npd-music-chartPandora remains the most popular streaming music service by far in the US, according to the latest research from NPD Group.

It estimates that Pandora’s free version was used by 39% of 13-35 year-olds in the US in the final quarter of 2012, well ahead of rival iHeartRadio’s 11% penetration.

Spotify’s free version was used by 9% of this demographic, with Grooveshark on 3% and services including Slacker, TuneIn, Last.fm and Xbox Music all fighting for scraps on 2% apiece.

What’s just as interesting is NPD’s breakdown of how 13-35 year-olds were listening to music in Q4 though. Traditional AM/FM radio remains the most popular form, but only just – accounting for 24% of music listening among this demographic, compared to 23% for internet radio.

With the former declining two percentage points year-on-year and the latter up six, it’s safe to suggest that internet radio will have overtaken AM/FM by the end of 2013, if it hasn’t already.

“Driven by mobility and connectivity, music-streaming services are rapidly growing their share of the music listening experience for teens and young adults, at the expense of traditional music listening methods,” says NPD’s Russ Crupnick in a statement, noting that more than half of Pandora and iHeartRadio users are accessing the services on their mobile phones, while one in five are using them in their cars.

In fact, when you add internet radio’s 23% share of music listening for 13-35 year-olds in Q4 to the 15% share for digital files and 14% share for on-demand services, ‘digital’ as a whole accounted for 52% of listening for the demographic that quarter. A tipping point of sorts, albeit one accompanied by the ongoing robust debate around industry income and artist/songwriter payouts from all this digital listening.