Consumer InsightsDiscussion for FCC    April, 2010
BackgroundThis presentation is in response to the request by FCC Staff to provide a better understanding of music consumer...
Agenda• Music Customer Segmentation   - Seven consumer segments   - Segment breakdown by age group   - Time spent listenin...
Third party research commissioned by WMG indicates we canthink about consumers in seven distinct segments                 ...
Segment profile: Infrequent listeners                                              Experience                             ...
Segment profile: Radio-centric listeners                                             Experience                           ...
Segment profile: CD-centric listeners                                              Experience                             ...
Segment profile: Multi-platform casual fans                                             Experience                        ...
Segment profile: Mobile listeners                                              Experience                                 ...
Segment profile: Multi-platform enthusiasts                                              Experience                       ...
Segment profile: Self-Proclaimed Pirates                                             Experience                           ...
Segmentation varies widely by age Segment breakdown by age group             100%                               Pirates   ...
Time spent listening vs. Music spend by segment              Total population, time spent listening and annual spend by se...
Agenda• Music Customer Segmentation   - Seven consumer segments   - Segment breakdown by age group   - Time spend listenin...
Fear of legal consequences and viruses topreasons for discontinued P2P use              Top reasons for discontinuing P2P ...
Why people pay to acquire music?                                                                                          ...
Agenda• Music Customer Segmentation   - Seven consumer segments   - Segment breakdown by age group   - Time spend listenin...
Convenience: Google “One Box” Music Search                 the doors - Google Search - Mozilla Firefox                    ...
Convenience: Myspace Music       paramore on MySpace hlousic - Free Streaming MP3s, Pictures B: Music Downloads - MozilLa ...
Connection: Direct to fan pre-sale                                                  Pre-Order Configurations:             ...
Connection: Deluxe albums in iTunes                                                                                       ...
Connection: The Connected Media Experience                      Objective: To offer compelling experiences by developing  ...
Agenda• Music Customer Segmentation   - Seven consumer segments   - Segment breakdown by age group   - Time spend listenin...
Final Thoughts & Discussion• Understanding music consumers shows many  consumers will buy music when       - It is conveni...
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2010 warner music group música

  1. 1. Consumer InsightsDiscussion for FCC April, 2010
  2. 2. BackgroundThis presentation is in response to the request by FCC Staff to provide a better understanding of music consumers based on research commissioned by Warner Music GroupNYC Consumer Insights Discussion for FCC 2
  3. 3. Agenda• Music Customer Segmentation - Seven consumer segments - Segment breakdown by age group - Time spent listening vs. music spend by segments• Consumer Insights - Why consumers discontinue P2P use - Why consumers pay for music• Product Strategy to Encourage Purchases• Final Thoughts & DiscussionNYC Consumer Insights Discussion for FCC 3
  4. 4. Third party research commissioned by WMG indicates we canthink about consumers in seven distinct segments Traditional listeners Digital collectors Pirates Multi- Multi- Infrequent Radio-centric CD-centric Mobile Segments platform platform Pirates listeners listeners listeners listeners casual fans enthusiasts Infrequent Higher TSL Higher Casual fans On-the-go Younger, Avowed traditional listeners, control, CD- who mix listeners who trend-setting pirates who listeners who though centric listening highly value music- represent a tilt towards primarily listeners devices control obsessed cross section Description radio passive and listeners of all control radio-centric behaviors% population 28% 23% 6% 15% 5% 10% 13% Primarily lean-back Primarily lean-forwardSource: WMG Consumer Research NYC Consumer Insights Discussion for FCC 4
  5. 5. Segment profile: Infrequent listeners Experience • Lowest time spent listening group • Very passive in their listening (listening to Infrequent terrestrial radio ~60% of the time and CDs ~20% of the time) traditional • Least technologically-oriented segment (“I’m the listeners who last to know about new technology” or “technology confuses me”) tilt towards radio Acquisition • Pay for most of their music acquisitions • Lowest spending segment • Feels satisfied with their collection (1K tracks)Demographics:• Age: ~45 years old • Ownership is least important to this segment• Gender: 43% male; 57% female Discovery • Vast majority discover music primarily via traditional means (AM/FM radio, TV/movies and other traditional platforms) NYC Consumer Insights Discussion for FCC 5
