US researcher NPD Group was a little surprised by this quarter’s dig into the state of music consumption in the US. While it expected CD sales to be down ‘ only right and proper in a recession ‘ and possibly online music sales might fall as well (though most online activities are resilient despite the recession right now) ‘ what it didn’t expect was a corresponding fall in pirated music downloaded from P2P networks with a 6% fall in P2P use and a 28% fall in people ripping CDs.
The NPD explanation is that teens have enough music, which of course is nonsense. Either the current batch of rock stars are just not demonstrating enough innovation or something else has gripped these teens and perhaps NPD has worked out what.
One startling statistic that it comes up with is that 54% of teens who heard a song they liked on MySpace Music were likely to simply listen to that song again on the site, compared with only 1% who claimed they would click through and buy the song.
NPD amasses a little more evidence before it starts to realize that all the free music services ‘ internet radio and web pages with playlists which lead to a free player ‘ are all leading to people listening to music in situ instead of saying ‘Hey I must have that track,’ and going away and buying it. Of course there are other explanations. For instance we think piracy has moved to the playground and that Bluetooth connections on handsets are responsible for transferring unprotected online tracks.
Think about a school with 1,000 students. Each one buys one legitimate MP3 track each term. They go to school and swap songs with their best friend using Bluetooth. The track is MP3 and has no DRM or copy protection. Then they both have two tracks, and next time they swap with someone they swap them both and have four. It only takes about the length of a term before every track bought by someone in the school is on their handset. And the modern handset is equipped to support up to 1,000 or more tracks. This type of piracy is not restricted to the dishonest, it becomes a social and socially accepted activity.
It could be that one generation has been taught not to buy a CD until they’ve heard all the songs and are sure they want to pay for a quality copy of the songs. But the next generation may not even know what a CD is and may not even own a device which CDs play on, and may only own a phone as their sole music device.
NPD said that it surveyed teens aged between 13 and 17 and that they acquired 19% less music in 2008 than they did in 2007.
CD purchasing declined 26% and paid digital downloads fell 13% compared with the prior year. In the case of paid digital downloads, 32% of teens purchasing less digital music said that they were unhappy with the music that was available for purchase, and another 23% said they already have a suitable collection of music. Another 24% said they had cutbacks in entertainment spending.
‘While we expected to see the continued decline in CD purchasing among teens in NPD’s music tracking surveys, it was surprising to see that fewer teens downloaded music from P2P sites or borrowed them from friends,’ said Russ Crupnick, entertainment industry analyst for The NPD Group. ‘These declines could be happening due to a lack of excitement among teens about the music available, but it could also reflect a larger shift in the ways teens interact with music, given that so much music is now available whenever and wherever they want it.’
NPD’s music tracking surveys noted sharp jumps in teen’s usage of online listening sources and satellite radio in 2008. More than half of teens (52%) listened to online radio in 2008, compared to just 34% in 2007. Of course satellite radios can now record tracks that listeners like under a special license deal that Sirius has. Downloading or listening to music on social networks also saw a large increase ‘ from 26% in 2007 to 46% in 2008; satellite radio listening among teens increased from 19% in 2007 to 31% in 2008. So this all supports this idea that there are other non-purchased version of music that kids can listen to.
Popular music sites like Pandora, imeem, and MySpaceMusic complemented by terrestrial and satellite radio, may mean less kids feel compelled to buy music or to share it with others.
NPD said 70% of web using teens actively used a portable music player in the fourth quarter of 2008, which is virtually unchanged from the same quarter the year before.
It’s fairly clear that a) something is going on b) NPD isn’t quite sure what it is. So expect NPD, in its next quarterly survey, to try hard to get to the heart of the matter.