Pandora and Spotify continue to dominate the internet radio market

Advertising revenues within the global internet radio market has been forecast to hit a value of US$1.2 billion by 2018, driven by the rising sales of connected home audio devices, Internet-enabled mobile devices, and in-vehicle entertainment systems.

Radio is one of the few media platforms that remains relevant even today supported by improvement in quality of programming and technological innovations that have ensured its availability over newer platforms.

Traditional radio service providers have effectively leveraged these technological advancements and the expanding global Internet network to provide audio broadcasting services to a wider group of users from stations across the globe.

Internet radio audiences are growing thanks to shifts in consumer listening behaviour from terrestrial radio to streaming stations.

Users are embracing internet radio on a growing range of devices, from PCs, smartphones and tablets to automobiles, connected-home appliances and other gadgets.

As internet radio audience grows, the landscape of revenue models is changing rapidly. There are services that offer free, ad-supported subscriptions, ad-free access for monthly or annual fees, and subscription-only services.

Streaming services such as Pandora and Spotify allow listeners to create their own online "radio stations", playing music they select or tunes picked for them based on previous selections. These services have become popular as they do not require the listener to buy individual songs or albums.

Apple is now expected to announce the launch of a music streaming service dubbed iRadio this week, as it plans to take on the big players within the internet radio market. Apple's service is expected to be free and the company's iAd division is said to be working on building advertising support for it.

Internet radio services are usually accessible from anywhere in the world -- for example, one could listen to an Australian station from Europe or America. Some major networks like CBS Radio and Citadel Broadcasting (except for news/talk and sports stations) in the US, and Chrysalis in the UK restrict listening to in-country because of music licensing and advertising concerns.

Even if growth in internet radio continues, streaming services face significant monetisation challenges. Licensing costs are high for services like Pandora and Spotify and could rise further as laws expire and contracts come up for renewal. Furthermore, the ad inventory on these services is limited. Subscribers see no ads at all, and users who opt for free, ad-supported tiers generally do not tolerate heavy ad loads.

For more information on the internet radio market, see the latest research: Internet Radio Market

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