MUSIC DISCOVERY AND CONSUMPTION IN A RAPIDLY CHANGING INDUSTRY
A THESIS
Presented to
The Faculty of the Department of Economics and Business
The Colorado College
In Partial Fulfillment of the Requirements for the Degree
Bachelor of Arts
By
Morgan Joel
May 2014
MUSIC DISCOVERY AND CONSUMPTION IN A RAPIDLY CHANGING INDUSTRY
Morgan Joel
May 2014
Economics
Abstract
The music industry is one that has been declining in overall sales for more than a decade. In recent years, advances in technology have altered many of the discovery and delivery platforms for music. The purpose of the study was to examine the different variables that affect the ways in which consumers use the internet to find and consume their music. The research uncovered a distinct difference in discovery and listening behavior between younger and older demographic groups. Digital music software, music blogs and new streaming services have become widely used among younger generations. However, the radio has been identified as the most popular method for both discovery and listening to music among older adults.
KEYWORDS: (Music Industry, Listening, Discovery, Internet Distribution, Technology Advances)
TABLE OF CONTENTS
1 INTRODUCTION...... 1
2 HISTORY OF MUSIC DISCOVERY AND CONSUMPTION...... 6
3 KNOWLEDGE DISCOVERY AND CONSUMPTION BEHAVIOR...... 12
4 MUSIC DISCOVERY AND LISTENING PLATFORMS...... 17 4.1 FM Radio...... 17 4.2 Music Blogs...... 18 4.3 iTunes...... 20 4.4 Pandora...... 21 4.5 Spotify...... 22 4.6 YouTube...... 23
5 METHODS...... 25
6 RESULTS...... 27 6.1 Respondents...... 27 6.2 Music Discovery...... 27 6.3 Music Listening...... 30
7 CONCLUSION...... 34
APPENDIX I 39
REFERENCES 44
LIST OF FIGURES
6.1 Music Discovery Techniques...... 28
6.2 Most Frequently Search for Genre...... 29
6.3 Music Discovery Frequency...... 30
6.4 Favorite Genre of Music...... 31
6.5 Music Listening Methods...... 32
6.6 Setting of Music Listening...... 33
1. INTRODUCTION
The music industry is one that has been radically changed by the internet in recent years.
In the past ten years, CDs have become obsolete and the main method of music distribution is in the form of digitized copies. Live music has grown highly significant and is viewed as a more authentic version of the artist’s music. The iTunes Music Store has grown rapidly since appearing in 2003 and now accounts for over a third of the United States record sales
(Waldfogel, 2010). While overall music sales have decreased over the past ten years, digital music revenues have skyrocketed by over one-thousand percent (Aguiar & Martens, 2013). The purpose of the study was to examine the different factors that affect the ways in which consumers use the internet to find and consume their music.
Due to the decrease in total record sales, the overall music revenue stream is falling for the artist. However, a growing number of artists are gaining access to a share of the music industry's revenue. Until about ten years ago, there was a distinct split between artists signed to major record labels and ones that were independent, or unsigned. The record label artists had access to recording studios, tour support and corporate promotion, while independent artists were largely shut out of commercial radio/broadcast media due to limited promotion resources
(Thompson & Cook).
With the expansion of the music industry on the internet, many promotion and distribution avenues are now more accessible to all artists. “The music industry has adapted to
1 the internet world, learned how to meet the needs of consumers and monetized the digital marketplace” (IFPI, 2013). Music has not only adapted to the internet, it is at the very heart of its development. Music is helping drive technology, far beyond the limits of the recorded music market.
Independent artists can now sell their music on the same digital platforms as any major label artist, for a fraction of the cost. There has been an explosion of multimedia outlets and social networking services with negligible barriers to entry for the artists: satellite radio, specialized webcast stations, music discovery sites like Pandora and streaming services like
Spotify (Thompson & Cook).
Not only has technology improved go-to-market strategies for music producers, but it has also played an enormous role in facilitating the consumption side of the industry. In the past ten years, the technology that facilitates online sampling of digital audio and other digital goods has been revolutionized. Various software packages have made it increasingly easier for consumers to search, download, and share music files. Music is an information good, specifically, an experience good whose true value is revealed to a consumer only after it has been consumed.
Music needs relatively little time and skill to consume. It also has the characteristics of a quasi‐public good; once the good is provided to some consumers, it is fairly difficult to prevent other consumers from consuming it (Gopal, Bhattacharjee & Sanders, 2006).
According to a study by Peitz & Waelbroek (2005): "Downloading digital products for free may harm creators and intermediaries because consumers may no longer buy the version for sale." However, they illustrate in their paper that the negative effects of pirating music may be overcompensated by the positive effects due to sampling. Consumers are willing to pay more because the match between product characteristics and buyers' tastes is improved. Their
2 argument is that music downloaders use the downloaded files for sampling in order to make educated purchasing decisions. Sampling allows for consumers to find the products that are of actual value to them, therefore, the music industry may actually benefit from file-sharing networks (Peitz & Waelbroek).
Emerging new business models are not only adopting different pricing structures but they are beginning to take into account other assets than just music. The music marketplace is beginning to shift from commodity market to a service one (Duchêne & Waelbroeck, 2006).
This is illustrated by websites like SoundCloud, which offer a wide variety of services ranging from free music streaming to specific tailored options for big-name artists. Scientists in France have also proposed a new method of music classification that is based on data mining techniques.
Their method allows for the rapid extraction of similarities between musical titles or artists
(Pachet , Westermann & Laigre, 2001). This classification could become extremely beneficial to the online music stores and music streaming sites, which are constantly inundated with new music. It is virtually impossible to code all the genre data accurately and this method could be an effective solution.
While harsh critics of music sampling and sharing still remain, evidence points to the fact that digital technology has unalterably changed the music industry. If the music industry is going to prosper, it needs to embrace this transition (Gorry, 2005). "The definition of content has changed. We are moving from a packaged to a nonpackaged world. It is not about discs in plastic covered cases or pages of print anymore- the consumer can now pull content in the format and bite size he or she wants" (Levy, 2006). The music industry needs to welcome these technological changes and work to formulate an effective solution that works well for both the consumers and producers of music (Garrity, 2003).
