A new Nielsen report, produced in collaboration with MIDEM 2011, shows young consumers are especially active in purchasing downloads, streaming music and acquiring mobile apps. But it doesn't help answer the important question: How much are they worth?
"The Hyper-Fragmented World of Music" does a good job in representing the fragmentation. No single monetizable channel is being used by more than 60% of the global online audience. Fifty-seven percent of global online respondents have watched a music video on a computer in the last three months while 17% of them have purchased a music download.
But the unifying theme is the activity of young consumer. The younger online consumers, aged under 24, are most active in viewing music videos on a computer (71%) and mobile phones (35%). The 25 to 29 group is just a few percentage points behind in both categories.
Streaming services are most popular with the 21 to 24 age group as 37% of them have used one in the last three months to a computer and 34% to a mobile device. The global averages, across all age groups, are 26% to computer and 21% to a mobile device.
Twenty-two percent of global consumers age 25 to 29 - the highest percentage of any age group - have purchased a music track to their computers in the last three months. And 25% of them have purchased a download to a mobile phone in the last three months. The 21 to 24 age group purchased digital music at a similar clip over the last three months. Twenty-one percent of this group has purchased a track to a computer while 31% has purchased a track to a mobile phone.
The 21 to 24 age group is the most aware of music subscription services (74%) and also the most interested (34%). The 25 to 29 age group and the 30 to 34 age group are close behind in terms of interest.
But activity doesn't necessarily translate into value. Interest in music can simultaneously be heavy but difficult to monetize. If there is one red flag in the Nielsen report, it's the lack of relative value of the different age groups though metrics such as per-capita spending on music downloads.
The report refers to value only once. After calling the 21 to 24 age group the "premier consumers of music apps," Nielsen admitted that age group had the highest proportion (71%) who allocated $0 to $5 per month for purchase of mobile apps and two-thirds of people have "a very limited budget for music apps."
That uncertainty about value is also found in music subscription services. Of people who had streamed music in the last three months, just 22% said they could definitely or probably pay for such a service while 57% would stream for free in exchange for advertising. Since 26% of people said they had streamed music in the last three months, that means 5.7% (0.26 x 0.22) of likely subscribers expressed interest in such services. Nielsen did not break out interest by age group.
Nielsen found that online viewing of music videos is the most popular way to access music online. Fifty-seven percent of global respondents have watched an online video in the last three months.
Piracy is the second-most popular way to access music online. Thirty-five percent of global consumers surveyed admitted to using a file-sharing program in the past three months. But that figure was only 11% of respondents in North America and 21% in Europe. Other continents have a much high rate of file-sharing usage: 41% in the Middle East/Africa/Pakistan, 43% in Asia Pacific and 45% in Latin America.