Is Free Music Running Amok in Europe? New European Commission Survey Looks at Digital Consumption

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Free streaming and downloading may be common, but people pay for access at a decent rate, according to survey.

A new report on online content by the European Commission says 60 percent of the nearly 27,000 European consumers surveyed in January either streamed or downloaded music in the previous 12 months, higher than video content (59 percent, excluding sports), games (37 percent), sports (35 percent) and e-books (27 percent). 

But while people are listening in great numbers, they're paying at a relatively low rate. Among consumers that accessed these five categories content online, music had the second-lowest percent of both paid users (29 percent, better than only sports with 19 percent) and paid subscribers (12 percent, four percentage points higher than e-books with 8 percent). E-books had the highest share of paid access at 46 percent. Games were second, at 34 percent.

At first blush, these numbers look bad for music; nearly two in three people surveyed use the Internet to access music but less than a third of those people were paying customers, meaning just 17 percent of Europeans surveyed had paid for digital music in one way or another. Europe looks like a continent of freeloaders.

But the numbers aren't as bad as they seem. The report presented the information in a way that overstated consumers' disinterest in paying for digital music. 

Music actually holds up very well relative to other categories. To see why, consider the case of e-books, the leader in paid access with 46 percent. One might think e-book readers are better off financially or have more respect for copyright. But e-book consumers may simply lack the options for free or illegal access that are typical for other categories. So while a large portion of them paid, a small portion (27 percent) of them accessed e-books online in the first place. Thus, just 12 percent (46 percent times 27 percent) of people surveyed paid for an e-book -- five percentage points lower than music.

The EC's report should have added one more chart that showed the total percentage of people that paid for each type of content. Here's what such a chart would have shown: 18 percent for video, 17 percent for music, 13 percent for games, 12 percent for e-books and 7 percent for sports. Instead, the report offered two charts for the components of those numbers. The first chart showed the percent of people that access content online. The second chart showed the percent of people who answered yes on the previous chart that ended up paying for the content. The first number multiplied by the second number equals the most important number, the percent of all people surveyed that paid for the content.

Not that music is the healthiest of media categories. Growth in global recorded music revenues has been roughly flat in recent years, although the live business is healthy. As a point of comparison, the games category, which had a lower rate of paying customers than music, is projected to have revenue of $86.1 billion next year, up from $66.3 billion in 2013, according to Newzoo.

But as far as consumers' willingness to pay, music does almost as good or better than its peers.

Music is also good at giving itself away. The EC's survey revealed 88 percent of Europeans that download or stream music can often, or always, find what they're looking for -- the highest rate of the five categories. This is the kind of number that worries many people in the music business. Look no further than some labels' and artists' efforts to limit or eliminate free listening on Spotify, the largest music subscription service in the world. Piracy still exists but captures little attention these days, almost as if it has been completely eviscerated (that's hardly the case).

Free, legal music is public enemy number one these days. The industry is searching for a balance between an acceptable number of free listeners and a necessary number of paying listeners. It wants to offer enough free content to keep piracy low but not so much that potential payers are lost. But how many more people could realistically be expected to pay? As these numbers show, music is doing a relatively good job getting consumers to pay for digital content.