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Some physiologists believe that music preferences are decided by one of two factors. One is that song preferences are completely random; the other, that our musical choices reflect important aspects of our personality (Chamorro-Premuzic, 2011). While the aim of this study was not to discover the factors that determine a person's choice in music type, it is a topic that is related to the theme of consumer preference. The tools that consumers prefer to use for music discovery and consumption need to be examined in further light, for the music industry to better tailor its products and services to consumers. Different individuals interact with the music industry in many different ways. People have many unique methods for how they find and then consume their music. By studying consumer preferences for music discovery and consumption, record labels will not only be able to target customers more effectively, but it may shed light for new business opportunities within the music industry.
A web-based survey, using Qualtrics, was the method used for data collection in the study. The method for reaching music consumers was Facebook and email marketing because the web address was easily pasted into the body of the message. The aim was to capture a large sample size with varying characteristics.
The specific data that was analyzed encompasses much of how users interact with the industry:
Music discovery
o Discovery Platform
o Setting of discovery
o Most frequently searched for genre
o Frequency of music discovery
Music listening/ consumption
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o Consumption Platform
o Music genre preferences
o Setting of consumption
o Frequency of music consumption
Do they share music with friends
Do they enjoy the same music as their friends
This data, in addition to the demographics, will help shed light on what specific variables affect how individuals interact with the current music industry.
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2. HISTORY OF MUSIC DISCOVERY AND CONSUMPTION
Music discovery and listening have been around for some time. Archeologists have verified that music began as long as 36,000 years ago, with discoveries that provide evidence of man singing well before then. Music was seen as a unique form of storytelling, where stories could be passed down through different generations and educational messages sung to children.
It became part of numerous cultures, allowing for communication between people that may otherwise not have been able to correspond. However, the first true movement in the mass music consumption occurred during the 4th century with the rise of European Christianity (Ogden,
Ogden & Long, 2011). The rise of Christianity facilitated the development of written music, which eventually led to mass non-religious music creation and consumption.
When music was first introduced into the Christian faith, it was solely oral. Musicians performed out of their Christian duty, they received little to no pay but performed because their strong devotion to God. By the early 7th century, a new form of plainchant was created under the authority of Pope Gregory (Ogden, Ogden & Long, 2011). A plainchant is a body of songs or chants that are used in the liturgies of the Western Church. This new form of plainchant was called a Gregorian Chant. The Gregorian Chant was a musical performance made up of chants, and was used in the liturgical services of the Roman Catholic Church. The liturgical tradition which the Church created was a vocal, monophonic music composed in Latin using sacred texts from the Ancient and New Testaments (Gregorian Chant, 2013).
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At this time, experimentation with sacred music was under the strict direction of the
Church. The rules that were developed by the Church applied to all development and use of music. The church controlled exactly what was played and how it was played. There was no consideration for the listener of the music; consumer preferences did not matter. Because these
Gregorian Chants were a widely accepted standard media during mass, it was essential that they were written down in a form that could be passed out to local churches. The end result was a written musical notation system that made music more widely available.
Almost ten centuries later, during Protestant movement of the 16th century, music's next major impact on society took place. People began to give up the strict rules that were placed on the music of the Roman Catholic Church. Secular music grew and became a focal point of society during the Renaissance period. Non-religious music became popular with the masses.
This music was especially enjoyed by the upper-class, who had money to spend on leisure activities.
In 1448, the movable printing press was invented by Johann Gutenberg. This printing press facilitated access to printable knowledge which had not been previously available to the masses (Inventor of the Week: Johann Gutenberg, 2004). The printing press specifically aided in the mass distribution of sheet music. It allowed sheet music to be printed and sold to the masses.
The printing press also supported the mass production of books. Many of these books focused on social behavior, specifically the positive benefits of being musically involved (Ogden, Ogden &
Long, 2011). These books increased the demand for new music and musicians which helped foster growth in this emerging industry.
By the mid-17th century, it was estimated that there were approximately 1,500 independent music artists living in London. These artists had to work to earn money and were
7 mostly employed by royal and upper-class parties. At this time, there was a strong link between the musician and the audience. Since the artists were often employed by their audiences, they had to tailor their music to their direct needs of their employers. However, with the increasingly high demand for music, musicians began veering away from this fixed revenue model. Artists no longer had to write and play music exclusively to please their employers.
A concert society began to develop, it allowed its members the ability to attend shows by purchasing tickets through subscriptions. Some historians say this is where the subscription service business model in the music industry was first developed. This system of distribution and revenue generation sustained the industry, while financing the operas and symphony orchestras
(Ogden, Ogden & Long, 2011). The emergence of a concert society was one that would help drive and sustain the music industry for the next couple centuries.
By the mid-19th century, the number of musicians and music groups in western Europe was growing rapidly. Music distribution through sheet music was continuing to grow, which helped increase the demand for pianos. By the late-19th century, it was not uncommon to see a piano in an upper-middle class household. In 1877, Thomas Edison introduced his phonograph
(Edison Film and Sound: The History of the Edison Cylinder Phonograph, 1999). The phonograph played rotating discs, engraved with waveforms. As the cylinder or disc rotated in the phonograph, a stylus or needle traced the waveforms and vibrated inside the phonograph to reproduce the recorded sound waves.
Two decades later Edison released an improved version of the phonograph called the
Nickelodeon. The Nickelodeon would play two minutes of music for a nickel. This device became the first music entertainment system and began to replace sheet music as a primary form of music distribution and marketing. People of all social classes could listen and enjoy music that
8 used to only be available to the upper-class. This was one of the first times that new music easily gained access to the public. This device facilitated the process of music discovery and allowed for the expansion of new artists into the growing industry. The phonograph was replaced by the gramophone in the early 20th century. The gramophone used flat discs that were smaller and produced higher quality music. The gramophone discs were also much harder to counterfeit than the phonograph's which benefited the artists and producers.