  6. 6. Segment profile: Radio-centric listeners Experience • Above average time spent listening • Most lean-back segment with ~75% of the time to Higher time terrestrial radio and ~10% of the time engaged with their CD collections spent listening • Generally indifferent to technology (“technology is listeners, not important to me” or “it is not worth the time though to learn how to use it”) primarily passive and Acquisition radio-centric • Pay for a large share of music acquisitions • Below average spend annually and collection size (~2K tracks) • Ownership is only somewhat importantDemographics: Discovery• Age: : ~45 years old • Majority discover music primarily via traditional• Gender: 45 % male; 55% female means, but ~10% frequently do so via social media sitesNYC Consumer Insights Discussion for FCC 6
  7. 7. Segment profile: CD-centric listeners Experience • Average level of time spent listening but very highly engaged and lean forward • Listen to CDs ~60% of the time and terrestrial Higher radio ~20% of the time control, • Satisfied with their technological engagement (“I am happy with the technology I know” and CD- “technology is not important to me”) centric Acquisition listeners • Pay for a large share of music acquisitions • Above average level of spend and average collection size (~2.5K tracks) • Ownership is very important to this groupDemographics: Discovery• Age: ~44 years old • Majority primarily discover via traditional means• Gender: 40% male; 60% female • Packaging matters: find a meaningful amount of music via “interesting looking displays” NYC Consumer Insights Discussion for FCC 7
  8. 8. Segment profile: Multi-platform casual fans Experience • Below average engagement • Slightly lean-forward in their listening but choice Casual of platforms largely driven by convenience fans who • Digitally-oriented with ~70% of time spent in digital formats, but across a highly fragmented list mix of platforms listening • Like to be on the forefront of new technology devices Acquisition • Proud of their music collections (~2.7K tracks) • Pay for the majority of their musicDemographics: Discovery • Though traditional platforms are important for• Age: ~39 years old discovery to most of this group, 1/3 of them• Gender: 53% male; 47% female frequently discover music via social mediaNYC Consumer Insights Discussion for FCC 8
  9. 9. Segment profile: Mobile listeners Experience • Average level of listening, but highly lean-forward, and primarily via portable devices • Most control-oriented segment On-the-go • Highest iTunes usage listeners • Value technology highly (“Technology makes my who highly day-to-day life better”) value Acquisition control • Second highest spending segment, paying for 67% of music acquisitions • Large collections with ~3.7K tracksDemographics: Discovery • Though traditional platforms are important for• Age: ~33 years old discovery to most of this group, 25% of this• Gender: 52% male; 48% female segment discover music frequently via social media NYC Consumer Insights Discussion for FCC 9
  10. 10. Segment profile: Multi-platform enthusiasts Experience • Most highly engaged segment (“I have to be the first to know about popular music”) Younger, • Significant amount of lean-forward listening augmented by high-levels of lean-back listening to trend- drive an insatiable need to discover music setting • Highly digitally-oriented (>80% in digital format) music- obsessed Acquisition listeners • Proud of their music collections (~4K tracks) but continue to add to those collections at the highest rate among segments • Acquires more music without payment than other predominantly paying segmentsDemographics: Discovery• Age: ~35 years old • Though traditional platforms are important for discovery to this group, 20% of them frequently• Gender: 60% male; 40% female discover music via social media NYC Consumer Insights Discussion for FCC 10
  11. 11. Segment profile: Self-Proclaimed Pirates Experience • Represent a cross-section of experience/control behaviors, but most closely mimic digitals Non- • Average level of listening per week purchasers • Decidedly lean-forward, primarily engaging in a who variety of digital platforms represent a • Highly technologically-oriented group (“I am the first to know about new technology”) cross section of all control Acquisition behaviors • Pay for a small portion of music acquisitions, but they still spend some money annually • Relatively large collection (~3.1K tracks)Demographics: Discovery• Age: ~33 years old • Tend to drive high discovery for others (“others• Gender: 59% male; 41% female always want my advice on music”) • 30% of this segment frequently discover music via new media platformsNYC Consumer Insights Discussion for FCC 11
