M aster Thesis CSC, K TH

CONSU M E R V A LU ES
IN DIGIT A L M USIC DIST RIBUTION

Student
Johansson, Beatrice
Thesis in

Media technology,

M aster level
Supervisor
Rosenq vist, Christopher
Examiner
Li, Haibo
Client
~ To whom it may concern.
Contact
label@towhomitmayconcern.cc

CONSU M E R V A LU ES
IN DIGIT A L M USIC DIST RIBUTION

A BSTR ACT

Through out the ages, humans have devoted themselves to musical expression. For m any
people music is a daily ingredient, and for some it is an im portant part of having a
prosperous life. During the latest years we have seen a change, a movement, within the
music industry.
In connection with an increasing digital evolution, the physical music industry got
affected to evolve and move into the digital space. In the digital realms new services
and features are presented daily to satisfy music listeners, which has opened up a huge
source of music that no longer is limited by physical record shelves located in a physical
record store. Despite this, the music industry has struggled with creating a willingness to pay for digital material, which is often argued to be due to a missing sense of
value of ownership when purchasing digital media.

This thesis aims to examine how the physical values

can be converted into the digital
world, to cater to consumers, and thus to increase the willingness to pay for digitally
distributed music. The purpose of this thesis is:
DIGITALISATION WITHIN THE MUSIC INDUSTRY
HOW CAN EXPERIENCED PHYSICAL MARKET VALUES BE CONVERTED INTO NEW DIGITAL VALUES?
To investigate this purpose, three different methods of research were conducted.
Interviews were made with people involved with the music industry, to hear about their
personal opinion and forecasts of the digital music market. To gather insight from an
audience angle a focus group was cond ucted, supplemented with a survey that was sent
out to people associated to music oriented network. To build a foundation of necessary
information and to understand the music industry, literature studies were made on the
current market situation and also about different companies, representing different distribution models available on the market.
The investigation proved that as a consumer of digital distributed music it is possible
to notice certain behaviour and goals with consuming music online. Also, there seems
to be a positive evolution for the streaming based services, since streaming offers access
and possibility to navigate towards new music in an effective way. What is also clear,
according to investigation, is the difficulty to transform a previously strong physical
market into the more fluid and open digital space.
We are currently in the starting blocks of the digital evolution, and the all the
opportunities offered have not yet been discovered or applied. The proposals presented in
this thesis are general forecasts of how the music industry might evolve in the nearest
future, and what benefits and obstacles that way occur while adapting to new digital preconditions.
"Chaos is merely order waiting to be decipher" Jos Saramago
2

PR EFAC E

Six months ago I started this journey towards my final project, and finishing my five-
year-long master degree in Media Technology at the Royal School of Technology. Even
though it has not always been easy, being a student has been a safety during these last
years and it feels unreal that this is going towards an end.

I dedicate this thesis to the innovative and open minded people of To whom it may
concern., who in cooperation this final project has been conducted. Without their knowledge
and useful connections this project would have become a lot more nerve-wracking for me.
There are a lot of people i want to give my greatest gratitude to.
First, i would like to thank my supervisor Chris, who has encouraged me and has given me
great support during this period. I also would like to send a special thanks to J, for
always supporting me and for believing in me, pushing me to take on new challenges in my
life. And lastly, i dedicate great gratitude to my friends, my family and M. Thank you all
for bringing me great joy and for always lifting me up when losing hope.
Thank you.
Beatrice Johansson

May 2014, Stockholm

TABLE OF CONTENTS

INTRODUCTION
p. 06

1.1 Background p. 06

1.2 Purpose of thesis

p. 06

1.4 Delimitations

p. 07

1.3 Problem definition

1.5 Definitions

p. 06
p. 07

M ETHODS

p. 08

2.1

Literature studies

p. 08

2.2.1

Implementation p. 09

2.3.1

Implementation p. 10

2.2
Interviews
p. 08
2.3

2.4
2.4.1

Focus groups p. 09
Surveys p. 10
Implementation p. 11

TH EORY p. 11

3.1

The evolution of the music industry

p. 11

3.2

Consumption and distribution online

p. 13

3.2.2

iTunes "Everything you need to be entertained"

p. 16

3.1.1 Today and the future p. 12

3.2.1
3.2.3

Spotify "Music for everyone"

YouTube "Broadcast Yourself"

p. 15
p. 16

3.2.4 BitTorrent Bundle p. 16

3.2.5

Music download and file sharing (P2P)

p. 17

3.2.6 TuneCore p. 17

3.2.7 Summary p. 18
3.3

The evolution of digital music

p. 18

3.3.2

Nostalgia and digital innovation

p. 21

3.3.1

Innovation areas and their affect on the music industry

p. 19

3.3.3 The long-tail theory p. 21

3.4

Consumption behaviour and openness online

p. 22

3.5

Human perception of media performances

p. 24

3.4.1

The creation of viral spread

p. 23

R ESULTS

p. 25

4.1 Interviews

p. 25
4.1.1

Eric Hrle, artist manager at D-E-F

4.1.3

Hasse Lindgren, musicologist p. 27

4.1.2
4.1.4

p. 25

Craig Penney, head of marketing at [PIAS]

p. 26

Jonna Lee, artist and founder of To whom it may concern.

p. 29

4.2 Focus group

p. 31

4.3 Survey

p. 34

DISC USSIO N
p. 37

5.1

Com parison of the results from the interviews

p. 37

5.3

Individual consumer groups based on interaction

p. 40

5.2

Comparison of results from the focus group and survey

p. 38

5.4 Features of digital distribution

p. 41
5.5
5.6

Choice of pricing model and distribution p. 42

Limitations and shortcomings of the studies p. 44

CONCLUSION

p. 44

6.1

Possibilities of increasing revenues for labels and artists p. 44

6.3

Personalised navigation and discovery

6.2 Utilise the evolving relations

p. 45
6.4

Streaming/on-demand is an effective distribution model

6.5 Service and listener individuality

6.6

Model for individual consu mer groups

6.7 Concluding reflections

R ECOM M EN DATIONS

p. 45
p. 45
p. 46
p. 46
p. 46

p. 48

Appendixes p. 48
Appendix A

p. 48

Appendix B p. 49
References p. 52

1 IN TR ODU C TION

In this chapter there is an introduction to the theme of this thesis, the purpose
with its sub-questions together with limitations and necessary definitions.
1.1 Background

We are moving towards a music industry that increasingly is converted into the digital realm. Where we take part of music through streaming services, downloading and through
file sharing which in turn affects the way we consume and experience music.
This way of consuming music has shifted the ownership of physical content towards sharing
digital content with other listeners, not having a unique copy of your favourite CD, but
instead providing a new amount of music being accessible. (MyNewsdesk, 2013)
Today the digital market stands for about 1/3 of the music revenues. By looking at the
development of both the Internet and the music industry we will most probably face a future
where a larger majority will be digital sales. Using new and innovative technologies
makes it possible for music distributed digitally to be transformed, and to become something that creates new values for both the creators and the consumers. (Music Business
Research, 2013)
When buying a physical copy of a record one experiences to get so much more than the
actual music. You can display the physical copy in your home, read and look at the folder
inside, you can give it away or it can be for your own personal use only. (Off Book
PBS [1], 2012) Music producer Loefah describes the physical values of a record when being
interviewed for Fact Magazine.(2012)
"You can viably frame a vinyl cover and put it on the wall.
It's also got all these personal associations when you take a vinyl out
of your record collection it takes you back to when you bought it,
where you were in your life" - (Fact Magazine, 2012)
By personalising and developing the digital format delivering the music, listeners may
be more willing to spend money on buying music. And artists get to exhibit their music
through interesting and new ways, which will help them communicate their creative vision
and also help them create revenues that will keep the whole system alive.
1.2 Purpose of thesis
The concept of this thesis is to look at the digital music industry and emphasise properties for companies to apply when promoting and distributing artists online. This
will be investigated both from a company and a consumer angle. For the companies with purpose of increasing the consumption of digital music content and for consumers to listen
to their needs, thus providing them with extended content and values to make the digital
content equal to the physical.

1.3 Problem definition

Purpose of the thesis is to investigate:
DIGITALISATION WITHIN THE MUSIC INDUSTRY
HOW CAN EXPERIENCED PHYSICAL MARKET VALUES BE CONVERTED INTO NEW DIGITAL VALUES?
Based on this aim, the project has been divided into three sub-questions:
1 What digital and physical values are there from a consumer aspect?
2 How do we consume music?
3 Can, and should, physical values be transmitted into the digital market?
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1.4 Delimitations
The investigation of this thesis is focused mainly on digital solutions that can
create a product value for consumers that are equivalent to the value they get when they
buy a physical product. There are five kinds of music services described in this report;
Spotify, since it is one of the biggest subscriptions based music services in the world
(Spotify [2], 2013). iTunes because it is the major licensed service for downloading
singles, albums and music videos. Thereafter there is a presentation of YouTube since it
is the biggest free service providing audiovisual content. (IFPI, 2013)
In may 2013 BitTorrent, a site often associated with illegal downloading, launched their
legal download service BitTorrent Bundle. (BitTorrent, 2014) Being a classified illegal
service making it into the legal market, BitTorrent are being considered as a peculiar
merged digital service and is therefore mentioned as the fourth kind of music service
in this thesis. Finally, there is an overview on the downloading and sharing movement,
commonly known as peer-to-peer (P2P).
As a musician or a music label there are several different digital distribution services that can be used to market the music on platforms like Spotify and iTunes. There will
be a short description of TuneCore, one of the most frequently used services, to give
a short insight in their work and functionality when distributing material online for artists. (TuneCore [1], 2014)
1.5 Definitions

The definition of digital value is that it should match up to the same value experienced
from a physical copy of a record, vinyl or other physical product for music listening.
Physical value can for instance be represented by physical ownership, the ability to interact with a physical object, artistic values in form of physical design and appearance
and also by its physical portability.
During this thesis different word for explaining values
, characteristics and features
appear. Here are some short descriptions of their meaning in this thesis.
ACCESSIBILITY

INTER ACTIVITY

Access and usage of a chosen feature

at any given moment and through
desirable format.

The ability to interact with a

specific feature in various ways,
in addition to its original
purpose.

U NIQUENESS

A DDITIO N A L CONTENT

The ability to access additional

content that supports the product or a
feature, digital or physical. For
instance merchandise or visual content.

Personalised experience of
a special feature, for example
limited edition of a product.

OW NERSHIP
The ability to purchase and own a
specific item.

In this case, the feature mentioned in this thesis is represented by audio content.
In this thesis the word for download appears in various situations, which attempts to explain either services like iTunes, BitTorrent Bundle or peer-to-peer services where a file
is downloaded to a device. Streaming and on-demand listening refers to services like
YouTube and Spotify where music is streamed, providing music through the device without
downloading any visible file.
7

2 M ETHODS
In this chapter all methods of research are described. The literature studies primary
gave a deeper understanding about online behaviour, consumption and the digital
progress.
Secondly it provided good knowledge about the supplementary methods that were perfor med. Interviews where conducted to get a professional insight to this specific area
and to hear about their future forecasts.
To gain understanding about consumer behaviour a focus group was formed. To validate
the qualitative research a quantitative survey was conducted as well to gather
thoughts about what constitutes value to the consumers and how this could be converted
into the digital world.
2.1 Literature studies
A literature study has been made to create a foundation of information, useful for the
deeper understanding of the music industry and its development. Areas such as consumer's
behaviour online and human perception are examples of studies demonstrating how people
are affected by content and consumption of digital media. In addition to this there is also
a resume of theories dealing with the evolution of digital spaces and their impact on both
the industry and consumer behaviours.
All the information has been gathered primarily from books but also from electronic
sources and video material. For the methods used research has been done to make sure they
got conducted in an accurate way.

2.2 Interviews
To understand a person's point of view, and to get it described by the person's own
words, conducting an interview is a useful method. An interview provides you with qualitative knowledge that can be used to present a deeper, but also personal, insight within
specific topics.
Professor Steinar Kvale chooses to divide the role of the interviewer into two different
metaphors. The first is when the interviewer is a so-called miner. A miner seeks and digs
for golden pieces deep inside the objects' surface, without trying to influence or "guide"
the object, finding pristine thoughts and feelings.
The second metaphor is the traveller. As a traveller you rather follow a predetermined
path while interviewing a person. This is more like a regular conversation where the object
gets to answer questions and interact with the interviewer. (Kvale, 1996, pp. 1-3)
Kvale establishes that most interviews are a lot like every day conversations; the only
difference is the purpose of the conversation. As in case of research the purpose is to
collect stories from the interviewees linked to the given topic(s). This will often
be reflected on the conversation, as it becomes more structured, based on a person's regulations. (Kvale, 1996, p. 5)
In most cases the interviews are semi structured, which means it is partly structured but
at the same opens up for openness and spontaneous elements, adapting to the character
of the person being interviewed. When structuring the interview process there are seven
stages to think through before the actual meeting:
1
Clarify the theme and purpose of the
investigation. "WHAT", "WHY" and "HOW" are
the common used criterias to answer at
this stage.
8

2
Make a frame of the investigation, both
by moral issues but also from a knowledge
seeking point of view.

3
Conduct the interview(s) in a suitable
way for the investigation. Try to stick
to the frames determined in stage 2.

4
Transcribe the material.

5
Analyze the material based on the framework defined for the survey.

6
Validate the findings and decide their
level of reliability.

7
Compile the results. Make it readable,
easy to understand and only present the
key elements important for the
investigation. (Kvale, 1996, pp. 27-88)
2.2.1 I m ple m entation
The interviews where conducted both by mail and in person, both using a semi-structured
frame as foundation (see Appendix A, p 48). Though the frame was modified depending on
the recipient when conducted in person. All the interviews made over mail were transcribed
into a coherent text, as also the audio materials from the interviews made in person.
Mail interviews were used with recipients located outside of Sweden. Due to having the
questions on mail the recipients could plan their time and think through their answers.
Interview objects where selected based on their private interests and professional
connections to music and distribution. However, all participants are interviewed based on
their personal opinions and thoughts and not as business representatives.
2.3 Focus groups
According to Thomas L. Greenbaum (2000, p. 6) focus groups are applicable and useful
when searching answers to "WHY?" consumers behave in a certain way.
"The strength of the focus group technique is that it enables a group of
individuals to share their views" - (Greenbaum, 2000, p. 6)
In definition a focus group basically is a group of people with a minimum of 4 and a maximum of about 10 people involved. In most cases the focus group is conducted in an isolated
area, sometimes by surveillance from an external group behind a one-way mirror. To make
a successful focus group a lot of responsibility lies upon the moderator.
As a moderator you must be able to communicate with the members of the group so that
they will understand the purpose of the session, and also what is expected from the members
regarding time etc.
It is also important for the moderator to be well prepared with equipment for documentations, so the material can be transmitted to a resume of the most important discussions.
(Greenbaum, 2000, pp. 3-34) Key element of being a good moderator is to be as unbiased
as possible, to not affect the groups opinions.
Though it is at the same time of great essence to be able to direct the group back on track
or towards related areas, for instance if the group would lose focus or if they nag out
on one particular topic. (Greenbaum, 2000, p. 37)
Besides the moderator, the group dynamic also plays an important role, which is often
on the moderator's agenda to bring together. For some topics a minor age variety among
the participants can be preferred, but to traverse generational borders is most of the
times not good in research purpose. Mixing gender is often not an issue though it is rather
more important that the participants have similar experiences regarding to the topic.
(Greenbaum, 2000, p. 65)
9

