Page 29 - AC/E Digital Culture Annual Report

mighty YouTube. According to the Music Con- sumer Insight Report 2016 compiled by Ipsos for IFPI, 82% of YouTube users visit this site to listen to music. Bearing in mind the volume of visits the platform receives, this equates to about 820 million listeners.All these novelties are evidently revitalising an industry that had been cowering in fear for several years. Thanks to subscriptions to online services, average expenditure per person per year is now higher than that generated by physical sales. While these markets are growing, sales of music in both physical and download format are tending to fall, recording a 14% drop in the rst half of 2016.All this is spurring the industry to seek new methods of funding that are more in tune with the present times. More and more work needs to be done behind the platforms to connect with users, generate high-quality, customised content and o er services with a di erence... What direction are we heading in? David Kirkpatrick (Techonomy) speaks of a trend towards an emotional and social focus. Perhaps the answer lies in an e ective combination of the social media and the world of music, a new functional- ity in networking.The subscription system provides the industry with a steady income compared to the season- ality that characterises à la carte sales of tracks or albums. Except for models like Rhapsodyand Spotify, the subscription system had never developed any kind of income similar to that of à la carte models.Thanks to subscriptions to online services, average expenditure per person per year is now higher than that generated by physical sales. While these markets are growing, sales of music in both physical and download format are tending to fall.In Sweden – the birthplace of Pirate Bay and Spotify, where legal streaming services are widely used – a positive impact has been de-tected on total music sales, as well as a notable fall in piracy. This underlines how important it is for the music industry to create business models that are consonant with people’s changing music consumption habits instead of focusing its e orts on copyright laws.Even so, streamed music consumption services continue to bear heavy burdens that can hinder their ability to function as sustainable and pro table businesses. For these freemium busi- nesses, a paradigm shift would involve reducing the taxes they pay on content to the traditional industry, which uctuate between 50% and 60%; according to Spotify, Pandora is reckoned to pay as much as 70%. This, coupled with other costs, leaves little room for pro ts.The main development the record industry has witnessed during the transition from physical to digital distribution and consumption is probably the rising popularity of smartphones, tablets and app stores (Apple’s iOS and Google’s Android, well behind the former). When consumers buy smartphones and tablets they not only acquire new platforms for consuming music but also new devices capable of performing transactions. For example, it is possible to complete the full experience cycle on a portable device: search, discover and acquire, consume and share. For music companies (or any other company o ering content for that matter) as well as developers, these modern consumption devices create new opportunities and new ways of distributing and monetising music.The value of music in a digital environment: from free to enhanced experiencesOne of the main debates in today’s music industry is the value of music in the digital era. The concept of value was traditionally perceived as the measure of pro t an economic actor can obtain in exchange for an object or service. From a merely economic perspective, the value ofAC/E DIGITAL CULTURE ANNUAL REPORT 201729Smart culture. Analysis of digital trends