Nielsen’s latest music report highlights price, free alternatives are holding back subscription services
Nielsen has released its annual Music 360 Report which highlights some of the key trends in the US music industry.
The research firm opens by stating how important music is to the general public, reporting that 91% of Americans listen to music in a typical week, and 75% of them listen to much online. The latter figure especially has jumped by 12% over the past year, giving the industry much to be cheerful about.
In addition, Nielsen reports that 44% of users listen to music on a smartphone in a typical week.
However, the study also shows that old habits die hard, with 61% of respondents stating that radio is their biggest influence when it comes to discovering new music, followed by friends and movies. Online services are fourth, and just 27% of respondents state they discover new music through them.
Music streaming services are also struggling when it comes to the spending decisions made by the average consumer. Music subscription services constitute just 11% of the overall expenditure on music.
What is perhaps more worrying is that just 9% of those who do not pay for streaming services state they are likely to start paying in the next six months, whilst 78% claim to be unlikely to do so. This shows that yes, there is a growth opportunity for streaming services, but it is a limited one.
Price appears to be the biggest deterrent to people using the likes of Spotify and Apple Music, with 46% of respondents stating that these services are too expensive. Following close behind however the second biggest deterrent is the existence of services like YouTube and Vevo, that do not require the user to part with any cash at all: the existence of free alternative is stated by 42% of respondents to be a reason why they choose not to subscribe.
The report’s result show that the industry cannot rely entirely on paid subscription service to substitute declining revenues elsewhere in the recorded music space - at least as long as the subscription model remains anchored to the $9.99 price point. The industry needs to experiment with lower price points for subscriptions - $10 is clearly too much for the majority of everyday consumers - and figure out how to hightlight the differences between free services and the likes of YouTube.
(Andrea Leonelli)