Saturday, October 27, 2018

Make Money With Music By Online Music Sites

In this article, we take a look at just a few years ago about the digital music market as well as its possibilities of monetization in order to allow us to take a certain perspective of where we come from and where we are going within the scope of exploitation of the music on the internet.

Currently, several digital music business models are being used. The most common are the legal download (touching its end). the streaming services of payment and the free streaming services supported with advertisements. The known providers of these services are YouTube, Spotify, iTunes and Pandora.


Digital Music Market is Growing


Although the digital music market continues to grow. there is a difference in value between the actual price of a song or album and what is perceived to be worthwhile.

What people are really willing to pay for a digital music file is less than the actual price of the file or for a streaming payment service.

This low willingness to pay for digital music services is problematic for the music industry . Not only in the download of files is the willingness to pay, the subscription services have the same problem.

Spotify , a popular streaming service, claims to have 60 million active users. While only 15 million of those users have a subscription to the service. So 75 percent of Spotify users do not pay for the service.

In 2011, a survey showed that only 12 percent of digital music users had paid for streaming services.

This value gap is a serious problem for digital music providers. For example, in 2012 Spotify had an operating loss of 80 million euros, in 2013 the loss was 93.1 million euros.

The illegal download, also known as piracy, through p2p networks is in decline. In 2008, 63 percent of young Internet users, aged 14 to 24, said they illegally downloaded. 2013 , 40 percent of these Internet users downloaded illegal music.

By analyzing the trends of the last five to ten years and other research results. The current problems will be identified. And recommendations made for the future of the digital music industry.

Any business model must be viewed from the perspective not only of the business itself. But also from the perspective of the consumer. The labels and the artists to determine acceptance. If the business model does not meet the demands of users, they will look for alternatives, such as illegal music downloads. Artists must also be willing to allow their music to be distributed through digital services.

What are the problems facing the digital music industry and how can they be solved?


Throughout the article, we will seek to provide information on the following issues:

  • What digital music business models currently exist?

  • How many people use digital music services and what services do they use?

  • Are there people willing to pay for digital music services?

  • How has the use of digital music changed in the last five to ten years and how has this affected the music industry?

  • How profitable have digital music services been in the past and what can be expected in the future?


Commercial Digital Music Models


Streaming and downloading digital music are the most common models. With streaming, the user has the right to listen to music or videos, with the download the user obtains the real ownership of a digital file.

Both types of digital music business models are a collaboration between artists, labels and services with the aim of providing music to consumers in exchange for a payment.

The figure below shows a simplified version of the relationships between these actors.

  • An artist signs with a record label and makes music.

  • The record company has a license agreement with digital music services that gives them the right to distribute the music.

  • The digital music service makes music available to consumers at a cost.

  • The digital music service pays the stamp depending on the number of downloads or reproductions.

  • The stamp takes a part of the profit and pays the artist.


Actually, variations of this model are possible, since not all artists are signed with a record label and license agreements tend to differ with respect to payment.

Willingness to Pay


The graph below compiled on the basis of data that the streaming services have published and the data of the IFPI.

Spotify's revenue for subscriptions was 982.9 million euros. Revenue from advertising was 98.8 million euros. With 25 percent of subscribers paying this means that 91 percent of their income comes from subscribers.

A study conducted in the United Kingdom and the USA in 2012 it showed that the majority of consumers are willing to pay for digital music.

However, most users are not willing to subscribe to music services despite being stratified with these services. Especially young consumers have little willingness to pay because they are accustomed to having things online that are free and claim to be unaware that the illegal download is a copyright infringement.

The affinity with certain artists is still an important reason for many users not to download music illegally and pay the full price. In the survey that was carried out 25.3 percent of respondents considered the price of an unfair mp3 file of these respondents 23.6 percent had never bought digital music.

Among respondents who considered the price to be fair, 18.2% had never bought music. So of the people who consider that the price is fair, a greater proportion have bought digital music than among people who do not consider the price to be fair.

Showing a relationship between equity and willingness to pay, however, may not be very important since the difference is small.

