How We Listen: IFPI Finds Global Uptick in Both Legal Streaming and MP3 Ripping

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There's good news and bad news in "Connecting With Music," the IFPI's just-released music consumer insight report.

One of the main takeaways of the report -- here -- is that music consumers across the globe are increasingly choosing licensed audio streaming services, with 45 percent compared to 37 percent in 2016. That said, more than half of on-demand music streaming (55 percent) is from video sources like free-if-you-dig-ads YouTube, while the rest is split evenly between paid audio services (23 percent) and free services (22 percent), primarily Spotify's free tier.

That sustained dominance of YouTube among internet music consumers, however, has been a flashpoint in the industry. Unlike their licensed audio counterparts, upload video services like YouTube pay rights holders with a share of advertising revenue, as opposed to Spotify and other streaming services which have minimum per/stream rates. (IFPI estimates that the average YouTube user creates one dollar in revenue for the music industry annually, while the return on a Spotify listener is roughly $20 per year.) The "value gap" created by that disparity is the "single biggest threat facing the music world today," the IFPI says.

In the last six months, music consumers have been listening in four distinct ways: Radio: An average of 87 percent of people globally are still tuning in to radio of some kind, with 68 percent using broadcast and 35 percent streaming over the internet. Video Streaming: 75 percent of consumers spend time with YouTube and other similar services for music. Audio Streaming: An average of 45 percent use some type of audio service, primarily free ones (39 percent) over paid (27 percent). Purchased Music: 44 percent are purchasing some of their music, whether its CDs (32 percent), downloads (28 percent) or vinyl (17 percent).

In the "children are our future" department, an overwhelming 85 percent of 13-15 year-old are using streaming services of all stripes (audio/video) to listen to their music. Of the teens who primarily choose audio streaming, 37 percent are through paid services. A third of those kids are paying for their own subscriptions, while 36 percent are on a family plan. Fifty-three percent of early teenagers have purchased physical or downloaded music (19 percent are already into vinyl).

The study finds that the use of smartphones to listen to music is increasing rapidly, with 90 percent of paid audio streamers going mobile. In the U.S. 63 percent of listeners are using their smartphones to do it, up from 54 percent a year ago. The study points out that the younger you are, the more likely a phone is your go-to way to listen. For example, 84 percent of 16-24 year-old use their phones for music, compared to only 30 percent of 55-64 year-olds.

According to the data, 50 percent of internet users have paid for licensed music in the last six months.

"This report shows some amazing trends defining this new era, how fans around the world are enjoying recorded music and connecting with the artists they love in so many ways," said IFPI CEO Frances Moore.  "The increasingly digital global music environment did not just happen. It requires an enormous amount of work from record companies and their partners to license over 40 million tracks to hundreds of digital services around the world."

While the consumption of licensed music has risen steadily, so has copyright infringing outlets for acquiring music such as stream ripping. According to IFPI, 40 percent of consumer have accessed unlicensed music, and 35 percent of all internet users are stream ripping, up from 30 percent a year ago. That number goes way up when you single out 15-24 year-olds who rip at a rate 53 percent, and 25-34 year-olds at 45 percent.

(Stream ripping took a big hit earlier this month when YouTube.mp3, a top website for creating MP3 files out of YouTube videos, was shut down as part of a settlement with the RIAA.)

To reach these overall findings, IFPI commission IPSOS to research internet users aged 16-64 in 13 of the world's top music markets -- territories that account for 85 percent of the global recorded music market. They include: Australia, Brazil, Canada, France, Germany, Italy, Japan, Mexico, South Korea, Spain, Sweden, United Kingdom, and United States.