At the start of the 20th century, music had become a widely consumable product. By
World War I, the record player had become a household necessity. In 1914, over 27 million records were printed (DeGraaf, 1995). During the 1920s, the AM radio was released to the general public. The first radio network was formed in 1926 and named NBC. Stations quickly began selling their airtime which created a demand for on-air advertising. The radio also had an enormous negative impact on the sales of other types of musical entertainment. The sales of pianos and sheet music plummeted, while concert attendance hardly fared better.
These new distribution methods helped new music reach the masses. Music was no longer limited geographically. It could be consumed by anyone with access to a radio or record player. The radio's popularity continued to grow, even through the Great Depression, music became an emotional escape from the effects of the Depression.
With the invention of the record and record player, the chain of record production and distribution became highly elongated. The production began with the artist or songwriter. An artist's manager would then connect the artist with a producer. The songwriter's manager would usually connect the writer with a publisher who would copyright the material and create a demo prior to connecting the songwriter with a producer. The material would go through pre- production, then the record would be recorded. Then, the music would be prepared for a
9 commercial release during post-production. This began the chain of record distribution. Once the finished disks were produced by the record manufacturer, they were shipped to a distributor.
The records were then distributed to a retailer, where customers could purchase them (Ogden,
Ogden & Long, 2011). This extensive process of production and distribution was a system that helped the music industry flourish, it was one that employed people across all points of the chain.
However, this process was the one that was eventually crippled by the boom of the internet.
In the 1950s, the radio employed the "Top-40" format for featuring songs. The Top-40s relied heavily on the use of "singles." These singles were individual tracks that were currently the most popular songs of the time. While the radio was able to adopt the use of singles, individual consumers were still forced to purchase records. However, the idea of singles would stick around for the next few decades until they erupted again on the internet.
During the 1970s and 1980s, music marketers began attempting to understand what their consumers wanted before they developed a product or service. The music industry began focusing more heavily on the needs of the consumer. This forced record labels to think about the product they were releasing in much more detail than they had prior. This product analysis also created more stringent guidelines for signing artists to contracts.
In 1999, Shawn Fanning revolutionized the music industry with Napster. Napster allowed for free mp3 file-sharing over the internet. While Napster was eventually shut down due to its illegality, before its extinction 80 million users were estimated to have used its services (Green,
2002). While the success of Napster was short-lived, it pointed to the potential impact that the internet could have on the industry.
The record industry's problems were magnified on October 25, 2001 with the introduction of the iPod. The iPod allowed music consumers to listen to music whenever and
10 wherever they liked. Over the next decade, Apple continued to produce one innovative product after another. By 2010, Apple reportedly controlled over 70 percent of the .mp3 market in the
United States (Yoffie & Kim, 2010). Within the past few years, subscription music services have erupted in the online marketplace. In 2012 there were an estimated 20 million Spotify users, 13 billion hours of music streamed thru Pandora and 23.4 million Sirius XM subscribers. In 2012, alone, there was a forty percent increase in online music streaming revenues. Subscription services are appealing to both the listeners and the service provider. They supply users with large content libraries, while providing the service provider with a constant cash flow and benchmark for measuring growth (Warr & Goode, 2011).
Music began as a performing art but was revolutionized by various emerging distribution channels throughout history. Music consumption has drastically been altered with the boom of the internet. The price structure, distribution channels, listening methods and marketing techniques have all been drastically transformed.
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3. KNOWLEDGE DISCOVERY AND CONSUMPTION BEHAVIOR
The ways in which people discover things vary significantly from person to person. The method for which knowledge is structured and searched for is highly dependent on the social and collective experiences of the individual. The individual comprises a schema of categories or concepts which are used for information processing. According to Bruce (1999):
...theory building in information science has promoted the view that people need to create a mental representation of a system or service in order to effectively utilise it. This mental representation is a reflection of past experiences, knowledge structures, belief systems, expectations and so on. In other words, the person who is using a system or service like the Internet is seeking some context for identifying this perhaps- unfamiliar entity with something that is more commonplace or more easily assimilate with, existing cognitive structures.
There are two common conceptualizations of the Internet. One is of connectivity, structure and networking. Connectivity between information users and information resources is the primary objective (Bruce, 1999). As long as the Internet has connected users to the resources they are looking for, it has met and achieved its goal. The second conceptualization of the
Internet is being an information store. This suggests that users expect more of the internet than just connectivity. It assumes that the Internet will provide additional services and support to the user. Generally with this conceptualization of the internet, satisfaction rates are lower. The adoption of a specific mental representation for the Internet can have a significant impact on the satisfaction that a person will derive from using the network (Bruce, 1999).
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The digitization of information has distanced individuals from the physical or tangible anchors that were used for common information acquisition behaviors like choosing, browsing, searching, selecting, determining relevance and using."In this age of digital information environments, users are looking for reality anchors based on non-digital models" (Bruce, 1999).
When they search for information, they want to feel like they are engaging in traditional information search techniques, such as visiting a library. Instead of using a pencil and paper to help process thoughts, individuals now think directly onto a keyboard. This has greatly altered the systematic process for knowledge discovery (Bruce, 1999).
Music's role on society has always been highly significant throughout world history.
According to Merriam (1964):
The importance of music, as judged by the sheer ubiquity of its presence, is enormous, and when it is considered that music is used both as a summatory mark of many activities and as an integral part of many others which could not be properly executed, or executed at all, without music, its importance is substantially magnified. There is probably no other human cultural activity which is so all-pervasive and which reaches into, shapes, and often controls so much of human behavior.
Music always had a significant influence on society, however, music's impact on the general public has likely increased since the boom of the internet and rise of mp3 players. Music is everywhere you look and is more accessible than ever before. The rise of the internet and technology have greatly altered both music discovery and consumption.
According to a study done by Nielsen 360 Music report, music discovery is still dominated by the radio. It is estimated that forty-eight percent of people still most often discover music through listening to the radio (Nielsen Holdings, 2012). However, with the rise of technology and influence of social media, music discovery techniques are beginning to change.
