Author Archives: Ket Garden

Consumer behaviour is very important for the music industry and a new research by IFPI contains key findings on changing consumer behaviour and provides valuable insights on the «value gap», which is the music industry`s most pressing priority.

«The value gap» is the massive mismatch between the growing consumption of music worldwide and the disproportionately small revenues that are returned to rights holders. It is caused by a market distortion allowing some major digital services to circumvent the normal rules of music licensing.

This denies musicians, artists, composers and investors fair compensation for their work; lowers investment in and diversity of new music; and skews competition among digital services. IFPI sees today`s proposal as a good first step in the process.

Notably, the proposal confirms that user uploaded content services that promote and monetize music should be covered by the same copyright rules as other on-demand services.

Commenting on the proposal, IFPI Chief Executive, Frances Moore said:

«The music industry has transformed itself in recent years, licensing hundreds of services, widening choices for consumers and investing in new, creative ways to bring artists to a global audience.

But to achieve sustainable growth, the music sector needs a level playing field.

This means creating an environment where copyright rules are correctly applied so that creators and producers can be confident to invest and license. It also means allowing digital services to compete on fair terms and enabling consumers to enjoy access to diverse sources of licensed music.

«Today`s proposal is a good first step towards creating a better and fairer licensing environment in Europe. Importantly, it confirms that user uploaded content services such as YouTube, which are the largest source of on-demand music, should not be able to operate outside normal licensing rules.

However, there is a lot more to do to make this a workable proposal. We look forward to working on this in the coming months with the Parliament and Member States.»

The music consumer behaviour is changing, and this is the key report highlights:

• Paid audio streaming is growing: 71% of internet users aged 16-64 access licensed music. Paid audio streaming services are growing in popularity, especially among under 25`s. One-third of 16-24 year old now pay for an audio streaming service.
• YouTube is the most used music service: 82% of all YouTube visitors use it for music. More people use YouTube to consume music they already know than to discover new content.
• Copyright infringement remains a significant problem: more than one-third (35%) of internet users access unlicensed music content. infringement is changing, with half (49%) of 16-24 year olds using stream ripping services to download music.
• Young people are highly engaged with music: with 82% of 13-15 year-old listening to licensed music and the majority willing to pay for music.
• Smartphones are moving towards replacing computers as the most used device for music consumption; especially in developing countries. Users of paid audio streaming services are particularly likely to listen to music on a smart phone.

Commenting on the report, Frances Moore, CEO, IFPI said:

«There are many positives for the music industry in this research: streaming services have revolutionised the experience of the music consumer, with growing numbers paying for audio streaming services;

listeners are responding to the benefits offered by on-the-go, on-demand access to music by moving more and more to the world of mobile, especially in emerging markets; and young fans are showing passion and engagement with music.

«Record companies, and the investment they make in music, are at the heart of this change. That investment is all the more important in the digital world, driving the creation of new music and helping artists connect with their fans.

«There are also key insights informing the policy debate on musics «value gap», the biggest problem for todays music sector. The research highlights the dominant position amongst music services of YouTube, as well as the fact that the site is used by consumers primarily to access music they know, on-demand.

Yet YouTube can get away without remunerating fairly artists and producers by hiding behind ‘safe harbour’ laws that were never designed for services that actively engage with and make available music enjoyed by the vast majority of its users.»

YouTube use a loophole in international copyright laws. The pay much lower licensing fees the music industry than services such as Spotify and Apple Music. YouTube considers itself a hosting platform rather than a content distributing platform.

This is a practice that has repeatedly been dismissed as unfair by record companies and competitors. YouTube say it is mostly a promotional platform for artists and record companies.

Spotify is twice as big as Apple Music. Spotify has 40 million paid subscribers, while Apple music has «only» 4 million. Spotify has 100 million of total listeners while Apple Music has 78 million.

To put that in perspective; YouTube doesn`t have any paid subscribers, but they are more than 8 times bigger than Spotify with its listeners.

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