I have had this pdf on my desktop, marked in red, for a long time, but I finally got to dig into it, today. This is an absolutely brilliant piece of research (albeit with a fairly small # of UK participants, about 1700 I think) that very clearly spells out where the Future of the Music Industry is taking us: licensing access, revenue sharing, ad-supported monetization, diversified revenue streams, complete music+video convergence, user-generated playlists and viral syndication, etc (you've heard all that from me before I reckon). This Olswang stuff is so good that I will show most of it on this blog, and comment on it (annotated by: Gerd comments).
This report is also a total argument for the fact that my own Music Widget / MusicAPI company Sonific is right in the sweet spot of things - and that's always a good thing, as well ;).
So here it goes:
Olswang: "Social networks are changing the accessibility of music, helping it to become more democratic and utilitarian and this, according to the 2007 Digital Music Survey released today by music and entertainment research specialists, Entertainment Media Research and law firm Olswang, is having a profound impact upon the discovery and purchase of music, with far-reaching implications for the music business"
Gerd comments: you can say that again. Streaming full-length music tracks (selectable by the USER without any restrictions whatsoever) is now becoming the default on social networks and blogs. Basically - and I said this 2 years ago - THIS IS THE NEW RADIO - and it should be licensed like radio (albeit for a much higher share of revenues).
Olswang: "The Impact of Social Networks on Music Discovery & Purchase The Digital Music Survey is currently in its fourth year and is an independent survey of 1,700 UK consumers. The research indicates massive increases over the last 12 months in usage of sites containing music such as YouTube (up 310% to 53%) and MySpace (up 57% to 55%). Amongst teenagers the incidence is huge – 77% have used MySpace and 69%, YouTube. For users of these social networks, music is playing an increasingly important role. For example, 39% of social network users have embedded music in their personal profiles (65% of teenagers). Approximately 70% do so to show off their taste and half do so to reflect their personality. What’s more, it seems to work as almost 60% agreed that they could tell a lot about a person from the music in their profile."
Gerd comments: embedded music will indeed be the #1 driver of how music is being found and purchased, going forward - give it another 12 months and EVERYONE will know what a widget is. Imagine an Amazon.com MP3-only downloading offer that is based on a flat-rate and / or bundling deal that 'feels like free' (remember Amazon Premium Shipping)...? that is on the receiving end of a click-thru from 500 Million social net users. It will no longer matter where and how the purchase happens, and whether there is any friction that can shore up the old scarcity paradigm, but WHO GETS THE CLICKS - getting and retaining Attention is the new mission; distribution is a default!
Olswang: "The survey findings strongly suggest that social networks are also impacting music discovery. 53% of people revealed they actively surf social network sites to discover new music and artists and two-thirds of all users regularly or occasionally discover music that they love on their preferred social network site. The incidence is higher still on MySpace (75%), Bebo (72%) and YouTube (66%)."
Gerd comments: this is indeed a huge marketing opp for the record labels, and one they need to embrace a lot more than they have until now. Forget the idea of fixed per-stream fees - being in the pipeline is what matters, and getting more people to pay attention is what will drive music commerce. Don't abolish the toll-booth - just move it down a bit further. PULL don't Push.
Olswang: "Crucially, the discovery is translating into changing purchase behaviour. 17% of social network users claimed it has a “big/massive impact” on the way they purchase music and 30% state that they “regularly/occasionally” buy CDs or downloads of music that they discovered on a social network site. This rises to 36% of MySpace users. However, more needs to be done to make purchasing this music easier, with 46% of respondents agreeing with the statement “I wish it was easier to purchase music that I find on these sites.”
Gerd comments: I think it is absolutely, positively and shockingly pathetic what most of the record industry has done so far to harvest the fruits of this enormous interest in music. People are TOTALLY interested, but -until now- the industry has done its utmost to screw it up with impossible commercial terms, copy-protection obsession, format wars, territorial restrictions and licensing turf wars. Ouch! Talk about a dysfunctional ecosystem - this is winning the grand prize.
Olswang:" Russell Hart, Chief Executive of Entertainment Media Research commented: Social networks are fundamentally changing the way we discover, purchase and use music. The dynamics of democratisation, word of mouth recommendation and instant purchase challenge the established order and offer huge opportunities to forward-thinking businesses.” John Enser, partner and head of music at Olswang, says: The music industry needs to embrace new opportunities being generated by the increasing popularity of music on social networking sites. Surfing these sites and discovering new music is widespread with the latest generation of online consumers but the process of actually purchasing the music needs to be made easier to encourage sales and develop this new market."
Gerd comments: Amen. Are you listening? This is your future!!!
I am going to stop here as you can read the rest on the Olswang site, but here are a few more morsels - couldn't have said it better myself: John Enser, partner and head of music at Olswang, says, "As illegal downloading hits an all time high and consumers' fear of prosecution falls, the music industry must look for more ways to encourage the public to download music legally. Variable pricing models and DRM free music, which would allow consumers legally to transfer music to other devices, were popular among respondents and represent new ways of enticing people away from breaking the law."
Finally, a few more stats that support these arguments (most are from emarketer which always has good stats on these matters). And visit my new Kyte channel.
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