2.3.1 I m ple m entation

The focus group where held at the Royal Institute of Technology (KTH) with six students
from the very same school. Participants where 24-27 years, consisting of five females
and one male. Collection of group members was chosen on the foundation to represent an
unbiased group of consumers within the same age range. Their personal relation to music
was unaware from the beginning.
The selection yielded a homogeneous group dynamics, free from hierarchy amongst the participants which in turn enabled for opened and evenly distributed discussions.
Before the actual execution of the focus group the design of the embodiment was performed
on a test group, consisting of three people. This was done at an early stage to determine
flaws in the design.
The format of the focus group began with a tour amongst the participants where they got
to describe their consumption of music: when, how and what. Thereafter there was an open
discussion about digital and physical sales and the pros and cons with the different
digital services mentioned in this thesis (iTunes, BitTorrent Bundle, Spotify, YouTube).
During the discussion questions like personal value, illegal downloading and the future
of the music industry where mentioned.
Finally, all the participants got to listen and observe a music video. Afterwards the
participants got to write down thoughts and impressions, audibly and visually, for examination of the member's perception of the content. The focus group went on for about an hour
in total.
2.4 Sur veys
The aim of conducting a survey is to gather information from persons about their
experiences, feelings, thoughts, behaviour, values etc. The administration of the survey
often occurs through online services or by email. By using any of these methods you can
reach a large number of people, randomly chosen or selected on the basis suitable for
the study. The transmission from the gathered answers into numbers and figures is often fast
and easy when conducted online, since the result is automatically compiled.
If a survey would be conducted one by one, the character becomes more like a structured
interview, which can be an advantage in case of demand for guidance or requiring the
opportunity to be able to ask someone to further develop an answer. (Fink, 2009, pp. 1-9)
Depending on what is expected from the survey there are several different angles to
consider. One is the design of the questions, if they should contain open ended or closed
questions. Open-ended questions are constructed in a way so that the participants can
give their personal responses written by themselves. The answers can then, if needed, be
categorized to decode patterns in the responses.
It is a good method to use if the aim of the survey is to find out what people liked and
didn't like about a new product, service, etc. When asking private questions, like annual
income, it is often more appropriate to use forced answers with different selectable
intervals.
A closed questionnaire contains of several statements, questions or scenarios followed
by a number of choices for the participant to choose from. When using closed question
it may be even more important to use accurate language, be extra clear and try not use non
commonly known terms, so that participants can be sure of which answers fit them the best.
(Fink, 2009, pp. 17-22) The purpose is to get high reliability, which means that the
accuracy is high and if the survey were to be conducted once more on the same premises the
characters of the answers would be almost the same.
Another important factor is high validity, which proves that the foundings of the survey
actually match with the requested measurement. (Fink, 2009, p. 41) Other methods
that can be used depending on purpose are rating scales (from 1 to 10 etc.) or checklist
responses.
10

 If the survey is distributed online it is important to make sure that all information
necessary for the participant is available. (Fink, 2009, pp. 26-28) Everything from
how the person got selected for the survey to what the aim of the survey is, anonymity and
confidentiality, estimated time consumption and how the questionnaire is constructed.
Ensure that the survey does not take too long to complete, otherwise there is a risk that
people get tired or entirely avoid implementing the survey.
Sometimes you may need to justify some questions, for instance personal questions, and
explain why they are relevant for the investigation. To reduce the risk of problems it is
necessary to conduct a trial run before the questionnaire is sent out for real.
(Fink, 2009, pp. 35-44)
By distributing the questionnaire amongst people you know, a large group and to people
with interest matching the theme of the survey you can improve the number of participants,
which will give you a better foundation for your survey. (Fink, 2009, p. 63)

2.4.1 I m ple m entation

The survey was sent out to an international music oriented community and also to people connected to towhomitmayconcern.cc informational network on Facebook and through
Twitter. Distribution forums were chosen on the basis to locate people with a seemingly
musical interest and a wide geographical spread, to see if the respondent's opinions could
validate the thoughts expressed in the focus group or if they differed.
The survey was online for 7 days (one week) and the total number responses during this
period were 849 people. Number of people that the survey reached is unknown. See form and
responses on pp. 49-51, Appendix B, under Appendixes.

3 TH EORY

Presented here are the theories necessary for understanding the music industry market,
consumption online and consumer behaviour online.
3.1 The evolution of t he music industry
Even though music has been around for a long time it wasn't until the late 19th century that it grew to become an industry. The key for it to develop into an industry was
when it became possible to mass distribute. And this, in turn, happened in the late 19th
century thanks to the printing technique, which enabled printed sheet music.
Another factor was the increasing opportunity to experience live music in public areas
such as bars, theatres, etc. During this period, occupations like promoters, publisher and
songwriters arise as a professional business. (Tschmuck, 2012, pp. 197-212)
At the same time, in the year of 1878, Tomas Alva Edison started to work on his first
phonograph. A device that engraved the different motion of sound waves onto a metallic
cylinder thus making it possible to reproduce sound when played. This invention basically
became the starting point for a musical revolution, although it was not the objective
of the phonograph initially.
First came the very similar invention to the phonograph called the graphophone, which
then turned into the first gramophone. The significant difference was that instead of rotating metal cylinders the sound waves were engraved sideways onto a gramophone record.
(Tekniska museet, 2010) The gramophone became very popular to have in bars and restaurants
for visitors to use as a so called jukebox, were consumers paid a small amount of money
and then got to choose the next song playing.
11

In the beginning, there were only a few major companies, both in U.S and in Europe, who
controlled the market, and the music being produced were mostly operas and waltzes from
Europe. But suddenly something happened, and the music industry took an inversion. (Tschmuck,
2012, pp. 9-23) It was around the 1920s that the first technological revolution began
in the spirit of the jazz scene's rising. The technological evolution was the development
of radio that started to play a big role within the music industry.
Thanks to this medium, people could now experience live music absent from the actual location of the event. Also, the radio became a great place for marketing musicians.
The record sales decreased their sales for a while due to the radios success, since the
radio could supply the audience with a great diversity of music and also established many
initially unknown artists. (Tschmuck, 2012, p. 225)
The second technical revolution was in the 50s when the quality of the discs improved
and the lightweight vinyl record was introduced to the market, which made it possible
to distribute albums and singles over longer distances without the risk that they would
break during the transport. This was during the same time as when rock'n'roll was
in everybody's ears.
In this era a lot of independent record labels started to establish themselves on the market and tried to compete with the big commercial ones. A lot of music labels started
to manage all the different processes involved, offering all general knowledge necessary
for producing music and at the same time promoting artists, all under one roof.
(Tschmuck, 2012, pp. 227-231)
Further on, in the 70s, major companies started to sign sub-culture bands that stood
out from the average user's taste of "good" music, e.g. punk rock, heavy metal and disco,
etc. The development of the music industry had opened up for the possibility to sign
alternative artists, making previous niche genres become commercial. This affected the
sales on vinyl and prices started to change, and from this point being divided into
three different categories; budget-, mid- and full price.
In the late 70s and early 80s the vinyl record sales started to drop slowly, simultaneously the first music video channels on television had been launched and started to take
hold, and also the first Compact Disc(CD) was introduced to the market. (Tschmuck, 2012,
pp. 155-157)

MTV was the first music channel, providing viewers with music 24 hours per day, which
became a huge hit. And it became granted for artist to have music videos to their singles.
MTV became an immense success as a promoting channel for artist and as a marketing
spot for other commercial companies. So the whole marketing strategy changed within the
music industry and for the first time the term "blockbuster" was associated with music
and not only successful feature films.
The music industry expanded with this and became more and more like an empire,
with sleek and flawless productions. As a counterpoint to this the hip-hop culture started
to experiment with the DJ scene, particularly in the suburbs of New York. They played
music on vinyl but started to add breaks and scratching noises to it, remixing existing
beats into something new. The mission was to sound nothing like the seamless commercial
music, but rather play with rhythm and mix it up with own rap lyrics. The rap scene grew
huge and soon some of the pioneers became very famous and commercialised, ending up on
the MTV scene as well. (Tschmuck, 2012, pp. 157-162)
The CD was a radical invention both by its technique but also by its appearance. The
technology was digital, which made it possible to store more music on one record, and also
the sound was significantly better in comparison with crackling vinyl records.
At the start the CD didn't really stick to the market, but after a couple of years the
sales increased and started to overtake the vinyl. This was basically the very first step
towards a more digitalised music industry. (Tschmuck, 2012, pp. 163 174)
3.1.1 Today and the future
12

"Record companies have adapted their business to a model increasingly based on

access to music, and not only ownership of music." (IFPI [1], 2014)
According to Peter Tschmuck there was a third revolution rising in the beginning of
the 80s' when Internet started to settle in every household: the digital revolution. This
revolution is still in motion and what will come out of it is yet to prove. There are
already visible changes, since the digital revolution has made it possible for artists and
musicians to promote themselves online and distribute their music independently, which
also has opened up for a more rapid international spread. (Tschmuck, 2012, p. 182)
An additional critical development born from the digital evolution during the 21st century, which changed the music industry, was the exploding smartphone and tablet market.
This new music market grew from an earlier wave of mp3-players and the equivalent iPod
produced by Apple, which created new market offerings and a greater access to music for
consumers. (Mason & Spring, 2011, p. 1036)
Once a year the International Federation of the Phonographic Industry displays sales
and changes within the global music industry. In 2013 their report showed that both the
record sales and the digital sales during 2012 had increased and started to show profit
for the first time since 1999. Digital sales went up with 9% which in turn means that
digital sales stood for about 34% of all revenues 2012, a majority position, and 10% out
of these 34% came from subscription of streaming services. (IFPI, 2013)
During 2013 the overall digital revenues went up with 4,3%, which implies a market coverage
of 39%. (IFPI [1], 2014) From 2011 on, licensed digital music services grew from being only
23 operating services on the market up to being 500 in the end of 2012. (IFPI, 2013)
Even 56% of the people who use non-licensed services give licensed services 'good grades',
which in translation means that they are good for getting access to a lot of music in a
legal way, according to the IFPI research. (IFPI, 2013)
The reason for the visible over all increase in music sales are partly due to the
growing digital market but also thanks to a noteworthy physical market increase, which
still accounts for a significant portion of all revenues. (IFPI [1], 2014) In addition,
services such as YouTube received a large stature, and in 2012 nine out of the top ten most
viewed videos were music videos. Digital music consumption has become mainstream, IFPI
establish. In 2012 two thirds of the entire world's Internet users had within a period of
six months used a licensed digital service, and among the 16-24 generation 81% had
used legal music services. (IFPI, 2013)
Record companies are in connection with this positive reversal exhibiting positive
thinking on market recovery. According to the IFPI research, record companies are working
hard to engage the classical music consumer to find the digital channels available and
to develop these channels so that they will fulfil consumers' needs and at the same time
open up for a widening of the audience. (IFPI, 2013)
3.2 Consu m ption and distribution online
Digital sales are increasing a lot, since more than 1/3 (39%) of all incomes in the
music industry are from digital sales. In 2013 almost two thirds of all internet users
within the age of 16-64 engaged in some kind of legal music service within a period of six
months. (IFPI [1], 2014) The digital sales are especially distinct in countries like
the U.S., Norway and Sweden were digital sales stand for more that 50% of all revenues
(Billboard, 2013). In the U.S., digital income stands for 60%, making it the largest digital market, and in Sweden digital revenues stand for 94% of the market (IFPI [1], 2014).
However, the consumption in countries like Sweden and the United States differs from each
other since the main source of digital revenue in Sweden comes from streaming subscription services, such as Spotify, while consumers in the U.S. make use of legal download
services, such as iTunes (Music Industry Blog, 2013).
In Sweden more than 70% of all the digital revenues come from streaming subscriptions,
13

which is a noticeable difference from the U.S. market, where subscription stands for 23%
of the digital incomes (IFPI [2], 2014). Below (see Table 1.) numbers are presented to
show the different markets relative to each other and their total revenue changes during
one year, from 2012 to 2013.
Sweden

U.S.

Ta ble 1.

Streaming

407%

202%

Downloads

-15%

26%

Comparison between U.S. and Swedish

music market revenue changes from
2012 2013.

Physical

-51%

-32%

37%

-5%

Total

(Music Industry Blog, 2013)

Based on these figures (Table 1.) a noticeable difference between the two markets is
shown. During the year of 2013 the Swedish music industry continued to show positive
numbers, with an overall increase of 5%. Especially the digital market displayed positive
numbers, and stood for 73% of all revenues during this year. The streaming trend continues to be evident in Sweden since downloading has decreased by 22% and streaming grown
with 30%. Also the CD sales decreased during 2013 by 23%, but at the same time the
sales of vinyl records rose 22%. (IFPI [2], 2014)
According to Daniel Johansson, Swedish researcher within computer since and music industry, iTunes did not get any real foothold on the music market when it first launched in
Sweden. Instead the digital market started to grow with the launch of Spotify and the trend
of a "pay per listen" instead of "pay per unit" shows to be a winning and fairer concept
for the Swedish market. (Johansson, 2013, p. 4-6)
In the U.S. the legal downloading services have been dominant for accessing music,
unlike Sweden's streaming culture. Though there are signs showing that this may change in
the nearest future. In 2013, for the first time since their launch, iTunes had a decrease
in sales, and overall the U.S. had dropping numbers in both downloads of tracks and albums.
Like Sweden they also had downwards figures in physical sales, aside from vinyl sales that
rose by 33%. Another big increase for the U.S. market was within the on-demand streaming sector, which rose by about 32%. Which implicates that streaming is starting to take
foothold within strong downloading cultures and not just in Scandinavia. (Evolver Fm, 2014)

Su bscription

Dow nload

Sweden

47%

7%

U.S.

