Music streaming services are too expensive and risk pricing people out of paying to listen, according to exclusive research for new media age.
A survey of 1,000 UK adults, conducted by Lightspeed Research, revealed 21% have used music subscription services like Spotify, Last.fm and We7, but just 3% paid for their premium offerings.
Only 6% of respondents said they would pay above £8 for a subscription, despite the majority of online subscriptions costing around £10.
There does seem to be a point at which people are uncomfortable paying for music online, whether streaming or downloading. While most streaming services cost around £10, above the amount most people are willing to pay, they do have lower price points too. The issue is whether people are aware of this, which I doubt, so the digital music industry has a serious education job to do if it wants behaviours to shift further away from illegal downloading.
Spotify and We7 charge £9.99 a month for access from both mobile and desktop, but £4.99 for PC-only access. Last.fm charges £3 a month for its ad-free service. Napster and Sony Qriocity’s streaming platforms each cost £10 a month.
Spotify recently cut back the service it gives to free users, halving the number of tracks people can listen to without paying. It’s also introducing incentives for people to switch to its premium service, such as album previews (nma.co.uk 14 April 2011). Spotify wasn’t available for comment.
Ralph Risk, marketing director EMEA at Lightspeed Research, said, “Subscription services need to figure out how to get people paying. The 75% of respondents who have never used a streaming service are an untapped market. The challenge is also to get them from free onto paid services, but 74% think the amount they should pay for a subscription service should be lower than £8.”
Steve Purdham, founder and CEO of We7, said the industry had an educational role to play to make music streaming a mainstream activity, particularly on mobiles.
“The early adopters who have already taken out a subscription with We7 or Spotify know that the next stage is streaming to their mobiles,” he said. “But we’re on a cusp between early adopters and the mainstream, and education will be key. When someone gets into streaming, MP3 downloading diminishes fast.”
For those who had never paid for an online music subscription service, the best incentives would be access to a wider range of tracks, the ability to download MP3s and access to more specialised music. Those who had already paid said they’d pay more for access to music from a mobile.
The research also revealed that 20% of consumers still don’t pay for music at all, with a quarter of those downloading from file-sharing sites.
Radio was overwhelmingly the most popular way to get free music, with 74% of those who don’t pay for music using this channel. Likewise, when asked the main way they found new music, broadcast media was the most popular, with 42% using radio and 16% TV, while 16% took recommendations from friends.
Press and online channels were lower: 6% mainly used music sites to find new music, 6% YouTube, 4% social networks and 2% each used newspapers and magazines.
Matthew Hawn, VP of product at Last.fm, said traditional media were still top because services such as YouTube and Vevo (see box) were popular tools for consumers to listen to music they already know rather than finding new music.
“Radio is still most important in this space,” he said. “I’m surprised at the low numbers for Vevo and YouTube, based on how dominant they’ve become. We’ve seen a lot of our users using social networks to broadcast their tastes and who their favourite bands are, but in terms of music discovery they aren’t good.”
According to the research, just 14% of respondents spend over £5 a month on downloading music, while 46% said they spend £6-20 on physical formats such as CDs.
In an average week, 30% of people’s music listening time is taken up by radio, broadcast or streamed, 14% by an MP3 player, 31% listening to MP3s on their PC, 11% via streaming services and 10% each on music TV channels and via mobile.
vevo seeks new talent
Music video platform Vevo, a joint venture between Abu Dhabii Media Group, Sony Music Entertainment and Universal Music Group, launched in the UK last week on mobile and web.
CEO Rio Caraeff told new media age the popularity of music videos delivered scale for advertisers, with Vevo offering a chance for labels to get exposure for newer talent via its range of original programming.
“This is a small percentage of our total streaming volume but it’s important because it gives opportunities to new artists,” he said. “Our programme The Lift breaks new artists. We pick a small number, no more than ten a year, and put the entire weight of our platform behind them to try to discover the next Lady Gaga.”