When my daughter, who is 17, wants to hear a song, she doesn’t turn to radio. Nor does she go to Spotify or Pandora. YouTube is her on-demand streaming service. A new study out from Nielsen says she is not alone. More teens listen to music on YouTube (64%) than radio (56%), iTunes (53%) and CD (50%).
Radio is still the primary machine for music discovery across all ages, but it looks like this study does not try to restrict the definition of “radio” to AM/FM.
The new Nielsen report offers insights on all aspects of music consumption including listening and purchasing behaviors; music discovery; live events; the use of social networking and mobile music apps; as well as how the economy is affecting music sales.
“The accessibility of music has seen tremendous expansion and diversification,” said David Bakula, SVP Client Development, Nielsen. “While younger listeners opt for technologically advanced methods , traditional methods of discovery like radio and word-of-mouth continue to be strong drivers. With so many ways to purchase, consume and discover great new music, it’s no wonder that the consumer continues to access and enjoy music in greater numbers.”
One of the takeaways of this study is that radio is a music discovery machine — curated programs and personalized streams work well for helping people find new music. But once they find it, they are inclined — especially teens – to turn to YouTube where they can WATCH it. When it comes to on-demand streaming, YouTube is (still) the elephant in the room…
Music sales are up this year, bucking a several year annual decline. Led by strong digital downloads of albums and songs, music sales in the US are up 1.6% through May 8th. That’s according to Nielsen. Physical album sales continue to drop, but the rise in online sales is compensating for the first time. Digital album and track purchases went up 16.8 percent and 9.6 percent respectively.
A contributing factor in this would be the release of the Beatles catalog online which drove catalog album sales to a 5.4% increase. CD sales were down, but only 8% compared to double digit declines for several previous years. And strangely enough, Vinyl album sales were way up – 37% year over year, after growing 14% last year.
So what does all of this mean? Well, the future’s not as bad as it seems. Perhaps precipitous drops in revenue are a thing of the past for the record companies.
Nielsen Entertainment recently expanded its coverage of music streaming measurement, adding several key streaming platforms to its streaming panel. Newly added services include Vevo, Slacker, MOG, Thumbplay, Akoo, and Cricket. Data from these services, and from the existing reporting panel consisting of AOL, Napster, Rhapsody, Verizon Wireless and Yahoo! will appear in Nielsen’s BDS reports.
Nielsen Entertainment produces reports on lots of activity related to the music industry – Nielsen BDS monitors music played on radio stations in the US, Canada, Europe and Mexico. Nielsen SoundScan reports on physical and digital song sales. They provide lots of insight into things like what songs people listen to and buy, which it sells to radio programmers, record companies, etc. Sources like Billboard produce their reports from this data.
During the first six weeks of 2011, Nielsen tracked more than 1.1 billion music streams through online music streaming services. More than 165 million streams per week are captured and nearly 26 million weekly song downloads are tracked. That is a lot of streaming music activity.
According to their press release, Nielsen is the only company able to provide weekly trending information on streaming activity, as well as a more granular understanding of from where consumers stream music. Nielsen also provides insights on the type of streams; on-demand streams, those songs/videos that consumers choose to listen to, versus programmed streams, or when songs are not chosen by the consumer.
As music streaming activity and digital downloads increase while physical song sales sink, streaming’s importance is growing as an important measure of who is listening to what. I expect we’ll see the list of streaming music platforms in their panel to continue to grow.
Digital song sales for the first half of the year were off very slightly (.2%) from the same period last year, indicating that the price increase from 99 cents to $1.29 on iTunes did have some negative impact on the number of tracks sold.
Meanwhile, full album sales were down as well – 11% to 154 million from 172.9 million units in the corresponding period last year. But digital album sales actually rose nearly 13% during the same period, offset by the continued decline of physical cd album sales which were down 18%. Last year album sales dropped 8.5% but digital album sales rose by 16%.
Lady Antebellum had the best selling album for the first half of the year.
So what does all of this mean? It appears that the negative impact from the 30% price increase on iTunes was minimal. It also looks like record labels and artists may have found a formula for increasing album sales – some combination of pricing, marketing and artistry that is convincing more and more people to purchase albums rather than single songs.
