Feeds

Home streaming is 'killing music'

So why are big labels so keen on it?

Choosing a cloud hosting partner with confidence

Two weeks ago a US market research company caused a panic in the music business when it reported sales of MP3s had declined. DRM has all but disappeared from digital music, while music catalogs and retailer choice have grown... and yet the volume of digital song sales fell. Ironically, it's the major labels' darling Spotify that's bearing the sharp end of the backlash.

Two thirds of people don't download unlicensed music at all, it's a minority pursuit. But that "honest" mid-market is not only losing the habit of buying CDs, it hasn't acquired the habit of buying digital songs either. NPD found that between 2007 and 2009, about 24 million Americans stopped paying for music in any form.

The number paying for digital song downloads fell year on year in 2009, the analysts estimate, by 600,000 to 34.6 million. None of this is particularly surprising - and gives impetus to the call that the music business start treating the public as customers again.

But what really put the cat amongst the pigeons was a comparison between free streaming services such as Spotify and on-demand radio services, such as Pandora. Spotify is the major labels' darling: they invested in it, hold potentially lucrative shareholdings, and gave it preferential royalty rates to get it off the ground. Yet when people joined a streaming service it led to a 13 per cent decrease in paid downloads. Interestingly, NPD found that paid downloads by Pandora listeners increased 41 per cent. Why the difference?

"More listening just means more listening and tends to lead to less purchasing," reckoned NPD's Ross Crupnick.

Spotify wasn't mentioned by name by Crupnick, it hasn't yet launched in the US, and NPD only looked at US consumers and services. It should also be noted that Spotify has a "paid" option, as well as a link to purchase downloads. Yet, as we revealed last year, the conversion rate from free to paid was a third of what Spotify was boasting.

One major label refusenik is showbiz veteran Ed Bronfman, who runs Warner Music: he's wary of cannibalisation and suspicious of rival Universal constantly talking up its investment in Spotify. NPD's research has given him the ammunition he's been looking for.

The argument for free streaming services is that they bring people in from pirate territory, a more subtle form of "behaviour change" than hitting them over the head with a hammer. This is the case put by We7, which targets a young demographic. But for hardcore music fans, who were pretty happy buying CDs in big numbers, Spotify gives them every justification for spending money on something other than music. Maybe the roof needs fixing. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
Microsoft EU warns: If you have ties to the US, Feds can get your data
European corps can't afford to get complacent while American Big Biz battles Uncle Sam
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.