Internet radio has the potential to be the most ubiquitous form of media ever. More commanding of your attention than film, television, or books. This is because listening to music can be enjoyed while doing other activities. Before I go further, let me make an important distinction: there are two types of listeners, lean back and lean forward. Lean back listeners hear music programming via a playlist or radio station (think “set it and forget it”), whereas lean forward listeners actively select individual songs. The majority of people prefer a lean back experience.
In 2014, one third of Americans used their phones to stream music. Young adults (18-24) listened to internet radio more than terrestrial. Two of the top five most popular apps in America ( Pandora and Youtube) are used for streaming music. With Americans now spending more time on their phones than watching television, there has never been a more opportune time to maximize internet radio experiences.
Let’s consider the potential internet radio landscape. The average person sleeps approximately seven hours a day, meaning there are up to seventeen listening hours per day that one could listen to internet radio. Additionally, it’s expected that in two years 3.5 billion people will be online, bringing the total of possible listening hours worldwide to 59.5 billion per day. With the average revenue per thousand hours amounting to $42.77 (Pandora’s rate in 2014), there is a possible daily cap of approximately $2.5 billion in 2017. Granted, this assumes that the market rate is equal throughout the world, which currently is not the case.
For this potential to be realized, companies will need to provide highly personalized listening experiences that have yet to be fully optimized. Internet radio will need to match every part of your day. Imagine passively being pushed the right music that helps you wake up, motivates you to run faster, work more productively, and more. This type of personalization has already begun in advertising but hasn’t been well implemented on internet radio.
However, the barriers to this hyper personal internet radio are slowly being eliminated. The swath of personal data that comprise our tastes is growing, which in turn means we are also able to better understand the tastes of similar people. With the decreasing costs of streaming, collecting, and storing large sums of data, as well as the growth of powerful tools to analyze it, our ability to explore and draw inferences from this wealth of information is seemingly endless. Lastly, the vanguard (major record labels) are now willing to make this digital shift. In the last three years, labels have signed deals that make their music libraries legally accessible on-demand, setting the stage for this transformation in digital discovery based on big data.