www.musicweek.com

22.01.11 Music Week 3

Study shows eight distinct user groups in bid to understand household behaviour

From dabblers to fanatics: the UK’s digital diversity revealed in report

Digital By Robert Ashton

THE INDUSTRY’S SKILL at helping potential digital companies tailor their online services to the UK’s music buyers has been strengthened after new research identified a vast range of consumer behaviour.

The 46-page Into The Future report, commissioned by the major labels and UK Music, may also help the industry in targeting its Digital Economy Act notifications to filesharers, after uncovering eight key groupings, from music obsessives to those who rarely shell out on music or only buy CDs.

The study, compiled by the Future Business Research Group – a coalition of senior executives from majors and music organisations’ research facilities – underlines what digital experts have been saying for years: not all music buyers are the same and there is no one-size-fits-all service.

The study also provides a platform for the BPI – which recently established its Innovation Panel – and others to work with ISPs to build a range of services that will appeal to each group and even help bring those users currently dabbling with unlicensed services into the legal fold.

UK Music chief executive Feargal Sharkey says, “It is important to help us and the membership to make better and more informed decisions and understand what the people out there want, what are they thinking about, what are they missing and what do we need to be doing to satisfy that demand?”

Another senior executive familiar with the report says, “It is the first time the industry has done something like this to create industry-wide understanding and get behind new models and drive innovation.”

After dividing households into those which do or do not buy music digitally, the researchers created three broad segments: those who engage in more free than legal downloading; those who spend more on legal downloads than accessing unlicensed sites; and those who almost exclusively still buy CDs.

These three groups then threw up the eight categories that got the industry excited. These are: ● Music Obsessives, form 11% of the population and are passionate about music and switch between licensed and unlicensed services; ● Budget Conscious, low-income households with low interest in buying music and constituting just

8% of the population; ● Generation Free, who use P2P and do not spend any of their lower than average income on music ● Affluent Digital Converts, the 11% of the population that are highincome households and are currently the main audience for legal digital services; ● Going Digital, the 15% of households in transition towards digital and who believe illegal downloading is wrong. As a result, they are ripe for the next wave of online services; ● Digital Dabblers, comprising 12% of the population but who spend little on music, finding many of the existing digital services confusing; ● Physical Fanatics, who love older bands and added-value physical product but are not tech savvy and are unlikely to download in the future; ● Traditional Physical, comprising nearly a quarter of the population but are uncomfortable with new technology.

The report concludes that the industry needs to tailor services to Music Obsessives because they are one of the groups in the high music spend category, which accounts for 91% of total spend (see box).

Researchers concede this group holds some negative views about the music industry: they will support upcoming bands but are less inclined to put any more money in the pockets of established groups such as The Rolling Stones. One executive explains, “People pirate for different reasons, but these guys are passionate about music, they are high value and important.”

The report notes, “If the industry treats them [Music Obsessives] in what they regard as a heavy-handed manner, they might be deterred from adopting legal services.”

Sharkey also points out that social networking crops up as an important element for music services

“It is important to help us to make better and more informed decisions and understand what the people out there want” FEARGAL SHARKEY, UK MUSIC

throughout the report. He adds, “I thought it was intriguing that regardless of their consumption pattern around music or their social economic background the whole social interaction thing around music is still important. It’s the same trait we all shared at school at the back of the bike shed listening to the Top 20 on a Tuesday lunchtime with our mates.”

The industry has less of a problem with the Affluent Digital Converts, Going Digital and Physical Fanatics, which form the rest of the 48% of the heavy-spending population. Affluents are already on iTunes and Go-ing Digitals only need to be enthused.

The report suggests for the latter group that, “If we can find their trigger points in the way that Sky TV did with sports broadcasting we can drive another wave of adoption of legal digital music in the UK”.

The four low-spending groups – Traditionals, Dabblers, Budgets and Generation Frees – comprise the majority (52%) of the population, but only account for 9% of the spend.

The industry perceives the Dabblers as the most likely group to migrate on to legal digital services because they “want to get more out of digital music”, but find it difficult because they are not tech-savvy and are put off by the range and choice of services.

