Do Teens Really Like Subscriptions More than Paid Downloads?

When perusing the results of a Piper Jaffray survey of U.S. high school students, keep in mind there's a big difference between considering to buying a product and actually parting with your money.

A couple rows of data catch the eyes and confuse the mind. The first shows the percentage of teens who say they would consider paying $0.99 per track to purchase music. While 22% might seem horribly low, it's actually almost the same as the fall of 2007 (it was 21% back then and has fluctuated between 11% and 27% since). And, oddly, it's far lower than the percentage of teens who say they do indeed purchase tracks from online music stores (where most popular tracks cost over $0.99 apiece). So Piper's survey suggests that more teens actually pay for downloads than say they would consider paying for them.

The second confusing point is about those who would consider paying $15 per month for an online music subscription service. If you look at the Spring 2011 column you'll see 37% of teens surveyed said they would consider paying for such a service. That's obviously higher than the 22% who say they would consider paying $0.99 per track for music - although the same survey clearly indicates 35% of them are already purchasing track downloads.

But before you declare the access model more popular than the a la carte model, check out the consistency in the responses going back to Fall 2007. Each time teens are surveyed, they show a relatively positive attitude toward subscription services. The percent who answered "yes" has hovered around the 37% mark over the years, peaking at 46% in Spring 2009 and hitting a lot of 34% in Spring 2010.

In other words -- astonishingly -- high school students have consistently not put their money where their mouths are. There were 21.5 million teens from the ages of 15 to 19 in July 2008, according to the U.S. Census Bureau. Thirty-seven percent of 21.5 million is about 8 million - a far higher number than what U.S. subscription services are pulling in across all age groups.

There are a number of factors preventing 8 million teens from subscribing to $15-per-month music services. An obvious issue is that people initially express interest in the subscription model but never end up actually becoming a subscriber. Market research has long overstated the actual appeal of these services and underestimated the length of time it will take for these services to take root with consumers.

But there are likely other factors, such as lack of proper hardware. As the survey shows, only 17% of teens have iPhones, a likely gateway to paid music services. Piper gives no indication as to teens ownership or desire for Android or other mobile phones. One can imagine teens experiencing payment problems since these services require payment by credit card. Another factor is the prevalence of file-sharing services. Sixty-five percent of teens surveyed said they download music files from file-sharing services - a number that has held fairly steady since Fall 2007. ( Business Insider)

Anyone Laughing At Amazon's Cloud Service May Not Be Laughing For Long …
-- Amazon's new Cloud Drive service was received with some skepticism when it launched last week. But Google and Apple have nine good reasons to be scared of Amazon and its new Cloud Drive storage service, writes the Echo Nest's Paul Lamere in a post his blog, Music Machinery.

At the heart of Lamere's argument are the strengths Amazon can build upon. One strength is cloud computing. "Amazon has been leading the pack in cloud computing for years," he writes. "They know how to build reliable, cost-effective cloud-based solutions, they've been doing it longer than anyone." He points to Amazon's success with the Kindle, which allows buyers to access books from a variety of devices.

Amazon's expertise at cloud computing comes through in Cloud Drive and Cloud Player. As I wrote last week, Cloud Drive is a well executed, easy-to-use product for mainstream music buyers. It solves a real problem - storage of purchased digital files. And if you buy music at Amazon's MP3 store, the price is attractive. "Cloud Drive is not a feature-rich subscription service filled with bells and whistles," I wrote last week. "It was never intended to convert cash-strapped tweens into paying customers. It does not integrate social media, discovery or editorial. It doesn't scrobble to Last.fm and it doesn't have personalized artist radio stations. Instead, Cloud Drive does one thing and it seems to do it pretty well."

The Kindle also shows that Amazon "seems to care," he writes. Google provides a cluttered overabundance of music while music has turned out to be "just another feature" for Apple's iTunes. But the Kindle, Lamere observes, is a device that "arguably improves the reading experience." Cloud Drive is in its early days, but he is "hopeful that Amazon will apply their same since of care for books to the world of music." ( Music Machinery)

The Hotfile Case And Its Ramifications
-- The MPAA's lawsuit against Hotfile is a "test case" of cyberlockers' copyright liability, writes Eriq Gardner at The Hollywood Reporter. Hotfile is a Florida-based company that offers an online file hosting service. While Hotfile has non-infringing uses, it can also be used to host and share content without the permission of the rights holders. The question, writes Gardner, is how little knowledge of infringement would require Hotfile to take steps to reduce piracy on its service.

"Right now, the company is framing itself as an innocent, even if its technology pretty clearly is being used malevolently by others. But technologies don't commit crimes -- those behind the technology or those in front of the technology do. It's up to a court now to jump in and decide the gray areas separating the responsibilities of the former over the latter -- right from wrong. This will not be the last time this important issue comes up." ( The Hollywood Reporter)

Microsoft, Toyota Team Up
-- Toyota is partnering with Microsoft to offer Internet-connected services in its automobiles. Reports say the companies plan to offer multimedia services as well as GPS and power management systems. For example, the companies plan to launch a service that monitors a person's power usage at home to charge electric cars when power rates are lowest. The partnership with Toyota follows Microsoft's years-old partnership with Ford that resulted in the SYNC car connectivity system. ( Reuters)