To all those who say the music industry is dead. Yes I understand this will probably start e fights

Santana · April 2011

People do value music. But are they willing to pay for it?

There's no doubt that everyone here loves music. We hold it in high esteem, and often define ourselves by our choice in it, so there's no doubt that we value it greatly.

But are we willing to pay for it?

Believe it or not, "traditional" music sales (that's physical and digital, where we pay for ownership and the lifetime right to listen) are still strong. For the third year in a row, music sales in 2010 reached the 1.5 billion mark. If you hear anyone say the industry is dead, they are naive and ignorant.

But these direct traditional sales do not represent the entire industry, nor do they suggest the future of such sales are stable.

The biggest difference is the advent of streaming services like Spotify, which is rumoured to hit US shores soon. Other indirect channels are in advertising, "pipelines" (radio or TV) and mobile royalty payments.

But to secure a stable future, the industry needs to ask itself some important questions.

What are music fans willing to pay for? Where do they currently spend their money? Which of the new music services hold most promise? And how do different age groups react to the options available?

Last week we started looking at a survey on online music consumption by music industry analysts Nielson, who tried to answer these questions with a survey answered by 26,000 people worldwide.

This week we'll be looking at another paper from the same survey called "Willingness To Pay For Music".

So what did they find?

Although music fans' willingness to pay varies, they're still bonded to traditional music sources:

Over 40% of music fans are still happiest paying for music via a traditional means like CD or DVD.
Around 20% of music fans would pay for digital tracks or music related apps on their computer or mobile phone.
Almost 70% would not pay for music through a games console, or pay to use web radio.
People from the Asia/Pacific region are most likely to pay for music - but we also saw last week how they're the most likely to get music for free too.
Those aged under 45 are most likely to pay for digital downloads through a computer, particularly 20-24 year-olds.
On streaming:

15-17% of music fans would pay to stream on a computer or mobile phone.
Africa and the Middle East are the only places where people would rather stream on a mobile than a computer.
The younger the consumer, the more likely it is they would pay to stream music.
Streaming awareness is growing at a fast rate - so fast that these figures could have grown significantly since their publication.
On internet video and social media:

Video services are the most popular platform to consume music, with 57% having watched a music video in the last three months. That's right - music on YouTube is more popular than iTunes.
16% of global music fans would consider paying to listen to music through a social network like Facebook, with a further 21% saying they might. If that sounds wild to you, it's probably because you're from the US or Europe, where less than 10% would pay for music in this way.
There's plenty more facts in the document if you want to read it yourself, but there's a few clear lessons here.

For the most part, people are still most familiar and comfortable buying a physical product. It feels like you own it for life, even if you don’t consider that the format could become redundant and dated in years to come.

But there's huge opportunities for the industry in the new digital arena beyond stores like iTunes. There's video and music streaming, mobile apps, exclusive content and social networks.

And because the industry are getting wise to these opportunities, we can expect to see their changes before our very eyes. Expect them to push hard in each of the above areas, and expect to spread your money across these services.

But will the improvements to new services pull some people away from illegal music consumption? Only if paying for the new services becomes easier and more convenient than the illegal sources. And if they can do that, it'll probably be worth giving them our money anyway.

Finally, last week we kicked off a survey to find out about how you access music, and see how UG readers stack up next to the global average.

We got hundreds of responses and the results are utterly fascinating - but we're saving the results for the end of this series. UG readers will probably find out more about each other than ever before.

This week it's just one question, all about your willingness to pay for music and where.

http://www.ultimate-guitar.com/news/industry_news/where_money_is_spent_on_music.html