by Dash Two Staff.

Did you know that more than half of Americans listen to Internet Radio? Of this population, 39% choose personalized radio, 27% prefer streaming live, and 18% is into on-demand music. As more and more innovative tech start-ups jump into the game for a piece of the American music business, we might be witnessing another powerful takeover in the already-crowded industry.

Historically, we have moved from expensive Vinyl records to affordable cassettes, from loving cheap, convenient CD albums to worshipping mp3 files. The fact is music consumption has been and is going through a significant phase change—similar to when we abandoned the classic Kodak film for digital cameras in the 2000s—and its evolving trends continue to re-establish the basic structure of the music industry.

Aside from the powerful iTunes, which revolutionized the way Americans buy their albums, internet radio services such as Pandora, Spotify, TuneIn, and Rdio have begun to own a significant part of the music consumer pie. As the third most popular way that Americans use to discover new music, Internet Radio has outrun even giant networks such as Amazon, YouTube, and Facebook, despite their larger and ever expanding ecosystems.

Each with its own unique services, internet radio startups swiftly compete with traditional radio stations not only in distributing popular music and audio content but also in serving local and national advertising messages to their users. Within nine years, Pandora has established itself as a major radio network with 77 million listeners and more than 9 percent of total U.S. radio listening as of May 2014. Similarly, Spotify and TuneIn are also taking over the streaming music market and growing their own empire of subscribed users and loyal listeners

In a deal signed between Merlin’s 20,000 plus indie labels and Pandora, the internet radio service committed itself to helping their newer artists get discovered, using Pandora’s discovery techniques to increase exposure to fans and relying on playback data to decide on set lists and tour locations (Engadget). On another note, TuneIn is trying to connect traditional radio stations, artists, and podcasters with their fans (Digital Trends) and create a platform where hosts and listeners can communicate directly. The competition is getting stiffer and stiffer for traditional radio stations while other newcomers such as iHeartRadio are eagerly joining the race.

Although the convenience of being able to choose your own genre or playlist to listen to is already attractive enough on its own, the true irresistible power of streaming services comes from mobile usage and the mobility of these apps. Consumers have grown accustomed to bringing their personal music wherever they go–except this time it won’t be in mp3 format but streaming smoothly via the internet. This takes the pressure away from having to download all of your favorite music before a trip and free up storage space in your devices. While the shuffling option offers a taste of the classic radio streaming-not having to choose what songs to listen to, consumers still control song choices and playback order. It’s important to note that 63% of internet radio listeners own a smartphone and 83% of smartphone owners have some types of internet radio apps on their mobile devices.

Due to their advanced technology nature, internet radio services offer a very ideal and competent environment for advertisers and brands looking to connect with their consumers. There are the appeal of associating a brand with a particular artist or genre of music representing certain lifestyles, the extent of readily available ad inventory, or the appeal of non-skippable in-stream commercial that run relentlessly. More importantly, services such as Pandora and Spotify require certain user registration data such as musical preference, zip codes, ages, and genders, which translate into valuable targeting tools for marketers and advertisers. With more focused targeted ads and a good knowledge of user demographic, internet radio platforms certainly enjoy an advantage over traditional radio stations. Research firm eMarketer even forecasts that digital advertising in the radio market will more than double by 2018 to about 21 percent of total audio advertising revenue.

Meanwhile, brands and advertisers need to develop a deeper understanding of how each internet radio service differs from one another, ensuring that our advertising dollar will be used wisely to reach desired groups of consumers. There are some concerns in satisfying Internet Radio’s minimum spending and how to track delivered impressions, which is extremely important in measuring the success of your campaigns. Although advertising on internet radio is not the cheapest option, it is still much more affordable than traditional radio advertising and, if utilized strategically, can achieve highly desirable results.

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