You can download all of the reports at Nielsen.com

Putting a price on music’s value
With more music available than ever from an unprecedented number of sources, we have seen that customers do use (and therefore value) music and the different channels. For content providers, understanding consumers’ willingness to pay for content and via what channel(s) will be essential to the industry’s future.

The most popular form of digital music consumption was the “watch” habit with 57 percent of respondents having watched music videos on computers in the last three months. Other popular forms of consumption were streaming music on a computer (26%), streaming music on a mobile phone (21%), watching music video on mobile phones (23%) and downloading or using music apps (20%).

The sources for consuming music are as diverse as consumers’ willingness to pay. The industry is continuing to investigate alternate revenue streams and the broad approach makes sense as consumers diversify their digital music sources.

Music goes mobile
Mobile phone technology and increasing popularity of smartphones are providing a new and potentially lucrative revenue opportunity for the music industry. Especially among digital music’s early adopter 20-24yr segment, the mobile phone is fast becoming the mainstay of how they stay connected to the world (via internet) and how they listen to and increasingly buy music. More promisingly, nearly one in four (24%) of the 20-24yr old segment globally indicated they would be prepared to pay to download music videos on their mobile phone. According to the Nielsen survey, males aged between 20-24yr are the global early adopters for digital music consumption and industry marketers need to understand and anticipate the changing habits of this segment to develop viable revenue models. Generating the most interest to those looking for mobile music apps were music discovery tools and streaming apps.

On a regional level, consumers in Asia Pac by far showed the highest activity for music downloads on mobile devices.

For more regional and demographic insights on consumers’ willingness to pay for music and more, download The Hyper-Fragmented World of Music, a series of reports released in conjunction with MIDEM at Nielsen.com.

Will consumers pay for online news and entertainment they now get for free?

Nielsen asked more than 27,000 consumers across 52 countries, and the answer is a definite “maybe.” As expected, the vast majority (85%) prefer that free content remain free. Yet there are opportunities to be found in the details. Indeed, when asked to focus on specific types of content, survey participants are more willing to at least consider paying for particular categories, especially if they have done so before.

Will Pay / Won’t Pay
Online content for which consumers are most likely to pay—or have already paid—are those they normally pay for offline, including theatrical movies, music, games and select videos such as current television shows. These tend to be professionally produced at comparatively high costs.

Consumers are least likely to pay for content that is essentially homegrown online, often by other consumers at fairly low cost. These include social communities, podcasts, consumer-generated videos and blogs.

In between are an array of news formats—newspapers, magazines, Internet-only news sources and radio news and talk shows—created by professionals, relatively expensive to produce and, in the case of newspapers and magazines, commonly sold offline. Yet much of their content has basically become a commodity, readily available elsewhere for free.

Compensation Conditions

Whatever their preferences, consumers worldwide generally agree that online content will have to meet certain criteria before they shell out money to access it:

• Better than three out of every four survey participants (78%) believe if they already subscribe to a newspaper, magazine, radio or television service they should be able to use its online content for free.
• At the same time, 71% of global consumers say online content of any kind will have to be considerably better than what is currently free before they will pay for it.
• Nearly eight out of every ten (79%) would no longer use a web site that charges them, presuming they can find the same information at no cost.

• As a group, they are ambivalent about whether the quality of online content would suffer if companies could not charge for it—34% think so while 30% do not; and the remaining 36% have no firm opinion.

• But they are far more united (62%) in their conviction that once they purchase content, it should be theirs to copy or share with whomever they want.

Despite the growing consensus that the media may only be able to generate appreciable online revenues by charging consumers for content, there is little agreement on just how to do that. Companies are experimenting with a range of payment models, from full service subscriptions to individual transactions, or micropayments. Among those surveyed by Nielsen, about half (52%) favor the latter, albeit micropayments have proved cumbersome to implement in the past. But a more manageable system may be no more enticing. Only 43% say an easy payment method would make them more likely to buy content online.

Regardless of what systems they choose, media companies will almost certainly not abandon advertising; and consumers will doubtless still see ads along with paid content. For the 47% of respondents who are willing to accept more advertising to subsidize free content, that may be tolerable. Yet it will probably not sit well with the 64% who believe that if they must pay for content online, there should be no ads.

Find Out More

• How do responses from consumers around the world compare?
• Are developing markets more likely to embrace a pay-for model?
• Does age factor into a willingness to pay?
• Which payment methods are the most acceptable?
• Where are the best advertising opportunities?

• Download Changing Models: A Global Perspective on Paying for Content Online

Virginia Harvey, Client Service, Nielsen Monitor-Plus

SUMMARY: The rise to stardom does not come arbitrarily, but rather is often the by-product of a carefully constructed plan that brings together a perfect blend of talent, timing and a great advertising promotion plan. Nielsen investigates how some of the more recent campaigns in the music world achieved success.

