the online music market in europe— new business models and
TRANSCRIPT
The Online Music
Market in Europe—
New Business Models
and Consumer Choice
Consumers across Europe are embracing digital media, using new devices and changing the
way they access entertainment. In response, music companies have reinvented the way
they do business, innovating with business models and licensing a wide range of services.
Music rights holders have licensed more than 13 million tracks for use by more than 300
digital services in Europe.
Music companies today license a range of services, offering not only ownership of tracks
and albums, but also ubiquitous access to comprehensive music libraries. In many markets,
almost every conceivable
commercially viable way of
accessing music online has
been licensed.
The range of consumer choice
for accessing music digitally is
growing significantly. Music
subscription numbers in many
EU countries are now
advancing steadily; new social
network and recommendation
functions have been added to
existing offerings; a new
generation of smartphones and
applications has made more
services available across
different devices and has
helped boost the popularity of music downloads in key markets; new commercial
partnerships are taking shape between music companies, internet service providers (ISPs)
and mobile operators; and the first services have emerged that enable consumers to access
music from digital lockers or through devices in the living room, such as TVs.
These developments have helped maintain the industry‘s digital revenue growth. Digital
channels accounted for 29 per cent of overall recorded music revenues in Europe in the first
half of 2011, up from 18 per cent in 2010. In 2010, the European digital music sector was
worth nearly €750 million, up 22 per cent on 2009. In the first half of 2011, digital sales in
Europe grew by a further 23 per cent — more than three times the global rate. The rise of
subscription services has helped drive this digital growth. This has been particularly visible
in Scandinavia, where the success of subscription models has contributed to significantly
higher-than-average rates of digital music revenue growth, with Sweden up 51 per cent and
Norway up 55 per cent in the first half of 2011.
Nevertheless, increasing revenue from digital channels is not offsetting the sharp fall in
physical format sales in Europe. These have declined in value by more than half in the last
decade, falling from €7.1 billion in 2000 to €3.1 billion in 2010.
The digital music market is evolving and there is still plenty of room for growth in Europe.
This is reflected in surveys conducted in one of the most advanced digital markets, the UK,
where only 14 per cent of internet users aged 16-54 frequently purchase music online
(Harris Interactive, 2010).
Digital piracy is the single most important factor holding back further development of the
legitimate music business. Additional factors that have been cited include undeveloped
technology infrastructure in some markets; cumbersome taxation levels; and varying levels
of trust in online transactions and credit card penetration.
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Despite these market challenges, consumers continue to enjoy great choice in digital music
services internationally. At the end of 2010, there
were more than 300 legitimate music services
across Europe.
Demand from consumers to access music across
multiple channels and platforms has spawned
increasingly diverse models.
Music downloads are still the dominant source of digital revenue and continue to grow.
Apple‘s iTunes has sold more than 10 billion downloads worldwide since it was established
in 2003. It has been joined by a range of competitors including AmazonMP3, 7digital,
HMV, Tesco and FNAC.
In September 2011 iTunes reached out across Central and Eastern Europe to become the
second online music store available to consumers in every country in the European
Union after eMusic, with all of its tracks available through stores in different local-
language websites across the region. In November 2011, search engine Google launched its
own licensed download store.
The music subscription model is making major advances, firmly establishing itself in the
European market. Subscription services have existed for several years, but portable
subscriptions only worked on certain devices, limiting flexibility for consumers. Only
recently has the sector been able to take advantage of improved compatibility, underlying
technology and broadband penetration levels. Today, consumers can use subscription
services widely across mobile devices, vastly improving quality and the consumer
experience. One of the key challenges for music companies remains migrating users of
unlicensed services to legitimate services.
Services such as Spotify, Deezer and We7 are
building mass audiences and broadly present two
kinds of offering to consumers: a free
advertising-supported streaming service, and a
premium paid-for service. The use of these two
tiers by a single service has become commonly
known as the ‗freemium model‘. These services
expanded their audiences significantly in the past
year, with growth coming from both tiers.
Spotify is the biggest digital retailer in Norway, Finland and Sweden, and the overall
number two digital service in Europe after iTunes. Spotify has attracted more than two
million paying subscribers globally, of which 1.6 million are estimated to be in Europe. In
Autumn 2011, it opened for business in Austria, Belgium, Denmark and Switzerland, so it
is now available in 11 European countries.
Deezer‘s free, advertising-supported streaming service has achieved significant reach in
France. Deezer‘s paid-for services, including its bundled offer with mobile operator
Orange, have reached an estimated 1.4 million subscribers, the vast majority in France. The
company has also announced its intention to launch in more than 100 countries across
Europe and around the world in the next few months.
