New research commissioned jointly by music body BPI and the Entertainment Retailers Association (ERA), reveals that music consumption has entered a new multi-channel era, in which fans increasingly stream for their daily music needs but also like to buy, collect and gift the music they most enjoy on CD and vinyl.
With surging sales of vinyl albums (up 50 per cent year-to-date) and a softening in the decline of CD sales in recent years, the research suggests physical formats may be more resilient in the multi-channel era than most commentators predicted. Indeed, it indicates that, for many fans, on-demand access and ownership models represent a winning combination.
The online survey1 by AudienceNet, conducted last month, shows that two thirds (66 per cent) of music fans consider themselves ‘multi-channel’ listeners –with as many as 69 per cent of the survey respondents either agreeing or strongly agreeing with the statement: I stream to discover music and see what’s popular, but when I come across something I love, I like to buy it.
Table 1: Multi-channel profile – percentage of music listening from each source (base: all respondents)
The survey suggests this emerging trend is not confined to the baby-boomers who grew up when music was only available on physical formats, but extends to so-called Millennials – the new generation of younger consumers who have grown up in the digital age.
Table 2: Multi-channel profile – percentage of music listening from each source – by age (base: all respondents)
Kim Bayley, Chief Executive Entertainment Retailers Association, comments: “This research suggests music fans are a great deal more nuanced in their approach to new forms of technology than they are sometimes given credit for. They understand there are some benefits which streaming can deliver better than CD or vinyl and vice-versa. It is important, therefore, that the industry responds to this and ensures that music is available how and when music fans want it.
“Luckily the UK has one of the most diverse music retail landscapes in the world, from thriving independents to ground-breaking digital services to the High Street, supermarket and Internet offerings. Preserving that diversity is key not just from the industry’s perspective, but also the music fan’s.”
Geoff Taylor, Chief Executive BPI and BRIT Awards, comments: “The enduring appeal of compact discs and vinyl has surprised many commentators who wrote them off years ago. But these physical formats still represent over 40 per cent of UK music consumption, after decades of success.
“Our new research explains why they remain so popular, even with music downloads and the explosion in audio streaming. It shows that, unexpectedly, streaming may be enhancing their appeal to many fans, who appreciate the immediacy and convenience of services like Spotify, Apple Music and Google Play to discover and enjoy a huge range of new music, but still want to own and collect albums by artists they truly love.”
Such multi-channel consumers increasingly look to streaming services, both paid-for subscription and free ad-funded, including Spotify and Deezer, as well as paid-for subscription only – Apple Music, Google Play and Tidal, for discovery, curation and the connected experience they offer.
The Official Charts last year recorded 13.7 billion audio streams in the UK – a total likely to double again and reach a new landmark of 25 billion audio streams in 2015. Streaming is also on course to eclipse downloads as the most popular digital format.
At the same time, however, many fans value the opportunity to also purchase music by the artists they love, whether on CD, vinyl or downloads. This is driven, the survey suggests, by a desire to emotionally engage with the recording and the cover artwork that comes with it – to own, collect and interact with it.
One of the key considerations that reinforce the appeal of CD and, increasingly vinyl also, remains the ability to purchase it as a gift for family and friends. One in five (22 per cent) of the respondents say they purchase CDs to give as gifts. Gifting is listed in the top five reasons for why a CD purchase is made, with around two thirds (65 per cent) of people who only buy CDs citing it as a reason for their purchase, but nearly 8 in 10 (79 per cent) of those who both buy CDs and pay to stream music listing it as a factor when making a purchase.
Table 3: Music purchasing – totals for buying, receiving & giving (base: all respondents)
Up to 40 per cent of albums are purchased in the final quarter of the year, when Christmas-related gifting is at its peak. With major new albums now out, including Adele’s record-breaking 25, as well as heavyweight offerings from the likes of Coldplay, One Direction, Little Mix, Justin Bieber and the King himself, Elvis Presley – which is selling heavily on CD – and extended edition albums from Ed Sheeran and Sam Smith, this Q4 promises to be a potentially strong year-end for the physical format.
Just over four in ten (44 per cent) of those surveyed, and who pay to stream, believe the introduction of streaming has either increased (13 per cent) or maintained (31 per cent) their spending on CDs. Whilst other respondents may spend less on CDs or no longer buy them, the positive relationship between a significant segment of subscription streamers and physical consumption has not previously been studied.
When it comes to vinyl nearly half (48 per cent) of the respondents who also pay to stream indicated they are now either spending more (19 percent) or at least maintaining their spend (29 per cent). Again, there are other respondents who are now buying less vinyl or none at all, but the fact there is an increase in vinyl purchasing among a relatively large group of streamers is noteworthy.
Demand for CD continues to decline in relation to the music market, but there are signs this rate may be slowing. In 2012 sales dropped by a fifth (20 per cent), in 2013 by 13 per cent, but by 2014, when demand for streaming arguably really took off, the decrease was down to 8 per cent. In the first half of 2015 this figure stood at 6 per cent, with CD still accounting for over 60 per cent of albums sold – and worth around half a billion pounds to the UK recorded music market when combined with vinyl sales. ERA figures additionally show there are now more than 10,000 High Street outlets that stock CD and vinyl across the UK.
Vinyl presents an even more encouraging picture. Whilst its appeal remains relatively niche (at 2 per cent market share), it has shown remarkable growth since 2007, when only 205,000 copies were sold. Official Charts data for 2015 to date shows LPs are on track to eclipse the 2 million unit mark for the first time in over 20 years. Much of the impetus has come from the independent retail community, which launched Record Store Day in 2006, whilst chains such as HMV have doubled the floor-space dedicated to vinyl in recent years and just this month Tesco announced it is stocking vinyl LPs. The format is particularly popular with Rock bands, ranging from heritage acts Pink Floyd, Led Zeppelin, Iron Maiden and Oasis to more recent groups as Arctic Monkeys and currently Royal Blood, whose fans see vinyl as a ‘badge of honour’.
The research throws up encouraging insights for streaming services and high street and online retailers alike. Just over a third (34 per cent) of the respondents would like to see more ‘one-stop-shop’ services, where they can stream, but also go on to buy CDs or vinyl or download music. It’s interesting that leading streaming service Spotify is currently experimenting with a High Street pop up shop within Top Shop. The respondents who also like to buy CDs and vinyl could be tempted to buy greater quantities if there were more exclusive tracks and limited edition content, priority access to gigs and discounted merchandise.
Table 4: Buying more CDs – what would tempt them? (base: all respondents)
The research shows there are a number of factors which encourage CD and vinyl purchasing. Chief among these for multi-channel consumers is the ability to pay a one-off price to own permanently – 90 per cent for CD rising to 95 per cent when it comes to vinyl. Collecting (83 per cent and 97 per cent for CD and vinyl respectively) also ranks highly, alongside sound quality (92/94), the store/browsing experience (81/90), and having cover artwork (76/91)
Table 5: What is important when buying & owning CD (base: all respondents)
Table 6: What is important when buying & owning vinyl (base: all respondents)