A sold out show or an album going gold, platinum or diamond is music to the ears of emerging artists and veteran musicians alike. But achieving that goal typically takes more than just great songs—exposure is a key contributor. In the February issue of Consumer Insight, Nielsen reported that music artists saw album sales climb as much as 700% one week after the Grammy’s aired on broadcast television. Now, Nielsen takes a closer look at the backstage-pass advertising that amplifies album sales, digital downloads, and concert sales.

Total concert advertising spend
In 2008, total advertising spend for concerts in combined print, TV, Internet, and outdoor tallied just over $207 million. April dominated sales with $23.2 million, which surpassed May—a close second—by 10%. Contributing $2.3 million to April’s total was spending for Neil Diamond’s Home Before Dark tour.

A review of the top three artists’ spending for 2008 reveals that Neil Diamond once again led total spending at $6.2 million, followed by Tina Tuner with $4.3 million and Trans-Siberian Orchestra (TSO) $3.6 million. TSO, which tours on a yearly basis during the holiday season, increased advertising spend in 2008 by 37%. The increase paid off, as 2008 ticket sales grossed $47.3 million—a 28% increase over 2007 results of $36.9 million.

Overall, monthly spending was fairly consistent, with one exception—January started the year slow with a $9.4 million outlay.

Veteran acts re-emerge
Tom Petty & The Heartbreakers’ 2008 tour proved to be one of the biggest of the year. With an estimated 32 U.S. shows and 25 sell outs, total ticket sales grossed $34.8 million. Helping to re-ignite the name—to about 97 million viewers—was a calculated move to play at the Super Bowl XLII half-time show.

Additional media vehicles that contributed to a successful tour included countless articles in magazines and online blogs about Petty’s recent greatest hits album and tour. From SPIN to Variety, Tom Petty & The Heartbreakers’ had a wealth of media exposure. Roughly two-thirds (64%) of their promotional spending was placed in newspapers and one-third was split between local radio ($223,000) and television ($141,000) ads.

The pay-off in publicizing is further revealed by a review of Tom Petty’s tour promotion ad spending in 2005 and 2006. In 2006, ad spending increased 61%, from $430,000 to $694,000, grossing $25.2 million in ticket sales—$3.2 million higher than 2005 sales.

Hot commodities
A new era of Tween fans have emerged with the introduction Hannah Montana and the Jonas Brothers. With the help of the Disney Channel, acts such as these have become a household name. The Hannah Montana show—with viewers that number upwards of an average 10.7 million over the past three years—has driven awareness levels so high that traditional advertising for the 2007/2008 tour totaled only $430,000. An additional $2.7 million was spent promoting various Hannah Montana paraphernalia, such as toy figures, playsets and perfume. Hannah Montana sold out all 70 shows from October 2007 through January 2008 and grossed $55.2 million in ticket sales.

While the Jo Bro’s have been associated with Disney (collaborating to create a Disney Channel original movie), the bands’ main source of promotion was TV, magazine, newspaper, and radio ($1.3 million). As impressive as their third album was—selling 525,000 copies in just the first week of its release alone—they sold out only 54 U.S. shows out of 82 and total ticket sales grossed $41.9 million. While both acts are hot commodities, girl power triumphs and solidifies the importance of exposure and familiarity.

Rise from obscurity
When Apple introduced the iPod in 2001, their eye-catching roller-skating, freestyle silhouette advertisements paired with memorable songs transformed the digital download world—and brought success to many little-known artists. Most notable was the release of the third-generation iPod Nano, when Apple featured the single 1234 from Feist. Prior to the commercial airing in September 2007, the single generated 60,000 digital downloads. After the commercial hit the airwaves, downloads increased ten-fold—rising to 638,000 from September to December 2007, according to Nielsen.

With the success of that campaign, Apple continued to spotlight up-and-coming bands. When The Ting Ting’s hit single, Shut Up and Let Me Go, appeared in an iPod commercial in April 2008, it peaked at number 55 on the Billboard Hot 100 list. And in September 2008, the newest fourth-generation iPod Nano (Chromatic) line introduced the band Chairlift with a 30-second commercial that featured the song Bruises, which was just enough to send the song to the top of the Billboard Bubbling Under Hot 100 Singles chart.

Movie soundtracks can also have a profound affect on the popularity of a song. In February 2008, M.I.A released the single Paper Planes, which gained commercial attention when it was featured in the film and trailer for Pineapple Express. Digital copies soared from one week to the next selling 58,800 the week prior to the opening of the movie to 102,000 copies during the week of opening day—a 74% increase. From the time of the film’s opening week in early August, which included $6 million in TV ad spending to the end of September, digital copies spilled over to one million. Several months later, the song appeared in the film and soundtrack Slumdog Millionaire gaining awareness once again. The song eventually peaked at number four on Billboard Hot 100 and was nominated for the Record of the Year during the 51st Grammy Awards.

Chart toppers
The right exposure has the power to elevate a band to a level of success not possible otherwise. Finding the best promotion mix is vital. From targeting the right audience and selecting impactful platforms to delivering creative messages that resonate—understanding the consumer is the fundamental building block from which all successful programs begin. Whether the goal is instant stardom, re-introduction or business-as-usual, the ability to top the charts is all about creating awareness.

