Cambridge, MA (April 15, 2005)–Digital audio formats, like satellite radio, online radio, and podcasting–subscription-based programming that is pushed to MP3 players–are creating new business models and opportunities in radio and the music industry. According to “The Future Of Digital Audio,” a new report from Forrester Research, Inc., 20.1 million U.S. households will listen to satellite radio and 12.3 million U.S. households will use their MP3 players to listen to audio podcasts by the end of the decade.
“Consumers want to listen to what they want, when they want, on the device of their choosing. New formats like online radio and podcasting, where downloadable content is sent directly to an MP3 player, give consumers more programming and ultimate flexibility,” said Forrester Research VP Ted Schadler. “If radio and music executives can successfully shift their thinking to embrace new audio delivery methods, both industries will benefit from new revenue streams and increased consumer loyalty over the next several years.”
To succeed in today’s fragmented, consumer-driven market, radio should take note of the lessons learned in the TV industry when cable entered its programming mix. According to Forrester, music and radio executives must adopt subscription-based models, on-demand delivery, and ad targeting strategies for radio to successfully maximize its new formats. For example, in addition to rolling out high-definition (HD) radio, broadcasters like Clear Channel and Infinity Broadcasting should move quickly to both ad- and subscription-supported online delivery and subscription-based programming and services to HD receivers to accommodate varied consumer demand.
The radio industry will also contend with increased ad skipping as the adoption of TiVo-like digital radio recorders (DRRs) increases. Improved ad measurement capabilities online and offline will ease some of the ad industry’s concerns by enabling it to target specific listeners.
Forrester Research, Inc.