  12. 12. Segmentation varies widely by age Segment breakdown by age group 100% Pirates 80 Multi-plat enthusiasts 60 Mobile 40 Casual multi-plat CD Radio- 20 centric In- frequent 0 13-17 18-25 26-35 36-50 51 Core music consumers* 52% 41% 29% 22% 17% % digital** 90% 87% 82% 71% 54%Source: WMG Consumer Research* Core Music Consumers: CD-centric, mobile, multi-platform enthusiasts, and 2/3 of self-proclaimed pirates** Share of core music consumers who are digital NYC Consumer Insights Discussion for FCC 12
  13. 13. Time spent listening vs. Music spend by segment Total population, time spent listening and annual spend by segment 100% Pirates Pirates Pirates Multi-platform Multi-platform 80 enthusiasts enthusiasts Mobile Multi-platform Multi-platform enthusiasts Mobile 60 casual fans CD-centric Mobile Multi-platform Multi-platform casual fans casual fans 40 Radio-centric CD-centric CD-centric Radio-centric Radio-centric 20 Infrequent Infrequent Infrequent 0 Population Time Spent Listening Recorded music spend Traditional Digital PiratesSource: WMG Consumer Research listeners collectors NYC Consumer Insights Discussion for FCC 13
  14. 14. Agenda• Music Customer Segmentation - Seven consumer segments - Segment breakdown by age group - Time spend listening vs. music spend by segments• Consumer Insights - Why consumers discontinue P2P use - Why consumers pay for music• Product Strategy to Encourage Purchases• Final Thoughts & DiscussionNYC Consumer Insights Discussion for FCC 14
  15. 15. Fear of legal consequences and viruses topreasons for discontinued P2P use Top reasons for discontinuing P2P use 100% Other Free streaming services 80 Sites difficult to use Preference for iTunes Sites too time-consuming 60 Moral objection Desire to support the artist 40 Poor track quality Bad virus experience (personal or 20 friend) Fear of legal consequences 0 Share of mentionsSource: WMG Consumer Research NYC Consumer Insights Discussion for FCC 15
  16. 16. Why people pay to acquire music? ACQUISITION 100% "When at a concert" "It is an impulse purchase" "For access to concert tix" "For pre-release tracks" 80 "For addl bonus content/features" “Connectedness” "When it is an artist I really support" 60 "Nervous about legal consequences" "To acquire music not available for free" 40 "To acquire music in an easy to listen to format" “Convenience” "To acquire music I want quickly and 20 easily" "To ensure that the file/CD is fully functional" 0 Top reasonsSource: WMG Consumer Research NYC Consumer Insights Discussion for FCC 16
  17. 17. Agenda• Music Customer Segmentation - Seven consumer segments - Segment breakdown by age group - Time spend listening vs. music spend by segments• Consumer Insights - Why consumers discontinue P2P use - Why consumers pay for music• Product Strategy to Encourage Purchases• Final Thoughts & DiscussionNYC Consumer Insights Discussion for FCC 17
  18. 18. Convenience: Google “One Box” Music Search the doors - Google Search - Mozilla Firefox ~iew Hi~tory ~ool<:rnarks IDols tielp 7.o,----------------------;.;::S~:;;.;:~~~!C~~ C Readability .-, the doors - Google Search Go gle I-Ith_e_do_o_rs ---- 1 Search I Advanced Search Web ~ Show options Results 1 - 10 of about 43,400,000 for the doors (0.30 seconds) The Doors Sponsored Unks ~ :~i,~~;~~~~t1~~~:r~~o~~~~~~~ ~:~t5:r . . - rI ~ t 2004 - 709 [B Hello I love You - The Very Best of ... - 2004 - 2:40 [B The End - The Doors - 2006 - 11 :40 More songs from jLike.com Listen on: Rhapsody - Pandora - Lala The Doors ::I> " Bright Midnight Records, biographies of Jim Morrison, Ray Manzarek, Robby Krieger, and John Densmore, discography, galleries, multimedia, and forum. Light My Fire wwvv.thedoors.com/- Cached - Similar The Doors (on tour) - The [Joors (2006) The Doors - Wikipedia the free encvclopedia The Doors were an American rock band formed in 1965 in Los Angeles, California. Through the majority of its existence, the group consisted of vocalist Jim ... Discography - Jim Morrison - The Doors (film) - The Doors (album) en.wikipedia.org/wikiffhe_Doors - Cached - Similar The Doors (film) - Wikipedia the free encyclopedia The Doors is a 1991 biopic about the 1960s-1970s rock band of the same name which .. 0:03 I 0:30 114») emphasizes the life of its lead singer, Jim Morrison.... en.wikipedia.org/wikilThe_Doors_(film) - Cached - Similar I±IShow more results from en.wikipedia.org The Doors - Touch Me The Doors - The end 3 min 13 sec - May 22, 2006 10 min - Aug 24, 2006 www.youtube.com WoNW.youtube.com The Doors (1991) ****" by Oliver7.0110 from 28,497Kilmer, Meg Ryan, Kyle Maclachlan. The story of the Directed Rating: Stone. With Val users famous and influential 1960s rock band and its lead singer and ... www.imdb.com/title/tt0101761/- Cached - Similar The Doors - Discover music videos, concerts, & pictures at LasUm Watch videos & listen free to The Doors: People Are Strange, Light My Fire & more, plus 171 JI . , •. , . . .NYC Consumer Insights Discussion for FCC 18
