The NPD Group: “iTunes Usage Report” Finds U.S. Music Consumers Interested in Taking Music To The Clouds

Between seven and eight million people would have “strong interest” in paying for subscription- and cloud-based music services on the iTunes platform.

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After the service’s launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music

Port Washington, New York (Vocus) July 14, 2010

The NPD Group, a leading market research company, recently surveyed Apple iTunes, iPod, iPhone, and iPod Touch users to explore their reactions to various music subscription-model concepts. According to NPD’s “iTunes Usage Report,” more than a quarter of respondents expressed strong interest in a free cloud-based music option, and many were willing to pay a subscription fee to access their own music libraries from multiple devices and platforms.

NPD’s “iTunes Usage Report” asked consumers to report on their reactions to a music service offering free and unlimited streaming of content from the consumer’s own iTunes music library, and several paid options for music subscriptions offering combinations of music streaming, music downloads, and universal Web access to the consumer’s iTunes music library.

Between seven million and eight million iTunes users in the U.S. would have strong interest in one of the paid subscription options, according to the report. These consumers indicated a willingness to pay a minimum monthly fee of $10 -- either for streaming music or access to their personal music libraries on multiple devices. NPD estimates that there are 50 million iTunes users in the U.S. According to NPD’s music industry research, a model that offers iTunes users free access to their own music libraries would attract in the range of 13 to 15 million subscribers.

“After the service’s launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music,” said Russ Crupnick, vice president and senior entertainment analyst for The NPD Group. “If the consumers who indicated strong interest in a paid subscription actually adopted one of those services at $10 per month, the market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per-download model.”

“We don’t yet know what, if any, effect these services might have on the traditional pay-per-download music model, or whether consumers will ultimately spend more on digital music overall, if or when any of these options eventually rolls out,” Crupnick said.

Data note: The information in this press release is based on The NPD Group’s “iTunes Usage Report,” which is based on an online survey fielded to members of NPD’s online panel in May 2010. The report is based on 3,862 completed surveys from qualified respondents (age 13 and older). Each respondent reported using iTunes at least once in the past three months. Statistical significance testing has been employed at the 95 percent confidence level, unless otherwise noted. The “iTunes Usage Report” was independent research conducted by NPD to assess the potential for music subscription services and to profile iTunes usage habits. The concepts tested were also developed independently by NPD.

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,800 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us, visit http://www.npd.com/, or follow us on Twitter: @npdgroup.

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