Tuesday, December 18, 2007

Exploring the online music market: consumer characteristics and value perceptions

From our friends at Copyriot comes the news of a new thesis on dissident forms of digital textuality, be it from the side of the Orthodox:

Exploring the online music market: consumer characteristics and value perceptions
By Styvén, Maria
The advent of the Internet and the digitization of music has resulted in a multitude of new challenges and opportunities for the recording industry. So far, sales of digital downloadable music have not compensated for the decrease in CD sales throughout the twentyfirst century. To attract new customers and successfully compete with file-sharing networks, commercial online music services need to meet customer expectations by delivering what they value. Therefore, to increase the understanding of prospective customers, the purpose of this thesis was to explore and describe customer value and target groups within the online music market. Data were collected through a survey of Swedish consumers between 16 and 60 years old.

Customer-perceived value of downloadable music, in terms of expected value for money, was found to be quite low. Value could, however, be increased by improving the most important benefits. In addition to fundamental functions, such as ease of use and search, a large music catalogue, and good sound quality, flexibility in use is essential. This involves ensuring transferability, compatibility, possibility to duplicate files, and opportunity to sample. The high level of desired flexibility suggests that digital rights management (DRM) restrictions decrease value by making it difficult for consumers to use the product freely. Furthermore, perceived value could be enhanced by decreasing privacy risk, such as concerns about paying with credit card online, and, most importantly, lowering prices. Consumers, on average, thought that a downloadable song should cost 5–6 SEK, i.e. about half of the current price. However, providing better value in terms of the proposed benefits, combined with lower risk, would improve consumers' willingness to pay.

The study also found that current potential target customers of online music services are between the ages of 25 and 45, have a higher-than- average interest in music, low concerns about risk, and are experienced users of the Internet and digital music overall. Clearly, use of file- sharing networks and commercial online music services is not mutually exclusive. In fact, P2P users in the study were generally more likely than P2P non-users to be customers of commercial services. Moreover, increased customer value of pay-per-download services is more likely to result in higher usage intentions among consumers with current Internet music download experience. An important challenge for commercial online music services, therefore, is not only to attract more file sharers, but also to retain occasional customers by increasing the perceived value.


While Rasmus at copyriot feels embarrassed to be part of the academy that produces such work (and I can understand why as well, with the stench of business so close at hand). I, however, think there is some value in any discussion on how information, such as music, is consumed today. We live in a society that is totally formed by consumption and nobody can ignore that. The idea that

P2P users in the study were generally more likely than P2P non-users to be customers of commercial services. Moreover, increased customer value of pay-per-download services is more likely to result in higher usage intentions among consumers with current Internet music download experience.


may render the 'pirate' image of the socially defined P2P file sharer somewhat harder to maintain in its gross totality. Many who download also buy. The argument about P2P file sharing is not about the technologies, but is rather about the profits of copyright holders. Many P2P file sharers also support the industry they rally against in their choice of hardware, buying blank CDs, paying ISP charges, and so on (even in clothing and going to concerts). Of course the profits of the top five media mutlinationals could be even greater if all P2P networks were closed tomorrow, but in reality they are doing fine and many pirates are paying their way. It almost impossible not to.

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