Brands In A Digital Music Space

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A brief insight from me into the digital music space from a brand perspective.

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Brands In A Digital Music Space

  1. 1. BRANDS IN A DIGITAL MUSIC SPACE There is a gradual shift away from traditional advertising, which is ineffectual, with recent research showing that as many as 75% of adults actively avoid advertising whether on TV, billboards or banners1. The modern consumer lives in a complicated marketplace where brands are constantly competing for attention in various ways. This means that it is very difficult to engage them in a top down way, prescribing to them why a particular product is better than another. Consumers are more interested in brands that offer them some sort of emotional connection by engaging them as equals. Effective use of music for brands is all about creating emotional ties between the brand and the consumer, and connecting people to the brand through music and artists in an interesting and innovative way. Successful marketing is now more about offering something of value and being authentic and open; delivering something new and interesting into their lives that facilitates them to come to their own decision that your brand is worthy for them to buy into. The value of this is then translated both into the purchases that person makes and also the information they share with others. According to a recent report 50% of social network users said that they considered information shared on their social network before making a purchase decision2. We are firm believers in new marketing principle of the ‘Four E’s’: • Emotions • Experience • Engagement • Exclusivity This kind of engagement can be done in a number of ways but we strongly believe in music as great way to connect with consumers. Music is very important to people; it’s the media format people would least like to live without3. The same research shows that people listen to music on more than 5 different platforms and the amount they listen per day is consistently rising; the younger they are, the longer they listen. Another recent report shows that 40% of social media users embed music in their personal profile, and over 50% use social media sites in order to find or socialise around music4. Music is an extremely effective way to engage consumers in a brand. 1 SIFO 2009 2 Beresford Research 2009 3 Milward Brown / Brand Amp 2007 4 EMR
  2. 2. Social Media 600 Million people use services such as Facebook, MySpace, and Twitter; Facebook alone has 400 million users, whilst MySpace has 125 million users. Social media is without a doubt huge; but the big question for a brand is how to access it in a sensible way. We think the best way to access this space is through music, as more than half of those who surf social network sites are doing so in order to find or socialise around music. People also like to share music via their profile with 40% sharing music on their profile5. Personalised Radio Personalised radio is one of the fastest growing areas of music delivery online with Last FM, Spotify and Pandora fast becoming household names. Some 4.5 million people in the UK had tuned in to personalised online radio services such as Spotify and Last FM by December 09, up from 3.9 million in May and 2.9 million in October last year. Online Radio Online radio is an extremely popular area that is also growing; 17.4 million UK adults have listened to online radio to date, 15 million of these are 6 listening live; this is up 500,000 from May to December 2009 . Brands and broadcasters are embracing the format and there are more radio stations online than anywhere else. 5 Entertainment Media Research (EMR) 6 RAJAR 10/12/09
  3. 3. Online radio success is very much in line with the rising importance of the Internet, which is of course THE growth medium. Radio is a complementary medium to surfing the web and therefore a lot of people are doing it. Research has shown that this combination of radio and surfing can drive traffic more effectively to a brand or product than the sum of the two separately7. Digital Downloading Digital downloads are incredibly popular with big tracks being downloaded a huge amount of times legally and illegally. The track ‘Right Round’ by Flo Rida sold 636,000 downloads in a single week in February 2009, and 2009 was a record year for digital music sales. 7 RAB 2008
  4. 4. In 2009 Europe was the fastest growing region for digital music sales across the world and 27% of the music industry’s global revenue comes from digital channels8. The market leader is iTunes who now have over a 100 Million accounts across 23 countries9. File Sharing Quality music is heavily downloaded; free quality music is downloaded in even greater numbers. Research conducted by Capgemini found that 70 per cent of all music consumed in the US, UK, France and Germany came through digital channels, while revenues from digital platforms in those countries accounted for only 35 per cent of industry revenues. The conclusion of course is that consumers are embracing music delivered digitally but less-so when they have to pay for it. In 2009 a Harris Research report suggested that 23% of the general population in the UK illegally file-share music. EMR have also reported that 71% of people involved in increased file-sharing activity in the UK did so ‘because it is free’. Similar studies in Japan and Sweden by GFK and the IFPI found that the main reason for illegal music downloading was because it was free rather than better choice or quality. 8 IFPI 9 Apple

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