Is YouTube the New Radio?


Teens aren't consuming music the way that their parents do.

Sure, there's always been a generation gap when it comes to the type of music that younger listeners crave. "Turn that down" and "In my day, we had real music" are hand-me-down remarks.

We've also seen media go from vinyl and 8-track tapes to CDs and cassettes before giving way to the digital revolution of recent years.

However, today's youth aren't just listening to MP3s of tunes that are toxic to the ears of adults. An eye-opening Nielsen survey shows that teens are relying on Google's (GOOG) YouTube for their music-listening pleasure more than any other medium.

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Neilsen's Music 360 survey showed that 64% of participants between the ages of 13 and 17 turn to YouTube for music. It's free. It's convenient. The videos can simply stream in the background as the listener does something else.

Radio comes in second, listened to by just 56% of the teens in the survey, while 53% use Apple's (AAPL) iTunes, 50% still listen to CDs, and 35% stream Pandora (P).

As you can probably imagine, adults prefer radio (65%) and CDs (61%) to the digital offerings, though even there, YouTube, at 44%, is more popular than Pandora at 32% and iTunes at 29%.

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Farewell to the CD

The music industry has been suffering declining CD sales through the past decade. The Internet birthed digital piracy, though it also ushered in the era of legal downloads.

Want to see a scary number? Just 36% of the teens surveyed had bought a physical CD during the past year.

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YouTube may be behind some of that. Unlike Pandora's free digital service, where listeners can't pick the exact songs they're streaming and there are limits on how often you can hear tunes, there's nothing stopping YouTube users from hitting the play button again. They'll have to put up with ads from time to time, but it seems teens are finding that preferable to actually buying songs.

The trend is undeniable: The percentage of teens who tune in on YouTube is nearly twice that of teens who have bought a physical CD. Sure, a lot of those teens are also buying tracks through iTunes -- and we won't get into how many are downloading music illegally -- but YouTube is a major tastemaker in the music industry now.

In other words, if record labels want to make sure their artists get noticed by young listeners, they'd better make sure they're putting out entertaining music videos.

This may seem like the early days of MTV all over again, but it's so very different.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.