Has Internet Killed the FM Radio Star?

From streaming services and on-demand music platforms to connected cars and other IoT devices, is traditional radio taking a backseat to the internet for introducing new artists to the world?

Historically, FM radio has been the primary medium for breaking new artists. However, there are many signs of trouble for the future of traditional AM and FM stations. The Recording Industry Association of America (RIAA) reports that the number of Americans who pay for a streaming music service jumped from 5 million in 2011 to 22.6 million in 2016, with studies from Edison Research indicating that adults aged 18-to-24 now say that they spend more time listening to streaming music than traditional radio. Analysts in the UK have recently predicted that digital radio listeners will soon be the majority, while Norway became the first country to cease FM radio broadcasting earlier this year. And traditional radio stations are losing ground. BBC Radio 1 reported a loss of more than 2 million listeners over the past five years, while Spotify’s UK audience has now surpassed Radio 1’s numbers for the first time ever.

Although there’s no question that lots of people still listen to the radio, playlist curators at streaming services are increasingly becoming the primary tastemakers for music fans, with record labels shifting their focus in turn to match the evolving landscape. Indeed, FM radio has mostly been relegated into a follower in breaking music, commonly waiting months after a song’s digital peak to play it. With the increased competition for listeners across the board, from people replacing talk radio with podcasts to those who choose the rich alternative content available from interactive services overturning the radio dial, traditional stations appear to be losing their industry stronghold.

Does this mark the beginning of the end for radio?

Not necessarily. Consolidation may hold the potential to change the course. Internet music giant Pandora, which has 76.7 million listeners and 4.7 million paid subscribers but also suffers losses and faces the lowest share price in over a year, has just received investment from Sirius XM. Many believe that Sirius XM will eventually end up acquiring Pandora and acquisitions like this could certainly be game-changers, allowing digital radio businesses to remain highly relevant.

The nation’s biggest radio broadcaster, iHeart has been fighting its troubles since the takeover in 2008 by attempting to transform into a multi platform digital brand and finding ways to monetize its digital audience. Whether this massive undertaking succeeds or fails, the approach is likely to find a further foothold in the world of radio. For traditional radio stations, investing in powerful internet music services while embracing technological developments and innovations in their own operations may be the keys to retaining their importance in the music industry.

By Sergey Bludov,
Senior Vice President of Media and Entertainment Practice at DataArt

Originally published at blog.dataart.com.