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Music on the Move

The 2007 Digital Music Survey from Entertainment Media Research shows that both traditional and not-so-traditional models for selling music face considerable challenges. However, there are also some surprising opportunities for new revenues.

The survey shows that the widespread use of social networking websites has changed the way in which consumers find and purchase music. Seventeen per cent of social networkers said that such sites have a ‘massive’ or ‘big’ influence on the way they buy music. These figures are higher on music-centric sites such as MySpace and Bebo. Twenty-seven per cent of Bebo users said that the site had a massive/big influence on the way they bought music. Eighty-one per cent of its users had found ‘music that I love’ through the site.

Despite their popularity, however, respondents revealed an ambiguous attitude towards social networks online:

• 45% agree “Popular community sites have been ruined by advertising and big business.

• 56% agree “There are too many community websites now”

• 41% agree “Very popular community websites are full of idiots”

While consumers agreed that they found new music through social networks, this is less likely than ever to lead to a legal purchase through a service such as iTunes. While the number of people buying legal downloads is still increasing, its growth rate has slowed considerably. In 2006, there was a 40% increase in legal downloaders; this rate of growth shrank to 15% in 2007.

Piracy, on the other hand, is booming, with 43% of respondents admitting to downloading music illegally. Moreover, an unprecedented 18% of people agreed that they would download more unauthorised tracks in the future. While teenagers remain the main culprits, the largest year-on-year increase was in the 18-34 year-old age bracket. The lack of any negative consequences for music piracy seems to be the main reason for this increase. The results showed that downloaders are considerably less worried about the risk of prosecution for piracy in 2007 than they were in 2006.

The presence or absence of DRM protection is now a notable consideration for music consumers. Sixty-one per cent said that DRM ‘invades the rights of consumers’. Sixty-eight per cent of consumers agreed that downloads ‘are only worth purchasing if free of DRM’. Thirteen per cent of illegal downloaders cited DRM as a reason not to buy legal tracks.

There is more bad news for the music industry when it comes to mobile downloads of music. Only 16% of respondents bought music on their mobile phones, with just 5% more saying that they are likely to start doing so. The ascendancy of the Apple iPod seems the most important reason for the poor results here, with half of respondents citing ownership of a personal music player as a reason for their lack of interest in mobile downloads. Apple can’t take all the blame, though: nearly half of respondents (47%) said that they just weren’t interested.

It’s not all doom and gloom, though. There has been a marked increase in the number of people listening to radio on their mobile phones, up from 15% in 2006 to 25% in 2007. Mobiles are one of the few platforms on which people are listening to more radio, rather than less. The potential rollout of DAB receivers on mobile phones opens the possibility for consumers to ‘buy this song’ as they are listening to radio broadcasts, according to the report’s authors.

Other internet delivery mechanisms might also provide new revenue streams. The survey found that 10% of respondents are interested in and willing to pay for webcasts of live performances. A further 64% are interested but not willing to pay, making an ad-funded model for such performances seem a more viable business proposition. In total, 74% of consumers stated that they were ‘interested’ or ‘very interested’ in live webcasts and in webcasts of past shows.

The report is available online here (PDF file). The survey was conducted in June/July 2007 with 1700 music consumers aged 13 to 60.