According to a new study by Nielsen PreView, not surprisingly, album sales and digital tracks do go up following a Super Bowl half-time performance. However, not all artist sales are equal and not all markets respond similarly.

The study, which analyzed music sales of the past four Super Bowl half-time acts, reveals that sales have risen as much as 300+%, particularly when the artist’s performance is well-received. However, according to the research, much of this growth can be attributed to a desire for consumers to reacquaint themselves with a star. In fact, markets with the weakest artist sales prior to the Super Bowl experienced the greatest lifts in sales following the Super Bowl.

Read the full study.

Artists such as Lil Wayne, Taylor Swift, Rihanna, Coldplay and Flo Rida helped consumers make more decisions to buy music than ever for the fourth year in a row according to Nielsen SoundScan. While total album sales slipped 14% from 500.5 to 428.4M in 2008, sales of digital albums were up 32% from 50M to 65.8M in 2008. Sales of individual digital tracks also grew, soaring 27% over the previous year’s sales. Ironically, in the new digital age, sales of vinyl LPs were at an all-time high (1.88M).

More SoundScan data is available in Billboard’s Year In Music 2008, which features 250 Year-End charts.

Year In Music 2008 Factoids:

• Music purchases in 2008 reached 1.5 Billion, marking the fourth consecutive year music sales have exceeded 1 billion; 1.4 billion (2007) vs. 1.2 billion (2006) vs. 1 billion (2005) .
• Music sales exceeded 65 million in the final week of 2008, representing the biggest sales week in the history of Nielsen SoundScan. The previous record was Christmas week 2007 with 58.4 million music purchases.
• Metallica’s “Death Magnetic” is the best selling Internet album for the year with 144,000 sales.
• During 2008, more vinyl albums were purchased (1.88 million) than any other year in the history of Nielsen SoundScan. The previous record was in 2000, with 1.5 million LP album sales.
• Note that more than 2 out of every 3 vinyl albums were purchased at an independent music store during the year.

Holiday Season Factoids: (last 6 weeks of year).

• Overall album sales during the 2008 holiday season were down 19% as compared to 2007, with sales of just over 80 million.
• Album sales during the holiday season accounted for 19% of all album sales for the year.
• Digital album sales during the holiday season experienced significant growth over 2007 with an increase of 37% to 9.9 million sales.

Digital Factoids:

• Digital track sales break the 1 BILLION sales mark for the first time with more than 1,070,000 digital track sales. The previous record was 844 million digital track purchases during 2007; an increase of 27% over 2007.
• Digital album sales reached an all-time high with more than 65 million sales in 2008; up from 50 million in 2007; an increase of 32% over the previous year.
• 2008 is the first time a digital song broke the 3 million sales mark in a single year. There were 2 songs that achieved this milestone; Leona Lewis’ “Bleeding Love” and Lil Wayne’s “Lollipop;” with sales of 3.4 and 3.2 million respectively.
• In 2008, there are 19 different digital songs with sales that exceeded 2 million compared to 9 in 2007.
• 71 Digital Songs exceeded the 1 million sales mark for the year compared to 41 digital songs in 2007, 22 in 2006, and only 2 digital songs in 2005.
• Rihanna is the biggest selling digital artist in 2008 with nearly 10 million track sales compared to Fergie in 2007 who had 7.5 million track sales.
• There are more than 450,000 different physical albums that sold at least one copy over the Internet during 2008 compared to 390,000 in 2007.
• Note that digital album sales accounted for 15% of total album sales compared to 10% in 2007 and 5.5% in 2006.

Digital Records Broken In Last Reporting Week Of 2008:

• Digital track sales surpassed 47.7 million. The previous sales record was 42.9 million, week of 12/23 -12/30/07.
• Digital album sales this week broke the two million mark for the first time with sales of 2.4 million sales; breaking the previous record of 1.9 million (12/30/07).
• The top 200 digital songs for the week posted an all-time high with 13.6 million sales; breaking the previous record of 11.9 million during the last week of 2007.
• The first time that the Top 5 digital songs (combining all versions of the same song) sold more than 300,000 downloads in a week with Lady Gaga’s “Just Dance” selling 419,000. The record for most downloads for a digital song in one week continues to be Flo Rida’s “Low” with sales of 467,000 set during the last week of 2007.

Best Seller Factoids:

• Lil Wayne’s Tha Carter III was the biggest selling album of the year with 2.8 million sales.
• Taylor Swift is the biggest selling solo artist, with sales greater than 4.0 million albums and AC/DC is the biggest selling group in 2008 with sales of 3.4 million.
• As Taylor Swift stands at the top of the list, marking the 2^nd time in the last three years that a country artist is the top selling artist for the year.  Rascal Flatts was the biggest selling artist in 2006 with 5 million sales.  Josh Groban took the honors last year (2007) with 4.8 million sales.
• Taylor Swift’s Fearless and self-titled album finished the year at #3 and #6 respectively with sales of 2.1 and 1.5 million. This is the first time in the history of Nielsen SoundScan one artist had two different albums in the Top 10 on the year end album chart