  19. 19. Convenience: Myspace Music paramore on MySpace hlousic - Free Streaming MP3s, Pictures B: Music Downloads - MozilLa Firefox [Ie ~dit ~ookmarks loo!:; ttelp Iii Ittp:JllIIIW·myspace,com!paramore Iii CJ Home Browse People Fmd Fnends loul ~lum Yldeo Gilmes More log In Sign Up -=-....... ............ ~ ~....-., ............ http://www.myspace.com!paramore!music-player.sindex=-I.O&shuffle=false&amix=false&jlmix=falsei _-~:::::- ON TOUR WITH RELIENT KAND FUN. STARTING APRIL 26TH 1 Li, HE,E F"R [;1E ;1,[111 rET IIIF,,,;11 II music. r:J aramore ~ paramore posted a new blog entry: Paramore in Europe this week! ~lar 22 l1l paramore posted a new blog entry: Honda Civic Tour dates! 2010 ~lar 19 ~ paramore posted a new blog entry: New shows in Ireland announced! With Green Dav!NYC Consumer Insights Discussion for FCC 19
  20. 20. Connection: Direct to fan pre-sale Pre-Order Configurations: Pre- • $24.99: Digital Only • $32.99: Standard CD • $124.99: Vinyl + Litho • $179.99: Coffin Box • All versions included access to pre-order site, free shipping, pre- and 320kbs digital delivery on night of release Pre-order site content: Pre- • 350 minutes of exclusive video footage Free digital single downloads 10 preview riffs • 1 free ringtone • “Making of the record” footage record” • Tour pre-sale pre- • Listening party premierNYC Consumer Insights Discussion for FCC 20 20
  21. 21. Connection: Deluxe albums in iTunes ms q,Search Store Lady GaGa I Gona feeling BlackEyedPeu ~;:;,r:1a~~1 (feal. Justin Tlmber1a ..."SHARED Qj Hom" ShMng All Hour Cymb/lls Yeasayer -;7 MlckeyMOI,Jse .. Various ArtlSlS Halloween Song... VallOuaArtlSla -- S-~ Olympk:Theme fre<leric~ Fennel ABC: Vano, Yes, My Heart Anna Maria Alberl;lh Here I Sand Streetwire Bewitched. Bothered and Bewild Youre the One The VOQues Off of Wondel1and Jackson Browne This Is the Moment Studio Group 1 Need You low it LadyA.nlet>e"m The King of WishfUl Thinking Go Thanks Of" the BooQiIl Ride Rene ~> Bolh Sides tlow IRemllslered) Jo 3. Aebinh (DeluKe Version) Deluxe WlldY<X,lngHear•.• The Essentllli D... UltlmSleColle<=Il ... Slarsandthe ...... AGo LIWayne NOlSenes Dono"sn CaplUl3 Tennile Betty Buckley John ~ We Just Disagree (Single Versio 4 TheE,N.O.(TheEnergytleverOl ... BlackEyedPeu 6. The Who: Grealeal Hits $7.99 Valentines Day Albums TheWh" III. 7 Soldier of Love Sade 8. The fame Monsler (Deluxe Ver ... erIDi... Lady GaGa 9 Animal Love to Love Atlantk:60th-L ... The UltImate To... Stronger wllhEa... Love Drunk Cnll.yLove VariouaArtisls V.no"aArttsta " A DELE Tony Bennett MaryJ.BliOe BoyaLikeGrIs MIChael Bublt Ke-Sha 10 ~~~hOf..OSe (Deluxe Version) /lumber 1.; LOY... (500) Days of Su... Krls Allen lAm.•• sashafle ... To Love Again Love (Bonus Tra... Love Songs Various Artisls VarNlusArtlsls KrisA,len Bey"nce Chrisa,,111 .. a"yz.lden Chicall" 1. Gliner In the Air lLivel " 2 Poker face / Speechleas/Your .. Lady GaGa Whats Hot 3.~:~~z;~e 4.lfIWereaBoy(Llvel + X C Gl Deluxe 1 . Fu hou e Ukl e Ve 0) ~ Deluxe NYC Consumer Insights Discussion for FCC 21 21
  22. 22. Connection: The Connected Media Experience Objective: To offer compelling experiences by developing a new open standard in digital media packaging Connected Media Experience… - Is a digital package format and supporting back-end services - Is a collection of files, such as MP3 audio files, JPG images, and more - Can include online assets and updates that are available to registered users. - Is intended for computers, phones, portable devices, set- top boxes, and more - Can include User generated content and will work for indie labels and garage bands - Is intended for all media types but will be implemented for music content initially - Is an open standard: www.connectedmediaexperience.orgNYC Consumer Insights Discussion for FCC 22 22
  23. 23. Agenda• Music Customer Segmentation - Seven consumer segments - Segment breakdown by age group - Time spend listening vs. music spend by segments• Consumer Insights - Why consumers discontinue P2P use - Why consumers pay for music• Product Strategy to Encourage Purchases• Final Thoughts & DiscussionNYC Consumer Insights Discussion for FCC 23
  24. 24. Final Thoughts & Discussion• Understanding music consumers shows many consumers will buy music when - It is convenient - They are provided real value - The purchase fosters their connection to the artist• But the unfettered availability of unauthorized services remains an impediment to the legitimate marketNYC Consumer Insights Discussion for FCC 24

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