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We7 opened for business in the UK and Ireland in 2007, offering first a download and
subsequently a streaming service. The free-to-use advertising-supported service enables
users to access a ―music DJ service‖ that offers tailored playlists, while premium
subscribers can enjoy an on-demand streaming service. The company has announced it
intends to open for business in Italy, the Netherlands and Spain by the end of 2011.
The music industry sees great potential in continued strategic partnerships with internet
service providers (ISPs) and mobile operators that have billing relationships with a wide
customer base. This makes them ideal partners for subscription services, either bundled
within the cost of a broadband fee or paid for separately.
For ISPs and mobile operators, music services may also
bring key benefits. First, they are a valuable way of
acquiring new customers in a highly competitive market and
second, they have a significant effect in reducing ―churn‖
and helping to retain customers. In addition, music services
can increase ISPs‘ average revenue per user (ARPU) and can
be a valuable brand repositioning tool.
Third-party research points to the potential commercial value of music to ISPs and mobile
operators. Ovum‘s 2010 report Is There a Commercial Argument for ISP Music Services?
estimated that ISPs in the UK alone could achieve additional revenues from new music
services of more than £100 million per year by 2013. Meanwhile, analysis by Informa
Telecoms & Media, Unlocking the Real Value of Mobile Music (2010), found large mobile
operators in Western Europe could realise as much as €78 million each in the first year
from partnerships with established music streaming services, such as Spotify.
Music industry-ISP partnerships have been struck across Europe in the last two years.
These generally follow one of two models: where the ISP develops its own branded music
service, such as TDC Play; or where the ISP partners with an existing music service, such
as Telia and Spotify in Sweden.
In Sweden and Finland, ISP Telia offers a four-month free Spotify subscription to its
customers when they sign up to a mobile package.
In Denmark, TDC was the first ISP to offer unlimited
music downloads to its mobile and broadband
customers at no additional charge. At the end of 2010,
TDC announced its customers had downloaded 250
million songs since launch – the equivalent of 45
downloads per person in the country. TDC has said
music has helped TDC reduce broadband customer
churn by approximately 50 per cent.
In Norway, Telenor has launched a subscription
service, WiMP, in cooperation with mobile content
provider Aspiro and Platekompaniet, Norway‘s largest chain of music stores. The service is
also available in Denmark. WiMP does not offer an ad-supported tier, but following its
free trial period it saw a strong conversion rate to paid subscription.
In Italy, FASTWEB launched a music service in partnership with Dada at the end of 2010.
It enables fans to access millions of songs from major and independent labels. They can
download 15 high-quality tracks per month and stream the entire catalogue.
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In France, alliances between mobile and online services such as Orange-Deezer and the
new SFR-Spotify deal are expected to boost the online music market, as indicated by the
increasing number of new customers subscribing to Deezer thanks to its deal with Orange.
In Ireland, Eircom has launched its MusicHub service, offering free unlimited streaming of
four million tracks without advertising to existing Eircom broadband customers. Users can
also download DRM-free tracks for 32 cents and keep them even if they leave the service.
Customers can build playlists and recommend songs through social networking features.
In the mobile sector, Vodafone has a large paying customer base across Europe. The
company announced in 2010 that it had almost half a million customers for its music
subscription service. The offering combines the convenience of subscription with the sense
of ownership provided by downloadable track bundles.
Another option for today‘s music fans is to buy access to music bundled in with a device.
Many mobile phone operators offer such services, whether their own or through partner
services.
The deal behind Nokia Music was the first to
use this kind of licensing model, but many have
followed. It is a concept that can be expanded
beyond mobile phone handsets. There is an
expectation that in the future, big-ticket
consumer purchases such as cars, could involve
a bundled music deal.
In the digital age, the music industry seeks to engage consumers wherever they want to
access music. Music in the living room is an obvious next step. Research conducted in the
UK by ICM for Omnifone found 79 per cent of people listen to music in the living room
compared to 39 per cent on a portable player.
Several innovations came to market in this area in 2010. They included the partnership
between Spotify and Sonos, allowing Spotify premium subscribers to stream songs in any
room in their home through the Sonos Multi-Room Music System. The service has been
made available in seven European countries.
In France, Apple has sold about 300,000 Apple TVs, which enables customers to view
films, music videos and photos, or listen to music, either from files stored on their computer
or online through streaming services such as iTunes orYouTube.
In Sweden and Finland, through Spotify‘s partnership with Telia, subscribers can now
access music through their TV set. Apple also launched the new version of Apple TV in
these territories.