23%

27%

UK

22%

33%

Ta ble 2.
% of Internet users during six month
period 2013. Comparison of market
share between subscription and download
services in Sweden, U.S. and UK.
(IFPI [1], 2014)

In comparison, there are cultures where physical sales are noticeably strong in market
position. One of these cultures are for example the UK, were vinyl sales rose 101%
during 2013. By looking at the UK digital distribution between subscription and downloading
during a six months period in 2013, figures show that downloads, mainly through iTunes,
are the most exploited when purchasing music digitally in the UK, see Table 2.
Whereas it appears that the U.S. is slowly starting to become evenly distributed between
subscriptions and downloading, and Sweden continues to have a distinct majority of
sub-scription based streaming users. (IFPI [1], 2014)
14

 Globally subscription based services or on-demand services are growing in a fast pace.
In just one year, from 2011 to 2012, the numbers of subscriptions increased with 44%
worldwide (IFPI, 2013). In total, subscription stands for about 51,3% of the digital revenues, including both paying and free-user consumers, which there are a total of 28
million paying subscribers worldwide (IFPI [1], 2014).
According to the research by IFPI, consumers express several reasons to why legal music
providers are attractive. The three main reasons that especially are appealing with
download services are: The experience that it is easy and safe to pay, the warrant to use
of a legitimate service and that the brands providing downloaded services are trusted.
In addition to these factors people who use subscription based services added the advantages of finding new music easily and the freedom of choice to use a free version, which
in turn enables the possibility to listen to single songs for free without having to
buy them first.
IFPI themselves point to the advantage, or at least the possibility, that it is easy to
integrate with social media in a different extent than download services can provide.
Free listening and the ability to discover were clear benefits that also were mentioned
for consuming music via video streaming services such as YouTube. (IFPI, 2013)
3.2.1 Spotify "M usic for everyone"
Spotify launched in 2008 with the ambition to become an option for music listeners to
get full access to music in a legal way, instead of using illegal services, and making
it possible for artists to expand on the market. Hoping that this combination would make
up for losses within the declining physical sales. A secondary goal has since early stages
been the focus on being a social service, both for consumers and artists, making the service more interactive and dynamic. (Spotify [2], 2013)
By allowing companies to advertise via Spotify, they can offer a possibility to chose
between free service or an ad-free service in the exchange of a monthly cost. Through
these sources of income, Spotify can bring in royalties to the artists. (Spotify Artists
[1], 2013) Currently Spotify has about 24 million users worldwide, with an inventory of
over 20 million songs available, and since the beginning there have been around 4.500.000.000
hours of streaming.(Spotify [1], 2013)
From all these users about 25% (6 million) pay corresponding 99 SEK (approximately $15)
each month for a Premium subscription. Being a Premium user thus means that the service
is ad-free and that you can listen unlimited on all your connected devices such as smartphones, tablets etc. According to Spotify, one member (free or premium) is about 1,6x more
worth than a regular music listener (listening to records) in the US.
A regular listener spends about 25 dollars per year and a Spotify member is valued to be
worth approximately 41 dollar per year.
In 2013, which is the most successful year so far for Spotify, the company paid about 500
million dollars in royalties and became operative in 55 countries by entering 38 new
markets. (Spotify Artists [1], 2013 ; IFPI [1], 2014)
In total Spotify has paid about 1 billion dollars in royalties since their launch in 2008.
Out of Spotify's total revenues about 70% are reserved for royalties only (Spotify Artists
[1], 2013).
At a press conference in 2013 Daniel Ek, founder of Spotify, presented that the next
step for Spotify is that they will add another kind of free membership for those who use
tablets when listening to music (Spotify [2], 2013).
Moreover, in the beginning of 2014 Spotify announced that they would make it possible for
artists to sell their merchandise through their artist page (Spotify Artists [2], 2014).
3.2.2 iTunes "Everything you need to be e ntertained"
It was in 2001 that Apple launched the first version of iTunes 1.0 as a service for
consumers to store digital music, making playlists etc. In 2003 the big revolution for
15

iTunes happened as they launched the iTunes Store (iTunes 4.0) as the first virtual music
shop. The concept was to let people pay for albums or singles, and in return receive
an mp3-file added to their iTunes library. In the first year over 70 million songs were
sold, and soon music videos, apps, books, podcasts and movies etc., were added to the inventory.(Mac Life, 2011)
Today iTunes is the most widespread music service and also the biggest service in the
US, with a total of 500 million users globally who bring in revenues of 5.5 billion
dollars every single quarter (Cult of Mac, 2013). iTunes is not only the biggest music
store, it is also the most common used media player. There are more than 37 million
songs available and since their launch in 2003 over 20 billion songs have been purchased
(Apple, 2014).
Since the start, one of the strengths with iTunes, according to Apple, has been its simple and stylish design. Attractive design and high usability is still a big part of
the concept when developing the service. Later, much of the development has been focused
towards personalising iTunes and also making all purchased content automatically compatible with all Apple devices. (Apple Key Notes, 2012) To buy a single or an album on
iTunes, the pricing for consumers varies slightly around $0.99 for a single and $12.87 for
a whole album (Catapult distribution, 2014).
3.2.3 You T u be "Broadcast Yourself"
"We ARE creating new forms of effectively broadcasted content"
(Joshua Green,Off Book PBS [2], 2013)
2005 was the year when YouTube first sat its foot on the Internet as a video service
for everyone to use, with the first uploaded video "Me at the zoo" in April the same year.
About one and half years later Google bought YouTube for $1.65 billion dollars.
Since then, YouTube has grown to be the biggest video service and also the second biggest
search engine (Daily Infographic, 2013). Today YouTube has more then 1 billion unique
visitors every month to their site as they operate in 61 countries (YouTube [1], 2014).
Since 2008 YouTube has been offering a Content ID for artist who puts up their music and
video content on the site. Fans and others can put up content created by others, even
if it is copyrighted. By using the Content ID the artist, right holders and YouTube can
monitor this in a suitable way for the artist. By doing so the right holders can decide if
they want the uploaded copyrighted material (by fans etc.) to be removed or if they want
to monitor the traffic to these videos or if they want the content to work as external
sources of profit, by monetising the revenues from the targeted ads. (Future of Music, 2013)
During time there has been an increase and development of sites providing services that
can rip of the music in posted videos for free, and making into an mp3-file.
This challenges the iTunes business even if the quality of the ripped songs does not always
reach the quality provided on iTunes (Levinson, 2009, p. 76).
Media research specialist Joshua Green explains the YouTube ecosystem to be driven
by the people who use it. Partly through uploaded material but also thanks to the "super
fast feedback loop", through commentaries etc, affecting the content almost immediately.
Thanks to YouTube we have, according to Green, widened our ideas of what is worthwhile
and potentially significant audiovisual content (Off Book PBS [2], 2013).
The custom music video channel VEVO has more than 630 million music videos in its inventory with about 243 million unique users (Hypebot, 2014 ; IFPI [1], 2014).
3.2.4 BitTorrent Bu nd le
The concept of the BitTorrent Bundle is to provide the consumers with more; therefore
they promote this with a new type of file format containing more than just an mp3-file.
All downloads are free, in exchange of an email address, but there is an option to donate
money for the downloaded content if desired. BitTorrent Bundles most popular music download
16

are by the artist Moby, who released his album Innocent through BitTorrent Bundle in
October 2013.
When downloading the album the file also contained music videos and limited content such
as a collection of stems used. An attempt to open up for people interested in creating
remixes, which resulted in about 68 thousand remixes being created. According to BitTorrent
out of all the 8.9 million who downloaded the Innocent bundle about 130 thousand continued to the album on iTunes.(BitTorrent, 2014)
Since the start BitTorrent Bundle total user rate has increased with 200% and they have
collaborations with about 8.000 artists, which has generated about 60 million downloads,
448 published bundles and 21 million site visits (BitTorrent, 2014).
3.2.5 M usic dow nload and file sharing (P2P)
The birth of music download and sharing between networks was in 1999 when an open
source program called Napster was first launched. Napster made it possible for people to
exchange music files between each other, for free. The launch was done as an experiment
restricted to only 30 people, but during the first week 15.000 people joined the network.
Eventually this was noticed by the Recording Industry Association of America (RIAA), who
proclaimed Napster to violate the copyright law, and initiated a process of lawsuits.
In February 2001 the number of lawsuits were over 2,97 billion by numbers, which was the
same figure as the number of files being traded during that month. (Riedel, 2006)
Later on, other platforms for sharing and downloading information has emerged, for
example the Swedish based platform The Pirate Bay, who has become one of the most debatable actors within this topic. The Pirate Bay was launched in 2003, and presented a
manifesto in 2009 about limitless sharing and exchange of information over the Internet.
In May 2006, the site had more than 1 billion unique users at their site, and has
since start faced a number of lawsuits. (Crawford, 2009, p. 3)
P2P file sharing is still a subject under discussion. It is a subject that divides
musicians, and listeners, into different standpoints (Riedel, 2006). Rough calculations
show that approximately a third of all internet users around the world access and use
non-licensed services, P2P (Peer-to-peer), to access and to share all kinds of content,
like music for instance. Music files are uploaded and downloaded between networks, without
any economic obligations. (IFPI, 2013)
Since the music industry aims to expand on the digital market IFPI claims that a
successful launch of artists online is not enough. It is essential to protect musical creations and make it difficult for them to spread to non-licensed services. Another big
culprit considered by IFPI are the search engines that often publish links to non-licensed
sites when a search is executed on an artist. (IFPI, 2013)
IFPIs research figures show that 60% of non-users of illegal sites believe that it is
unfair to the musicians that they don't get any reward for illegal downloads, and that
search engines should always promote legal sites before illegal when a search is done.
When investigating how the users of illegal sites argued, the numbers proved to be the
same. 60% thought that accessing content without giving anything back to the creator is
unfair. 55% of both sides also proved to argue alike about that the fact that companies
should not do their marketing through these kinds of services. (IFPI, 2013
3.2.6 Tu neCore
As an artist that wants to be available on all legal online platforms there are a number of digital music distribution services. Such services make sure that artists are
exposed to digital stores like Spotify, iTunes, Amazon etc., without doing any claims on
copyright or ownership. TuneCore is one of the biggest digital music distribution services
online. The service was launched in 2006 and has since than helped hundreds of thousands
labels and artists to market themselves, which has over the years generated over $350
17

million in revenues. (TuneCore [1], 2014)

There are two pricing options for artists who use TuneCore. One option is to pay
individually per published work. The costs are $49.99 per album ($29.99 first year) and
$9.99 per single. With this solution the artist gets to keep 100% of the total revenue and
will be exposed to over 75 different channels. Option two entails paying a lump sum of $75,
with the advantage that thus can publish an unlimited amount of material, at any time.
(Tunecore [2], 2014)
In addition to all the exposure on different digital channels TuneCore also provide a
service where they monitor the music on YouTube and make sure that it becomes profitable
whenever someone exploits the material, audio or visuals. However, in this case TuneCore
are taking 10% of the total income as commission. In both cases TuneCore makes sure to
regularly post updates and statue reports to the artists and labels to follow up their
activity online.
For those who wants to release their music decoupled from a record label there is an
opportunity to get their music mastered by TuneCores own audio engineers, for a given cost
of 75$. (TuneCore [2], 2014)
3.2.7 Su m m ary
Here is a summary (Table 3.) of the different music services for consumers presented to
give an overview of the services feature and character. TuneCore is not represented
since this is a service for distributing music to distribution services, not providing any
listening services themselves for music consumers.
3.3 T he evolution of d igital m usic
"Every Consumer Is a Producer" - (Levinson, 2009, p. 1)
Paul Levinson, author of the book "New new media", argues that one of the digital
revolutions since the birth of Internet was when the traditional physical services got
transformed into the digital world. Thus making physical activities into "new media"activities, which in later years have developed to an extent where the consumers eventually
became producers to many of these "new media"-activities, thus transforming these services
into "new new media". YouTube, blogs, podcast etc., are examples of platforms and
forums that have changed our way of consuming media online. But it is not these kinds of
forums that belong to the "new new media". It is rather their readers, followers and
viewers that create the "new new media" with their interactions, their effectiveness and
the content they produce themselves.
"New new media" is always free to the consumer, and sometimes also for the producers,
Levinson argues. Therefore sites like iTunes and Amazon do not go under "new new media".
Another characteristic feature of "new new media" is that different forums or platforms do not compete but rather take advantage of each other. For instance a YouTube clip
is easily embedded to a Facebook page and a blog post.

18

Ta ble 3.
Overview of the different music services presented in this thesis.

Spotify

iTunes

YouTu be

BitTorrent Bundle

P2P

Business

Streaming/

Download file

Streaming/

Download bundle

Download bundle

Pricing

Free (ads

Free or voluntary

Free

m odel

model

On demand

On demand

Pay per download

Free (with ads)

and restricted

given sum

listening) or
Premium
(subscription
based)

Other

Feature

Music player

Easily integrated

Visuals/

Additional

Classified to

available

with other

Video material.

content in

violate

on multiple

Apple products.

Comment field.

downloaded bundle.

copyright law.

devices.

