At the Digital Music Forum East in snowy New York, executives gathered to hear new data comparing what happens to music sales when people use interactive radio services such as Pandora as opposed to subscribing to unlimited streaming services such as Rhapsody and Spotify.
The Pandora-like radio model has a promotional effect on music sales, increasing them 41 percent, according to NPDs data. Meanwhile, streaming services that let users hear just about any song they want, such as Spotify, cause people to buy 13 percent less music.
This is understandable after all, the whole point of an on-demand music service is that you can hear whatever you want, whenever you want, without buying anything. However, senior industry analyst for NPD Group Russ Crupnick drew a surprising conclusion from the data:
Were eating our young, Crupnick told attendees, according to CNET. For some people, more listening just means more listening and tends to lead to less purchasing.
The key here is that Pandora Spotify. One is a radio, the other a record collection.But its not a bad thing for the industry that on-demand services like Spotify and Rhapsody replace sales thats what theyre designed to do. Its no accident, and neither is the much-higher premium a penny per stream that labels and publishers extract from them, which is ten times more what streaming radio sites pay.
If everyone paid a penny every time they played a song on their computers without buying a single song, the record industry would be in far better shape than it is now. More listening doesnt need to mean less money, even if it means less purchasing. But for some reason, that model is seen as eating our young, when compared to the pay-per download model, which is essentially the electronic version of buying an unbundled CD, cassette, or 8-track tape all formats that have become considerably less attractive to most people as they increasingly listen on connected devices, if they listen at all.
The Pandora-like radio model has a promotional effect on music sales, increasing them 41 percent, according to NPDs data. Meanwhile, streaming services that let users hear just about any song they want, such as Spotify, cause people to buy 13 percent less music.
This is understandable after all, the whole point of an on-demand music service is that you can hear whatever you want, whenever you want, without buying anything. However, senior industry analyst for NPD Group Russ Crupnick drew a surprising conclusion from the data:
Were eating our young, Crupnick told attendees, according to CNET. For some people, more listening just means more listening and tends to lead to less purchasing.
The key here is that Pandora Spotify. One is a radio, the other a record collection.But its not a bad thing for the industry that on-demand services like Spotify and Rhapsody replace sales thats what theyre designed to do. Its no accident, and neither is the much-higher premium a penny per stream that labels and publishers extract from them, which is ten times more what streaming radio sites pay.
If everyone paid a penny every time they played a song on their computers without buying a single song, the record industry would be in far better shape than it is now. More listening doesnt need to mean less money, even if it means less purchasing. But for some reason, that model is seen as eating our young, when compared to the pay-per download model, which is essentially the electronic version of buying an unbundled CD, cassette, or 8-track tape all formats that have become considerably less attractive to most people as they increasingly listen on connected devices, if they listen at all.
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