Music streaming Music streaming services and online services and online music consumptionmusic consumption

How access to everythingis more important thanownership of something

Report on music consumption amongst Norwegian students age 20-29June/July 2010

How does music streaming How does music streaming services services affect affect online online musicmusicconsumption habits consumption habits and and how can we expect suchhow can we expect suchservices to services to affect consumer behavior affect consumer behavior in in DenmarkDenmark??

First First things things firstfirst

•• A A music streaming music streaming service is a service is a subscriptionsubscriptionservice service that primarily provides access that primarily provides access totomusic streamsmusic streams..

Music Music services in services in use use in in DenmarkDenmark

Students in Students in Denmark October Denmark October 20092009Wimp Wimp not not launched launched in DK at in DK at the the time time of this of this serviceservice

•• Denmark Denmark is is behind when behind when it it comes comes to to streaming streaming services.services.•• TDC TDC Play Play is is the only the only legal service legal service consumers seem consumers seem to to useuse,,

but but it it isnisn’’t really popular t really popular and it and it isnisn’’t really streamingt really streaming......

•• 32% in 32% in Denmark use Denmark use a a subscription subscription service.service.•• 43% 43% using using a a subscription subscription service service download download lesslessillegal.illegal.•• Problem is Problem is however that however that 80% 80% of these use of these use aaservice service that that is not legal or is not legal or legally availablelegally available..

But how are things But how are things in in NorwayNorway??

After After all, all, streaming streaming services like services like Spotify Spotify and and WimpWimphave have been available been available in in Norway Norway for more for more than than a a yearyear..

...and ...and Denmark Denmark and and Norway are two Norway are two markets markets quite similar quite similar totoeach other each other ((people people in in both countries enjoy both countries enjoy hot hot dogsdogs))

WellWell, , things are quite differentthings are quite different......

My survey: In My survey: In Norway Norway 87% 87% use use a a streaming streaming serviceservice

And as And as many many as 52% do so as 52% do so on on a a daily daily basisbasis

Spotify Spotify is is the the most most popular popular serviceservice

LetLet’’s compare Norway with Denmarks compare Norway with Denmark......

87%87%

32%32%

Students 20-29 years of age

52%52%

9%9%

Students 20-29 years of age

Norwegian music consumersNorwegian music consumers::Access is Access is the new ownershipthe new ownership

Access is Access is clean while ownership clean while ownership is is messymessy

So So what does what does it it meanmean??

How does music streaming How does music streaming services services affect affect online online music consumption habits music consumption habits andandhow can we expect such how can we expect such services to services to affect consumer behavior affect consumer behavior in in DenmarkDenmark??

WellWell, , remember remember a fancy a fancy little thing called piracylittle thing called piracy??

•• 60,4% 60,4% using using a a subscription subscription service in service in NorwayNorwaydownload download less illegal (43% in less illegal (43% in DenmarkDenmark).).•• 2% 2% use use an illegal an illegal servie servie ((80% in 80% in DenmarkDenmark).).

Keep Keep in in mind that mind that in total 87% in total 87% use use a a streaming streaming serviceservice inin NorwayNorway, and 32% in , and 32% in DenmarkDenmark..

So it is without doubt important to look at legally available streamingservices as legal venues that drives traffic from illegal venues, butthat is kind of irrellevant as long as we don’t earn any money!

Industry

Perspective

ThatThat’’s why some records why some recordlabels labels and artists inand artists inNorway Norway have have withdrawnwithdrawntheir entire repertoirtheir entire repertoirfrom from SpotifySpotify

......but but as it as it looks looks likelike

My research shows that 21,6% of the ones using asubscription service, pay to use this service.

Let’s however simplify the big picture:

Other research in Norway (TNS Gallup InterBuss) published inAugust 2010 reveales that 1,3 million Norwegians use Spotify.19% pay to use it.

19% of 1,3 million = 247 000 paying subscribers

247 000 x 99 kr = 24 453 000 kr

247 000 x 49 kr = 12 103 000 kr

Also let’s not forget that Spotify paymentsto songwriters in Sweden rose 800% in the past year

Streaming Streaming services doservices doalso also have have the potentialthe potentialto to increase value ofincrease value ofmusic music in general as in general as thetheoverall overall musicmusicconsumption goes upconsumption goes up..

After After all all streaming streaming services covers a services covers a social needsocial need.. The The DJDJat private at private parties parties is is SpotifySpotify..

•• Sharing of playlistsSharing of playlists..

•• Hear anything anywhereHear anything anywhere..

So So maybe maybe it is a it is a goodgoodidea idea to not jump to to not jump to anyanyconclusionsconclusions??

..........yetyet

After all, it is a bit more complicated to After all, it is a bit more complicated to ““controlcontrol””your music on your music on ””illegal venuesillegal venues”” and and UGC sites.UGC sites.

* * Grooveshark Grooveshark is (Sept. 2009-October 2010) considered illegal by certain actors in the music industry.is (Sept. 2009-October 2010) considered illegal by certain actors in the music industry.

Digital positivism?Digital positivism?

If the music If the music is not is not on preferredon preferredstreaming streaming service, is it service, is it worthworthlistening listening to?to?

Another consideration:Another consideration:

•• Music streaming Music streaming services leads to a services leads to a decrease decrease in illegalin illegaldownloadsdownloads. . But they need But they need to be to be considered considered legallegal for for thisthisto make to make sense sense (!)(!)•• Overall Overall music consumption will go up music consumption will go up and and generategeneratemore more value value for for the music industry the music industry as a as a wholewhole..•• The The CD is CD is valued valued less in a world less in a world of accessof access..•• The future of music consumption The future of music consumption is is about providingabout providingaccess access to to content instead of selling unitscontent instead of selling units..•• Streaming Streaming services services need need to have to have everything availableeverything availablein order to be in order to be attractiveattractive..

Changes Changes inin music consumption music consumption and and consumer behaviorconsumer behavior

How does music streaming How does music streaming services services affect affect online online music consumption habits music consumption habits andandhow can we expect such how can we expect such services to services to affect consumer behavior affect consumer behavior in in DenmarkDenmark??

ConclusionConclusion onon::

Some thoughts on challengesSome thoughts on challenges......

Data Data traffictraffic

Unlimited data plans necessary when wanting to be spontaneous:• When do you listen to music on mobile devices?

• Where do you listen to music on mobile devices?

• If you have an unlimited data plan, what if you are on vacation in another country?

Everything availableEverything available

Network Network effectseffects

WhereWhere’’s the long tail s the long tail in in streaming streaming services?services?

The long streamingtale:

• People want access to the entire tail

• But do mainly listen to the head

• Or?

...and ...and profitability profitability is ais achallenge challenge in in everyeverybusiness business model model for for thetheentire value chainentire value chain..((even though even though I I argue there might argue there might bebemoney money in in streaming streaming services, it isservices, it isimportant important to understand to understand that that it isit isextremely extremely hard to hard to conclude onconclude onanything regarding future profitsanything regarding future profits))

DiscussionDiscussion!!