CHAPTER 1 INTRODUCTION

1.1 Research Object Overview 1.1.1 JOOX

Figure 1.1 JOOX Music Logo Source: http://jooxmusic.com/

JOOX (derived from the word "jukebox") is a legal streaming music service over the Internet with a personal touch, which was launched by Holdings Ltd from Shenzhen, China, which is the company behind instant messaging WeChat. Available in the form of a mobile app and the website, users can listen to more than two million songs and playlists local and international options for free, and download them to listen offline. JOOX is a new-fashioned app that provides free music services. People can download it for free on App Store. On JOOX, people can listen to any radio on demand, search top charts quickly, shuffle any recommended songs, add favorite songs, and enjoy other stellar services (JOOX, 2015). According to Kompas.com, through this application, users could search for the desired song by title, singer, to genre. The advantages of this application, all the music in the library have been licensed. Therefore, users could listen to music legally. For karaoke or sing-along fans, lyric's feature on every song will be a fun singing companion. Collection view or library could be customized with various colours or graphics that could be selected from Theme Gallery. Most of these

1 features are available for free. Even so, there are some songs that could not be enjoyed or played. To be able to listen to certain music, users are required to subscribe or become VIP in this service. There are several benefits to be gained when subscribing, like enjoying all the music according to JOOX's claim, there are three million songs in the library, listening to music offline, better sound quality, and no ads. The paid features of JOOX VIP are for true music lovers where JOOX users can enjoy extra services like Play On-demand, download songs to listen offline, best streaming quality, unlimited songs and free ads. JOOX VIP also provides Auto-Download feature, where JOOX will automatically download music added to the playlist automatically when connected Wi-Fi connection. And the last is the advantage of JOOX is presenting local music choices directly and thoroughly by the curator of JOOX based on the observation of the latest trends. Although it offers a lot of international hits, but JOOX still wants to build connections and local community, wrongly by prioritizing local songs to keep the air in the middle of the competition of international songs.

1.1.2

Figure 1.2 Spotify Logo Source: www.spotify.com Spotify is a digital music service that gives users access to millions of songs, podcasts and videos from artists all over the world. Spotify is immediately appealing because users could access content for free by simply signing up using

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an email address or by connecting with Facebook. Users could download the songs with Spotify premium, users could set the music to be available offline but it is not the same as downloading music in the traditional sense. The idea of Spotify's offline mode is to allow the users to have access to user‘s favorite music when users are trying to save mobile data or travelling somewhere where access to the internet might not be easy (Willings, 2018).

Spotify was launched in 2008 and has completely changed the way people listen to music ever since. By allowing users to play music directly from the cloud — rather than by downloading it first — Spotify became wildly popular, and as a start-up gave entrenched music industry players like Apple‘s iTunes a run for its money. Part of the allure for Spotify‘s users is that the service currently boasts more than 30 million tracks, and saves for some high-profile holdouts like The Beatles, it has pretty much every song users should ever want to listen to. Another attractive feature is that people could use Spotify for free, though that experience is interrupted by ads, does not have high-definition quality, and mobile phone users can‘t just play any song they want (Pullen, 2015).

1.2 Research Background

Nowadays, every single person in already used internet for communication basis. Since the Indonesian government developed the Internet infrastructure in the 1980s, the number of internet users in Indonesia continues to increase. According to APJII (Asosiasi Penyelenggara Jasa Internet Indonesia), the total population was 256,2 million until the year 2016 user penetration the internet reached 51,8% or 132,7 million consist of 52,2% man and 47,5% woman. The differences between 2014 to 2016 are quite high. APJII recorded that in 2014 Indonesia internet penetration is 34.9% or 88,1 million. Increasing in the internet shows that it‘s connected the world than ever before.

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Internet Users in Indonesia 2016

123,5 Million 132,7 Million 48.2% 51.8% 52,2% Man

47,5% Woman

Figure 1.3 Internet Users in Indonesia 2016 Source: Asosiasi Penyelenggara Jasa Internet Indonesia 2016.

The high number of internet users in Indonesia impacts the behaviour of Indonesia‘s people. There are several activities of people that change becomes online. One of the several activities is listening to the online music. Previously, people used compact disc and cassette to listen to the music. Before digital technology penetrated the world of discussing, people are still using radio devices and CDs to enjoy the music. Unlike today, people can easily enjoy music anywhere and anytime without having to carry radio or CDs. By incessant technological advancements, users now can easily listen to music by simply installing the applications available on the PlayStore service. It is proven by the survey result conducted by APJII (2016), Asosiasi Penyelenggara Jasa Internet Indonesia (APJII), the users that use the internet for listen to the online music streaming is 35,5% or 46,9 million users in Indonesia, this number is quite high for the internet users that use the music streaming. Indonesia's population of 250 million is a big market. Indonesian smartphone users are also growing rapidly. Digital marketing research institute Emarketer estimates that by 2018 the number of active smartphone users in Indonesia is more than 100 million people. With that amount, Indonesia will be

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the country with the fourth largest smartphone active users in the world after China, India, and America. (Kominfo 2015). The internet users is dominating by the Android users, and its affect the uses of music streaming application in android itself.