Inventory

< 20 million

< 37 million

< 630 million

< 448 (bundles)

Nu m ber

24 million

500 million

243 million

21 million

(VEVO)

(site visits)

of users

(Levinsson, 2009, pp. 1-5) "New new media" lives in synergy with each other, taking people away from traditional media such as television and books. Which paradoxically tend
to result in being the subject ending up on television, to represent the "new new media".
(Levinsson, 2009, p. 5)
Viral marketing and marketing per se in "new new media" is therefore more unpredictable, much faster and sometimes accidental, since it can all start with just one person
sharing a video to a friend and end up attracting more people than any promotional campaign
would do. But to become a real success you often need to not only become "famous"
in the "new new medium", you also have to get some recognition in the older mediums or
in the offline world as well. (Levinsson, 2009, pp. 63-70)
One of the key ingredients in the media environment, which also has spread to other
industries, is an ever-present entertainment value needed to sustain consumer interest.
(Bard and Sderqvist, 2000, p. 99)

3.3.1 In novation a reas and t heir affect on the m usic in d ustry
Tschmuck claims that the music industry is tackling a digital "Mediamorphoses". These
media-morphoses regularly happen over time and we have met them earlier in the jazz
revolution, when broadcasting first hit the market, and also when entering the rock'n'roll
19

revolution when the vinyl record made an entrance. These kinds of evolutions always occur
in a time of change and they overlap each other like waves, trusted by innovative ideas.
These innovations typically undergo four phases of treatment where the first three phases
are about to oppose the new dynamic by ignoring, downplaying and contesting.
And finally after having lived through these three stages the final phase is accepting
the new. (Tschmuck, 2009, p. 230)

In a time of revolution there are different units cooperating, see Figure 1. And the
outcome of a revolution depends on when an innovation is acknowledged and accepted,
then it can take on different creative paths amongst these units and affect the character
of the revolution. (Tschmuck, 2009, p. 238)
Fig ure 1.
Tech nological
possibilities

The creative roads between

the different units that affect one
another during evolution process.
(Tschmuck, 2009, p. 238)

M usic
practitioners
Business
practices

Social
actors

A requirement is also that there is a "system-alien" entering the industry to make the
evolution take off. The digital revolution involves a beginning for searching after
entirely different logics. Tschmuck notes that the logics are visual in terms of benefits
and disadvantages of the new digital tools, but that does not make the paradigm change
automatically. (Tschmuck, 2009, pp. 239)
According to Tschmuck the value of ownership has been transmitted into a value of access,
and the previously more passive consumption of music has turned into an active consumption, adapted and implemented to social and cultural connections. It has also created new
compounds terms, like prosumers and produsers, to explain the relation between creator
and listener, instead of using the now old terms producers and consumers. (Tschmuck, 2009,
pp. 233-235)
Tschmuck sums up by arguing that the digital revolution is in a state of creative chaos at the moment, as all revolutions are undergoing at some point. Digital actors are
carrying out several methods to organise and create structure, and interact with each other
to widen their views. Eventually someone will find a workable method that may become the
new terms. The conditions will reflect on the industry, but also socially, economically
etc., and the revolution will go into a more orderly phase. (Tschmuck, 2009, p. 248)
Depending on driving forces within the industry and who sets the frames, there are two
ways to go towards a once again controlled market; Controlling and narrowing the terms,
is one way. The other more "open" option is unpredictable but creates great volumes and
20

diversity, though it is more difficult to accept as regime. If the innovation that created
new conditions, however, came from someone outside the industry's control, resistance
can be strong already from the start, thus making it hard to take hold.
(Tschmuck, 2009, p. 249)
The authors Bard and Sderqvist are on the same track as Tschmuck. In their book The
Netocrats Bard and Sderqvist analyze media and the Internet's impact on the environment
in general. Their theory is, similar to Tschmuck, based upon the theory that we are undergoing technological paradigm shifts repeatedly, which takes place not only within the
media sphere but even socially, politically and linguistically. Along with the development
of information technology the language changes by the introduction of new words and
old words will be modified and change their initial meaning. This in turn means that we
alter our way of thinking, and therefore our way of living. The paradigm shift will
determine how we can and should think, according to Bard and Sderqvist. (2000, pp. 29-33)
In conclusion, Bard and Sderqvist believe that the present paradigm shift will result
in two different happenings. First, it will change our way of thinking socially,
economically and culturally due to a major development in information technology and the
fast digitalisation. This has affected our mind strongly and therefore these changes
are necessary. Secondly, the new norm will also take a new kind of formation, which is more
like liquid and not firm in its texture. (2000, pp. 29-33)
3.3.2 Nostalgia and digital innovation
Parallel to the digital revolution, there are clear signs of a revival in the consumption of vinyl records (IFPI [1], 2014), which actually belongs to a different era and a
former evolution in the music industry. (Tschmuck, 2009, pp. 225 231)
One of the fundamental things about music is that it creates memories, and is often
connected to specific moments when this particular piece was first heard etc.
This is a combination of biological, psychological and environmental factors. When marketing music, this particular feeling can be essential since nostalgia helps to strengthen
identity, the sense of meaningfulness and also helps to build social connections.
(Cartwright et al, 2013, p. 462)
Nostalgia mystifies the past, giving consumers something to bond over and at the same
time help them to express their personality. Thanks to technological developments there
has been a revolution in music where it is now possible to do remixes of existing pieces,
to access music in a whole new way and also it has increased the quality of the music
experience. (Cartwright et al, 2013, pp. 462-465) Cartwright et al. argues that distribution channels are key in this digital world, which is like the glue between demand and
supply. The electronic development has been giving new ways for people to interact with
the music, giving it new ways to be expressed, which gives us new ways to tangent
nostalgic emotions with the listener. (Cartwright et al, 2013, p. 465)
3.3.3 The long-tail theory
It was in October 2004 that Chris Anderson, editor in chief of Wired Magazine, wrote
his first blog post about "The Long Tail" theory. This resulted in a book about the subject, released in 2006. (Anderson, 2004, p. 1)
Anderson's theory was founded in an era when the move from the physical world to the
digital became increasingly clear in the media industry. Everything from books, movies and
even music became digital.
This challenged the big players, like Wired Magazine themselves, who got new opponents
represented by blogs and independent niche players that spread online.
What Anderson identified was that the need of so-called blockbusters, as we have seen in
the music industry when the music video culture was launched (see p. 12), declined quite
rapidly. The "head" represents these blockbusters, see Figure 2, on the curve. Where
the length of the head (and "neck") implicates the level of revenues, while the "tail" of
the curve represents level of popularity. (Anderson, 2004, p. 1)
21

revenues

Fig ure 2.

head

The Long tail theory shows that the tail

on the popularity-axis will grow thicker
due to digital evolution.
(Anderson, 2004, p. 1)

tail

high popularity

low popularity

Thanks to the digital space consumers can find alternative music and dig down into the
inventory of a service. The main reason that blockbusters earlier had been a leading
practice was due to physical limitations, Anderson claims. Physical limitations in the
sense that there are a costs of producing physical products, market them, distribute them
and storing them in physical stores.
All these factors affected the music that was being produced since it demanded its price,
and also required to reach a minimum in number of sales. This in turn created the blockbusters, which previously dominated the market. In conjunction with the digital
revolution and the move to digital space, a lot of the earlier costs that were required in
the physical space got eliminated. This creates an opportunity to provide even niche music,
since the physical shelf in a hired record shop is replaced with a virtual, substantially
free shelf, Anderson argues. (Anderson, 2004, pp. 1-5)
Another observation was that the pattern of consumption changed as well. The digital
space provides for a consumption of singles, instead of buying a whole album. Making
it possible to filter your browsing and consumption. The digital music services are aggregators, helping consumers to find exactly what they are looking for and helping them
find new music that probably appeals to their taste. Whereas recommendations, from either
other consumers or by some built-in algorithm, can direct consumers from bigger artists
towards more niche and unknown artists that may suit the consumers taste. By getting across
larger music inventory old music can be rediscovered, making it possible for people to
be nostalgic through modern technology. (Anderson, 2004, pp. 1-5)
Even if the tail has grown thicker, the head that represents the popular blockbusters, is
still important for the industry. They can't survive without each other. This, according
to Anderson, speaks for the on-demand model. Where you easily can access both the head
and the tail, and everything inbetween. (Anderson, 2004, p. 5)
There are people arguing against this theory like Anita Elberse, author to the book
Blockbusters, who proclaims that the head or the "neck" is the one part that will grow
bigger and the tail will only get thinner and thinner. In this case, the online culture
works as a promoter for only the big artists to become even bigger by using tools as
social media, movies and other content, Elberse claims. (Harvard Magazine, 2014)
3.4 Consu m ption behaviour and openness online

Like Joshua Green chose to describe YouTube as an ecosystem driven by its consumer's
interaction (see p. 16) virtual realities per se are based upon any consumption related
activity created by the consumers themselves. These groups are specific and unique depending on the actual subject and the created relations, which provides for specific norms
according how to interact and behave within the virtual reality. (Kozinets, 1999, p. 253)

From the start many virtual realities are unsocial activities that over times grow
to become something bigger. First time visitors often take the position of lurkers. Thanks
to this, an organically generated power and relations are stated within the community,
22

where there are theoretically four different roles for a participant to categorise as.
The first are the so-called tourists, who do not have a strong connection to the subject
neither to the social structure. Then there are the minglers, who are loosely tied to
the subject but appreciate being social with the other participants inside the community.
The third category is the devotees. They appreciate the subject, but do not have the urge
to be particularly social. Last, there are the insiders who are strongly connected to
both the subject and the social interactions within the community. (Kozinets, 1999, p. 253)
Often a virtual community consists of one or
that figure as "influencer" that have the ability
loyalty to the subject. Important for the virtual
of an equitable group, and maintain it, and avoid
(Kozinets, 1999, pp. 253-256)

several participants, mostly insiders,

to steer the group and affect their
reality is to provide for the creation
the creation of separate fractions.

Virtual communication can be designed for two-way communication, where the recipient or
recipients of a message can respond back to the sender. Or it can be a one-way communication where there is no possibility for the recipient to respond back. This can also be
done from one to many recipients as well. Within the virtual reality there is a tendency
to talk directly to large groups instead of individuals. Those who are treated as individuals often belong to the insiders. (Kozinets, 1999, pp. 253-256)
Jonathan Bishop explains that there basically are three different levels to go through
that affect people to seek for virtual communities and finally to join them and interact.
The first level is based on people's desire. It can be a desire for socialising with
likeminded people, desire of vengeance or a desire to affect something. The desire is about
to act out the desire, rather than to just satisfy a feeling. This is often applicable to
lurkers who have been observing a virtual reality and then after a while desire to act
out an opinion etc., to trigger an action. (Bishop, 2007, p. 1883)
The second level is for people driven by their cognitions, beliefs, goals in life, culture
habitant etc. This is an underlying driving force created in the first level, grown from
the desire of acting out.
A participant of a virtual community can have a goal to interact with others, built from
the desire of socialising with other, for instance. Further on, the goal turns in to
a plan on how to act this out (level 1). But to fulfil the goal in a satisfying way it is
important that the path collaborates with interests, values
and beliefs otherwise the
acting out of the plan may be stagnant. (Bishop, 2007, pp. 1883-1887)
In the third and last level the actual interaction is shaped. If a person has set up a
plan for how to reach their goal and fulfil the desire, which also agrees with ones values
and ideals, integration to the surroundings is doable. This is the step from where
a lurker becomes a participant, even if it is on an amateur level at first. (Bishop, 2007,
pp. 1883-1887)
Within a virtual reality it is vital to stick to the rules and laws, which can be even
more complex and a bigger number than in real life. The virtual self that enters the online
environment has to show a netiquette to don't be suspended or end up in isolation.
(Bard and Sderqvist, 2000, p. 192)
3.4.1 The creation of viral spread
A viral campaign or marketing (video, product, popular culture etc.) is very much like
regular word of mouth spread, the difference is that it occurs on digital media platforms which gives it a much greater potential in spreading over a big area in very short
time. (Levinson, 2009, p. 70)
"Content is shareable when it hits people emotionally and makes
people feel like they're proud to have it be associated with their identity" (Kevin Allocca, Off Book PBS [3], 2012)
23

 Rob Horning, executive editor at the online publication The New Inquiry, believes that
the creation of viral spread is strongly connected to something he refers to as the
"viral self". The "viral self" is driven by a wish to put ourself in a wider circular path,
providing us with a stronger self. Thus proving our social existence and offer
us golden nuggets in the form of viral content. (Horning, The New Inquiry, 2013)
"You can experience virality as an emotion." - (Rob Horning, 2013)
Sharing content with others, most common on social media, gives an instant response to
a shown feeling, thus making the feeling true. When existence is acknowledged it confirms a social existence, which in turn confirms the self. Horning calls on the importance
to give the "right" response to viral content. By showing the correct emotions and engagement it creates an interference in the narration, and therefore also a position in
the social context. (Horning, The New Inquiry, 2013)
3.5 Hu man perception of m edia perfor m ances
Nine out of the ten most popular videos on YouTube are music videos (see p.13) and
spreading content has never been as easy (see p. 15). Sofia Dahl, researcher within sound
and music communication, investigates in her doctoral thesis from 2005 how humans experience music and how they get emotionally affected depending on audio, but also trough
visual appeal. (Dahl, 2005, p. 14)
Visual movements in combination with music are primarily used as a way of communication.
Dahl chooses to quote Davidson and Correia (2002), where Davidson and Correia divide
this type of communication into four different categories depending on purpose of body
movements. The first one is to communicate with fellow performers. Or it can be a way for
the artist to express a story expressed in the music. Third, it can be a personal way
of movement by the performer and the last category is that the aim of the movements is to
engage and/or to entertain the fans/viewers. People are generally inclined to interpret
information even in minimalistic and austere visual expression.
In most cases a human can decide the sex of a person just by looking at how a person walks.
Both musical and visual cues or phase offsets can play a crucial role in the way a story
creates emotion.
Dahl notes that humans also have the ability to connect the auditory with the visual as a
unit. For example, if someone listens to one piece and at the same time experience visual
movements the interpreted time of the musical piece is recognised to continue if there
are visual movements even if the music has ended in complete silence. According to this
theory visuals affect both the emotional response and the aspect of time. Dahl points
out, therefore, how important visual messages are as a channel for musical pieces.
(Dahl, 2005, pp. 14-17)
For a musician who performs the music there are many more impressions involved, were
some of them are visual, from either fellow teammates or from one self. There are
also tactile impressions from the physical contact with the instrument and also kinetic
impressions in the form of the body, which has to move and strain muscles to produce sound
from the instrument. Above all, there are the auditory impressions.
Which is the impression that is the most accurate and important for the musicians, to keep
the correct timing and flow. (Dahl, 2005, p. 17)
In an earlier conducted work, Dahl together with her co-writer Anders Friberg, established that there is a strong connection between music and gestures. Naturally since
performing music instruments demands some body movements to produce sound. In this case
some movements affects the way the observer experience the sound (Dahl and Friberg, 2005,
p. 1). For instance the velocity of an instrument can impact the observers experience,
where high velocity often gets related to emotions such as anger, happiness or excitement
and a lower velocity is more related to sadness (Dahl, 2005, p. 14). Then there are,
as mentioned before, movements not related to creating the actual music but still being
24

important for the enhancement of the experience. Where both movements and speech can play
a significant role. (Dahl and Friberg, 2005, p. 1)
In the digital media world the visual part of music performance has evolved and changed
the relationship between artists and the listeners. Music experienced through a music
video, display not only gestures from the performer. It can be other elements incorporated
to enhance the listeners feeling. When looking at a video it is more than the expression
of an artist being shown, there is labour done by a stylist, director, photography etc.
representing the new way of interaction with the consumers. Sometimes even supporting
the audio with semiotics, or by using fictional narratives etc.
Thanks to technological inventions and improvements, music videos have the possibility to
be more influential on their audience. (Thomson et al., 2005, pp. 222-224)

4 R ESU LTS

In this chapter the result from the interviews, the focus group discussion and the
conducted survey are presented.
4.1 Inter views
All the interviews presented in this thesis have been transcribed, both those conducted
through mail and made in person. The mail interviews where made semi-structured, using
open-ended questions, see Appendix A (p. 48). This format was used as a foundation for the
interviews made in person, but there was room for modification depending on the conversations outcome.
4.1.1 Eric Hrle, art ist m anager at D-E-F
Eric Hrle runs a music management company named DEF, Deutsch Englische Freundschaft,
located in London, UK. D-E-F represents many European musicians and artists, and has done
for over 20 years. For Hrle music has a profound role in his profession, unbiased the
format. Even if Hrle listens to a lot of music in his profession, active listening
to music is something that is always present even at leisure. Hrle explores new music
mostly through radio specialist shows or playlists made by DJs, but also through blogs,
music services and magazines.
When describing the current state of the industry, Hrle believes that it is changing,
as it always does, it is just that the pace is much faster today. The advantages of the
digital music development, which have affected this pace, are that technology has made
the accessing process become not only faster but also more democratic, since the scope of
Internet has grown bigger. Thanks to the decoupling from the physical format factors like
time, space, money and music has taken on new roles and changed character, Hrle argues.
"Music is almost like air or water, available in abundance everywhere"
However, Hrle adds, this breadth and diverse accessibility can create confusion or
even discourage people from consuming music, when there is no clear path to follow.
This in turn can create problems to connect with others on a broader level. Hrle points
out that this is minor deficiency, which is outweighed by the benefits of digitalisation.
In the future, the options of the industry may become even more by numbers since people
like to find their own ways of accessing and search for music, and to display the music
aesthetically and socially through various dimensions, says Hrle.
Hrle believes that consumers will experience music as free of charge even if they do pay
for it through other types of services, such as mobile subscriptions, etc.
25

Revenues will come from legitimate music that reaches the masses, that benefits a few
operators: "It will come from ubiquity and scale which will only be reached by very few."

