Study: Digital audio to surge

Digital audio formats--from satellite radio to podcasting--are catching the ear of U.S. consumers.

By 2010, more than 20.1 million households will be hooked to satellite radio, up from 4.5 million subscribers at the end of 2004, market research firm Forrester predicted in a report released on Monday. Also by that time, nearly 12.3 million households will use MP3 players to listen to podcasts, it forecasted.

Streaming audio is expected to grow significantly as players like America Online and Yahoo, along with traditional broadcasters, shift or step up their online programming, the research firm said. By the end of the decade, online radio will reach 30 percent of all U.S. households and about half of homes that have broadband connections.

Forrester said new revenue opportunities like subscription-based models, on-demand delivery and ad-targeting strategies are emerging in the audio industry among businesses such as satellite radio and streaming audio. The radio industry will have to contend with the problem of ad-skipping technologies with TiVo-like digital radio recorders, but it could increase online revenue by targeting specific audiences.

High-definition radio for FM and AM broadcasts will lag satellite radio initially but will pick up to reach 9.7 million households by 2010, Forrester said. HD broadcasting offers additional programming and features such as traffic information meshed with onboard navigation systems and program guides. Broadcasters like Clear Channel Communications and Infinity Broadcasting should adapt subscription-based programming and online delivery to HD receivers, the study noted.

"Consumers want to listen to what they want, when they want, on the device of their choosing. New formats like online radio and podcasting, where downloadable content is sent directly to an MP3 player, give consumers more programming and ultimate flexibility," Ted Schadler, research vice president at Forrester, said in a statement.