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How does the music industry get people to pay for digital content?

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Music, Spotify, Consumer Media, Digital Media, Newspapers


How does the music industry get people to pay for digital content?

Music and news are very different businesses, but the digital age presented them both with a very similar problem: how do you get someone to pay for something they can get for free?

It's a question the music industry is tackling with some success according to the latest Ofcom report on media piracy. So what can news and entertainment publishers learn from this?

The proportion of digital music tracks accessed illegally in the UK fell to just 16 percent of total digital music consumption in the period between March and May this year, down from 26 percent a year ealier.

The total volume of tracks accessed illegally also fell to 199 million, down from 301 million a year earlier.

Illegal downloads proportion and total Ofcom

The fall in piracy has accompanied growth in digital sales which helped the music industry grow revenues 0.3 percent last year - the first rise since 1999 when physical CD sales were at their peak.  

After years of protesting about illegal downloads and filesharing killing paid-for sales, the music business has focused on convincing people to pay by building and supporting better and more convenient digital products. 

Streaming revolution

Apple's iTunes provided an easy way to buy digital music when it launched in 2003, but its success had no effect on burgeoning online piracy. The real innovation has come from affordable, good quality streaming services, most notably in the UK and across Europe with Spotify.

The Ofcom report shows £105 million was spent on online music subscriptions in the period covered, more than the £100 million spent in paid downloads. The amount spent on online music subscriptions has exceeded digital download spend in three of the three-month periods covered by Ofcom's reports since their launch in March 2012.

What streaming services such as Spotify offer is a well-built digital package that not only allow users to access all the content they want, but also provide them with a seamless multiplatform experience. For the top tier £9.99-a-month package, all your playlists are available on smartphone, PC and tablet, as well as local mp3 files.

Netflix similarly has built up a loyal and growing audience - 1.5 million in the UK as of August - with its monthly subscription and multiplatform movies.

If news providers do the same, can they convince consumers that it's worth paying for them rather than going to other free sources?

Careful pricing

Getting people to pay isn't just about good products, it's also about price. Ofcom data from 2012 shows just how sensitive the market is to small changes in subscription pricing.

All those newspaper groups that have arbitrarily set their subscription package prices at around £10 a month should take note that the likelihood someone will pay takes a sharp upward turn under £7.50.

Ofcom Kantar subscription music propensity to pay

Of course, Spotify contains music from all major and independent labels - it doesn't invest in or create content.

Nevertheless, good digital products, sensible pricing for an attractive package and investment in marketing, can all persuade people to pay for content that is easy to get elsewhere. It's taken the music industry a long time to get it right, but if they can do it why can't other parts of the media?

Image via Flickr courtesy of asgw used under a Creative Commons licence.

music, digital, pay, ofcom, streaming, publishers, services, downloading, piracy, tracks

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