AT&T has launched a new mobile music platform that delivers “song and album downloads, streaming radio, song match, lyric search and an enhanced music player – into a single, cohesive experience for AT&T mobile phones.” AT&T will charge customers $6.99 a month on top of a data plan fee, with song and album purchases charged a la carte.
The service will extend streaming music capabilities to “quick messaging phones”, also sometimes called feature phones, or non-smartphones. It’s currently available on three popular devices – LG Xenon, Samsung Solstice and Samsung Impression. It will soon be available for downloads on other phones and AT&T will begin pre-loading it on new devices this summer.
AT&T has clearly identified streaming music as a popular application for mobile devices, and created this platform to offer customers who are not using smartphones those capabilities. I’m sure they’re hoping those customers will see a good reason to purchase unlimited data plans so they can stream.
Meanwhile, Nielsen recently reported that smartphones will overtake other mobile devices by the end of next year as more and more customers choose to upgrade. The use of Wi-Fi increases from 5% for feature phone owners to 50% for smartphone users because smartphones give users more ways to utilize a broadband connection. Now AT&T has created a platform that enables feature phone customers with some of those capabilities.
Meanwhile, it’s all a good thing for the growing Internet radio audience…
Will consumers pay for online content they get now for free? That’s a question that Nielsen recently asked 27,000 consumers in 52 countries – and the answer was a resounding “maybe”. After 85% declared that they prefer getting their content for free, survey participants went on to indicate which content they would – or already have – paid for.
In fact, about a third of those surveyed indicated that they have or would be willing to pay for radio (music), and about a quarter for radio (news). 27 or 28% indicated they would or have already paid for podcasts.
Caveats are that they don’t want to see ads if they’re paying for the content, and they expect the content to be “better” than what they were getting for free. Men were more tolerant than women of the idea of advertising, and residents of North American countries were least tolerant globally of the idea of advertising within paid content.
It’s an interesting study in the ongoing debate of best ways to monetize online content. Applied specifically, this information would encourage online stations to create unique channels of audio content that they can charge for, and cultivate customers for that content from within their larger audience base.
Some online stations have been doing this – for $36 a year you can listen to Pandora’s Pandora One, which gives listeners a special desktop app, ad free listening, higher quality audio, and other special features. Digitally Imported offers a similar premium package for $5.95 a month, and Radioio offers an “audiophile subscription” that includes their 52 basic channels plus 20 channels only available to subscribers, along with ad free and better quality streaming.
Music sales have been changed by the Internet. That’s perhaps the most obvious statement I’ve ever written on Audio4cast. Nonetheless, it’s interesting to look at how the Internet has impacted music sales, and a post on Nielsen’s blog recently did just that, discussing a recent article in Billboard magazine.
Individual tracks accounted for 57% of all digital music sold in 2008. More intriguing is the fact that the top 200 tracks accounted for 14.5% of sales in 2004 and rose to 15.8% in 2005, 17.1% in 2006 and 2007 and 17.2% in 2008. Through October 25, 2009, the top 200 tracks’ share stood at 18.7%.
Not exactly what you were thinking, right? We all think of the Internet as fostering diverse listening and independent artists. So why are sales concentrating more on the most popular songs, not less?
It turns out that popular tracks may be benefitting from a “herd effect due to the viral nature of the Internet. The awareness generated by that small number of songs could drown out less popular songs.” In other words, top 40 playlists are still driving music sales. In any week, one of out four songs sold belongs to that top 200.
On the other hand, Album sales are trending in the other direction. “The top 200 digital albums have accounted for a smaller share of total digital album sales since 2004.” “The top 200 digital albums have shown an opposite trend in market share, steadily dropping to 21.9% in 2008 from 28.7% in 2004.”
Listeners that purchase albums online are listening to fewer hit albums and more eclectic album offerings, while those that purchase single tracks are concentrating on the top 200 songs more and more. The numbers show that it’s not exactly the expansive and expanding marketplace many have imagined. While the Internet has become the place to find and listen to music by independent and unknown artists, the diverse offerings have yet to impact digital song sales, which remain concentrated on the hits.