When Hrle is questioned about the role of the music video and its future Hrle argues
that the visual material has become disregarded and ignored yet simultaneously admired,
much thanks to YouTube. Visual material, when supporting music, often contains of undesirable and trivial content. Which can have a considerable impact if done with the right
quality on both the content and the music. In addition, in some cases the music unintentionally ends up being sidelined to the visuals. Hrle establish, however, that music
videos or visuals with high quality content will continue to have a strong future within
the industry.
4.1.2 Craig Pen ney, head of m arketing at [PI A S]
Craig Penney works as head of marketing at [PIAS] Cooperative, which provides marketing, promotion and distribution for independent labels and artists on an international
level. Besides listening to music at work, Penney consumes a lot of music from the moment
of waking up in the morning, when walking to and from work and while at home. Penney
appreciates to watch concerts, and sometimes to perform some of his favorite tunes himself
at a local karaoke bar.
Penney explains that at [PIAS] Cooperative, digital music plays an important role from
a commercial aspect as well as for the executive process. It is also the fastest growing
and most profitable area for the business. For instance, when listening to new music
and artists at work, for potential collaborations, this occurs solely digitally and often
master versions of music is delivered to [PIAS] digitally. When releasing a new artist
or musical piece it is also distributed digitally through a promo jukebox. Penney explains
that 10 years ago the digital revenue during the first launch week of an album was about
10%, now it is rather 40%.
Overall, Penney declares, digital revenues stand for a big share of [PIAS] total incomes.
Much thanks to the increased popularity of streaming and on demand services, like Spotify,
Deezer and YouTube.
"Media also looks at play counts on YouTube to influence editorial decisions,
this in turn influences our planning and we look to shape campaigns with a view
optimizing play counts."
When questioned about the current state of the music industry Penney response is that
music is more readily available and it is used in movies, commercials and TV more then ever
before. As a consumer, you are introduced to infinite options to consume music, thanks
to the development of 3G and 4G and due to streaming services. Which Penney believes in
turn has made it possible to consume music through your smartphone and to listen on-demand
without buying anything.
Penney compares the music industry with the film industry where services like the subscription-based film and series distributor Netflix and live broadcasted films seem to be
the future, the same goes for the music industry. This has in turn affected the live scene,
which is thriving, Penney says.
" Music fans like to spend their money on events rather than buying music they
can access elsewhere, the live market attracts huge money from sponsors now,
particularly festivals. Perhaps this is because the experience of being at an event
is not something you can accurately replicate through a digital format.
People still need unique experiences!"
However, there is instability in the market, according to Penney. Big companies are
getting bigger, like for instance Universal which recently bought up EMI. This has in
turn led to a huge market share for Universal but at the same time meant downsizing and
restructuring with accompanying partnerships. Meanwhile, Penney argues, physical stores
26

are forced to shut down and re-organise their business for the benefit of a stronger position of the digital stores such as Amazon, iTunes, etc.
The most important advantages, according to Penney, with this digital evolution are that
there is no shortage of supply and at the same time no overstocks. The manufacturing
and the delivery have decreased which is good from an environmental aspect. In addition,
people are more free in their choice of music, since it is no longer restricted by the old
delivery models. There is more profit to collect and several pricing models for consumers
to choose from, says Penney.
The major disadvantages are that people, according to Penney, seem to listen to music files
with poor quality, and also the fact that Apple appears to have a very large market share.

Penney believes that the future will be focused towards YouTube/VEVO and subscriptionbased streaming services, especially on mobile devices. Digital download will decrease
and physical objects will adopt a status as niche collectibles.
Even the illegal downloading and sharing will decrease since consumers will realize that
the legal options are more convenient, Penney argues. Even though Penney also believes
that the illegal download always will exist in some extent.
When asked about music videos and its future Penney thinks that visuals and videos has an
ability to contextualise music and capture the imagination from the fans in a unique way.
Especially now since so many people own a smartphone or tablet, Penney declares.
"Gangnam style (YouTube [2], 2014) would not have been the international smash hit
if it was without such an amazing video."
4.1.3 Hasse Lin d gren, m usicologist
Hasse Lindgren is a music enthusiast who from an early age played music himself and
later trained to become music supervisor and a music therapist. Alongside this, Lindgren
has also worked extensively with children and music, arranged a variety of musical
arrangements in Sweden, worked as a stage manager, has been director of studies at the
Swedish youth centre Fryshuset and a lot more. Currently Lindgren works as an administrator at the Swedish Arts Grants Committee and describes himself as someone with a very broad
musical background, who has never been involved with the strict commercial side of the
industry.
When asked about his opinion of the state within the music development Lindgren argues
that the industry is currently evolving and is in a phase of trying to find appropriate
working models to adapt to recent changes. There is a continuous struggle to make
people interested in paying for music and to financially compensate the artists correctly.
"How and how much?" are the big questions to deal with, Lindgren argues. As a reaction
to this Lindgren has perceived that more and more musicians are choosing to take control
over their own production and process.
Since Lindgren has been working with adolescents and children, he has noticed a change in
music consumption within this age group since the digital revolution began.
Before you identified yourself with the music and a record was classified as an art piece,
Lindgren declares.
When Lindgren himself was young he could buy a record based on one song only, then he
learned to appreciate the rest of the disc over time and found new great songs. This behaviour has changed in to more of a hit-based consumption, where people listen to one
particular song of an artist and then nothing more. This has affected the industry to no
longer put emphasis on releasing hit albums but instead focus on releasing singles, says
Lindgren, a format that basically was declared dead just a couple of years ago.
Lindgren argues that one of the underlying reasons to this phenomena is that the time
window you have as an artist to capture a listener's attention has been reduced.
Previously, the intro part in a song, before any actual singing was heard, could be up to
at least one minute long. Partly adapted to be played in radio where the DJ needed to talk
over the tracks. Lindgren has heard that same figure is about 8 seconds in the present,
27

which is necessary to entertain the listener's attention before it loses focus.

There is a tremendous pressure of information and impressions in the digital world, says
Lindgren, and it is very interesting to see how music and other art forms succeed with
building relationships through this huge amount of content. Lindgren has a feeling
that people have stopped creating relational ties, because they lack the energy to go that
little extra bit.
"Things that are about to acquire skills and to engage for a long time,
there you have problems in retaining people."
Everything in life needs to be instant, like fast carbohydrates, so the music industry
has to fight against the whole evolution of the society, Lindgren argues. One other reason
to why people have a hard time to consume music more profoundly Lindgren thinks depends
on the pressure of displaying a good digital identity, which demands a lot of work and
social planning, and that work steals time.
Lindgren expresses a curiosity regarding how Spotify will affect consumption in the long
run, because there is an illusion that everything exists on Spotify, according to Lindgren.
When you have access to everything you do not choose anything and the consumers put all
their faith in Spotify, but there is no personal relation, says Lindgren. When buying
records in your local record store you can create a bond with the owner who could introduce you to new music; now this is entirely mechanical, Lindgren argues.
This has contributed to a depersonalisation, but at the same time the amount of music is
surreal, Lindgren points out. Everyone can relatively easily create their own music,
of varying quality, and make it available to the public. It is hard as an artist to reach
out through that enormous mass. Digital development has also made it possible for anyone
to create cheap music videos, which opens up for possibilities to widen the artistic
extent by using relative mediums. Lindgren has also noticed an increase in reaching out to
distant branches, such as producing wine.
Some people argue that this overwhelms the consumer, Lindgren says, while some argue that
this is what brings the creativity forward. At the same time digitalisation also has
opened up for an internationalisation, you can go abroad easy and by just analysing your
streams you can easily figure out where your fans are located, making it easy to figure
out where to perform.
"There is so much manufactured out there... and they hit, but for a very short time."
Lindgren believes that the relation between the audience and the artists has changed,
especially in the sense that you can communicate easier. Though it is important for
the artist to be authentic in these cases, to reach out. Lindgren however believes that
it is too early to tell how the relationship between the performer and the audience looks
in the present, in about ten years it will be necessary to ask people about their relationship with their musical heroes.
"People's ignorance about the network and how they emit rights,
is another interesting aspect; justice issues.
That is one of the reasons to why I still buy records..."
When asked about the visible increase in vinyl sales Lindgren says that he believes that
people buy them because they enjoy the value in them, which is starting to become of
interest to the major record labels who try to produce more unique content. Lindgren believes people buy vinyl after live gigs but then they listen to the music online,
leaving the vinyl in its cellophane to preserve its value. Hardcore fans will always buy
everything that is released, Lindgren believes.
Lindgren says that it is clear that iTunes sales are the biggest revenue source currently,
by looking at what amount that goes directly to the artist. If not the record labels
charge more for streaming, then musicians will not survive. Since streaming is increasing
in numbers revenue levels must change so that artists want to exist there.
Before, record labels work a long time shaping and creating the artist. Maybe that process
28

is more instant today, since focus has changed towards producing hits and not building
relations, Lindgren reasons.
Consumers are infidels, says Lindgren, leaving one service for another since there is
no relation encouraging them to stay. To solve this and to make the young people become
willing to pay you need to go "indie", according to Lindgren. Being authentic and not
trying to include everything. Since we live in a world without boundaries we need someone
to create boundaries for us. By looking at the French, Japanese and Finnish market, which
stood solid when the music industry was at its lowest, you can detect a big increase
in the national market, Lindgren argues. This might be one of the important boundaries that
need to be done. Lindgren also believes that it is important to investigate the
audience and find out how many of them are actually interested in music and the arts, and
what is driving them to listen to music.
When summarising, Lindgren believes the biggest advantage with the digital evolution
is that it has made it cheaper to produce art, which in turn makes the creative process
available for everyone. People are a lot more creative even if they do not always get
famous from it.
The biggest drawback, however, is that the consumer has lost its relation to art. People
spend time looking into a screen all the time, and sight in combination with sound gives
really strong impressions, which helps us identify and relate, Lindgren says. By looking
at a screen all the time we do not get to create our own inner pictures, which may
provide an overload and keeps people away from exploring their environment, the nature and
physical abilities.
4.1.4 Jonna L ee, a rtist and fou nder of To whom it m ay concern.
For Lee music has been with her for a majority of her life. Lee started early to work
with music and has worked with music professionally, as self-sufficient, for 10 years.
She began by releasing her music through an independent record label. Since five years she
is running her own label producing music but also film art and other visuals.
Being present in the industry Lee has noticed that the increased digitalisation has meant
a democratisation for musicians in the process of creation. Something that Lee believes
started with early sites such as MySpace entering the digital market which then further
developed into other sites like Facebook and YouTube, and eventually created a need for
distribution services like TuneCore, which has made it possible for people to distribute
their music independently.
When Lee first started to work with music, she did not fully understand the role of the
physical record label, but with more experience she started to understand record label's
general assignments and division of labour and felt that it was not supportive enough for
her artistry to be signed to a traditional label. From that moment Lee started to
realise the idea to start her own label.
Lee describes her business being focused on digital distribution since her current
project started through YouTube in 2009, which was created out of an observation of
how little artistic material that existed on YouTube at the time. While there also was no
obvious market for this type of creation, where music and visual materials could be
distributed at the same time.
Therefore, Lee thought that it was interesting to see if such material would be noticed
amongst the more commercial content made for daily consumption. Nowadays, YouTube has
evolved and now there is a lot more of artistic content available, Lee believes.
"People did not seek out to YouTube to consume art, quite simply, and it feltlike
an interesting thing to see what would happen if our work was placed in this arena.
Would it be noticed when mixed subtly into it at a time, when the music industry
claimed the music video as being dead."
Lee works mainly by producing music films and through digital channels where the au29

dience can respond directly to the released content and senses that digital evolution has
made it possible to extend her musical work. Lee believes that even if the visual material can be more problematic to consume, in comparison to music that is more portable,
Lee thinks that the visuals can create a feeling that is being worn and perceived even when
only consuming audio content.
For Lee it is important to let the interaction with the audience to get reflected upon the
continuous work, both consciously and unconsciously, especially since she has chosen
to work with releasing new content in episodes in real time. This procedure opens up for
letting the audience experiences get response.
"Everything that the audience feels and thinks is so much more contemporary reflective
than many people understand, I think."
Although Lee still discovers new music through word-of-mouth and only listens to a few
records during a longer period, Lee is certain that the way of consuming music in general
has changed, due to the digital paradigm shift, into a much more rapid replacement
consumption. Being able to access a lot of music reflects upon consumption in a way that
the consumer also gets to experience a lot more music. Though the consumers also have a
shorter range of what they can handle to consume. To really get involved with a musician
it demands an extra-ordinary connection. As a listener you get numbed because you are
overwhelmed with the amount of choice, Lee considers. But she also believes that the human
brain and our behaviour will adapt to these changes and therefore our habits and consumption also will evolve.
The digital evolution has such a great impact on people right know, Lee establishes, and
we have not come to understands its greatness yet. The amount of information available
to us is incredible, and probably the knowledge of the digital world will increase and
therefore also become more organised,
"For long, the Internet has been a place to spend free time anonymously without an
entrance fee. But it is becoming more and more a part of our real lives".

