Though nearly one-third of digital music downloaders and streamers in the US currently acquire songs illegally using peer-to-peer networks, new ad-supported models for music delivery are gaining momentum as an alternative and have helped to cut down on illegitimate file sharing, according to a study by Ipsos.
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The annual “Digital Music Discovery & Purchase Process” study also found ad-supported models - such as the increasingly popular MySpace Music - are more palatable than file sharing to those who don’t want to pay. Such services are expected to play an increasingly important role as a legitimate channel for music delivery, Ipsos said.
Nielsen web statistics back up this claim. Traffic to MySpace Music has grown 1017% since the site’s inception last fall, the web analytics firm said.
Findings from Ipsos also point to the fact that ad-supported models should not be seen as head-to-head rivals to fee-based services because a significant portion of today’s illegal downloaders would not switch to fee-based services and would be lost to the legitimate music market if file sharing went away.
Fee-Based Market Maturing
The study also indicated that the fee-based market is maturing in terms of who is willing to pay to download and stream. The goal now will be to expand recurring revenue streams and to attempt to increase the volume of content that is purchased among those already making digital music purchases, Ipsos noted.
“If it were somehow possible to eliminate peer-to-peer services altogether, the fee-based market would grow slightly, but the real winners would be other free, albeit legitimate, ad-supported services,” said Karl Joyce, lead author of the study.
Additional survey findings:
- Currently, ad-supported and fee-based approaches to music currently have roughly equal appeal.
- If forced to choose something other than ad-supported, more than one-third of file sharers or inactive
users would enter the fee-based market. The rest are unwilling to pay and either take up file sharing or become inactive.
- If forced to choose something other than file sharing, about two-thirds of those currently involved in it would enter the legitimate market - almost entirely on the free ad-supported side. Only about a third of current filesharers are truly lost causes from a music industry perspective.
A key evolution for fee-based distributors will be how they choose to cooperate with and, ideally, leverage ad-supported models to try and encourage and reinforce paid downloading and subscriptions among those consumers who are not fee-averse, the report said.
Ipsos believes that free music models will continue to play an important part in digital music in the foreseeable future and that the industry will play a key role in determining the degree of legitimacy that free streaming - and possibly even downloading - models attain.
About the survey: The survey is part of TEMPO, an Ipsos bi-annual study of digital music behaviors. Survey data was collected between December 12-23, 2008, via a web-based representative sample of 1,392 US downloaders and streamers ages 12+. Data for this TEMPO Purchase Process study were collected using conjoint analysis, which, according to Ipsos, resembles real-world shopping behavior, where services are chosen based on their overall composition rather than on individual components.