+17% +28% +20%
downloaded or streamed
MP3s or CDs through your
+18% +16% +25%
computer

Internet-only radio +22% +11% +13%
The only
Audio-only music channels
+7% +10% n/a jurisdiction
w/ digital/satellite TV* where
Pandora is
SIRIUS/XM satellite radio* +4% +10% n/a legally
available
CDs on your stereo or
-19% -28% -35%
portable player
Base: Online consumers, age 18+, in the US, Canada and the UK - has listened to each audio medium

Satellite radio is the only clear displacement
medium 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

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

SIRIUS/XM satellite radio* -15%
MP3s or digital music files on mp3 player/mobile
device -1%

MP3s or CDs through 0
your computer

Podcasts—audio programs downloaded or streamed +2%

Internet-only radio or streaming services +5%
CDs on your stereo
or portable player +7%

Audio-only music channels
+10%
w/ digital/satellite TV*

Base: Online consumers, age 18+, in the US, Canada and the UK - has listened to AM/FM (AM/FM/DAB in the UK)

Leading Web Radio/Streaming
Services

In the US, Pandora dominates.

Leading mentions (unaided)—among past month listeners to Web-only radio/ music services
42%
27%
6%
2%
5%
3%
5%
2%
4%
3%
4%
1%
3%
2%
3%
1% Listened in past year
3% Favourite service
1%
2%
1%

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.

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

20%
11%
9%
3%
6%
3%
3%
1%
2%
1%
2%
1%
Listened in past year
2%
1% Favourite service
2%
2%

Base: Online Consumers in the UK, 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%
7%
4%
2%
4%
3%
3%
1%
3%
2%
3%
1%
2%
1%
2%
2%
2%
1%
2% Listened in past year
1%
Favourite service
2%
1%
2%
2%

Base: Online Consumers in Canada, age 18+; listened to online-only radio/ streaming in past month & named a service listened to.

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
Personalized

Streaming where you can play songs on demand 53%

Radio that offers a wide range of channels you
can customize by promoting or deselecting artists 37%

Radio that plays recommendations based on your
preferences & others like you 34%

Radio that plays recommendations from music 33%
experts based on your preferences

Radio that plays recommendations based on your
preferences using computer algorithms 26%

Radio that plays music mixes
designed by music experts 24%
Scheduled

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

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

Use a smartphone or iPod Touch for any purpose

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

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

29%

Use
21%
smartphone Use BlackBerry 11% 12% 6%

27%
US

Canada Use iPhone 8% 6% 13%
UK
10%

Use another type
10% 3% 11%
Use iPod of smartphone
12%
Touch

12%

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?

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

Has broadcast radio app

Has web-only radio/streaming service app

48%
43%
37%
33%
24%
20%

US Canada UK

Qc4 Do you have any of the following types of applications on your smartphone or iPod Touch?

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

Listened to broadcast app / past week

Listened to web-only service app / past week

31% 31%

21%
19%
14%

7%

US Canada UK

Qc4 Do you have any of the following types of applications on your smartphone or iPod Touch?

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

Benefits stated (unaided)

Better, cleaner
sound quality
67%
Have heard of HD Radio;
can state benefits More stations 28%

26% It's better/quality
(general)
9%

50% It's free/
no monthly fees
7%
Have never
heard of HD
Radio 24% Less talk, fewer commercials 5%
High definition/like HD TV
Have heard of HD Radio; (benefit unspecified)
5%
can't name benefits; not
clear on what it is Better music/variety 4%

Other 7%

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

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

2% Have an HD Radio
1% Someone else in HH has one
6% Someone else I know has one

91%
No one I know 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

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

APPENDIX
Online Consumers—
Audio Profile

33

Past week listening to broadcast radio*

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

An AM or FM radio station over
83% 85% 68%
a traditional radio

An AM or FM radio station streamed over your
26% 23% 24%
computer

An AM or FM radio station on your
10% 4% 14%
mobile phone or smartphone

An AM or FM radio station on your
17% 10% 12%
iPod or mp3 player

An AM, FM or DAB radio station
n/a n/a 21%
via Sky/ Freesat**
* Defined for respondents as "AM/FM radio" in US and Canada; as "AM/FM/DAB" in the UK
** Asked only in the UK

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
22% 11% 25%
specific songs on demand (total)

Online service that streams songs on
18% 8% 20%
demand over computer

Online service that streams songs on demand
10% 2% 10%
on mobile phone or smartphone

An Internet radio station, available only online
26% 10% 18%
(total)

An Internet-only radio station over your
20% 7% 13%
computer

An Internet-only radio station on your
10% 2% 7%


Past week listening to Sirius/XM satellite radio*

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

Sirius/XM satellite radio over a
14% 10%
regular satellite radio

Sirius/XM satellite radio streamed
6% 3%
over your computer

Sirius/XM satellite radio on your
4% 1%

* Asked only in the US and Canada

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

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
45% 47% 50%
mp3 player/mobile device

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

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


APPENDIX
About 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

Contact:

Jeff Vidler Corina Death
Senior VP & Managing Director, Radio Senior Research Manager, Radio
jeff.vidler@visioncritical.com corina.death@visioncritical.com

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