All Access Exclusive Analysis: A Tale Of Two Polls
October 11, 2007 at 9:40 AM (PT)
Encouraging results of online music usage from financial analyst firm PIPER JAFFRAY's annual teen fashion spending survey could well be undercut by an initial survey of what RADIOHEAD fans claim to be paying for the popular BRITISH band's latest release, "In Rainbows." Although the polling is not scientific and extremely preliminary, RADIOHEAD's Freakanomics-style experiment points troubling signs for record retail.
First, The Good News....
PIPER JAFFRAY's teen survey found that young music fans are slowly accepting paid online music sources over P2P file trading. P2P market share fell from 72% to 64% while 36% of teens indicated that they buy music from online services, an increase of 8% from last year.
58% said they paid about half-price (or less) of what it would be sold for on sale at HMV.
iTUNES remains the most popular online retailer, but its dominance slipped from 91% to 79%. Unfortunately for major labels hoping for increased popularity of subscription services, RHAPSODY or NAPSTER didn't make up much ground, each generating a 2% market share of attention. The big increase came in combined usage -- listed as "other" -- which includes sources like AMAZON, EMUSIC and mobile music stores.
Speaking of mobile, the iPHONE seems to be making inroads with teens, and after just three months of availability, 3% of those polled own an iPHONE, and 9% more expect to buy one in the next six months.
Although the online monitoring source HitWire noted that hits to RADIOHEAD's website has increased 11-fold because of the pay-what-you-like gambit (NET NEWS, 10/9), and band manager CHRIS HUFFORD claimed in the TELEGRAPH that this has been "an absolutely fantastic experiment "and that "more people have paid for it than not," the results of PASTE Magazine survey offer some more light on just how much the fans have been paying for the "In Rainbows."
Over 1,300 fans responded to the survey, which asked them how much they paid in categories -- 0-1 pound, 1.01-2pounds, 2.01-5 pounds, 5.01 to 10 pounds, 10.01-15 pounds, 15.01 to 20 pounds, more than 20 pounds, and they pre-ordered the disc box (which costs 40 pounds). In comparison, BRUCE SPRINGSTEEN's new album is listed for 17 pounds, but is on sale for about nine pounds at BRITISH retailer HMV.
The Survey Says....
According to this admittedly unscientific poll, 26% paid less than a pound, 31 % paid less than 2 pounds, and 58% said they paid less than 5 pounds -- which is about half-price (or less) of what it would be sold for on sale at HMV. Seventeen percent would pay from 5-10 pounds, which is about the price they'd pay for it at a brick-and-mortar.
Who would pay more than 10 pounds? Just 3%. The remainder (22%) said they ordered the disc box, which isn't surprising considering the intense loyalty of RADIOHEAD's legion of fans.
Again, this is not a scientific survey, but that doesn't mean the actual figures would be better. In fact, it could be more persuasively argued that the poll respondents would rather inflate the price they paid for "In Rainbows" than understate it. What's more, RADIOHEAD is an established superstar band in BRITAIN, and the other bands about to do this have also made their bones in Platinum records and sold-out tours. Yet it's highly unlikely, if not inconceivable, that new or up-and-coming bands could attempt this offer and profit by it.
Bottom line: While the trend of more consumers using paid online stores is promising, the perceptual worth of music, as evidenced in the PASTE Magazine poll, doesn't seem to be one that would cover the costs inherent to traditional label operations.
This story is far form over. In fact, a better illustration of the RADIOHEAD's experiment could be revealed when the band puts it on sale at traditional retail later this year.