Small businesses are overwhelmingly using consumer accounts not intended for commercial use.
The music industry is missing out on $2.65 billion annually due to businesses using personal music services in their storefronts, according to a Nielsen Music study.
The report was funded by Soundtrack Your Brand, which offers streaming for businesses at $26.99 a month, and is being lauded as the biggest study on the background music market to date. After surveying about 5,000 small business owners in the United States, United Kingdom, Sweden, Spain, Italy, Germany and France, it found that the use of personal streaming accounts -- instead of using business licenses -- is rampant.
The study estimates with 21.3 million businesses using consumer services globally, rights holders forfeit $2.65 billion annually. That figure factors an average of $11.96 per month lost for every business that uses a free personal music service and an average of $8.33 month is lost for every business that pays for a personal music service.
These totals were derived from 88 percent of small businesses reporting they play music daily or at least 4-5 days per week, with 80.3 percent saying music is important to their business (of that, 42.8 percent noted it was very important). As such, 86 percent of business said they were willing to pay some amount for the music, but the study did not specify what exact price point businesses deemed most reasonable. Meanwhile, those that do pay for streaming are mostly technically paying for the wrong services -- 83 percent (21.3 million) of small businesses who play background music use personal music services such as Spotify or Apple Music. Just 17 percent use services legal for business.
On top of it, more than half the businesses in each market incorrectly believed their methods of playing music were legal. In the U.S. that figure of confusion was 71 percent.
"Lack of innovation has driven small businesses to choose consumer services, as they are far more accessible and easy-to-use than most business alternatives," said Andreas Liffgarden, who used to run Spotify's business development and is now co-founder and chairman of Soundtrack Your Brand, in a statement. "We need a new generation of B2B streaming services, attractive to business owners, that make sure music makers get fair compensation."