The data, privately presented to digital decision-makers last year but only recently provided in full to Music Week, has already been fed into the arsenal of research labels and organisations are using to help online services target Britain’s consumers.

Recently the BPI established an Innovation Panel, in which a range of digital experts help steer potential new services towards gaps in the digital market. This forum claims to have already identified around 20 different market gaps, some of which could be worth tens of millions of pounds if exploited. A BPI spokesman says Into The Future has been useful in feeding into this process.

A UK Music spokesman adds the FBRG coalition will continue to build on this and other related work and he expects it to produce further research in the coming months. robert@musicweek.com

IN THIS

ISSUE

THE BUSINESS OF MUSIC www.musicweek.com

DIGITAL MYSPACE - THE FINAL FRONTIER How the great digital hope has fallen into irrelevance

ANALYSIS AMERICANS INVADE SONGWRITERS CHART Exclusive MW research reveals the top songwriters of 2010

0 3

7 7 6 1 3 6

7 7 6 6 6 9

9

22.01.11 £5.15

FEATURES FRANCE IN FOCUS A look at French music exports to the UK – plus

FREE Oui Love talent CD

On-air/on-sale to shake up singles charts and strike a blow to piracy

Smeezingtons’ songwriting claims crown

Major labels tune in to the public’s ‘age of immediacy’

Radio By Robert Ashton

THE ON-AIR/ON-SALE REVOLUTION HAS BEGUN, with Universal, Sony and the indies ripping up the rule book and releasing records to retail as soon as they go to radio.

The dramatic shift bows to demand from music fans and follows months of research, discussion and soul searching by the two majors. It provides artists with more creative campaigns and also ends the so-called “selfgenerating piracy”.

On-Air/On-Sale was the only logical way forward, says Universal Music UK chairman and CEO David Joseph. “For a lot of our younger fans and consumers the word ‘wait’ is no longer in the vocabulary,” he says. “You hear something and want it and then you search it. And if you search for it then you’ve got to make sure there is a legal site for that appetite.”

Sony Music chairman and CEO Ged Doherty adds, “We live in an age of immediacy – release windows are a thing of the past. We have heard loud and clear from our customers that they want to get hold of music they like as soon as they hear it and that is what we are going to give them.”

The move to on-air/on-sale, which will be phased in from next month for acts whose management are on board, ends a year-long campaign by the Music Managers’ Forum and the Entertainment Retailers Association to persuade record companies of the futility of leaving long gaps between tracks going on air and their availability instore.

MMF chairman Jon Webster says the move will lead to “happy consumers” as well as increased sales and revenue (see p4).

“For a lot of fans and consumers the word ‘wait’ is no longer in the vocabulary. You hear something and then you search for it… and if you search you’ve got to make sure there is a legal site for that appetite” DAVID JOSEPH, UNIVERSAL

AIM chairman and CEO Alison Wenham has also been a vocal supporter of same-day retail radio releases. She says her indie members have already been quietly getting on with narrowing the gap between radio and retail and she hopes the move by Universal and Sony will encourage more indie labels to get on board.

Wenham adds she has long argued that long lead times have actually weakened sales because people become fed up with tracks by the time they are on sale in shops. “The concentration of playlists can lead to the exhaus-tion of the popularity of a song,” she suggests.

EMI and Warner have yet to be persuaded by the benefits of the move, but one insider suggests EMI is “halfway there” and it is expected – or hoped – the two other majors will follow suit by the end of this year. Warner is understood to consider the issue on a case-bycase basis.

Research demonstrates online searches on first singles previewing albums peak at around the second week of radio play and that many people are annoyed they cannot buy music they have already heard on the radio.

With that kind of appetite for new music Joseph believes Univ-ersal had an “absolute respons-ibility” to make the same-day move.

“Not to try to do it in the way fans are consuming music is absolutely the wrong thing to do,” he adds. But he also points out that on-air/on-sale will be more exciting for artists because record companies can be more creative about their campaigns.

