Business Matters: Music Discovery Abounds, Conversion Needs Improvement: Study
Business Matters: Music Discovery Abounds, Conversion Needs Improvement: Study

Music Discovery Abounds, Conversion Needs Improvement: Study
-- Music discovery is alive and well, according to a new NPD Group/NARM study released Thursday. But there are some concerns that digital platforms too easily provide free content without doing more to convert consumers' attention into sales.

The study found that more than 80 percent of respondents were interested in learning about new music from artists they were already fans of, and 60 percent were interested in learning about unfamiliar artists in genres that they usually buy. OK, no surprises there. Since the 2007 study, brick-and-mortar stores have become less important for discovery (not a surprise) and social networks have risen in prominence. Again, no surprise since Facebook had just 50 million users in October of that year compared to more than 750 million today.

Somewhat surprising is the fact that Twitter appears to play a small role in music discovery, NPD Group senior VP Russ Crupnick said in a Thursday afternoon webinar for the study. Twitter was not among the top sources of discovery nor was it a common outlet people went to after a discovery.

How do people discover new music? The two most common sources are broadcast radio and personal connections (family/friends/co-workers). In all its various forms, TV (including competitions, awards programs, online video and scripted programming) is also "extremely influential."

As for Internet-based discovery, NPD calls online radio and web videos "also important for the most active music fans." Again, no surprises there -- unless you thought music lovers had long ago abandoned radio and TV for iTunes, YouTube and Pandora. But it's worth noting that only about 18 percent of the most avid listeners discover music on TV, while over half discover music on broadcast radio.

But the study also reveals just how much all this yearning for music discovery is concentrated in a small group of low-value consumers. The 55 percent of consumers who aren't terribly interested in new methods of music discovery represent just 18 percent of consumer spending on recorded music. NPD calls these groups the "comfortable," "casual" and "content" consumers. They tend to be older, don't spend much on music and tend to find new music on TV and radio.

The highest value group, the "committed" music consumers, account for 10 percent of consumers but 46 percent of spending. With a men age of 32 -- the youngest of the five groups -- they spend $267 per capita on music products (four times the average) and $139 per year on concerts. They buy all music formats and listen to all formats, and they want both access and ownership.

The second-most valuable group, the "converts," accounts for about a third of population and a third of spending. With an average age of 34, these consumers are likely to buy CDs and downloads. But they are more comfortable than "committed" consumers with accessing rather than owning music, Crupnick said.

What exists is a tale of two music consumers. "On one hand you have fans who can't find enough ways to learn about new music, whether it's at retail, through apps and social networks, or on radio and TV," Crupnick explained in the press release. "On the other hand there is still a large core group who learns by listening to AM/FM radio and on family shopping trips.

While people are busy discovering, Crupnick believes there is a conversion problem. This is to be expected, he says, because the business has changed so much. But the issue is that today's popular digital platforms allow consumers to delay or skip a high-value conversion. Crupnick singled out the "converts" as a group that could be more valuable if the music business did a better job at turning their interest into sales or subscriptions.

In other words, free online music and video, although limited in nature, is often good enough for some people -- and that's a problem for companies in need of digital revenue. But Crupnick adds that people should temper their expectations for conversion rates -- after all, there's a great amount of music being sampled -- even though he feels companies can improve conversion rates.

Amazon Buys Speech Recognition Developer Yap
-- Amazon has purchased Yap, the developer of speech recognition software. The deal actually went down months ago and only recently came to light via a SEC filing. Initial reactions were that Amazon had acquired Yap as a defense against Siri, the new voice recognition/artificial intelligence software in the new iPhone 4S. But as Wired points out, Yap's specialty is cloud-based voice transcription. So while Yap might not tell you how to get to the nearest ATM, it could fit very well into Amazon's drive to build powerful cloud-based services.
(The Atlantic, Wired)

Spotify Coming To Roku In Early 2012
-- Although the connected living room has been anticipated since the days the web was called the "information superhighway," it has only recently become a reality. Today's products have advanced to the point where connecting a TV to the Internet is not only easy but often preferable. One can access Netflix from a wide range of devices, for example, and today's gaming console is basically a connected multi-media digital content machine.

And now there's this: Spotify is coming to Roku, possibly in mid-January, according to a report at GigaOm. The service is already available to TeliaSonera digital TV customers in Sweden and Finland, and it's also available via Western Digital's WD TV Live or WD TV Live Hub media player. But Spotify would make a fine addition to Roku, which currently offers apps for music subscription service Rdio and Mog as well as Internet radio services Pandora, Live365 and ShoutCast.

Live365 Names Ed Schaffer CEO
-- Internet radio company Live365 has named Ed Schaffer to CEO. Schaffer, most recently was VP of business pperations, MediaWorks at Monster Worldwide, replaces outgoing CEO Mark Lam.
(Digital Media Wire)