Throughout history, consumers have always turned to their network of friends to find out which
13 product to purchase. Now with social media, consumers have access to communication with millions of other customers. "It's not just who you know. It's also who they know and what they know. Online social networks have the potential to connect you to a vast world of people and resources, and they've gone from fad to fact of business life" (Nielsen Holdings, 2012). Fifty-four percent of people are more likely to make a purchase based off a positive recommendation from a friend (Nielsen Holdings, 2012). Younger generations are shifting toward social media for discovering new music. YouTube has done an excellent job of bringing content and users together, on one social entertainment platform. Online social platforms have altered consumer buying behavior, content is no longer controlled by the record companies but by the audience of consumers.
Consumers like to help themselves, but also show off on the Internet. "People come to the web not just to find things, but to show off, to strut their stuff, and to interact with other interesting and bright people" (Seybold & Marshak, 1998). Consumers cannot only show off thru social media, but also shop with increased knowledge of products through online research.
Online marketplaces benefit both the consumers and retailers. Consumers are not restricted by time, distance or location, while retailers do not incur costs such as store staffing, maintenance and inventory. Retailers may also be able to carry items that originally would not be practical for traditional stores (Tabatabaei, 2009).
Shoppers are looking for hassle free, accurate transactions. They expect the proper display of relevant information and efficient download times for websites. Mass customization is a concept that has become widely accepted. Consumers can get whatever they want, whenever they want. The 24/7 availability of products and information related to those products has changed the consumer experience (Tabatabaei, 2009).
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Consumers are becoming more efficient and effective by shopping online because of ease of information accessibility online. Online browsers and shoppers display a higher level of price sensitivity than tradition in-store shopping. Many shoppers go online to research or preview the product before purchasing. Prices and features of products can easily be compared online to make an informed purchase decision (Tabatabaei, 2009).
A paper by two European professors analyzes the payment behavior of customers for online music. At the music label Magnatune, customers pay what they want for albums, as long as the payment is within a given price range ($5–$18). Magnatune's extensive pre-purchase listening access facilitates music discovery and gives consumers an informed buying decision, setting it apart from conventional online music stores. Based on the study, it was found that on average customers pay $8.20 for Magnatune albums. This is far more than the minimum of $5 and even higher than the recommended price of $8. While their conclusion seemed to point towards the assumption that Magnatune was employing an effective business model, their other results were fairly limited. They found that Magnatune's open contracts design could encourage people to make voluntary payments based on the appeal of the artist's work, however, it pointed towards the fact that consumer payment behavior related to music is somewhat random.
"People acquire and appreciate music mainly for reasons of enjoying playfulness, collecting music, killing time and relieving feelings and pressure, gaining recognition among and interacting with peers, ect" (Chen, Shang & Lin, 2009). Because of these varying consumption determinants, the right price for music is extremely difficult to determine. The utility of music varies from people to people. The value is personal and often is determined by the emotional or epistemic pay-off that is derived from the music (Chen, Shang & Lin, 2009). The payment behavior of music consumers has always been difficult to predict, however, it has grown even
15 more complex with the introduction of the internet. The determinants that affect the consumption and discovery behavior of music listeners needs to be studied in greater light.
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4. MUSIC DISCOVERY AND LISTENING PLATFORMS
Since the introduction of the internet, music technology has radically changed. There are an infinite number of ways in which an individual can find and consume their music. This section will discuss some of the various platforms in which music listeners can discover and listen to music.
4.1 FM Radio
FM radio is the most common form of music listening. FM radio is a broadcasting method developed by Edwin Howard Armstrong in 1933. It uses frequency modulation to provide a high-quality listening platform (The Lemelson-MIT Program, 2012). Frequency modulation is the encoding of information in a carrier wave by adjusting the frequency of the wave. FM radio stations are generally focused on a specific genre of music (i.e. rock, country, hip-hop, r&b, ect.) and often provide listening 24/7. While a radio station provides programming to attract its listeners, their profits come from selling advertising.
The station's programming usually cycles from the least attractive item, to most attractive, followed by commercials. The purpose of this plan is to build listener interest during the programming. Younger audiences are often targeted by advertisers because their consumer preferences can be altered more easily. Therefore, the most commercially successful stations
17 focus on younger generations. FM radio stations differ by location due to their limited frequency range.
Music listening with FM radio is fairly simple due to its easy access and wide availability. It is available in most motor vehicles. However, music discovery using FM radio can be difficult. Radio DJs often only state the name of the song once, making it difficult to remember the song name and artist. Also, most people listen to the radio in the car which makes writing down the name of the song a hassle while driving. In recent years, music discovery applications such as Shazam and Soundhound have gained popularity. However, while these greatly facilitate music discovery with the radio, they are still not perfect by any means. The applications require drivers to take out their phones while driving in order to identify a song in which they enjoy.
4.2 Music Blogs
"The world of music blogs is like a constantly expanding universe of words, sounds and opinions, but there are not many sites that stay relevant and engaging for long" (Pigeons, 2013).
There are thousands of music blogs littered across the internet. These range from
HotNewHipHop, a Hip-Hop blog that is focused on newly released Rap and R&B to
UltimateClassicRock, a blog focused on the era of Classic Rock and Roll to Stereogum, an Indie music blog. Music blogs come in all shapes and sizes and they can be created by virtually anyone who has a personal computer. They require little computer knowledge to create, just the ability to browse the internet and type. Therefore, the quality of the music, the blogger's knowledge and the legality of the music are all highly dependent on which blog is visited.
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The benefits of music blogs are that they allow easy and direct access to new music. The people operating the blogs are often obsessed with new music and spend their days combing the internet looking for new material to post. This new music can either be focused on a specific genre of music or a combination of many. Music listeners can find a music blog that fits every music taste imaginable. Music blogs are typically used for music discovery. They often provide streamable singles that can either be downloaded directly or provide website links for downloads. Users can scroll down pages and listen to full songs if they chose or snippets depending on their needs.
