Findings:
Ad-supported music distribution online is a viable business model, but not all service are turning a profit.
Many new business have been launched in the past 3 years.
Consumers are generally willing to accept advertising, if the service is free. Advertising online is much less frequent than traditional radio.
Survey results:
Sample size was 66 college students.
68% have paid to download, 32% have never paid. This is in line with IPSOS market breakdown of the roughly 30-35% who are totally unwilling to pay for downloads.
About half of respondents admit to downloading music illegally in the past month, only 12% say they have never done it.
Nearly 2/3 of respondents have used Myspace Music and Pandora. Less than 10% of respondents have never used streaming music.
To the question “Does advertising discourage you from using free music websites?” 82 percent said no.
78% of people choose a playlist based on genre or artist. We expected a greater emphasis on personalization and sharing, but less than 10% have listened to a station that was created by another user have listened to a station that was created by another user.
62% say that the ability to share their playlist is not at all important.
Most Satisfying:
Free: 24
Finding new artists 6
Accessible anywhere / immediate 4
Legal 3
Don’t have to select playlist 1
Nothing 2
Least Satisfying
Ads/interruptions* 26
Lack of selection 6
Bandwidth 4
Can’t download 4
Giving in to the man 2
Sound quality 2
*Different justifications for disliking advertising:
Intrusive/ Pop-ups
Takes up bandwidth
Cannot be skipped
Other Services identified by respondents:
Imeem.com, playlist.com, newgrounds.com, cdbaby.com, jango.com, Grooveshark, DigitallyImported, StreamingSoundtracks, Musicovery, rhapsodym
Research question:
For consumers unwilling to pay for music, is the advertisement-supported model of digital music distribution satisfying enough to stop illegal file-sharing?
Answer:
Probably not for most. 45% of respondents admit that they’ve still done it within the past month.
Although about 20% of respondents have not downloaded illegally, many people are still unsatisfied.
85% say that the advertisements themselves are not sufficient to discourage use, but they still have problems with intrusive advertising.
Keeping in mind that not all of these serves will prove to be sustainable business models, the sites that are most likely to succeed in the long term will be the ones that can provide advertising platforms that don’t bother users.
