Satellite radio reached 4.5 million subscribers in the United States by the end of 2004, up more than 150 percent from 2003, according to Forrester Research, a high-tech market research firm.

Releasing a report on the future of digital audio, Forrester Research said digital audio formats, like satellite radio, online radio, and podcasting - subscription-based programming that is pushed to MP3 players - are creating new business models and opportunities in radio and the music industry.

"Consumers want to listen to what they want, when they want, on the device of their choosing," said Ted Schadler, vice president of Forrester.

Schadler believed that new formats like online radio and podcasting, where downloadable content is sent directly to an MP3 player, will give consumers more programming and ultimate flexibility.

In addition to 20.1 million US households who will listen to satellite radio, 12.3 million US households will use their MP3 players to listen to audio podcasts by 2010, as MP3 adoption climbs and broadband reaches 62 percent of households, Forrester Research projected.

Online radio (streaming audio) will continue to grow as portals like AOL, Yahoo!, and MSN increase programming, and traditional broadcasters move portions of their programming online, reaching 30 percent of all US households and close to 50 percent of US households with broadband by 2010.

"If radio and music executives can successfully shift their thinking to embrace new audio delivery methods, both industries will benefit from new revenue streams and increased consumer loyalty over the next several years," said Schadler.

To succeed in today's fragmented, consumer-driven market, radio should take note of the lessons learned in the TV industry when cable entered its programming mix, Forrester Research said.

The market research firm suggested that music and radio executives adopt subscription-based models, on-demand delivery, and ad targeting strategies for radio to successfully maximize its new formats.

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