Teens Picking Pandora Over AM/FM Radio

While traditional AM/FM radio is still quite popular, Pandora and other free subscription-based Internet radio services are quickly gaining steam, especially among younger listeners, according to new data from the NPD Group.

During the fourth quarter of 2012, Internet radio services accounted for 23 percent of the average weekly music listening time among users between the ages of 13 and 35, an increase of 17 percent over the previous year. Moreover, six out of 10 teens and young adults said they are more often turning to streaming music services now than in the past.

But as the popularity of Internet-radio grew among this age group, traditional radio began falling out of favor. AM/FM radio accounted for 24 percent of music listening time during Q4, a decline of 2 percentage points since last year.

"Driven by mobility and connectivity, music-streaming services are rapidly growing their share of the music listening experience for teens and young adults, at the expense of traditional music listening methods," Russ Crupnick, senior vice president of industry analysis at NPD, said in a statement.

However, traditional radio is still much more popular among older adults. In the 36 and older group, AM/FM radio accounted for 41 percent of music listening, compared to just 13 percent for Internet radio.

The NPD Group's data comes from a survey of 7,600 consumers. Survey data was weighted to represent U.S. population of Internet users age 13 and older.

Meanwhile, Pandora is by far the most popular streaming music service among teens and young adults. Thirty-nine percent of music listeners between the ages of 13 and 35 use the free version of Pandora, while just 11 percent use iHeartRadio, and 9 percent use Spotify.

Still, Pandora has struggled to stay afloat in the face of hefty royalty rates. In Nov. 2012, it filed suit against the American Society of Composers, Authors and Publishers (ASCAP) over what it considers to be exorbitantly high royalty rates. As a result, the company in February limited free mobile listening to 40 hours per month, though Pandora said the change will affect less than 4 percent of its total monthly active users.

As listening on mobile devices increases, consumers are also less often turning to CDs and digital music files, according to the NPD Group. In fact, more than half of Pandora and iHeartRadio users accessed these services from their mobile phone. Moreover, roughly one in five Pandora and iHeartRadio users are also currently connecting to these services in their cars, where AM/FM listening has traditionally dominated.

Overall, 51 percent of 13- to 35-year-olds said they most often listen to music in their cars.

"Whether it's listening to AM/FM radio or Pandora, music continues to be an integral element in the American driving and commuting experience," Crupnick said.

For more, check out PCMag's recent interview with Pandora CTO Tom Conrad.