About Futuresource Consulting

Futuresource Consulting, the specialist research and consulting company, is delighted to be the official knowledge partner for CEATEC JAPAN. The company can trace its roots back to the 1980s and provides market insights into consumer electronics, digital imaging, entertainment media, broadcast, optical manufacturing, storage media, professional IT and education technology.
With more than 70 full-time employees providing in-depth analysis and forecasts across consumer and professional electronics categories, Futuresource is able to advise on market, competitive and technological developments, providing clients with access to the information that helps produce the best possible results.

Vol.022011/8/16

Internet Radio: New Business Models Will Define Growth

Pure-play (online only) Internet radio and music streaming services continue to experience relatively high consumer usage, although revenue stream development remains key to the future.

"Over the last 18 months a number of dominant pure-play regional Internet radio and music streaming companies have emerged with substantial user bases, notably Pandora in the USA and Spotify in the UK," says David Sidebottom, Senior Consultant, Digital Media at Futuresource Consulting. "These services offer many attractions, such as personalisation, playlists, social sharing and access from any device connected to the Internet, though competition is prevalent - in the USA, ad-free subscription satellite radio SiriusXM is one such example."

The regular Futuresource consumer research study, 'Living with Digital', shows that the number of US and European Internet users listening to Internet radio or music streaming services on a regular basis has remained relatively unchanged since 2009, at 38% in the USA and 30% in Western Europe. However, the study also shows that total Internet radio listening hours in these territories has increased by 27% and around 20% respectively.

"Most pure-play Internet radio and music streaming business models are built around free-with-ads and some low-priced premium subscriptions," says Sidebottom. "Other streamed music services charge up to 15 dollars a month and allow unlimited on-demand streams, though subscriber bases are currently small.

"A key driver of usage is mobile, which now accounts for around half of listening hours for pure-play, using apps on leading smartphone platforms like iPhone and Android. Additionally, 70% of conventional radio listening in the USA takes place outside of the home, including in vehicles - a market currently led by SiriusXM. Therefore, increasing use of smartphone Apps, connected devices and the march of mobile broadband are all key to a sustainable future."

Although there are issues still to be resolved, Futuresource believes pure-play Internet radio and music streaming services have a successful future, with one or two major players dominating national markets. Pandora and Spotify are currently attracting investor valuations of around $1bn, indicating that there is market confidence, despite low margins and current low remuneration to record companies. Ultimately, to transition towards a long-term business proposition, pure-play Internet radio providers must overcome the large volume of users that are choosing to listen for free, channelling them towards premium, paid-for services.

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