By 2005, 118 million consumers will embrace personalized digital audio content, defined by Forrester as music, news, information, and spoken word delivered anytime, anywhere. According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), a convergence of technologies will make streaming and downloading simple, challenging the current state of radio broadcasting.

“The self-serve audio consumer will tune in to hundreds of Internet radio stations from all over the world; will listen daily to personalized news, weather, and music content that can be delivered anywhere; and will be able to easily access archived programs,” said Jeremy Schwartz, senior analyst at Forrester. “The bottom line is that consumer demand for anytime, anywhere access to personalized audio will slowly but surely displace broadcast radio.”

Three technologies will converge to enable self-serve audio. First, intelligent tools that organize and recommend will combine knowledge about users’ music tastes with other users’ listening profiles to suggest new content. Second, Net radio devices that move throughout the home will begin to free users from their PCs. Lastly, wireless Internet will effectively make access to self-serve audio content available from any outdoor location.

These technologies will merge in three phases over the next five years, beginning with the PC Era from 2000 to 2001. Consumer confusion will force toolmakers to combine CD listening, Net radio tuning, file transfer to portable MP3 players, and playlist management into one interface. Major music labels are banking that making content available from famous-name artists will stimulate consumers to download more content. Penetration in this time frame will reach 58 million.

From 2002 to 2004, the Device Era will bring lower-cost devices, broadband penetration, and the availability of car-radio devices — moving self-serve audio out to the car and throughout the home, and driving adoption to 91 million by 2004. To effectively penetrate homes, Net radio devices will drop in price and become integrated into consumer electronics devices.

The final burst of self-serve audio, The Anytime, Anywhere Era, will occur from 2004 to 2005 and beyond, bringing even more technological advancements. Portable devices, improved wireless bandwidth, and wireless-enabled car radios will push self-serve audio adoption to 118 million people, or 41% of US consumers, by 2005.

“Although revenues for Net content sites are typically ad-driven, self-serve audio’s expanded reach, niche-market potential, and interactivity will lead to a different balance of advertising, subscription, and commerce revenues for different content genres,” added Schwartz. “Targeted, performance-based advertising will dominate; subscriptions will work for business, finance, and ad-free audio; and we believe commerce will make up 40% of revenues for music sites.”

For the Report “The Self-serve Audio Evolution,” Forrester surveyed 3,000 online users to determine how Internet developments will impact consumers’ on- and offline listening habits. Traditional radio listening still outweighs Internet radio listening, and more than 75% of Net users buy about the same number of CDs now as they did when they began listening to music online.