Is it possible that Internet radio has peaked? Have we reached the point where nearly everyone who wants to listen to online radio is already doing it? That’s a possible conclusion based on Arbitron’s Infinite Dial study.
According to Arbitron, usage of online radio failed to grow last year. In both the 2009 and 2010 studies weekly usage was 17%. The percentage of participants who listened in the past month was flat too at 27%. The percentage of people who have ever listened barely budged, moving from 49% to 52%.
Conventional wisdom has it that everyone wants to listen to radio online. Every knows that it will only be a matter of time before online radio overtakes broadcast radio. Maybe that is what everybody knows, but may be that’s wrong.
Take a look at the graph above. It shows online and broadcast radio listenership. Internet radio grew 300% in the first four years of the decade. In the second four years growth dropped to 50%, and now growth is down to 40%.
The rate of growth is slowing, and may be coming to a halt.
This wouldn’t be the first time a growth industry petered out a lot faster than anyone expected. Take satellite radio. When satellite radio first launched, there were wild projections that one day everyone would be listening to satellite radio.
Initially satellite grew very quickly. Sirius and XM subscriptions were growing over 30% a year for a time, and there were many discussions within radio about how to defend against satellite. It turned out the concern was unwarranted.
Sooner than anyone expected subscription sales started to decline, and subscriber churn increased. Recently the combined company proudly announced that net subscriptions had grown nearly 2% from a year ago.
Today the stock sells for a buck and no one talks about satellite radio as a growth industry except Mel Karmazin.
We hear a great deal about the phenomenal growth of social media. In early 2008, Nielsen declared Twitter the fastest growing social website with a one year growth rate of 1,382%.
A year later, the growth stopped. According to Quantcast, Twitter peaked in July 2009 and continues to lose ground. Details here.
Is Internet radio the next flame-out? Could Pandora become the Twitter of 2011? Stay tuned.