Lee declares that she definitely believes that the digital information and networking
will be a larger part of life in the future. And for the music industry Lee believes
it would be a huge step back trying to re-introduce the classical sale-and-purchase way of
thinking, which belongs to the earlier record business model. Artists needs to learn more
about their audience, and with that their own network as well.
For Lee it is important that the distance between her and the audience digitally is as
short as possible. And for her it is important to stand her ground and not adapt too much
to demands, and let the audience seek her if they are drawn to her work.
"It is common to use every platform available to reach out to as
many people as possible. I think it is rather who you reach than how many you
reach out to that matters"
Lee experiences that she, and others within music industry, have the ability to affect
a lot. This is something Lee regularly fights with when making important decisions.
For instance the ever-present discussion about adding ads to music videos when being played
on different platforms. This is something Lee tries to stay away from, but often the
industry almost forces artists to do embrace it to make a living. Naturally Lee wants to
get paid for her artistic work, but to encourage both musicians and consumers to be more
involved there need to be a shift of focus from what the actual format is towards what
is given to the people that are paying.
Reasonably, a streaming service in general is the most reasonable distribution method and
also most directed towards the future, Lee considers. However, even this distribution
model requires a change in pricing since there is a huge gap between the incomes and the
revenues directed to the artists.
Lee believes that with the unlimited selection of choice an overall view upon music
as being without material value has been established. Not due to the fact that music has
30

occasionally been free, or that music has no value to the listener, but rather that legal
downloading of music cost about the same as physical records.
Supplemented by a constant mass production of music and distribution channels.
Digital files are viewed as a copy of an original, which seems unworthy the money you have
to pay for it, Lee notes. The music holds the value in the digital format, not
the format itself. Somewhere along the line, the conception of value was misplaced into
making the packaging of the music becoming what one paid for.
"I think streaming services need to charge a bit more money as evolving,
and provide a really good service that underlines the quality of music and the artist
itself. Right now it feels like it is just in the beginning, it will all evolve."
4.2 Focus group
The focus group consisted of six people, five females and one male. The age of
the participants ranged between 23 and 27. All participants were students at the Royal
Institute of Technology and were chosen to represent an unbiased group of people, within
an appropriate age group, to open up for a discussion about the music industry and its
digitalisation.
The exercise began with all participants presenting their respective relationship to
music, how and when they consume music, to get an insight into each other's interest
in music. During discussion one participant expressed that for just a couple of years ago
music acted more as an instrument to create and to support an identity, by finding undiscovered music for instance. The same person experienced that music consumed today is
more of a mixed nature, and not as identity tied, but still being highly present every day.
Another participant also expressed that in younger days, when buying CDs, the consumption
had more of a "rebellious" touch.
The majority of the participants listen to music at least one time each day day, in
different constellations. One participant stood out and experienced a decrease in listening
due to podcasts and other audio material. Whilst one participant experienced an increase
in music consumption during the last six months, but had instead cut off the earlier
consumption of vinyl records. Majority listen to music while doing primarily something
else, having music as a supportive medium in the background while studying or during
transportation etc.
All participants used Spotify as music player, but some of the participants also supplemented by listening via SoundCloud and/or YouTube, primarily for finding music not
available on Spotify. One participant even felt that YouTube was the primarily source to
music and Spotify as second source.

Choice and usage of digital m usic ser vice
The entire group had a premium account, or shared a premium account, and frequently used
Spotify as media player and music service. Through discussion the participants argued
that it was so due to availability, large inventory, suppleness and its ease of use that
they had chosen to use Spotify. "Because we live in Sweden we have been exposed to Spotify"
one participant expressed. However, it was not all participants who accounted for
the monthly cost as they stated that they shared an account with another listener, partner
or friend etc. Another participant noticed:
"I had the non-premium account for half an hour last week and it was the
worst half hour of my life".
Two of the participants expressed a lack of inventory for certain artists, remixes and
house music etc. One of them enlightened the fact that downloaded music can be integrated
into Spotify, but the entire group felt that it is too much of an effort to go through.
"I have not come up with any good way to integrate it smoothly into my
music listening."
31

one participant expressed. In contrast, two other participants expressed that they had
never experienced a lack of music due to the fact that there are so much music to
find through Spotify, for example via Spotify Radio, which was a popular feature amongst
the participants.
However, the participants found it hard to get hold on new music by themselves via Spotify,
since it almost always requires the knowledge of a person or company that update lists
to subscribe to. Only few of the participants used to do their own lists on Spotify, and
mostly consumed music through others, like friends, radio playlists etc. None of the
participants had ever used any of the social tools integrated in Spotify, like for instance
connecting Spotify to their Facebook account. Neither had they ever used the commentary
function when listening to music on YouTube.
When asked about how the participants listen to the music they all agreed that the
shuffle function is often turned on and therefore music is consumed rarely in its presented order. Besides if listening to older music that previously exhausted physically, for
nostalgic reasons, or sometimes if it is a brand new album. One participant felt that the
term album is outdated.
The group was then asked to discuss whether listening to music is considered to be an
active or non-active action. The entire group felt that listening to music were active
when they were young and consumed records. Listening to digital music was considered being
a non-active activity, even though some of the participants wanted to pursue it more
actively. One participant said that listening to music is sometimes so perfunctory that it
is not noticeable when the music is over or shut off, but the headphones remains in your
ears anyway.
"Nowadays it is all about this passive music discovery, because I can not be
bothered to search for new music but at the same time I want to find new music."

Some of the group participants occasionally consume music videos, primarily of artist
they like and know do aesthetical appealing videos. One participant looks up new
artists with interesting sound to figure out what kind of person the artist is, which was
a factor considered important to make sure the artist was of suitable character.
R easona ble costs
The group was asked to discuss what is reasonable to spend on music per month.
Almost every one agreed that the cost of 99 SEK (approximately $15) per month is reasonable, yet several of them used accounts of their friends and partners to get away from the
monthly cost. This, the participants claimed to be because of the possibility provided
by Spotify to share an account as long as you listen offline. One participant considered
the monthly cost to be absurd.
That participant felt that there would be a lot better if every user where forced to pay
for an account, and then lower the monthly cost to about 510 SEK (approximately
$0,8$1,5). Another person considered the magic limit to be about 50 SEK (approximately
$7,7), based on the participant's own "entertainment-budget".
The same person was aware, however, that in younger days when living on a smaller budget
the money spent on music each month was higher. However, music was at that time physical,
which was perceived as more valuable. "You do not see the cost in music when it is
digital." the participant explained.
The discussion went on to be about additional content and how to add value to digital
music. Alluring for a lot of the participants was access to something personal with
the artist. If the artist modulated his/her own account you could connect that the money
you pay goes more directly to the artist, one participant explained.
If you could connect with the artists the willingness to pay would increase, expressed
another participant. The participants determined that a personal donation when purchasing
music, for instance trough BitTorrent Bundle, or through other crowd funding sites, such
as Kickstarter, would be of interest if it were an artist that one had been following du32

ring a long time.

One participant saw that this kind of model could be beneficial for people who also like
to create their own music, if bundle comes with additional tracks etc.
Submitting music to downloading sites, peer-to-peer, which two of the participants
occasionally used, was encouraged from the perspective that an artist can easily make their
inventory available to a lot of people without any direct restrictions.
Path to find new music
During the talk about the future of the music industry participants discussed that
there most probably will be less record labels and a lot more independent artists promoting
themselves. The machinery of Spotify Radio is considered cool but not good enough, so the
best thing would be some kind of aggregator to collect music, one participant expressed.
Same person also felt that there would be more quality music and more local based
consumption. Physical sales will still be around in the nearest ten years since the vinyl
is considered to be a symbol, the entire group agreed. One participant compared vinyl with
coffee, which was estimated to be consumed because of its stimulating effect but sometimes also due to curiosity about the story behind the origin of the coffee etc.
Though, these kinds of niched interests are very trend-driven and temporary expressed the
participant.
The disadvantages of digital sales that the group could come up with was the consumption of battery time, the need for good network coverage and that you do not get something
physical in your hand when purchasing music. The advantages pointed out to be that it
is at the same time non-physical, not taking any physical space in your appartment, and
that it is possible to consume music everywhere in an easy way.
Ta ble 4.
Responses from the focus group when discussing possible ways to display music and visuals,
and emotions that got evoked within the group when observing a music/visual piece.
Inq uiry

C o m m entaries

How (which devices) do you

imagine consuming this content?

Projector, TV, Computer, Larger screen,

Not phone, Sound is more important
than visual

Any emotions evoked?

Serene, A thought, Epicness,

Sense of surfing, Loneliness, Sorrow,
Beauty, Discomfort

Where do you imagine consuming this content?

Art show, Concert (projected), Party,

Home, In a bar (projected), In a store
(projected), During transportation

Closure ex ercise
The group got to watch and listen to a music video to be put into the feeling of
consuming visually and audibly materials at the same time. Video was chosen by the author
and with the premise that both audio and video would be unknown to the participants
before exercise, and also represent material where both sound and visual expressions had
the same amount of space.
33

 After the participant had been presented with the material they all got to write down
thoughts and their personal experience during the exercise. Participants were instructed
to range the importance of visual material for music from 1 (not important) to 5 (very
important). The average importance of music videos in general got generated to be 2,83 within
this particular group. One participant commented that visuals had an importance when
listening to music for the first time to get an idea of what the musicians wants to communicate to the audience.
For marketing music and artists videos are important, another participant noticed. All of
the group members expressed that they would probably consume only the audio if consuming
the same piece, which was exposed to them, a second time. One person added that if
the music were to be presented to a friend for the first time, video and audio would be
first choice. 50% of the group could detect some kind of storytelling while looking at the
video and listening to the music, and they experienced a variation of feelings that differed amongst the group.
The participants also got to give proposals of possible devices/screens and also locations
where audio with additional visuals would be suitable for consumption. The participants
exercise answers are available for reading in Table 4.
4.3 Survey
A survey was distributed through a forum site for people with music oriented
interests and it got posted once at the Facebook page and Twitter account of 'To whom it
may concern.'.

847 people responded to the survey, which was open for a total of seven days.
All the collected data can be found in Appendixes under Appendix B, see page 49-52.
The majority of the respondents proved to be males, as much as 85%. 2% was unisex
and the remaining 13% were women.
The age distribution showed that the majority of respondents were between 21-40 (64%),
34% were under 21 years, 2% were between 41-60 and only 1% was over 80.
As occupation 50% of the respondents were students. People within the media or art
proved to stand for about 23% together.

During the last six months the usage of digital service proved that the majority had used
iTunes, 31% (See Data 1). YouTube and Spotify got similar numbers with respectively 27%
against 22%.
Data 1. Distribution of digital services used during the last six months.
31% 266

27% 231

22% 187

10% 87

8% 67

1% 9

iTu nes

YouTu be

Spotify

BitTorrent
Bundle

other

none

34

69% of the respondents had, during the last six months, purchased physical content, CD or
vinyl, etc (see Data 2).
45% answered that the most important feature of physical content is "Uniqueness" followed
by "Ownership" (19%). One respondent posted "Creativity; beauty of the packaging" as most
important feature, "helping the artist" was another expressed emotion.
Data 2. Most important feature of physical content.

45% 380

19% 160

17% 141

8% 69

5% 44

4% 30

3% 23

Uniq ueness

Ownership

A dditional
Content

Interactivity

Accessibility

none

other

When asked about the most important feature of digital music content the majority,
40%, responded "Accessibility" (See Data 3). Own responses expressed were for example
"Audio quality" and "Speed: can listen instantly".
Data 3. Most important feature of digital services.

40% 342

23% 196

11% 93

11% 92

7% 56

6% 51

2% 17

Accessibility

Uniq ueness

Interactivity

A dditional
Content

none

O w nership

other

77% of the respondents expressed that additional content is important besides the
music itself. Almost the same figures as for how many who had bought physical music during
the last six months. For the respondents the most important feature of a digital
music service is its amount of inventory, hence 59% answered "Large music selection" (See
Data 4). Only 3% considered "Social features" as important. Other answers were:
"Art",
"No DRM (Digital Rights Management)",
"Availability; able to access/acquire music anywhere",
"Integrated across devices",
"High quality and that most of the money goes to artist",
"How much i connect with the piece",
"Easy to use",
"Tools and methods for music discovery",
"Atmosphere" and "Dependability on the service".
In relation to the 19% who answered "Ownership" as an important physical feature, only 6%
considered it important when talking about digital content.
35

Data 4. The most important feature of a digital music service.

59% 498

17% 147

13% 112

4% 37

4% 30

3% 23

Large music

Low price

Reliable pay ment

Stylish
interface

ot her

Social features

selection

security

When asked about payment, 14% considered that music should be free for consumers.
49% believed that a fixed cost per single or album is the fairest payment for music.
27% felt that donating an amount of choice is an equitable pricing model.
Only 10% considered subscription based payment as fair.
Dat a 5. Respondents respond to reasonable amount of money to spend on music during a year.
25% 209

20% 172

15% 131

13% 114

12% 102

9% 76

5% 43

$60 $100

$180 +

$100 $180
(e.g. Spotify
Premium user)

$25 $40

$40 $60

$25 or less

$0

A majority of 25% considered a reasonable amount to spend every year on music is between
$60 - $100, and 20% believed that more than $180 is reasonable (See Data 5).

