Since Napster and the advent of peer-to-peer sharing, the music industry has been frustrated by consumers operating outside legitimate channels.
Ad-supported models may offer a solution.
The “TEMPO Digital Music Discovery & Purchase Process” report from Ipsos MediaCT shows that in late 2008, only 19% of US digital music consumers participated in the fee-based market (that is, iTunes or Rhapsody).
The ad-supported market, represented in this study by MySpace Music, is already bigger than that, with 22% of respondents.
“The ad-supported models are proving to be an effective means of expanding the broader, legitimate market beyond just the fee-based realm,” said Karl Joyce, the report’s lead author.
When respondents were asked to imagine their music consumption habits in a world without file-sharing, ad-supported formats proved even more attractive.
More than one-half of users who currently take advantage of peer-to-peer sharing said they would look to services such as MySpace Music. The fee-based market, on the other hand, would grow very little.
Asked to imagine a world without ad-supported music, most participants in the study said they would leave the legitimate market rather than pay for music outright.
“Ad-supported, as it exists today, should not be seen as the enemy of fee-based distribution,” added Mr. Joyce. “It remains our firm belief that free music models will continue to play an important part in digital music in the foreseeable future.”
The free model has helped MySpace Music soar in popularity over the past year. According to Nielsen, year-over-year traffic to the site has increased more than 1,000%, making it the third-most-visited music site on the Web.
Internet users ages 12 to 24 were more than twice as likely as average users to visit MySpace Music.
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