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The ―cloud‖ is a watchword in digital music, even though the business models using it are
still in their infancy. Cloud services respond to consumers‘ growing interest in
―connectedness‖ between music and devices. They can either act as a ―locker‖, to enable a
consumer to access his or her own music collection through a range of different devices, or
offer the user access to a catalogue of tracks owned by the service provider . In both cases,
the music is stored on a remote server, owned by the service provider and streamed to the
user‘s devices. This means fans can access their music collections on their stereos,
computers, televisions, game consoles, smartphones, MP3 players and in their cars.
Apple‘s iCloud enables music purchased from iTunes
to be stored remotely on Apple‘s servers and played on
consumers‘ personal devices whenever they want. The
service was launched in the US in the summer of 2011
with expectations for a subsequent roll-out in Europe.
Sony Corporation‘s Music Unlimited is a cloud-based
music streaming service, launched in the UK and
Ireland in December 2010. The service allows
subscribers to stream their music from the cloud to a
range of internet-connected devices such as
smartphones, game consoles, TVs and Blu-ray players.
Carphone Warehouse and Best Buy launched a
licensed cloud music service in the UK in 2010.
Amazon and Google are currently concluding the
process of obtaining licences for their own cloud
services.
The rising penetration of smartphones, such as the iPhone and Android devices, is seeing a
growing proportion of downloads coming directly from such handsets. The growth in
smartphone usage in Europe has also brought other benefits. Digital services offer mobile
applications (apps) that significantly increase the value of premium subscription offers,
expanding the paying audience for services such as Spotify. Apps can also be used to
market music alongside other digital tools such as Facebook and Twitter.
The massive reach of music video creates a potentially sizeable ad-supported business.
YouTube remains the biggest platform for viewing videos online. It accounts for 43 per
cent of online videos watched in the top three European markets (UK, Germany and
France) - some 8.7 billion videos watched per month according to ComScore (October
2010). Other services, such as MTV and VEVO, command significant online audiences.
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Austria 3MusicStore
7digital
A1 Music
AmazonMP3
ArtistXite
DG Webshop
eMusic
Finetunes
iTunes
Jamba
Juke
Ladezone
Last.fm
Musicbox
Musicload
Mycokemusic
MySpace
Nokia Music
Preiser
Simfy
SMS.at
Soulseduction
Spotify
Telering
Weltbild
YouTube
Zed
Belgium
7digital
Beatport
Dance-Tunes.com
DjTUNES
Downloadmusic.nl
eMusic
Fnac
iTunes
Jamster
Junodownload
La Mediatheque
Legal Download
PIAS shop
Spotify
We7
Bulgaria
4fun
eMusic
Hitbox.bg
iTunes
M.Dir.bg
mp3.bg
MTel Music Unlimited
Musicspace
Cyprus
eMusic
iTunes
Czech Republic
eMusic
iTunes
O2 Active
Stream
t-music
Vodafone
YouTube
Denmark
3musik
BibZoom.dk
Bilka Musik
Billigcd.dk
CDON
DSB
DVDOO.dk
Ekstrabladet.dk
eMusic
GUCCA
Inpoc
iTunes
M1
Spotify
TDC Play
Telia
TouchDiva
TP Musik
VoxHall
WiMP
Estonia
eMusic
iTunes
Muusika24
Finland
City Market CM Store
DNA Musiikkikauppa
download.MTV3.fi
Download.NetAnttila
eMusic
Equal Dreams
iTunes
Meteli.net
MTV Music Shop
Nokia Music
NRJ Kauppa
Poimuri
Spotify
Store.radiorock.fi
France
121 MusicStore
7digital
Amazon
Beezik
Carrefour
cd1d
Deezer
Disquaire on line
E-Compil
eMusic
Ezic
Fnac
Gkoot electronic
iTunes
Jazz en ligne
Last.fm
Mondomix
MyClubbingStore
Neuf Music
Orange Music
Qobuz
SFR Music
Spotify
Starzik
Virgin Mega
YouTube
Zaoza
Germany
7digital
Amazon MP3
AOL Musik
ArtistXite
Beatport
Dance All Day
Deluxe Music
elixic.de
eMusic
e-Plus unlimited
Eventim music
Finetunes
iTunes
Jamba
JPC
Juke
Justaloud
Last.fm
Mediamarkt
Medionmusic
MP3.Saturn
Musicbox
Musik-Gratis.net
Musicload
Nokia Music
o2 Music
This is a list of legal online music services available in the EU Member States.
The list is compiled based on information supplied by national organisations and is
not necessarily exhaustive. We have endeavoured to keep the information up-to-date,
but cannot guarantee its 100% accuracy at any given time. For a full list of services
available worldwide please see www.pro-music.org.