36

5 DISC USSIO N

In this chapter the results from the conducted methods, in relation to the previous
theories presented in this thesis, are compared and discussed to examine interesting
and appealing facts.
5.1 Com parison of the results fro m the inter views
Comparing the results from the interviews gives a good overview to how different
people inside the music industry think and reason about digital music distribution and
its future development. All interviewees considered the industry to be in some kind of
intermediate position, a shift. This is consistent with previous theories introduced by
Bard & Sderberg (2000) who also speak of a paradigm shift, or a so-called mediamorphosis
as Tschmuck (2009) refers to it.
At this intermediate position, a lot of the expressed opinions amongst the interviewees
are labelled solely as estimated projections of the future of the music industry. This
progress is viewed as something that is connected to changes, both socially, economic
and aesthetically. A statement supported through Tschmuck's, by the theory about creative
paths between units and its influence on the final outcome. Though, it is jointly applied
to all of the interviewees that there is a feeling about the market to be overflowing with
content and information, creating both obstacles for consumers but also opens up for a
musical democratisation.
T he switch of the m usic ind ustry
Common with all interviews is the perception of the music industry, and the digital
realm in general, as overwhelming of information and content. Which has made it harder
to find a clear path when discovering new music and take it to heart. This has, like for
example Lindgren explains it, led to a more hit-consumption based music industry where
the consumers' relation to the music is affected in both terms of perceived value but also
financially for the artists.
This way of consumption may be the cause to a number of factors noticed by the interviewees, like for instance an increase of artists who choose to work independent from big
record labels, as Lee, and an audience who quickly loses interest and therefore requires
more instant feedback, as mentioned by Lindgren.
The digitalisation of the industry has opened up possibilities for creativity and extension of music not doable earlier, like Lee describes her artistic development. There
is a general opinion of a democratisation, where creators can produce music and for
instance visual content with tools available to anyone. From this it is possible to draw
connection to the emergence of many so-called viral spreads.
A combination of intriguing produced content and access to digital network followed
by many, which supports the content to easily be disseminated and become viral. Resembling
to Levinsons (2009) theory about the "new new media", where consumers become part of what
is produced within the industry, either through their own productions or from a distribution point of view.
This is a development that, among other things, has contributed to make online phenomenas
to go international, such as "Gangnam Style" mentioned by Penney. A viral example,
where a combination of appreciated visuals, acknowledged through YouTube, contributed to
the artist's huge spread internationally.
Horning (2013) argues that virality is strongly connected to the image of our digital
identity. Also Lindgren argues that our appearance online plays a significant role in
our lives, that creates a pressure to improve and sustain our digital personas to others,
which in turn steals time from engaging deeper in other activities.
With this argument it is possible to draw connections to Tschmuck's theory about the
37

new merged digital roles of the prosumers and produsers, where both consumers and professional creators are responsible for distributing content online. In terms of the
visual market within music, is argued that it is an implement that always will be current,
with an opportunity to grow even stronger within the digital market.
Both Penney and Lee indicate the visual medium as a great tool to extend the consumer
experience of a music piece and for artists to express their creative vision further, which
is also supported by Dahl's (2005) theory that humans have a tendency to link sounds
with picture as a unity.
R evenue increase
An important factor that was expressed is the need for placement change in the percentage of revenue that goes directly to the musicians, so that they can continue to exercise
their creative work. Hrle argues that the revenues will continue to reach only a few
actors on the market, which partly supports Elberses (Harvard Magazine, 2014) counterarguments against Andersons (2004) long-tail theory. Anderson is backed up by Penney
regarding his theory about liberation from physical limitations arising from the physical
distribution model, due to digitalisation.
According to Anderson this is one of the arguments for providing smaller artists with
visibility and increased revenues for independent artists.

The experienced lack of willingness to pay, detected amongst the interviewees, argues
to be due to a possibility to access music for free. Or, as Lee considers, it can be the
possibility of consumers' perception of music not being worthy its price in digital format,
due to the habits of owning a physical product. The question seems unanimously to be
how to get people involved and feel satisfied with what they are paying for when consuming
music digitally.
M usic distribution
Based on the discussions held with the interviewees, they seem to generally agree upon
that the future lies within on-demand listening, trough services such as YouTube or Spotify
for instance. However, this is not a complete solution to the distribution question as
it requires both a change for the musicians revenues, for example discussed by Lindgren
and Lee, and additionally requires a clear communication of what is offered and where.
Lindgren argues for the distributors to offer the consumers their context, to obtain their
loyalty, by marking the characteristics of the service.
This can be by niche marketing for example. Lee argues, from a distributors point of view
the importance lies in creating a personal and direct relation to the audience. And also
in return guarantee the services loyalty to the audience.
To summarise, providing consumers with an interface that guides them in an appropriate
way and to always provide good quality of music, through on-demand service, may be a key
to connect consumers further into digital music consumption.

5.2 Co m pa rison of results fro m the focus group and survey

Those who responded to the survey represent people with a strong music interest whereas the majority of the people in the focus group were chosen on the basis to have an
unspoken musical interest before the exercise. These two methods of empirical research are
interesting to compare, based on how music services should be designed and for whom, since
there are several characters of consumers to satisfy discovered from these two results.
Willingness to pay exists
The results from the survey and focus group differs regarding usage of service, thus
none of the participants in the focus group used iTunes as music service while a majority
of the respondents of the survey indicated iTunes as their primary source.
One explanation to the large number of iTunes users amongst the survey respondents can
be due to the international spread amongst the survey participants, since the forums the
survey was posted through have an international network.
38

 The focus group mainly used Spotify, which can be explained by the fact that all of
the participants were residents in Sweden, where Spotify was created and first launched.
This resulted in a natural difference in how the focus group and survey respondents
perceived the fairest way to pay for music. Where the majority of the survey respondents
believed in the model used by iTunes, in pay per release, and the focus group agreed on
the subscription based model to be the most fair. 10% of the survey respondents believed
in the BitTorrent Bundle donation strategy, which also was appreciated as a second
alternative by some of the focus group participants.
When the focus group discussed the amount of money appropriate to spend every month the
majority said that an amount corresponding to the monthly cost of a Spotify Premium account
was reasonable. Which would be the same as about $180 per year.
The survey rather showed that the majority wanted to pay less then that, around $100.
This could be explained by the large number of respondents who consumed music physically,
and therefore can experience that they want to spend less on digital music. At the same
time a large group was prepared to pay a lot more than just the yearly cost of a Spotify
account. Amongst the survey respondents a large number, 69%, had purchased music in
a physical format during the past six months. Which indicates an interest in physical products, at least amongst music enthusiasts. This can be explained as a phenomenon driven by
the nostalgic factors, which according to Cartwright (2013) is a helpful tool to enhance
ones identity. Much like an "analogue version" of Horning's (2013) theory of how we
strengthen our digital selves by using viral spread and also due to the noticed need of
owner value. It can also be explained by international spread amongst the survey respondents, since some territories still have strong physical sales statistics.
There seems to be a desire from both groups that uniqueness is something requested,
both when consuming digitally and physically. Like one participant from the focus group
argued; that uniqueness may be a fundamental reason behind a possible increase of WTP
(Willingness To Pay) for digital content. If there is an idea of a connection to the artist, thus creating an experience of one's payment being directed predominantly to the
artist rather than a major record label, it is possible to engage more listeners into paying for digital content. By providing the consumer with tools to interact within the music
service, consumers can support their artist and be part of the artist's development,
thus creating a relational bond.
The im portance of additional content
Both the participants of the focus group and the majority of the survey respondents
agreed on accessibility and the possibility to have music available on several devices,
thus making music portable, to be one of the biggest advantages of digital services.
Additional content proved to be important for the survey participants, as many as 77%, which
was also the case for the focus group but only when it involved a personal connection
to the artist. Only 11% of the survey respondents believed additional content to be the
most important factor, next to the music, when consuming music on a digital platform.
Additional content can be represented in many ways, both by physical content but also
through digital formats such as pictures, lyrics, videos etc. During the focus group
exercise video proved to be mildly important amongst the participants, with an average
rating of 2.8 on a scale from 1 to 5. This is rather high, hence none of them used to
consume music video frequently, and only occasionally for special reasons. This number can
be assumed to be higher among the respondents of the survey, where 27% of the respondents
consumed music primarily through YouTube. Which can be something connected to the fact
that the survey respondents are stated to be frequent music consumers, and therefore may
have a greater need to consume music on a further level.
Tschmuck (2009) argues that listening to music has shifted from being a passive
consumption to be something active since consumers integrate music to other areas. This
was something that the focus group thought differently about, they rather experienced it
to be more active and socially integrated when consumption consisted exclusively of phy39

sical content. None of the participants of the focus group had used social features to show
case to others what kind of music they consume, for instance through connecting their Spotify account to Facebook.
The survey showed a very low interest in social networking while listening to music
digitally. At the same time the interest for interactivity within the digital services
proved to be relatively high, even higher than the importance of interactivity when talking
about physical content.
5.3 Individ ual consu m er grou ps based on interaction
Based on interviews, survey and focus group that have been made for this thesis different
goals and purposes of music consumption has been detected. The focus group consisted
of unbiased people, where the majority proved to have a relatively neutral relationship to
music consumption, were music primarily was used to support another main activity. These
kinds of consumers reasonable represent a significant consumer group with specific needs,
that operates accordingly, when they consume music digitally. The people who answered the
survey, which was directed towards people with an out spoken music interest, proved
to think somewhat different about music in terms of economy, content and distribution.
Both during the interviews and the observation of the focus group, thoughts about more
narrowed and niched digital services, directed to one special consumer group, were expressed as a potential future development. From this observation it is possible to find
arguments that music services are suggested to consider what their service is offering
their consumers, and how the cost of the service is regulated depending on the content
provided for the special consumer group. Which could contribute to a decreased sense of
being overwhelmed by content and impressions.
By adding Kozinets (1999) theory about online roles; the tourists, minglers, devotees
and insiders, one method is to organise music consumers based on the same theory but in
terms of music engagement. In order to seperate the online roles and musical roles, the
four online behaviour categories can be translated into music experience behaviours:
Visiting, swarming, supporting and investing.
The interaction in this case represents the level of active engagement in interacting over
the service, which can be both general or involving a particular artist within the
service inventory. The connection to the brand is transmitted to the connection with a
specific music service, or the commitment to a special artist within the inventory.
From these two properties music behaviours can be divided into four different categories
based on their purpose of consuming:

Visiting
Swar m ing
Supporting
Investing

Non-active interaction, weak service/music connection

Active interaction, weak service/music connection
Non-active interaction, strong service/music connection
Active interaction, strong service/music connection

A basic need that exists for all categories is a high availability of the music, the
ability to be able to consume music on-demand and to consume through any desired device.
Behaviours can evolve. To explain further, behaviours are presented with the characteristics of each category.
Visiting
The visitors in this case have no specific goal by listening to music, other than to
consume music occasionally. For instance while doing other activities as studying, training
etc. The choice of music is based on what is appropriate for the situation. Choice of
service is not an active choice, it is rather based on the most frequently used service in
the persons closest environment.
Visitors are generally not interested in interacting with others, or to network within the
service. Additional content besides music is not of interest. The visitors choice of ser40

vice is often based on easy and fast access to music, for example through completed theme/
genre lists.
Swar m ing
The swarmers are interested in networking. They prefer to interact with people connected
to the service or with features integrated within it. For instance through commenting
and discussing or by distributing and sharing content. They do not have a special connection
to the service brand or to any artists, music consumption is secondary when swarming.
For the swarmers it is therefore important that there are tools for interaction and networking within the service.
Su pporting
When supporting it is not of interest to interact but instead building a strong relation to the chosen music service. As a supporter the brand becomes important, which can
be based upon pricing model, design, nostalgia, political reasons, founders of the service
or the origin of the service. It can also be tied to a specific artist or several artists
available within this particular service inventory.
For a supporter a large music selection is important, and that the service character is
consistent with the personality of the supporter.
Investing
An investor is the most invested music consumer. A strong relationship to both music
and networking can take part both generally or tied to a specific artist within the
chosen service music selection. Investors are both active listeners but are also active
within the service. They like to explore and can often take on the part as spokesperson.
5.4 Features of d igital distri bution
As reasoned by the focus group, and shown in survey results and noticed by some of the
interviewed, the former status and value of owning music as property has changed since
the market was relocated to the digital format. This may be due to that the business model
in the physical market has been transmitted straight off to the digital market, where the
perception of physical values transformed during the transmission. The former business
model has been brought in to the new digital platform, even though the consumption and
appearance has evolved. Perhaps the distance in method developed between digital consumption and the physical materialistic consumption has developed a bigger demand for vinyl
as the archetype symbol of the physical music format.
During the prime era of the physical market the music distributed got valued because of
its physical existence, which proved to be difficult to transmit directly to something
digital. Accessibility is one aspect and a value that has grown from a digital evolution,
but does not replace the value experienced when purchasing something physical.
In relation to services like YouTube, that is born in the digital world and therefore is
adapted to the digital market, thus have an easier way to develop rapidly according to new
consumer behaviours. It is arguable that the music industry needs to adopt some changes
in order to support the development of digital services and to keep up with the accelerated behavioural fluctuations.
By being digitally based features that were not possible to apply in the physical world
has become available. These features can supply the main purpose, in this case music
consumption, to become more extended and more valuable. The digital values differ from the
physical, but they are not necessarily that remote from each other. There is still pursuit
of uniqueness, according to survey results, and also a need to be able to interact
beyond the basic purpose of music listening. Interacting with a physical music piece could
for instance be by displaying a record cover in your home.
When interacting digitally it is easy to associate interaction to be connected with
social networks, such as Facebook. But according to survey results, and focus group
41

discussions, social features end up at the bottom of desirable features. Thus meaning that
the interaction that is aimed for is not necessarily about socialising with others,
and that consuming music can be separate from social networking and rather be about interacting with the music and service.
Based on this knowledge it is possible that the interaction rather is based on being
able to engage further with the music within the service. Which could for instance be,
as suggested in the focus group, a more direct communication to artists or being offered
additional material and the ability to be more involved. By enabling the possibility to
act further with content, and even spread it in the consumers network, this can strengthen
the consumers virality and also support the artist, as argued by Horning.
5.5 C hoice of pricing m odel and d istri bution

According to survey, results only 5% wanted digital music to cost nothing, but 14%
expressed that they thought that the fairest pricing option would be if the music were free
of charge. However on the whole it seems to exist a willingness to pay for music amongst
the respondents, and even 1/5 of all the survey respondents thought that it was reasonable to spend more than $180 per year on music (not including concerts).
In the focus group, the willingness to pay exists, but payment is avoided if possible
and the accepted amount was over all quite low. For some it was expressed that there was
an ability to increase accepted amount of payment if provided with a sense of increased
value within the service.
Based on the result of the interviewees and by looking at the current state of the
music industry it is clear that music needs to be charged for, to make people engaged to
continue produce music as a profession. From one aspect the music services has a responsibility to charge enough for their content for the artists to get paid.
Because of this, a need for reorganization of distribution of revenue between labels and
artists could exist, to be more favorable in terms of revenue for the musicians.
The relation has changed due to an expressed democratisation in the music industry, where
the independent labels now challenge the big label role. Regarding the payment methods,
in Table 5. is an overview of the characteristic advantages and disadvantages with the
different payment methods used for digital services investigated in this thesis, from a
consumer and an industry point of view.
If reasoning according to Anderson's (2004) long-tail theory the digital development in
the music industry has and will change the economic flow. One of Anderson's arguments
are that the strength of the digital music services is provide consumers with tools to find
what they are looking for and also to discover new music.
While several of the focus group members expressed that the discovery and navigation
towards new music is difficult and unsatisfying. Thus emphasising the importance of music
services to adapt their navigation towards discovery of music depending on their consumer
group. Only then the long-tail theory can be adopted and begin to influence the market
revenues.
If following Andersons (2004) theory, the on-demand service is at the present the most
beneficial distribution model for the consumers. By investigating what kind of distribution model that is currently growing stronger on the market, and by listening to both
interviewees and focus group, streaming or on demand listening seems to be a favorable
approach.
Ta ble 5.
In this table, characteristic advantages and disadvantages with the paying methods
investigated in this thesis are presented.
42

Pricing model

Subscription

Fixed cost per

Free + ads

Donation amount

Free of charge

based

single/album

(e.g. Spotify

of choice

(e.g. P2P)

(e.g. Spotify

(e.g. Itunes)

Freemium,

(e.g. BitTorrent

YouTube)

Bundle)

Premium)

Artist and
label

advantages

+ Reaching a

+ Bigger

+ Reaching a

+ Possibilities

large audience

revenues per

large audience

for larger

release

+ Large spread

revenues
+ Possibility
to adding
additional
content, lyrics
and video etc.

