Business model insights on how to beat music piracy – Vlerick Business School.
Business model insights on how to beat music piracy
In recent years, the popularisation of the World Wide Web and the rise of mobile music hardware have intensified online music piracy. Prof Dr Bert Weijters, Prof Dr Frank Goedertier and Sofie Verstreken have published an academic research study that examines music consumption preferences in today’s new context in which consumers face a myriad of music platforms with diverse business models and delivery modes. Counter-intuitively, the results show that consumers do prefer legal and ethical options, if available – but they favour different ways of making this economically viable.
Past research has argued that youngsters, in particular, use online technologies and platforms that facilitate piracy – and that youngsters seem to attach less importance to the ethical and legal aspects of music consumption. However, much of this research dates from an era in which ‘free’ was nearly synonymous with ‘unethical’ and ‘illegal’. That is, in the past, most applications offering cheap and convenient online access to music were illegal and did not create revenues for the artists. This raises the question: what truly drives youth’s music piracy consumption choices: a drive to defy the law, economic reasons, or convenience?
The current consumption context
The current context has changed and offers a wide variety of legal and illegal online music consumption possibilities (including file-hosting services, free with advertising streaming platforms, paying streaming models with the possibility to download, video converter programs, etc.).
This new context allows, and calls for, research that studies potential music consumption driving factors in a disentangled way. The research discussed independently examines ethical concerns and other music consumption preferences (e.g., quality, streaming versus downloading, presence of advertising, etc.) as explanations of age group differences in online music consumption.
The research responds to an urgent business need: industry stakeholders are uncertain about how to respond to illegal music consumption and are looking for up-to-date information related to the specific preferences of music consumers in this new context.
6 online music consumer segments
Prof Dr Weijters, Prof Dr Goedertier and Sofie Verstreken undertook their study to update the extant literature on online music consumption – taking today’s technological context into account. Specifically, their goal was to better understand the way consumers in different age groups make choices when faced with alternative music platforms that vary in a wide range of attributes, including the extent to which they are legal and ethical.
Their research identifies 6 online music consumer segments and suggests specific ways of approaching them:
- Free users are the youngest segment, and nearly all of these consumers have experience with downloading and/or streaming music. They are the most online music savvy segment and have an outspoken preference for free online music. Good quality is important to this segment, which means that ‘free users’ are not willing to sacrifice quality in exchange for free music.
- Quality seekers value high audio quality. They are the second most experienced segment – a high proportion of these consumers have downloaded before. Although this segment also shows a preference for free music, it is much less outspoken than the free users, so it is reasonable to expect a certain willingness to pay for (high-quality) music.
- Average users have music consumption preferences that are in line with the overall findings: i.e. high quality, legal and ethical (though less so than the quality seekers, law-abiding, and ethical consumers segments, respectively).
- The Indifferent segment is not very opinionated, except for a preference for downloading (with or without streaming). Limited experience with online music may be the reason for this, as nearly 23% of this segment have not downloaded or streamed music before. This is the only segment not concerned with quality.
- The Law-abiding segment is relatively inexperienced, and these consumers seem relatively indifferent towards quality. Their predominant criterion in choosing an online music platform is that it is legal.
- Ethical consumers, the smallest segment, attach most importance to artists getting a fair share of revenues. Remarkably, these consumers emerge as a segment distinct from the law-abiding segment. This suggests that consumers differentiate between legality and ethicality, and that consumers who care about the one aspect do not necessarily care equally about the other.
In general, this study suggests that the most promising avenues towards a more legal and ethical online music offering are:
1) A free music approach, supported by advertising, targeted at younger consumers and/or the free users segment (the two clearly overlap), and
2) A high-quality music approach, with the possibility to download for which a price can be charged, targeted at older consumers and/or the quality seekers segment.
Interestingly, the older segment prefers the legal/ethical options, while the younger segment prefers the illegal option over the legal paying option. This is not because of a difference in preference for ethical or legal alternatives, but because of a stronger preference for free music.
This shows that, in real-life choices, youngsters may appear to be less ethical and law-abiding, but the driving force behind this is mainly economic. In a way, this is reassuring, as it suggests that music piracymay be less deeply ingrained in the youth culture and norms than previously thought.
Source: “Online Music Consumption in Today’s Technological Context: Putting the Influence of Ethics in Perspective” by Prof. Dr. Bert Weijters (Department of Personnel Management, Work and Organizational Psychology, Faculty of Psychology and Educational Sciences, Ghent University), Prof. Dr. Frank Goedertier (Consumer Marketing, Retail & Branding Cluster, Area Marketing, Vlerick Business School) and Sofie Verstreken (Think BBDO, Belgium). Published online in the Journal of Business Ethics, 25 September 2013 (ISNN 0167-4544).