Figure 1.4 Market share of mobile OS in Indonesia from 2012 to 2017 Source: //www.statista.com/ The statistic shows the market share of mobile operating systems in Indonesia from January 2012 to December 2017. In December 2017, Android held a share of 88.37% of the mobile operating system market in Indonesia. It was estimated that by 2017 around 173 million people would own a mobile phone in Indonesia, of which around 43% would use a smartphone. The Android operating system was Indonesia's most widely-used operating system in 2017. At the beginning of the year it had almost 80% of the market share. Mobile phone users in Indonesia are increasingly using their devices to browse the internet and an estimated 28.78% of users accessed the internet from their mobile phone in 2017. (Statista 2017). Meanwhile, the Android operating system in general increasingly dominate the smartphone market in the world. Based on data from Strategy

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Analytics, at the end of the third quarter of 2016, there were 328.6 million Android devices shipped to the market. It grew by 10.3 per cent if compared to the same period in 2015. With the shipment of such devices, Android now has a market share of 87.5%, growing from its achievement in the third quarter of 2015 which was only 84.1%. In second place, there is an iOS-based device from Apple which has a market share of 12.1% with s5hipments of 45.5 million units. The achievement decreased from the same period in 2015 where at that time there were 48 million units shipped with a market share of 13.6%. Other operating system-based devices have a very significant decline. Due to the difficulty of competing with Android and iOS dominance, in the third quarter of 2016, there were only 1.3 million units based on other operating systems (including BlackBerry, Windows Phone, and Tizen) delivered over the period. It declined by 84.1% compared to the previous year. Neil Mawston (Executive Director, Strategy Analytics) said that Android continues to dominate the smartphone market in the third quarter of 2016. According to Mawson, "Android growth results in every platform of its competitors. Apple iOS was overtaken by Android and its market share declined to 12% in the third quarter of 2016 due to lacklustre performance in China and Africa. BlackBerry and Microsoft Windows Phone disappeared due to a change of strategy, while Tizen and some other platforms are weakening due to the limited product portfolio and the lack of developer support‖. (TeknoRus, 2017). Nowadays, listening to the music is become a trend in Indonesia. People always listen to the music through online music streaming. According to Daily Social id, almost 90% of respondents listen to streaming music regularly within the last six months. And of those regular listeners, most 51.05% are listening to between 1 to 14 hours of streaming per week. Therefore, streaming music has gone main-stream in Indonesia. (Zebua, 2018).

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Figure 1.5 Music Streaming Habits Source: DailySocialid Indonesia is one of the countries with huge growth potential of streaming music, Benny Ho as a Director of Business Development of Tencent as a Senior Director of Business Develop JOOX revealed that after JOOX taking part in Indonesia for a year, JOOX has recorded 98.4% of users streaming music from their mobile phone Joox. Where it turns out 78% of mobile users come from the Android platform, while the remaining iOS users. In addition, the audience of these applications is said to Benny Ho, has touched the market of young and urban. The largest position of 48% is dominated by users in the age range between the ages of 18-24 years old. Meanwhile, in gender he said, the percentage of 53% of Joox users are women. Meanwhile, based on demographics, 55% of users are located in Greater Jakarta area, followed later from East Java, Java, Bali, and also North Sumatra. (Muthalib, 2016). Indonesia is one of 60 countries visited by Spotify. Total active users Spotify recorded reached 100 million. 50 million of whom are paid users. Since its presence to Indonesia at least 11 billion minutes of songs and music played. Also nearly four billion songs and music played since the launch. (Alpito, 2017). The percentage of respondents who subscribe to paid music streaming is 51.86%, so Indonesian consumers are definitely at least beginning to pay for music streaming services. The two top-of-mind paid music streaming services in Indonesia, based on our survey, are JOOX 70.37% and Spotify 47.70%. (Zebua, 2018).

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Many streaming service providers are starting to provide its services in Indonesia such as MelOn, , and Sky Music. The four service providers are already emerging first but have not grabbed the attention of the people of Indonesia. The lack of promotion, the difficulty of paying and the exclusivity of the service providers make these four names still difficult to compete in the Indonesian market even more so with the emergence of two newcomers from streaming service providers who directly steal the public's attention, they are JOOX and Spotify. Both of these streaming services compete to be number one in the streaming music streaming service provider in Indonesia. JOOX was brought to Indonesia for the cooperation of Tencent Mobile and MNC Group while Spotify was brought to Indonesia as part of Spotify Global strategy to expand their worldwide expansion. Indonesia is one of 60 countries visited by Spotify. Total active users Spotify recorded reached 100 million. 50 million of whom are paid users. JOOX is popular thanks to their all-out promotions in various media ranging from TV commercials to newspaper ads and popular Spotify thanks to their worldwide name for streaming music. (Suryanda, 2016). Moreover, based on the preliminary data gathering that researcher got, most of the respondens prefer JOOX and Spotify. Based on the explanation above, the author would like to conduct a research which is entitled ―Analyzing Music Streaming Application Adoption in Indonesia Using a Unified Theory of Acceptance and Use of Technology 2: A Case Study of Premium JOOX and Spotify in Indonesia.‖

