New Study Provides Insights Into US Paid Download Patterns

A new Ipsos study shows that US consumers continue to experiment with paid digital music services in record numbers.

Over Half of U.S. Downloaders Have Paid – One Quarter in the Past 30 Days – In December of 2005, over half (52%) of American downloaders aged 12 and older report having paid a fee to download music or MP3 files from the Internet, and 24% had done so in the past 30 days. These figures represent a continued increase in fee-based downloading activity over the past year. 47% reported having paid a fee to download music or MP3 files from the Internet in December 2004. Based on the current US Census figures, approximately 25 million people have paid a fee to download music or MP3 files from the Internet – 11 million Americans in the past 30 days.

The research also revealed some interesting trends:

• Adult downloaders aged 25 to 54 continue to drive the growth in paid downloading (67% have paid to download among 25 to 34 year olds, 59% among 35 to 54 year olds). And while younger downloaders continue to experiment with fee-based downloading, they are less likely than older downloaders to have done so in the past 30 days. Furthermore, only 13% of college aged downloaders have paid for digital music in the past 30 days.

• Nearly equal proportions of male and female downloaders have paid to download digital music files off of the Internet: 51% of U.S. male downloaders aged 12 or older report having engaged in this activity compared to 53% of American females.

• U.S. paid downloaders in this evolving digital marketplace are nearly three times as likely to have used a la carte download (or ‘pay-as-you-go’) services compared to fee-based subscriptions, (77% vs. 27%), and when they do, they download an average of eight songs each month.

• Despite the current popularity of online a la carte services, when asked whether online fee-based a la carte, subscription, or satellite radio was the most appealing digital music service, U.S. downloaders (and particularly those aged 18-24 and 35 or older) were most likely to say Satellite Radio (32% vs. 28% for fee-based a la carte and 8% for fee-based online subscriptions services among total U.S. downloaders age 12 and older).

• One-fifth of Americans aged 12 and older now own a Portable MP3 Player, up from 12% in December of 2004.

Desire For A La Carte Songs And Recent Portable Device Purchases Fuel Growth – The study found that for many frequent fee-based downloaders, the desire to purchase an individual song without having to buy the entire album fueled their first foray into fee-based digital music, with a recent portable MP3 player purchase and the perceived convenience of an online purchase also being key drivers to initial fee-based downloading. This is reinforced by the findings that 30% of US fee-based downloaders first paid to download within in the past 6 months, and corresponds with record growth over the past year in Portable MP3 Player ownership.

“This suggests that many consumers may act impulsively when entering this market, with the moment of truth in fee-based digital music coming via the desire for an individual song, convenience and as a means of acquiring content for their new MP3 player,” according to the study. “The key for continued overall category growth will be to encourage consumers who are new to this market and sampling fee-based services for the first time to become more consistent in their fee-based content acquisition behaviors." 

In other words, more people are buying players and many are willing to fill them with paid content particularly since they can purchase a favorite song without buying the whole album.  But how do we keep them coming back and not just turning their players into personal classics stations?  Releasing new tracks by an act over time instead of 10 at once in an album-like format is certainly one possible answer as well as variable pricing and providing compelling content and extras like interviews and videos.  But as the industry struggles with declining revenue more creative answers need to be found and the experimentation needs to start now.

Read more from the Ipsos study and see some related charts here.