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It’s About Belief

The following article appears today in RAIN News:

When my daughter was born I bought my first Volvo. I believed it was the safest car for my family. I’ve bought many more since and today, she drives a Volvo. What does this have to do with radio or music or streaming? As we celebrate (well some do) the launch of Apple Music this week, success will reflect how much belief Cupertino can create around the paid subscription model. Here’s what it won’t be about:

1. It won’t be about price

The argument goes like this. Consumers used to spend $100 on a few CDs. Therefore $120 for a subscription is going to be a great alternative to buying CDs or downloads. All the music you want for much less money. Here’s the problem. The majority of Americans spend nothing on recorded music. According to MusicWatch’s Annual Music Study fewer than 4 in 10 Americans paid for music. The average CD buyer spent $30 on CDs, while download buyers spent $59. Overall the number was $52. And it’s irrelevant. Research shows that we buy CDs or downloads to celebrate music that we want to collect, particularly from our favorite artists. Occasionally we discover new music and buy that too.

Within reason, the monthly fee won’t matter. Believers will pay anything reasonable, doubters will pay nothing.

2. It won’t be about celebrity

The Tidal team is learning this. Celebrities can create awareness. But streaming services are a utility, not jewelry. You had to have an iPod, not a Zune, and iPhones became cooler than Blackberries. We may evangelize our favorite service but nobody on the subway cares what streaming service you listen to. It’s not a personal brand.

We should applaud artists who stand up for compensation. When the conversation makes it to the Today Show or Twitter we pay attention, but only briefly. The truth is that the public has no clue what the conversation is about, and probably cares even less.

3. It won’t be about prohibition

MusicWatch research shows consumers aren’t likely to pay based on windowing content or removal of certain artists or songs. Exclusives may not be effective either. Only 9 percent of streamers claim they would be persuaded to pay because of artist exclusives. That was pretty low on the list of motivating factors. There are simply too many options, and frankly, too much to listen to. If there’s a hole in the catalog it won’t sink the ship. That’s not to say that a window couldn’t help a particular artist sell more at iTunes or Target. It’s just doubtful that prohibition is the best tool for attracting paid subscribers.

If Apple Music is successful at building a subscriber base it will be because consumers believed. What will constitute belief? It is the ability to thoroughly control the music that you listen to. That is one of the few things that the freemium model does not offer. Control means being able to select which artists, which albums and which songs you listen to- when you want, where you want, and on the devices you want. If you value that, you will pay. Apple is betting that the free trial will help make you a believer.

Conversations around sound quality, social connections, and curation all have a place. When we write the story of Apple Music it will be about whether sufficient numbers of people cared enough about control to make it a success.

digital music recording and playback from a computer

With a Possible Relaunch of iTunes Radio Streaming Service, Apple Has Some Catching Up to Do

In a search for more users, Apple is rumored to revamp its iTunes Radio service for its Worldwide Developer Conference next week

 Huntington, N.Y., June 3, 2015 – With Apple rumored to be planning a major revamp to its iTunes Radio music streaming service at the company’s Worldwide Developer Conference next week, new data from MusicWatch, a company providing consumer research for the music industry, reveals that the company has some catching up to do. iTunes Radio is the sixth most popular service for music streaming among U.S. Internet users, age 13 and older. However iTunes is more at parity among iPhone users.

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“iTunes, which consistently dominates the market for paid digital downloads, has more competition in the music streaming category and has had less success than other streaming services in attracting an audience,” said Russ Crupnick, founder and managing partner of MusicWatch. “If iTunes Radio weren’t an Apple service, we’d be applauding its progress, but with nearly 70 percent of all U.S. Internet users now streaming music, Apple has an opportunity to become more competitive in that market.”

Based on MusicWatch’s Annual Music Study, Apple’s current iTunes Radio service accounts for just 5 percent of the listening hours among the major streaming services, which includes Pandora, Spotify, iHeart Radio and YouTube. In fact, three out of four iTunes Radio users also stream music from YouTube; and nearly the same proportion of iTunes Radio users also listen to Pandora.

The new Apple streaming service is rumored to use a paid subscription model. MusicWatch estimates that 18 million streamers, out of the estimated 135 million music streamers in the United States, either paid directly or shared a paid account for a subscription service in the past year.

“Getting consumers to pay for subscriptions has been challenging, but Apple has some advantages, with a database of customers, a healthy gift-card business and the potential of Apple Pay,” said Crupnick. “Based on the success of iTunes Music, iPod, iPhone and iPad, Apple is superb at teaching customers the benefits of new technology. When it comes to streaming, however, Apple needs to offer a vision of why a paid subscription makes sense, in a world already cluttered with free options”

Methodology note: The data referenced in this press release is from the MusicWatch Annual Music Study, which was released in April 2015. MusicWatch surveyed 5,000 U.S. consumers, age 13 and older; results were projected to the U.S. population.

 About MusicWatch, Inc.

MusicWatch provides in-depth music consumer research and analyst services for the entertainment industry. With more than ten years of trended data and new research released quarterly, MusicWatch helps clients understand the latest market trends, consumer purchasing and listening habits, including music streaming services, broadcast and satellite radio, and music devices. For more information, visit www.musicwatchinc.com.

Press Contact:

Lee Graham

lee@leegrahampr.com

212-333-4983

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