Apple’s iTunes continues to strengthen its position as the dominant fee-based digital music destination, while a host of other services are striving to grow consumer mindshare and establish clear points of differentiation, according to the third annual TEMPO Digital Music Brandscape Study from Ipsos.
For consumers, sound quality, ease of use and search remain the most important features of fee-based music services; extras and the ability to exchange ideas with others gain in importance.
Napster and iTunes remain current awareness leaders; awareness of Yahoo Music has increased; and that of MySpace has skyrocketed, suggesting that underserved areas of the market are still untapped, according to Ipsos. (The study was conducted prior to the launch of Microsoft’s Zune Marketplace.)
Key findings regarding awareness of music services:
- Among U.S. downloaders age 12 and older, iTunes gained significantly in both unaided and aided awareness over 2005, moving from 57% to 66% for total awareness.
- Napster experienced some erosion in awareness, dropping from 79% to 68% total awareness.
- Awareness of Yahoo Music increased over the past year, with total awareness reaching 53%, up from 49% in 2005.
- There was a strong gain in awareness of MySpace as a music source, up from 16% to 54% in just one year.
“MySpace is a strong example that there remain areas of opportunity in the still evolving digital music market. It will be increasingly important in 2007 for other services to develop and clearly communicate their own competitive differentiation, as the momentum of iTunes in this category may be too difficult to compete directly against with similarly positioned offers,” said Matt Kleinschmit, VP of Ipsos Insight and author of the TEMPO study.
As has been shown in previous TEMPO research, strong name recognition does not necessarily imply leadership in the fee-based digital music community.
- While Napster continues to hold the No. 1 position in overall consumer awareness, U.S. downloaders are more likely to rate iTunes as the “best” fee-based digital music service, followed by Napster (41% and11%, respectively).
- The change in “best” identification was significant for both brands, with iTunes’ increasing from 33% and Napster dropping from 22%.
- MySpace also made strong gains in “best” mentions, jumping from just 2% in 2005 to 8% in 2006 – third after iTunes and Napster.
- “Best” brand mentions decreased for LAUNCHcast, MusicMatch, AOL and RealPlayer; mentions for other online digital music services and stores remained fairly consistent over the past year.
According to Kleinschmit, “the best strategy for competing in this increasingly crowded and commoditized market will be to court those market segments that may be currently underserved, possibly by focusing on service enhancements that are currently not offered on the well-known websites. These efforts will not only help to differentiate new striving brands from iTunes’ current brand strength and appeal, but may also attract potentially more loyal segments of digital music users who are interested in more specialized niche features than just core functionality.”
U.S. music downloaders age 12 and older continue to value a broad range of functional characteristics when selecting a digital music service. Good sound quality, ease of use, ease of search, a broad selection, low prices and good value were all reported to be important when choosing an online digital music service or store.\
Value-added features that had been less important last year showed the largest gains in importance this year, including extras like podcasts or album artwork and the ability to exchange ideas or recommendations with other users.
Another shift from previous studies has been the apparent increasing sophistication among consumers with regard to song use restrictions: offering consumers the freedom to do whatever they want with the music they buy has become significantly more important.
Data on music downloading behaviors was gathered from TEMPO: Keeping Pace with Digital Music Behavior, a quarterly shared-cost research study by Ipsos Insight examining the ongoing influence and effects of digital music in the U.S.
Data were collected between August 21 and 30, 2006, via a web-based representative sample of some 1,500 U.S. downloaders age 12 and over. With a total sample size of 1,517, one can say with 95% certainty that the results are accurate to within +/- 2.53%.