Listen Up!

A few years ago, you’d be forgiven for thinking that the music industry was dying.  Reports of illegal downloads and file sharing killing the music industry were rife with David Lammy, the Minister for Intellectual Property, in 2009 declaring that illegal downloading was “something that needs tackling and we are serious about doing so” (source: The Guardian).

Fast forward to 2015 and we’re seeing seismic shifts in the music industry.  The BPI reported that UK music industry revenue grew by 1.9% in 2013 and the IFPI reports that global revenues from digital music services are expected to match those from physical sales for the first time in 2015 (source: Campaign).  Reflecting this digital growth, over the summer this year we’ve seen a whole host of big players entering the streaming market.  Joining a market dominated by Spotify and Google Play Music All Access, are a whole host of big brands, including  Apple Music, Amazon’s Prime Music, Tidal from JayZ and it was recently reported that Facebook is due to join the party (source: The Guardian).

So are we now a nation of streamers?  According to new research from Ipsos Connect, the answer is no.  In their Technology Tracker, released this week, they reported that 19% of us have streamed music over the last year with a similar proportion paying to download music.  However, there is definite evidence that the younger age groups are driving the market, with 44% of those aged 15-24 having streamed music over the past year, while only 12% of the over 35s have done the same (source: Ipsos Connect).

The market is still finding its way with revenue models; at one end of the spectrum, we have JayZ asking us for £20 per month to access Tidal, and at the other Spotify offers an ad supported service for free, with a premium paid-for service.  While our own research has estimated that the £10 mark is about right for a streaming service, with over two thirds of Brits saying that this is a fair amount, it’s estimated that between 30-60% of streaming service users pay for the privilege.

Clearly, advertising revenue is still a vital lifeline to many streaming services, which presents us with huge opportunities as marketers.  For example if Spotify has 20 million subscribers and around 6 million of them pay, there are around 14 million of the most elusive advertising targets for the taking.  As targeting on these services becomes more sophisticated, allowing us to target by playlist and therefore potentially by emotional state, our brand messages are likely to become more effective, offering us opportunities to connect with people while they exercise, commute or even by specific mood.

All in all, it would seem that, like Mark Twain, reports of the death of the music industry were greatly exaggerated.

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OMD UK

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