However, there are many downsides of music blogs. Due to the fact that there are so many scattered across the internet, it is generally fairly difficult to find one that perfectly fits an individual's preferences. A simple Google search will yield fairly strong results, however, many are hidden somewhat far down Google's results pages. Most often, music blogs are recommended by friends or people with similar tastes in music which can make them a sort of
"cult-like" following.
Due to the large catalog of music internet blogs, extensive time is required to sift through the content that is published. Some blogs are updated multiple times a day, while others post much more sporadically. Therefore, finding a reliable and consistent music blog can be a task within itself. However, once an individual finds the music that they are interested in via the blog, he/she must find a way to download or purchase the music. Often if the site posts download links for the songs, they are frequently illegal copies of the music. If the blogs do not have download links, additional time may be required to find digital copies of music that are available for download. Lastly, because most people with a computer can publish a music blog, the content
19 that is written on blogs can often be highly unreliable. Many bloggers have limited knowledge about the music or artists and often make up content to attract a larger audience.
That being said, music blogs provide a large amount of content with relatively easy access. The right ones are operated by people that are knowledgeable about the content and provide interesting commentaries about the music. Generally, the most daunting task is finding the right music blog that fits a person's music preferences. Once one is found, music enthusiasts often rely heavily on these blogs to facilitate their music discovery.
4.3 iTunes
Created by Apple Inc in 2003, iTunes is a media player, media library and mobile device management application. It is used to download, play and organize digital audio and video on computers running on both the OS X and Microsoft Windows operating systems. Users can download a wide variety of digital media using the iTunes Store. Individuals can purchase singles, albums, music videos, television shows, movies, audio books and podcasts using this digital marketplace. In recent years, iTunes has become a popular place for mobile application downloads. In total, customers have spent over $10 billion on the iTunes App Store (Miller,
2014).
iTunes allows easy and direct access to digital music. By 2010, the iTunes store was the largest music vendor in the world. The iTunes store benefits users who are looking to own and have unlimited access to basically any type of music. The store is easily browsable, categorized by genre and top rated music. It allows users access to 90 second samples of the songs before a user purchases the song. Once purchased and downloaded from iTunes, users can organize and make playlists with any song in their library. The songs are easily synced with Apple's mobile
20 devices allowing for listening on the go. The songs are also stored directly in .mp3 or .mp4 format on the individual's personal computer allowing for full ownership of the songs for personal use.
However, this unlimited and hassle-free access comes with a hefty price tag. While users can upload CDs from their personal collections, most downloadable singles cost $1.29 and older singles cost around $0.69. Albums generally range between $10 and $13. Therefore, a 5K song library could cost you up to $8,000. This is an extremely high price for a music library that contains a large majority of songs that are only listened to a handful of times. In addition, some music enthusiasts complain that iTunes' catalog of music is limited and out-of-date. Many blogs and subscription services are updated much more frequently than iTunes, leaving iTunes as a last resort for audiophiles.
4.4 Pandora
Pandora Internet Radio is a music streaming and automated music recommendation service that uses the Music Genome Project algorithm to tailor its music choices to the individual. Pandora was founded in 2000 and as of its IPO in 2011, its database included over
800,000 songs from 80,000 artists with 80 million registered users (Schonfeld, 2011). Pandora offers free-unlimited listening to its database of songs. After choosing an artist, song or genre, the music recommendation algorithm will base a playlist off of the original music choice.
Pandora allows users to skip, like and dislike certain tracks to help better tailor the music to their preferences. Pandora also provides small biographies on the artists and albums, supplying additional information for users that are interested. Registered users can bookmark songs which can then be sampled later or purchased directly from Amazon or iTunes. Individuals can also
21 publish or share songs that they enjoy to Facebook or Twitter. Pandora has mobile device applications and can also be installed in many cars (BMW, Buick, Chevy, Ford, ect.).
While Pandora is easy to use, it has some serious drawbacks. Pandora is only available in the United States, Australia and New Zealand. It also functions much like a normal radio. While songs can be skipped, they can only be skipped at certain rates. Pandora's licensing allows for six track advances per station per hour. The free version allows for 24 skips in a day, while the premium version allows slightly more. Users cannot choose songs that they would like to listen to on-demand, they are at the mercy of the algorithm. Also, if a person wants to re-listen to a song that they enjoyed, they must either buy the song from iTunes or find it somewhere else on the internet. Lastly, if a Pandora station is listened to for a long duration of time, it begins repeating the songs that were already played.
4.5 Spotify
Spotify is a music streaming service that offers Digital Rights Management (DRM) content from music labels. Spotify announced that it has approximately 24 million active users with over 6 million paying subscribers. It's digital audio database contains over 20 million songs, with 20,000 being added each day. It is also available in over 55 world-wide markets (Spotify,
2013).
Music can be browsed by artist, album, genre, playlist, or record label, as well as by direct searches. Listeners can share songs on social media, create playlists and save their favorites tracks for easy access. There are currently two types of Spotify accounts, free and premium. The free version allows you to listen to millions of songs with no-charge. This can be done on a computer, tablet or mobile device. The free version is made possible by
22 advertisements, so users must endure advertisements during their listening sessions. The premium account is $9.99/month plus tax. It gives listeners unlimited access to Spotify's music database. With Spotify Premium, the user listening experience is uninterrupted. There are no advertisements and tracks can be downloaded and listened to offline. The premium version provides the "highest quality audio" to its subscribers (Smith, 2013). It also links to Shazam, a music discovery application that recognizes previously unidentified songs for listeners using sound patterns and voice recognition. Some users complain that Spotify doesn’t have a full library of featured artists, such as The Beatles and Radiohead. However, for around $10/month
Spotify Premium provides music enthusiasts with one of the best deals in terms of music selection, availability, access, ease-of-use and price.
4.6 YouTube
YouTube is a video sharing website that was created by three PayPal employees in 2005 and sold to Google in 2006. The website uses HTML5 and Adobe Flash to host a wide variety of user-generated content. This content includes television clips, amateur video blogging and music videos. Site visitors can find virtually any type of video on YouTube. YouTube sees approximately one billion unique visitors each month, with over 6 billion hours of content watched. One-hundred hours of video are uploaded to YouTube each minute and according to
Nielsen, YouTube reaches more U.S. adults between ages 18-34 than any cable station (Nielsen
Holdings, 2012).
