Edison Research and Triton Digital’s annual Infinite Dial study came out this week. This year’s study shows that YouTube still rules the digital music market, Amazon’s strategy of digital audio through Alexa-powered smart speakers is continuing to pay off, and podcasting continues to gain in popularity.
The consumer research study grew out of digital radio usage—hence the name “Infinite Dial”—in the late 1990s and has expanded to cover all digital audio services as well as social media usage. Its longevity and methodological consistency make it more and more influential every year.
The Infinite Dial has consistently tracked the use of YouTube specifically for music for several years. It continues to show that YouTube is, by a wide margin, the most popular online service for music. Fully half (50%) of the survey’s respondents use YouTube for music listening on a weekly basis, up from 46% last year. Among 12-to-34-year-olds, that number rises to 70%. The next most popular digital music service is Pandora, at 22%, but its listenership is dropping as people shift from digital radio to on-demand services like YouTube, Spotify, Apple Music, and Amazon Music Unlimited.
Among the pure on-demand music services, Spotify is the most popular at 20%, having shot up from 16% last year. Apple Music is a distant third at 11%, followed closely by Amazon Music at 9% (the Amazon Music brand encompasses Amazon’s paid MP3 downloads as well as Amazon Music Unlimited on-demand streaming).
But Amazon is moving up fast. Its strategy has been to push adoption of its digital music services through its Alexa-powered smart speakers by building it in and offering it at a lower price than competing services—and that strategy is bearing fruit. Smart speakers continue to gain in popularity: now 23% of respondents own at least one smart speaker, up from 18% last year and 7% two years ago. Amazon’s Alexa-based devices lead the smart speaker market, especially when Alexa-powered Sonos devices are taken into account; and almost twice as many smart speaker owners use Amazon Music as the general public. Smart speakers have emerged as table radio replacements for the digital age.
Another beneficiary of the smart speaker phenomenon is iHeartRadio, the streaming audio service that features Internet simulcasts of thousands of AM/FM radio stations. When you tell a smart speaker that you want to listen to a particular radio station, it uses either the iHeartRadio or the TuneIn app to stream that station. iHeartRadio carries more of the bigger commercial radio stations than TuneIn, so iHeartRadio presumably gets more usage on smart speakers. That’s likely why iHeartRadio’s usage is on the rise again after having dipped last year.
The other big digital audio story in Infinite Dial 2019 is podcasting. Weekly podcast listening is now up to 22% of respondents, or 62 million people, up from 17% last year. Podcasts are increasingly popular on smart speakers as well as smartphones, and they are displacing CDs as audio sources for the car—where the study shows that in-dash “infotainment” systems with built-in Internet connectivity are on the way to overtaking the more cumbersome use of mobile phones for Internet-based car audio.
The continuing rise in podcast listening is leading to a gold rush of investment money in the space. Spotify’s acquisitions of Gimlet Media and Anchor for over $200 million last month make particular sense given the Infinite Dial’s finding that over half (53%) of Spotify users listen to podcasts, up sharply from 32% last year and reflective of Spotify’s recent efforts to promote podcasts on its platform.
Another large investment in podcasting was announced last week: a startup called Luminary raised $100 million in venture capital to launch an ad-free, paid-subscription, Netflix-like service, featuring exclusive content from a combination of TV celebrities (Lena Dunham, Conan O’Brien, Trevor Noah) and public radio veterans (Guy Raz of The TED Radio Hour and How I Built This, and Adam Davidson of Planet Money). Luminary’s strategy is similar to that of Midroll’s Stitcher: provide an app that gives access to the hundreds of thousands of free podcasts out there for free and charge a monthly fee for early access to the exclusive content. (Stitcher charges $5/month or $35/year while Luminary intends to charge $8/month.)
Attracting a paying audience to podcasting is a challenge that many industry insiders have written off as too difficult. Almost all podcasts are free. Unlike music, consumers have no memory of ever paying for them. And there is an ocean of high-quality content out there—much more than high-quality episodic television content—making it difficult to aggregate into a single compelling service as Netflix and Hulu have done for TV. On the other hand, it’s been proven that if you attract a large enough audience and feed enough money into it, ideas for monetizing that audience will emerge often enough to attract venture capital.