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Nokia Music
PlayNow
shop2download
Simfy
T-Mobile Music
UMusic
Vodafone
Weltbild
WOM
Zaoza
zwo3.net
Greece
123play
Akazoo
Cosmote
eMusic
EMI Downloads
iTunes
mpGreek
Viva
Vodafone
Wind
Hungary
Dalok
iTunes
UPC Music
Vodafone
Ireland
7digital
ArtistXite
Bleep
CD World
Eircom MusicHub
eMusic
Golden Discs
iLike
iTunes
Last.fm
Meteor Music Store
MySpace
Nokia Music
Universal Music
Vodafone
We7
YouTube
Italy
Music Planet 3
7digital
Azzurra Music
Beatport
Cubo Musica
Dada
Deejay Store
eMusic
Fastweb
GazzaMusic
IBS
InnDigital
iTunes
Jamba
Last.fm
m2o.it
Mondadori
MSN Music
Net Music Media World
Nokia Music
Sorrisi Music Shop
TIM
Vodafone
Yalp
YouTube
Zed
Latvia
eMusic
iTunes
Lithuania
eMusic
iTunes
Luxembourg
eMusic
iTunes
Malta
eMusic
iTunes
Netherlands
7digital
Dance-Tunes
Downloadmusic.nl
eMusic
Free Record Shop
GlandigoMusic
iTunes
Jaha
Jamba
Last.fm
legal download
Media Gigant
MP3 Downloaden
MSN Muziek Downloads
MTV
Muziek.nl
Muziekweb
Nokia Music
Radio 538
Spotify
TMF
TuneTribe
Vodafone
You Make Music
YouTube
zazell.nl
Poland
eMusic
iplay.pl
iTunes
Last.fm
mp3.pl
Muzodajnia
MySpace
Nokia Music
Orange World
Soho.pl
YouTube
Portugal
7digital
Beatport
eMusic
iTunes
Jamba
Nokia Music
Optimus
Qmúsika
SAPO/ Musicaonline
Music Box (TMN)
Vodafone
Romania
Best Music
Cosmote
Dump.ro
eOk
Get Music
iTunes
Music Mall
Music Nonstop
Orange
Trilulilu.ro
Vodafone
9
Slovakia
eMusic
iTunes
Orange
Nokia Music
Youtube
Slovenia
eMusic
iTunes
mZone
Spain
7digital
Beatport
Blinko (Buongiorno)
Dada
Deezer
eMusic
IbizaDanceClub.com
iTunes
Jamba
Last.fm
Los40.com
Magnatune
Media Markt
Movistar
MTV
MUZU
MySpace
Olemovil (Jet
Multimedia)
Nokia Music
Orange
Rockola.fm
Spotify
Tuenti
Vodafone
Yes.fm
Yoigo
YouTube
Zune
Sweden
7digital
Beatport
Bengans
CDON
Check-in music
eClassical
eMusic
Enjoy
Gazell Digital Store
iTunes
Klicktrack
Last.fm
Mr Music
Musikbiten
Musikshopen
MySpace
Nokia Music
Omnifone
Sound Pollution
Spotify
WiMP
United Kingdom 7digital
AmazonMP3
Babelgum
Beatport
Bleep
Boomkat
BT Vision
Classical.com
Classical Archives
Classics Online
Coolroom
Deezer
DJ Download
eMusic
Fairsharemusic
Historic Recordings
HMV Digital
iLike
iTunes
Jamster
Joost
Juno
Last.fm
Mewbox (Android)
mFlow
MTV
Music Anywhere
Music For Life (Talk
Talk)
Music Unlimited
Musicovery
MusicStation
MUZU
MySpace
Naxos Music Library
Nectar Music Store
Nokia Music
Ooizit
Orange Music
Partymob
Passionato
Play.com
Music Unlimited
Spotify
Tesco Downloads
Textatrack UK
The Classical Shop
Track It Down
Traxsource
T-Mobile
TuneTribe
Vidzone (PS3 only)
Virgin
Vodafone
We7
Yahoo! Music
YouTube
Zune
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ICMP
ICMP is the world trade association representing the interests of the music
publishing community internationally. ICMP members are music publisher
associations from Europe, North and South America, the Middle East, Africa and
Asia-Pacific.
www.icmp-ciem.org
IFPI
IFPI is the trade association representing the recording industry worldwide, with a
membership comprising some 1400 record companies in 65 countries and affiliated
industry associations in 46 countries.
www.ifpi.org
GESAC
The European Grouping of Societies of Authors and Composers (GESAC)
represents 34 of the main copyright collective management societies (authors‘
societies) in the European Union, Norway and Switzerland, administering the rights
and remuneration of almost 700,000 authors, composers and writers in a variety of
sectors (music, audiovisual, literary, visual and graphic arts) as well as music
publishers.
www.gesac.org
Published January 2012
All photos credit of Fotolia