While music is not YouTube's primary focus, it has become a large hosting site for music videos and .mp3 tracks. According to Nielsen's 2012 Music 360 Report, approximately 65% of teens listen to music through YouTube (Nielsen Holdings, 2012). YouTube allows users to easily
23 search for songs based on title, artist or genre. It often hosts multiple versions of songs and it gives registered users the ability to comment on certain videos. It is a free service, therefore, listeners have to watch advertisements before they have access to the music.
However, there are numerous problems with YouTube as a music listening site. Due to the fact that YouTube is highly unregulated, users often have to sift through a great deal of content that is not genuine. Virtually anyone can post on YouTube, therefore, people make copies of songs which can often alter a track's quality and authenticity. Tracks are commonly sped up or slowed down which often only deceives YouTube users that have heard the originals.
Most songs are posted on YouTube as .mp3 with cover art as the display video. Videos are constantly being removed due to copyright infringement, which reduces the reliability of the site.
YouTube is a free and easy way to listen to music. Its simple user interface allows for straightforward access. However, due to its "free-for-all" publishing platform, individuals often must sift through a large amount of user-generated garbage in order to find the music that they set out to find. Users can also only listen to the music on YouTube while connected to the internet, unless it is illegally downloaded or purchased on a third party digital store. In essence,
YouTube could be a great place for a quick listen. However, it may not the best option for an audiophile or music enthusiast looking for high-quality and organized music.
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5. METHODS
A Qualtrics survey was the method used for data collection in the study. Qualtrics is a web-based tool for building surveys. It allows the survey designer to tailor a custom survey to the needs of their study. Once the survey is generated the creator receives a web address link, which can be used to market the survey to the target audience. The method that was used for reaching music consumers for data acquisition was Facebook and email marketing because the web address was easily pasted into the body of the message. A description of the study was also included in the advertising message.
The aim was to capture a large sample size with varying characteristics. The data sample attempted to encompass different demographic groups, ages, sex, major/ job and location of residence in order to better represent the music industry consumers as a population. The specific data that was analyzed contained much of how users interact with the industry including:
Music discovery (i.e. radio, music blogs, iTunes, Pandora, Spotify, movies, Shazam, ect.
o Setting of discovery (i.e. social setting with friends, concert, alone, ect.)
o Most frequently searched for genre (specific focus on new music)
o Frequency of music discovery
Music listening/ consumption (i.e. radio, music blogs, iTunes, Pandora, Spotify, iPhone,
iPod, other mobile device, car stereo, ect.)
o Music genre preferences
25
o Setting of consumption (i.e. social setting with friends, concerts, work, school,
working out/exercising, ect.)
o Frequency of music consumption
Do they share music with friends
Do they enjoy the same music as their friends
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6. RESULTS
6.1 Respondents
Between 95 and 98 individuals answered every question on the survey. Fifty-three percent of the respondents were students, with forty-seven percent being of older age (26+).
Eighty-seven percent of the respondents identified themselves as white, with five-percent being
Latino. Sixty-six percent of individuals reside in the Northeastern United States. Twenty-two percent live-in the Southwestern and Western U.S. Due to the fairly equal distribution of responses between students and non-students, the results were broken into two sub-groups.
Students represent the 18-25 age group, while the Non-Students represent the older demographic
(25-61+).
6.2 Music Discovery
The breakdown of music discovery techniques was fairly skewed for Non-Students, however, Student responses varied heavily. Radio was the most popular discovery technique for non-students, with over thirty percent of individuals acquiring their new music from that source.
Only eight-percent of Students received their new music from the radio. Pandora was the second and third most popular method for Non-Students and Students, respectively. YouTube only represented 11% of music discovery for Students. Nineteen percent of individuals in both groups said they got their new music from family and friends and it was the most popular method of discovery for Students. Music blogs represented the second greatest source of new music for the
27 younger generation, while zero percent of individuals from the older generation said they used music blogs.
35
30 25 20 15 Students 10 Non-Students
Percentageof Individuals 5 0
Figure 1. Music Discovery Techniques
The most frequently searched for genres of music for Students were Hip-Hop/Rap and
Alternative. However, these two genres were some of the least frequently searched for genres of the older generations. Rock, Pop and Country music were among the most popular new music genres for Non-Students. Blues, Children's Music, Reggae and World Music had some fan-base amongst Non-Students, however, they had no presence among Students.
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30
25
20
15
10 Non-Students 5 Students Percentageof Individuals 0
Pop Jazz Rock Blues Metal Dance Reggae Country Classical Electronic R&B/ Soul R&B/ Alternative World Music World Hip/Hop & RapHip/Hop Children's Music Children's
Figure 2. Most Frequently Search for Genre
Finding music in a social setting with friends was the most popular location for discovering new music for Students, while discovering new music alone was the common for
Non-Students. For both groups, the most popular frequency for music discovery was 2-3 times a month with over 30% of respondents choosing that option. Twenty-percent of Students searched for music daily, while over 27% of Non-Students searched for new music less than once a month. The time period spent on discovery was generally under 30 minutes for both groups.
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45
40 35 30 25 20 Non-Students 15 Students 10 Percentageof Individuals 5 0 Never Less Once a 2-3 Once a 2-3 Daily than Month Times a Week Times a Once a Month Week Month
Figure 3. Music Discovery Frequency
6.3 Music Listening
The most popular music for Non-Students was Rock, while Hip-Hop/Rap was the most listened to genre for Students. Electronic and Alternative were popular among Students, however, had little following from Non-Students. Many Non-Students said that Pop was their most listened to genre, however, no Students chose that type of music.
