• by Jack Loechner , Staff Writer @mp_research, December 3, 2012

According to The NPD Group, 50% of Internet users (96 million) listened to music on an Internet radio or on-demand music service in the past three months. 37% of U.S. Internet users listened to music on Pandora and other Internet radio services, while 36% used an on-demand music service, like YouTube, VEVO, Spotify, MOG, Rhapsody, and Rdio.

The audience for Internet radio grew 27% year over year, as the on-demand music audience increased by 18%. As Internet radio and on-demand listening has risen, the number of consumers who reported listening to music on CDs dropped 16%. The music audience for AM/FM radio fell 4%, and the number of consumers listening to digital downloads declined 2%. 

Russ Crupnick, senior vice president of industry analysis at NPD, said “... although AM/FM radio remains America’s favorite music-listening choice... Internet radio and streaming services available today... have... replaced CDs for second place... ”

The study revealed that since 2009 the percentage of Pandora users who also:

• Listened to AM/FM radio declined by 10 percentage points
• Listened to cds on a non-computer device fell 21 percentage points
• Listened to digital music files on portable music players also dropped 21 points

Part of these declines can be attributed to the fact that 34% of Pandora users are now listening to music on the service in their cars, either connecting through an in-car appliance, or listening via car-stereo-connected smartphones or other personal listening devices, says the report.

Since 2009, among YouTube and VEVO users:

• CD listening on players and in cars dropped 22 percentage points
• Listening to digital files on portable players declined 17 points
• Listening to AM/FM radio fell 12 points

Consumers who listened to music on Pandora, VEVO, and YouTube also noted a significant positive effect on their overall discovery and rediscovery of music. 64% of these services’ users reported rediscovering older music, and 51% were learning about new music.

Data (in this study) is weighted and projected to be representative of the U.S. Internet population (age 13 and older).

For more information from NPD, please visit here.