Another 2010 study conducted in Korea showed that what consumers are willing to pay for a file is significantly less than the actual price of a file. The difficulty to obtain the file, the time it takes to find and download the file is also a factor in the willingness to pay.

Fear of legal repercussions also remains an important factor. A simulation in the study showed that the best way to reduce illegal file sharing and increase purchases of legal digital music was with a combination of higher costs for illegal file-sharing transactions and lower prices for digital music files.

The study showed that lowering prices would be, by far, the most effective way to get more users to buy music.

On the other hand, it was found that not only price, but also quality and risk are a factor in the choice between legal and illegal downloading. The most important finding by Prof. Dr. Marc Fetscherin was about the role of DRM (digital rights management) restrictions .

These are the restrictions that apply to the files that determine how the file can be used.

The number of times a song can be played or the number of devices that can be copied can be limited by DRM restrictions.

The best way to get users to buy music online is to lower the price of the files and add more DRM restrictions or ask for a higher price per file without DRM restrictions in the file.

The current situation with high prices and restrictions of DRM is an important reason why consumers are not buying music online.

Another investigation by Chiang Assane found that economic incentives and law enforcement are effective strategies, especially combined, to reduce piracy.

Its result showed that income, ethics and risk perception play a dominant role in willingness to pay.

Strategies to increase willingness to pay could include version control, such as offering a special edition and packetizing, offering combinations of songs for a fixed price.

They also found differences in willingness to pay depending on sex, age and ethnic origin.

Male students, younger students and white / Caucasian and Asian / Asian students are less willing to pay for music. Therefore, digital music services must take these differences into account for their marketing policies.

The most important thing is that they found that the disposable income is much more influential for the willingness to pay than the probability of being caught illegally discharging and the perceived penalty.

Participation of the Artists


For anyone that any digital music business model works, it has to have music to offer. If the artists are not willing to provide music, the business model will fail.

A famous example of an artist is Taylor Swift who brought out his music from Spotify because he felt that his music was not being valued enough and the amount paid was not as high as the true value of his music. She was named the IFPI artist of the year for being the most popular artist for music downloads, streaming and physical format sales throughout the world.

She can be seen as influential and powerful in the music business because of her sales amounts.

So if one of the best-selling artists in the world is against streaming services, and influential artists share their opinion and decide to withdraw if streaming music services, these business models are not going to be viable since users will lose interest in the use of these services.

User Behavior in Streaming


A study on the behavior of users on Spotify has been made. The data collected between 2010 and 2011 were collected in users from Sweden, the United Kingdom and Spain.

They found some useful statistics for digital music services.

A careful observation is the difference between streaming music and streaming music videos .

Music is often used as background music while watching music videos that require the attention of users.

This leads to the belief that the context in which the music is transmitted differs from the context in which music videos are reproduced, complementary and not interchangeable.

Tidal seems to be one of the few services that offers streaming video and audio. The Spotify research found that there was a morning peak of mobile session one hour before the desktop sessions during the week.

Apparently, the Spotify mobile application is used on the way to work. In the early afternoon there is another peak, when commuting back home.

On weekends the use is more evenly divided, there is no peak in the morning or at night or during the lunch hour.

Mobile sessions tend to be short in the morning, while desktop sessions last longer. An easy-to-use mobile interface while switching and a clean and professional looking Web Interface for the use of background music during business hours could improve the satisfaction of a service.

In general it was found that the number of mobile sessions is much greater than the number of desktop sessions. So a focus on a mobile application is of great importance to any service that wants to have a serious opportunity to survive the competition.

Most services start with a desktop version and then add a mobile player, which seems to be the wrong way.

Another key factor in making your music service successful is how you can install / use the service on various devices.

Many of the Spotify users have installed Spotify on several devices, usually at least 1 mobile and often 2 or more desktops. So the synchronization between all the devices is important. The most mobile session is between 3 and 6 pm whereas most of the desktop sessions are between 6 and 11 pm.

People use a mobile phone at work, at school or on the move and when they get home they switch to the desk.

The more knowledge a service has from its users, the better it can be adapted to be a perfect fit with the wishes and demands of users.
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