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World Music Rock Reggae R&B/ Soul Pop Metal Jazz Hip/Hop & Rap Students Electronic Non-Students Dance Country Classical Blues Alternative 0 10 20 30 40 50 Percentage of Individuals
Figure 4. Favorite Genre of Music
The most popular method for listening to music for Students was thru iTunes, however, only eight-percent of Non-Students said they listened to their music via iTunes. The radio was the most popular method for Non-Students, with Pandora being second. Spotify was more popular than Pandora for Students, while the opposite was the case for Non-Students. Thirteen-percent of Non-Students said they typically listen to their music via the car-stereo, while zero percent of
Students chose that method. Music blogs represented 10% of listening amongst Students, with zero-percent of the older generations. YouTube only represented only 2% of Student listening, with zero-percent of Non-Students.
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Students Non-Students 0% 0% 2% 2% 4% 10% 12% 13% 2% 26%
7% 14% 0% 31% 9% 2% 9% 0% 0% 15% 2% 13% 17% 10%
Figure 5. Music Listening Methods
Thirty-five percent of Students most often listen to music in a social setting with friends, while
32% of Non-Students listen to their music alone. The second most popular setting for both groups was working out/ exercising. Just over 20% of Students chose 'other' as the social setting for listening and approximately 10% of Non-Students most frequently listen to music at work.
Only 2% of respondents most frequently listen to music at concerts and/or live performances.
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35 30 25 20 15 10 5 Non-Students 0 Percentageof Individuals Students
Figure 6. Setting of Music Consumption
The majority of the respondents said they listen to music daily (87%). The duration of each music listening session varied heavily across all respondents, however, it was fairly consistent across both groups. Forty-five percent of all individuals said that their average listening session was between 11-30 minutes in duration. Thirty-one percent of respondents identified their average listening session as 31-60 minutes and 22% said there average listening session duration was over an hour in length. Seventy-five percent of respondents said that they share their music with their friends and 83% of people said they enjoy the same music as their friends.
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7. CONCLUSION
The music industry has been fundamentally changed by the internet in the past ten years.
Hard copies of music have become obsolete and the main method of music distribution is in the form of digitized copies. Live music has grown to become the number one way that artists make their profits, due to the number of ticket sales, sponsorships and large profit margins. The iTunes
Music Store has grown rapidly since appearing in 2003 and now is the largest music vendor in the world. While overall music sales have decreased over the past ten years, digital music revenues have skyrocketed and new streaming service are becoming popular amongst younger generations.
The purpose of this study was to examine the different variables that affect the ways in which consumers use the internet to find and consume their music. A web-based survey tool was used to examine approximately 100 individuals, ages 18-61+. The survey recorded results from a wide variety of respondents. However, there were some uniformities in the demographics. Over
50% of the respondents were ages 18-23, which was likely due to the fact that the researcher was of college-age and had greater access to individuals that were of similar age. However, just under
50% of the recorded respondents were above student-age (24-61+). Therefore, the researcher had two unique groups to compare, both a younger and older demographic.
The radio was the most popular method for both discovery and listening among the older generations. This may be due to the fact that the radio has been around for their entire lives and
34 they may have felt uncomfortable in adopting new music technologies. The Nielsen 360 Music
Report stated that 48% of individuals use the radio to discover their music. While the Nielsen percentage was much larger than the one recorded in this study, it was still the most popular form of discovery among the older demographic. While the radio is predicted to become extinct due to increases in other technology and streaming services, this study would suggest that it is still very much alive and heavily relied upon by older-aged individuals.
A large portion of individuals in both groups said they get their new music from family and friends, however, it was the most popular method of discovery for Non-Students. Also, the most common setting for listening for Students was in a social gathering with friends. Eighty- three percent of the respondents said they enjoy the same music as their friends. This could suggest that younger generations rely heavily on their peers for new music and that it is often played during social events. Business opportunities could present themselves in creating more ways for individuals to socially interact with their music.
Music blogs were extremely popular with younger generations which could be due to the social aspect of the blog. They are also usually the most current and up-to-date delivery platforms for new music, which is represented by the fact that a large percentage of the younger respondents said they look for new music daily. YouTube only represented 11% of music discovery and 2% of listening for Students, with no older generations identifying as heavily utilizing YouTube. The Nielsen's 2012 Music 360 Report stated that approximately 65% of teens listen to music through YouTube which was not the case in the study. This could suggest that
YouTube is becoming obsolete as a delivery platform, especially with the recent introduction of several streaming services.
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iTunes was much more popular for the younger generation than it was for the old. This could suggest that the program is not widely used by older adults, however, the reasoning for not doing so remains unclear. Further investigation by iTunes may be useful to determine why the software has not reached an older audience. iTunes also accounted for less than 10% of music discovery. This may be due to the fact that music is easily downloaded from iTunes for future listening, however, it may not be the easiest to find on the program. Full songs are not available for streaming, therefore, the music must be listened to elsewhere before the purchase. Pandora was the second and third most popular method for Non-Students and Students respectively, while the up-and-comer, Spotify, was more popular among Students. This may suggest that the service has not yet reached older generations.
While the majority of music artists make most of their revenue from concerts, less than
1% of respondents from both groups said they get their new music from concerts or live performances and only 2% most frequently listening to their music at concerts. These results seem fairly intuitive. Concert goers usually attend live performances because they already enjoy the music of that particular artist, they are not looking to discover new music. Concerts are also extremely expensive and time-consuming, therefore, individuals do not listen to music most frequently at these live performances. Concerts are a venue for music fans to see their favorite artists lives.
For both groups, the most popular frequency for music discovery was 2-3 times a month.
A large portion of Students searched for music daily, while a substantial percentage of Non-
Students searched for new music less than once a month. This suggest that younger generations search for music more frequently and the music industry should capture this interest by updating
36 websites and applications that target the younger demographic (iTunes, Spotify, ect.). Music listening, on the other hand, was something that is done daily by most respondents.
