Radio April, 2010

Report

Contents
Introduction Key Findings Changing Role of Broadcast Radio Leading Web Radio/Streaming Services What Kind of Web Radio/Streaming Service Generates the Most Interest? Going Mobile Impact of HD Radio in the US Implications APPENDIX The Online ConsumerAudio Profile About the Study and Vision Critical 3 7 11 17 21 23 28 31 33

Introduction

Peeking Around the Corner...

Its often said that research works better as a rear view window than as a windshield. You gain insight into whats 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 Criticals 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 Criticals proprietary global panelsproviding 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

Key Findings

1 of 3

Reports of broadcast radios 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 Pandoras 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 Radioand 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 % smaller

Bigger role in my life

Same

Smaller role in my life

US

28%

45%

28%

even

Canada

22%

54%

24%

-2%

UK

32%

47%

22%

+10%

Qa4 Base:

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? Online consumers, age 18+,in each countryhas 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 Male Female Age 18-44 Age 45+

even +1% even +5% -5%

-2% -3% -2% -8% +4%

+10% +10% +10% +9% +11%

Qa4 Base:

Thinking back over the past couple of years, how has the role that each of the following play in your life changed? 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)
Bigger role in my life
MP3s or digital music files on mp3 player/mobile device Online service that lets you stream songs on demand Podcastsaudio 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
* Asked in US and Canada only
Qa4 Base: Thinking back over the past couple of years, how has the role that each of the following play in your life changed? Online consumers, age 18+,in the US, Canada, and UK; has listened to audio medium

Same

Smaller role in my life

Net Momentum
% bigger % smaller

56% 41% 39% 42% 36% 31% 30% 18% 36% 40% 43% 36% 44% 48% 47%

30%

14% 19% 17% 22% 20% 22% 23%

+42% +22% +22% +20% +16% +9% +7% -28%

46%

Momentum of audio alternatives largely similar by countryexcept 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 Spotify is legally available

MP3s or digital music files on your mp3 player/mobile device Online services that let you stream songs on demand Podcastsaudio 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
* Asked in US and Canada only
Qa4 Base:

+36% +16% +17% +18% +22% +7% +4% -19%

+46% +7% +28% +16% +11% +10% +10% -28%

+44% +36% +20% +25% +13% n/a n/a -35%

The only jurisdiction where Pandora is legally available

Thinking back over the past couple of years, how has the role that each of the following play in your life changed? 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... SIRIUS/XM satellite radio* MP3s or digital music files on mp3 player/mobile device MP3s or CDs through your computer Podcastsaudio 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*
* Asked in US and Canada only
Qa4 Base: Thinking back over the past couple of years, how has the role that each of the following play in your life changed? Online consumers, age 18+, in the US, Canada and the UK - has listened to AM/FM (AM/FM/DAB in the UK)

Net Momentum for Broadcast Radio

-15% -1% 0 +2% +5% +7% +10%

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% 3% 1% 2% 1%
QD1. QD2. Base: Which online radio stations or music streaming services do you remember listening to in the past year? And which one would you say is your favouritethe one you listen to most often? Online Consumers in the US, age 18+; listened to online-only radio/ streaming in past month & named a service listened to.

Listened in past year Favourite service

Spotify has made a big impact in the UK, though not on the scale of Pandora in the US.
Leading mentions (unaided)among past month listeners to Web-only radio/ music services
20% 11% 9% 3% 6% 3% 3% 1% 2% 1% 2% 1% 2% 1% 2% 2%
QD1. QD2. Base: Which online radio stations or music streaming services do you remember listening to in the past year? And which one would you say is your favouritethe one you listen to most often? Online Consumers in the UK, age 18+; listened to online-only radio/ streaming in past month & named a service listened to.

Listened in past year Favourite service

Canada, where neither Pandora nor Spotify is available, has no dominant Web radio/music service.
Leading mentions (unaided)among past month listeners to Web-only radio/ music services
9% 7% 4% 2% 4% 3% 3% 1% 3% 2% 3% 1% 2% 1% 2% 2% 2% 1% 2% 1% 2% 1% 2% 2%
QD1. QD2. Base: Which online radio stations or music streaming services do you remember listening to in the past year? And which one would you say is your favouritethe one you listen to most often? Online Consumers in Canada, age 18+; listened to online-only radio/ streaming in past month & named a service listened to.

Listened in past year Favourite service

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 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

Personalized

53% 37% 34% 33% 26% 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

Going Mobile

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 countryBlackberry leads in North America, iPhone in the UK.

29% Use smartphone

21%

Use BlackBerry
27%

11%

12%

6%

US Canada UK

Use iPhone

8%

6%

13%

10% Use iPod Touch

12%

Use another type of smartphone

10%

3%

11%

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

Reflecting Pandoras impact, US smartphone/iPod Touch users are more likely to have apps for Webonly services than for broadcast radio.
Has broadcast radio app Has web-only radio/streaming service app

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

US

Canada

UK

Qc4 Base:

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

More US smartphone/iPod Touch users stream Webbased radio than broadcast radio on their apps.
Listened to broadcast app / past week Listened to web-only service app / past week

31% 19% 14% 7%

31% 21%

US

Canada

UK

Qc4 Base:

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

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.
Benefits stated (unaided)
Better, cleaner sound quality More stations It's better/quality (general) It's free/ no monthly fees

67% 28% 9% 7% 5% 5% 4% 7%

Have heard of HD Radio; can state benefits

26% 50%
Have never heard of HD Radio

24%

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

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 Base:

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

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

APPENDIX Online Consumers Audio Profile

33

Past week listening to broadcast radio*

AN AM, FM OR DAB RADIO STATION (TOTAL) An AM or FM radio station over a traditional radio An AM or FM radio station streamed over your computer An AM or FM radio station on your mobile phone or smartphone An AM or FM radio station on your iPod or mp3 player An AM, FM or DAB radio station via Sky/ Freesat**
* **

86% 83% 26% 10% 17% n/a

91% 85% 23% 4% 10% n/a

77% 68% 24% 14% 12% 21%

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) An online service that lets you stream specific songs on demand (total) Online service that streams songs on demand over computer Online service that streams songs on demand on mobile phone or smartphone An Internet radio station, available only online (total) An Internet-only radio station over your computer An Internet-only radio station on your mobile phone or smartphone

32% 22% 18% 10% 26% 20% 10%

16% 11% 8% 2% 10% 7% 2%

32% 25% 20% 10% 18% 13% 7%

Base:

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

Past week listening to Sirius/XM satellite radio*

SIRIUS/XM SATELLITE RADIO (TOTAL)

17%

12%

Sirius/XM satellite radio over a regular satellite radio Sirius/XM satellite radio streamed over your computer Sirius/XM satellite radio on your mobile phone or smartphone

14%

10%

6%

3%

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 MP3s or CDs through your computer MP3s or other digital music files on your iPod on mp3 player/mobile device YouTube music videos Audio-only music channels w/ digital/satellite TV* Podcastsaudio programs downloaded or streamed HD Radio**
* **
Base:

52% 46% 45% 36% 30% 19% 3%

49% 51% 47% 38% 25% 17% n/a

53% 50% 50% 37% n/a 21% n/a

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

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

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 Criticals 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 errormeasuring sampling variabilityon 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 Senior VP & Managing Director, Radio jeff.vidler@visioncritical.com Corina Death Senior Research Manager, Radio corina.death@visioncritical.com