The shift could also encourage more legal online music services because they will be able to get their hands on legitimate digital tracks at the same time as the pirate sites.

“We can do lots more deals with companies who want to set up streaming or downloading services. It gives them fuel to launch and be really competitive because they can be marketed as having tracks available immediately and of a better quality,” explains Joseph.

In addition to ending years – even decades – of accepted working practices at record labels, who will now have to rethink their marketing strategies, the move will also have a significant impact at radio. The effect of same-day sale and radio play means tracks are unlikely to shoot into the upper reaches of the charts on the day of release.

More typically, they will enter the lower reaches and then climb steadily. They are also likely to stick around longer if radio producers add the tracks to their A- and B-lists. Again, many executives see no problem with Joseph suggesting the sales charts may start to behave like the airplay charts. “I think things will come in, they will rise and they will grow with new audiences,” Joseph adds.

There is also a piracy agenda. Many supporters of on-air/on-sale suggest the Digital Economy Act will be undermined by the industry itself for as long as it continues to allow digital files of music, which are not legitimately available for sale, to flood the internet. A senior executive says, “It is untenable to send letters to people [under the DEA] who you are accusing of piracy while you allow this.” robert@musicweek.com

See pages 4-5 for further Music Week analysis

THE US WRITING AND PRODUCTION trio behind Cee-Lo Green’s Forget You and Bruno Mars’s Just the Way You Are (Amazing) have been named as the most successful songwriters in the UK last year, Music Week can reveal.

Peter Hernandez aka Bruno Mars, Philip Lawrence and Ari Levine, who make up The Smeezingtons, top an exclusive top 50 chart compiled by Music Week and based on writers’ shares of the OCC’s top 100 biggestselling singles of the year.

The Bug/EMI – published writers scored three UK number one singles during the year, beginning with Nothin’ On You by B.o.B featuring Mars, followed by Just The Way You Are (Amazing) and Forget You. Their hits in the year-end top 100 also take in Billionaire by Travie McCoy and Mars and K’naan’s World Cup song Wavin’ Flag.

EMI-signed Norwegian songwriting and production duo Stargate take second place on the songwriters chart after co-penning hits for Katy Perry, Rihanna and Alex Jordan, while Cherry Lane/BMG Rights’ will.i.am, who topped Music Week’s 2009 songwriters chart with Black Eyed Peas, finishes third thanks to writing Usher’s chart-topping OMG and further success with his band.

IQ and the Sony/ATV-published Journey rank fourth, after both their original version and the Glee Cast’s cover of Don’t Stop Believin’ finished among the year’s 30 topselling singles.

Biffy Clyro frontman Simon Neil is the highest-ranked UK songwriter on the list, finishing in fourth place after his Warner/Chappell-published song Many Of Horror – renamed When We Collide – was covered by 2010’s X Factor winner Matt Cardle and topped the Christmas chart. He is joined in the Top 10 by fellow Brits Tinie Tempah and Labrinth.

Sony/ATV’s Jonathan Rotem, who co-wrote Iyaz’s Replay and hits for Jason Derulo, is eighth, Universal’s Owl City ninth and Sony/ATV’s RedOne is 10th on the list. ● see p10 for the full rundown

NEWS ON-AIR/ON-SALE

4

Who wins and who loses in the wake of the majors’ release date decision?

DIGITAL NEWS THE FALL OF MYSPACE 7 Cuts and a possible sale spell trouble for former digital giant

MEDIA NEWS CAPITAL GAINS IN AIRPLAY CHART 8 National roll-out benefits network’s playlisted tracks in radio rundown

PUBLISHING NEWS THE US INVASION 10 2010 songwriting chart reveals UK writers are few and far between

UNEARTHED MARCUS FOSTER

12

Solo act to benefit from label Communion’s link-up with Geffen

FEATURES DIY MAKES ITS MARK 13 Artist-run labels make inroads in 2010’s year-end market shares

FEATURES FRANCE IN FOCUS 17 We look at the growing popularity of French musical exports in the UK

FEATURES BRAZILIAN FLAIR

22

Your track-by-track guide to our CD showcasing Brazilian talent