1.3 Problem Statements

The number of internet users in Indonesia is increasing. For 2014, the number of internet users in Indonesia reached 88.1 million users. In 2015 continue to increase up to 93.4 million Internet users, and in 2016 again increased to 100.1 million Internet users. Internet users in Indonesia grew 51% within a year. This figure is the largest in the world, even far exceeds the global average growth of

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only 10%. The Android operating system in general increasingly dominate the smartphone market include Indonesia. Nowadays, JOOX and Spotify become a huge music streaming application in Indonesia. People in Indonesia recently using JOOX and Spotify to listen to the music through their smartphone as one of the mobile apps. Music streaming application is one of the choices in getting an entertainment to listen the music. The price where its relatively cheaper and simpler when the user use the premium or VIP service in JOOX or Spotify rather than they have buy a music disc or download the music from a legal web music developer. The application of music streaming is increasingly competing in improving the quality of the service to the customers. Therefore, customer‘s preference for services in music streaming as a mobile application is important to understand. From the search of some previous studies related to customer‘s behaviour intention, the author want to know which factor that have a significant influence.

1.4 Research Questions

According to research background and problem statement that already explained before, so the author has a research questions there are: 1. How does the consumer‘s assessment towards the factors on using premium service of music streaming application adoption in android mobile phone in Indonesia? 2. How does the Behaviour Intention of consumers towards premium service of music streaming application adoption in android mobile phone in Indonesia? 3. Based on the UTAUT2 Model, what are the factors influencing consumers Behaviour intention in the context of premium service of music streaming application adoption in android mobile phone in Indonesia? 4. Do age and gender differences affect the influence of the UTAUT2 Model factors towards Behaviour intention of consumers in the context of premium service of music streaming application adoption in android mobile phone in Indonesia?

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5. Can this proposed UTAUT2 Model be used for predicting the Behaviour intention of premium service of premium service of music streaming application adoption in android mobile phone in Indonesia?

1.5 Research Objectives

1. To analyse consumer‘s assessment of factors based on the UTAUT2 Model (Performance Expectancy, Effort Expectancy, Facilitating Condition, Social Influence, Hedonic Motivation, Price Value, Habit, Behavioural Intention and Use Behaviour) in the context of premium service of music streaming application adoption in android mobile phone in Indonesia. 2. To analyse the Behavioural Intention of consumers towards premium service of music streaming application adoption in android mobile phone in Indonesia. 3. To test the factors based on the UTAUT2 Model that influence the consumer‘s Behavioural Intention in the context of premium service of music streaming application adoption in android mobile phone in Indonesia. 4. To test if age and gender differences affect the influence of the UTAUT2 Model factors towards Behaviour Intention of consumers in the context of premium service of music streaming application adoption in android mobile phone in Indonesia. 5. To test whether this proposed UTAUT2 Model can be used for predicting the Behaviour Intention of premium service of music streaming application adoption in android mobile phone in Indonesia.

1.6 Significance of the Study

The benefits of this research are divided into two parts namely the benefits for academic and business aspect.

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1.6.1 Academic Aspect This research is hopefully beneficial to understand how far the influence of UTAUT 2 factors towards premium service of music streaming application adoption in android mobile phone in Indonesia. The result of this research is also expected to fulfil marketing literature and supported previous research. 1.6.2 Business Aspect This research is hopefully could be used to understand consumers‘ preferences towards premium service of music streaming application adoption in android mobile phone in Indonesia which could be beneficial for the companies to understand the factors that strengthen the service. The results of this research are also expected to understand the consumers‘ behaviour intention in decision making thus could improve the service to reach consumers‘ expectation.

1.7 Research Scope

1.7.1 Location and Object of Study

The location of the object study is conducted in Indonesia where the music streaming application such as JOOX and Spotify services available. The location of the study is categorized based on the five area of APJII research; Sumatera, Java, Sulawesi, Kalimantan, Bali and Nusa Tenggara Barat. The objects of study are JOOX and Spotify users who use VIP and Premium in JOOX or Spotify and in the age of 15-60 years old.

1.7.2 Time and Period

The period of this study starts from January 2018 until May 2018.

1.8 Systematic of Writing

CHAPTER I : INTRODUCTION

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This chapter briefly shows the research object overview, research background, problem statement, research question, research objectives, and research writing systematic. CHAPTER II : LITERATURE REVIEW This part tells about theories, previous researches, framework, hypotheses, and scope of the research. CHAPTER III : RESEARCH METHODOLOGY This chapter explains the research type, operational variables, research steps, population and sample, data collection, validity and reliability test, and data analysis method. CHAPTER IV: RESULTS AND DISCUSSION This part consists of chronological and systematical result of the research based on the problem statement and objectives of the research. CHAPTER V : CLOSING This last part of the research contains conclusion, research limitations, and suggestions of the research.

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