The most frequently searched for genres of music for students were Hip-Hop/ Rap and
Alternative. However, these two genres were some of the least frequently searched for genres of the older generations. This means that the Hip-Hop/Rap industry needs to focus on targeting younger generations for growing its audience base. Alternative music could be re-labeled as
Rock when trying to market toward an older demographic. This is due to the fact that Alternative music was unpopular among Non-Students but Rock was the most well-liked music market for
Non-Students. Many Non-Students said that Pop was their most listened to genre, however, no
Students chose that type of music. This may be due to the labeling of the Pop genre as an "older" genre, representative of the Michael Jackson and Madonna era of the 1980s. Pop music is also notoriously known for being popular among older children and teenagers. Due to restrictions in the research, the survey was unable to target that demographic. However, further research into why Pop music is not popular among college-aged students may be useful information for the music industry.
The greatest limitation of the study was the number of responses. Between 94 and 98 individuals responded to the 17 questions of the web-based survey. While this was a decent population size, more respondents would have given the researcher a more accurate sample population. However, due to time constraints, the researcher was forced to rely on the results at- hand.
As discussed previously, the diversity of the demographics was fairly limited. The majority of the responses were from individuals that identified as being white and 66% of respondents were from the Northeastern United States. There were under 100 responses to the
37 survey, with around 50% being students of college-age. However, the equal distribution of college-age and non-college age gave the researcher two interesting groups of individuals to compare fairly equally. Future studies need to attempt to expand the sample size to encompass a larger audience with varying demographics. A sample size with greater diversity would have more accurately depicted the nation's population.
Future studies are needed in this area to analyze the different factors that determine how individuals discover and listen to their music. The music industry has drastically changed with the rise in the internet. By continuing to study consumer preferences for music discovery and consumption, it may shed light on new business opportunities within the music industry. On
March 6th, Spotify announced that it had acquired the Echo Nest, a company founded by computer scientists from M.I.T. which analyzes music consumption behaviors. More now than ever before, music companies want to have the ability to analyze their consumer's music habits in order to better tailor their services to customers.
The music industry is one that has been declining in overall sales for more than a decade.
It is widely recognized that serious changes need to be made in order to bring the industry back to its once thriving place. Additional studies need to determine whether the music streaming shift that the industry is currently experiencing is just a fad or a fundamental change in the music delivery system.
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Appendix I
Music Discovery and Consumption Survey
Online Consent Form
You are invited to take part in a research survey about your individual music discovery and consumption behavior. Your participation will require approximately 5-10 minutes and is completed online at your computer. There are no known risks or discomforts associated with this survey. Taking part in this study is completely voluntary. Children must receive approval by their parent/ guardian. If you choose to be in the study you can withdraw at any time without adversely affecting your relationship with anyone at Colorado College. Your responses will be kept strictly confidential, and digital data will be stored in secure computer files. Any report of this research that is made available to the public will not include your name or any other individual information by which you could be identified. If you have questions or want a copy or summary of this study’s results, you can contact the researcher at the email address: [email protected]. If you have any questions about whether you have been treated in an illegal or unethical way, contact the Colorado College Institutional Research Board chair, Amanda Udis- Kessler at 719-227-8177 or [email protected]. My participation indicates that I am 18 years of age or older.
Q1 What is your age? 18-25 26-32 33-40 41-50 51-60 61+
Q2 In what geographic region do you reside? West Southwest Midwest Southeast Northeast
Q3 What is your race/ ethnicity? Non-Hispanic White or Euro-American Black, Afro-Caribbean, or African American Latino or Hispanic American East Asian or Asian American South Asian or Indian American Middle Eastern or Arab American Native American or Alaskan Native Other
39
Q4 What is your occupation? Student Management Occupations Business and Financial Operations Occupations Computer and Mathematical Occupations Architecture and Engineering Occupations Life, Physical, and Social Science Occupations Community and Social Service Occupations Legal Occupations Education, Training, and Library Occupations Arts, Design, Entertainment, Sports, and Media Occupations Healthcare Practitioners and Technical Occupations Healthcare Support Occupations Protective Service Occupations Food Preparation and Serving Related Occupations Building and Grounds Cleaning and Maintenance Occupations Personal Care and Service Occupations Sales and Related Occupations Office and Administrative Support Occupations Farming, Fishing, and Forestry Occupations Construction and Extraction Occupations Installation, Maintenance, and Repair Occupations Production Occupations Transportation and Material Moving Occupations Unemployed
Q5 What is your favorite genre of music? Alternative Blues Children's Music Christian & Gospel Classical Country Dance Electronic Hip/Hop & Rap Jazz Latino Metal Pop R&B/ Soul Reggae Rock World Music
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Q6 How do you typically discover the music you listen to? Radio Music Blogs iTunes Pandora Spotify Movies Shazam YouTube Friends/ Family Other
Q7 How do you typically listen to your music? Radio Music Blogs iTunes Pandora Spotify YouTube Concert/ Live Performances iPhone iPod Other Mobile Device Car Stereo Other
Q8 In what social environment do you typically find new music? Social setting with friends Concert/ Live Performance Alone Other
Q9 In what social environment do you typically listen to your music? Social setting with friends Concert/ Live Performance Work School Studying Alone Sleeping Working Out/ Exercising Other
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Q10 For which genre of music do you most frequently search for new music? Alternative Blues Children's Music Christian & Gospel Classical Country Dance Electronic Hip/Hop & Rap Jazz Latino Metal Pop R&B/ Soul Reggae Rock World Music
Q11 How many times a month do you look for new music? Never Less than Once a Month Once a Month 2-3 Times a Month Once a Week 2-3 Times a Week Daily
Q12 During each music discovery session, how long do you spend searching for music? 0-10 minutes 11-30 minutes 31-60 minutes 61+ minutes
Q13 How often do you listen to music? Never Less than Once a Month Once a Month 2-3 Times a Month Once a Week 2-3 Times a Week Daily
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Q14 Per music listening session, how long do you listen on average? 0-10 minutes 11-30 minutes 31-60 minutes 61+ minutes
Q15 Do you share music with friends? Yes No
Q16 Do you enjoy the same music as your friends Yes No
Q18 How do you feel about music pirating or sampling?
Thank you very much for you participation in the survey. If you have any further questions about the research please contact [email protected].
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