Consumer

advantages

+ Unlimited

+ Only support

+ No economic

+ Only support

+ No economic

listening of

favorite artists

condition needed

favorite artists

condition

+ Unlimited

+ E.g. YouTube

+ No economic

+ Unlimited

access to

visual content

condition

+ Unlimited

access to

service

added

needed

listening

inventory

needed

service
+ Download of

+ Ability to

content

evaluate content
before paying
+ Additional
content offered

Artist and

- Difficulty

- Harder to

- Advertisement

- Uncertain

disadvantages

generating

reach target

on content

source

revenues for

audience

label

Consumer

disadvantages

needed

of revenue for

independent

to receive

the artist

artists

revenues

- no revenues

- Lack of

- Costs are

- Limited

- No streaming

- Varying

additional

high in

listening

service

quality

content

relation to
streaming

- Interrupted

- No streaming

listening

service

purchased con-

- Limited access

- Classified as

tent only

to service

an illegal act

- Access to

- No additional
content
- No streaming
service

43

 5.6 Limitations and shortco m ings of the studies

Even though music in digital format has been around for some time, it is still difficult
to say certain conclusions and to forecast the future. Therefore a lot of the investigated
sources are based on theories and personal opinions about digital distributed music.
The methods used for this thesis may have affected the results and it is possible that
other methods would have been given a different outcome.
The focus group was conducted with a gathering of people where their relation to music and
digital consumption was unknown.
If the group would have consisted of others, the result might have been different.
Also, the people in the focus group only represent one age group, of people between 24 27.
The results of the focus group were affected the by the nature of the discussion.
The number of respondents in the survey was limited because the form was only open for
one week and posted through a restricted number of sources. It can be assumed that the
result may have been different if the survey remained open for a longer period and through
other platforms. One weakness of the survey was the lack information of geographic affiliation of the respondents. The survey was distributed through three predetermined forums,
with a preconceived idea of reaching music consumers.
Interviews were conducted with a limited number of people. Conducting more interviews
with people from different professions within the industry would naturally have resulted
in more varied responses and opinions.
Methods and studies undertaken for this thesis have been limited both by time and availability. Despite this, there are some differences and similarities of the various studies
that provide a foundation for general conclusions about how digital music distribution may
be designed to meet consumer needs and grow with the digital development.

6 CONCLUSIO N

In this chapter conclusions drawn from the discussion with interest of the thesis
purpose are presented. The purpose of the thesis to investigate was:
DIGITALISATION WITHIN THE MUSIC INDUSTRY HOW CAN EXPERIENCED PHYSICAL MARKET
VALUES BE TRANSFERRED INTO NEW DIGITAL VALUES?"

The investigation has therefore been focused towards investigating the perception of
value of digital music and improvements of digital distribution and format.
This thesis was made to create an expose of the current state of the climate of music
consumption and the music industry.

6.1 Possibilities of increasing revenues for la bels and artists

It has been shown that a willingness to pay for digital music exists, and also that
there is a need for increased revenues for musicians to sustain the ecosystem of the
industry. As long as revenues from digital music are based on the physical market business
model it is difficult to financially compensate creators and encourage an increased diversity, and also to encourage listeners to pay for music.
Knowing your audience and maintaining a direct and transparent communication with it whilst
clearly establishing the purpose of how the service can satisfy will establish a relational bond between distribution service and consumer.
The willingness to pay may differ in respect of acceptable amount to pay, depending
on the consumer group concerned. The willingness to pay may be higher within groups that
44

are highly commited to music or to the digital service. The expected level of engagement
should be clear, so that the consumers can decide if their purpose and engagement level
is sufficient in relation to the price and the service.
6.2 Utilise t he evolving relations
Thanks to the digital development, the communication between musicians and the audience
has become both faster but also shorter. From a music listeners perspective this has
led to a combined role as a consumer but also as a contributor. In the form of sharing
creative ideas, content and thoughts online.

Investigations have shown that there is a desire for uniqueness when consuming music.
At the same time it is expressed that the previous sense of relational bonding when
purchasing music in a physical store has gone lost in the digital age. By opening up for
interaction between a music service and its consumers the bond can be renewed and updated
with digital standards.

Interaction can be structured as one-way or two-way communication, or both at the same

time through partial channels. Interaction does not necessarily consist of text-based
interaction, but may take other shapes. For example, by producing content and share material; listeners-to-listeners or listeners-to-artist and vice versa.
If the interaction is based on a one-way communication it is important that the tools for
communication are sufficient, so that for instance the listeners of a specific artist can
easily express their thoughts, emotions, etc.
The same goes for the artist to communicate with the audience. A two-way communication,
where both parties can communicate with each other, may advantageously be adapted according
to artist desires to increase the willingness of personal communication.
To preserve the integrity and personal space, preferred by the artist, is important.
Important for both methods is to maintain an honest communication between the listeners
and the artists.
6.3 Personalised navigation and d iscovery
A characteristic of the physical record store is that there are people assisting the
consumers about finding music and to present new discoveries. Different types of consumers
require a different amount of help to find new music and are willing to spend different
amounts of time on searching for music.
Meeting the prospective consumer group/groups with the right type of navigation service in
order to locate music can benefit all parties. Low music involvement, such as visitors
or swarmers, traits like quick search engine and easy discovery are generally appreciated.
Examples are complete playlists and music channels.
A more engaged music listener is likely to be less constrained by time spent on searching
for music on their own but appreciates help with finding new music. Offering a technological solution generating music based on the consumer's personal taste, which can fill
a need for personal service such as in a physical record store.
6.4 Strea ming/on-de mand is an effective distribution model
Streaming and on-demand listening, through services like Spotify and YouTube, are
proven to be an appreciated service model both by focus group participants, survey participants, interviewees and by looking at the global increase of streaming.
Factors important to music consumers are access to a lot of music and to be able to
consume it at any given moment through any device of choice, which is commonly significant
for on-demand services.
For labels, having access to a large audience can be beneficial for spreading and building a personalised relationship with the audience and find the target group.
45

Even though streaming distribution in the current state does not generate large revenues
for independent artists, there are indicators showing a change if adapting to the digital
ways of consuming and satisfying listeners needs.
6.5 Ser vice and listener individuality
Listeners engage in music services with different goals about their consumption, and
understanding the driving forces behind the use of a specific digital music service can be
useful. By adapting the service towards the consumers level of interaction and relation
to the digital service the different needs of the listeners can be met and the listeners
will in turn know exactly what is expected of them in terms of engagement. A clear
communication will help the audience to understand what service that will best meet their
needs and from a distribution point of view to sustain a relational bond to the audience.
6.6 M odel for ind ividual consu m er grou ps
Here is an introduced model, see Table 6, over different consumer groups and their
characteristics, based on the conclusions presented. This model is adaptable for both consumers and distributors to meet and serve individual needs.
6.7 Conclud ing reflections
The investigation of this thesis was based upon the following sub-questions:
What digital and physical values are there from a consumer aspect?
How do we consume music?
Can, and should, physical values be transmitted to the digital market?
Found during the investigation was that from a consumer aspect the greatest value of
physical content is the experienced ownership. Currently access and greater diversity
has become one of the most important values of the digital market, replacing the need for
ownership.
Due to these new values, digital listening behaviours can be manifested in several ways
depending on the purpose of listening. Music has developed greater presence for consumers
in the digital age, as it is readily available for usage when desired.
The amount of music and choices available to the listeners can for some be experienced
as overpowering and numb the listeners. This can be reasoned to be one of the factors
behind the apparent upturn that the physical market, in terms of an increase in vinyl sales,
has seen.
Being active in the digital market creates possibilities for developing new values for both
artists and listeners. The challenge for the music industry is to adapt to the new way
of consuming and diverse itself from the physical market. Then the new digital values can
be established.
In summary, based on the thesis problem definition:
DIGITALISATION WITHIN THE MUSIC INDUSTRY HOW CAN EXPERIENCED PHYSICAL
MARKET VALUES BE TRANSFERRED INTO NEW DIGITAL VALUES?
In conclusion physical market values can not be directly transferred into the digital
format. The digital format has to evolve in terms of content and how consumers access music to fulfil the values that are desired.
Generating a sense of uniqueness, interactivity, ownership and accessibility that is
adapted for specific consumer behaviour can enhance the digital values to become equally
valuable as the physical assessments. The digital format can be seen as unlimited in its
ways of shifting shapes, and digital music can address the same ability.
Social features built in to digital distribution service, enables the listener to share
46

and to communicate. Important is that the social movement comes from within the music
service, and is not implemented from an extended source. Social features within a service
can provide a healthy ecosystem and sustain interactions that revolve around music and
its environment. If social connections are not particularly important from a consumer side,
a need for uniqueness and establishing relation to the artist often is.
To enhance the experience for the listener, additional content can make a greater impression on the listener, which also enables artists to express themselves creatively in a wider
sense.
Increasing the benefits of consuming music digitally can encourage listeners to explore the possibilities and advantages of it and create a personal connection between
listeners, artists and services, which enables for networking opportunities thus widens
the spreading and sharing possibilities.
Ta ble 6. Characteristics of consumer groups in digital music.

Group

Investors

Visitors

Su pporters

Swarmers

Consu mer

Consume music

Occasional

frequently.

music listening,

Supporting

Frequent networking

Frequent networking

Very low

specific service

with service and

with service

interaction

or specific

others. Occasional

artists.

music listening.

characteristics

and others.

Interest

Low interaction.

Large music cata-

Fast and easy

logue. Interacting

access to music

and networking
features.

Tools

Tools for inter-

Easy navigation and

action. Tools for

discovery, through

collecting and

completed, specific

organising music.

playlists etc.

Specific musical

Interacting

catalogue or

and networking

service.

features.

Supporting

Tools for inter-

artist or service

action, discussion

of choice.

forum, sharing- and

uploading options
etc.

Co m m unication
interest

Im portance

of additional
content

47

One- and two

None

way communication

Very important

Not important

One way

Two way

communication

communication

Some importance

Some importance

7 R ECOM M E N DATIONS

The digitalisation within the music industry is within its early stages. Based on the
questions asked in this thesis, there are a lot of interesting subject and adjacent
questions to investigate. It would be interesting to do a study about digitalisation from
a gender perspective.

Survey investigation proved to be answered by a majority consisting of males, which

opened up for thoughts about if this factor affected the outcome in any way.
Are there any differences in usability when consuming music online between the sexes?
And also, are there different important features of the interface design that can optimise the digital use?
It would also be intriguing to perform a deeper investigation of economic factors involved. For instance, what is the most appropriate to charge for digital music?
Which is an adjacent issue for investigation linked to the future of major record companies
and their economic role within the industry.
Possible to discuss and examine are different ethic questions like environmental impact,
adding commercials to music services and about gathering information and surveillance
of the consumers to improve the service, etc.
From a practical point of view it would be interesting to see new ways of distributing
music digitally to be developed, programmed and/or examined. The same approach applies
for new ways of navigation and discovery within music services.
APPENDIXES
A PPE N DIX A
Interview questions
The Royal Institute of Technology 2014

Please give a brief descriptive of your work:

What role does digital music have in your daily professional life?

How would you describe the current state of the music industry?

What do you believe are the biggest advantages and disadvantages of the
development of digital music distribution?
What is in you opinion the future of the music industry in terms of format,
channels and distribution?

Where do you believe the biggest revenues will come from in music?

What are your thoughts on downloading and sharing?

What is your view on music videos; their importance and future?
When do you consume music?
Through what channels do you discover new music?

Examples: blogs, social networks, magazines, streaming sites

48

 A PPE N DIX B
AG E.
847/847 people answered this question

64% 538

34% 290

2% 18

0% 1

0% 0

2140

020

4160

81 +

6180

SEX.
847/847 people answered this question

85% 720

13% 112

2% 15

M ale

Fe m ale

ot her

OCCU PATIO N.
847/847 people answered this question

50% 424

16% 138

13% 109

10% 85

5% 46

4% 33

1% 12

Stu d ent

Other

Art

M edia

None

Econo mics

Crafts

49

DIGIT A L M USIC.
847/847 people answered this question

Which service have you primarily used during the last six months to access digital music?

31% 266

27% 231

22% 187

10% 87

8% 67

1% 9

iT u nes

YouTube

Spotify

BitTorrent
Bundle

other

none

PHYSIC A L M E DIA.
847/847 people answered this question

Have you bought any physical music during the last six months?

69% 581

31% 266

Yes

No

PH YSIC A L I M PORTA NCE.

847/847 people answered this question

Which of these factors are the most important to you, besides the music,
when consuming music physically?

45% 380

19% 160

17% 141

8% 69

5% 44

4% 30

3% 23

Uniq ueness

Ownership

Ad d it ional
content

Interactivity

Accessibility

none

other

50

DIGITA L I M PORTA NC E.
847/847 people answered this question

Which of these factors are the most important to you, besides the music,
when consuming music digitally?

40% 342

23% 196

11% 93

11% 92

7% 56

6% 51

2% 17

Accessibility

Uniq ueness

Interactivity

A d ditional
content

none

Ownership

other

A DDITION A L CO N TE NT.
847/847 people answered this question

Do you experience additional content as important when consuming music?

77% 648

23% 199

Yes

No

FAIR PU RCH A SING.

847/847 people answered this question

What option do you believe is the most fair way to pay for digital music?

49% 415

27% 232

14% 117

10% 83

Fixed cost
per single/album

Donating a mount
of your choice

M usic should
be free

Su bscription to a
strea m ing service

51

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57

Layout

Jan Scharlau

2014

~ To whom it may concern.