entertainment: music trends march 2011. contents

Entertainment: Music TrendsMarch 2011

Contents

Market Environment

Annual digital music revenues to hit £12.3bn by 2015

Bolstered by the take-up of subscription services, annual digital music revenues are predicted to hit $20 billion (£12.3 billion) by 2015. Revenues from music subscription services will grow by over 60% between 2011 to 2015 at the expense of individual track downloads from outlets such as iTunes. The growth in individual tracks downloaded from digital music stores has slowed in the US - a trend likely to be emulated in Europe.

Analysts said that the industry is failing to cope with the amount of music freely available online, not just the illegal kind but on-demand music services such as Spotify, which is masking the fact that the industry isn’t maximising revenue potential.

A BPI report released during the last quarter suggested that digital music downloads account for over a fifth of legal music sales in the UK, but that over 76% of all music downloads were classified as illegal.

Source: NMA.co.uk

Music: Did you know?

• Growth in sales of digital music halved last year in spite of increased action on behalf of governments to tackle digital piracy globally.

• Digital music revenues grew 6% to $4.6 billion in 2010, only half the 12% growth seen in 2009, and a fraction of the 25% growth in 2008 (Financial Times, Jan 2011)

• Of all music singles sold, 98% are now purchased online, according to the latest figures from the Office of National Statistics. In 2007, digital and physical single sales totalled 87m, in 2009 digital and physical sales had reached 153m - an increase of over 75%.

• Digital album purchases grew by 160% in the two years between 2007 and 2009 as more and more consumers shifted to using mp3 devices. Physical album purchases fell by 14% over the same period.

• 25% of young people aged 11-14 purchase clothes online, 23% purchase video games, 21% purchase DVDs, 20% purchase CDs and 18% purchase music downloads (MediaTel, November 2010)

• In September Britain recently passed the 500-million mark for digital music downloads (Official Charts Company)

• Official digital music has grown at a phenomenal rate with over 98% of the singles bought now being downloads (MediaTel)

Source: Mintel Oxygen, Feb 2011

Source: Mintel Online Spending Habits, Feb 2011

Online Spending Habits: Market Size and Forecast

• Online spending in the UK exceeds that of any other European country, with IMRG data putting the figure at £58.6 billion in 2010.

• Online spending grew by 17.6% year-on-year in 2010.

• Average level of spend online by consumers has been responsible for driving growth. Ofcom estimates that average online consumer spend for the year reached £1,031.

UK online spending trends and forecasts, 2005-15

Source: IMRG Capgemini Index/Mintel

Worst case (£m) 87.2

Mintel forecast (£m)97.3

(£m)58.6

Best case (£m) 107.4

0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mark

et

valu

e (

£m

)

95%

Confidence intervals

90%

70%

50%Actual Forecast

Est.

0

Note: 2005-10 figures are from IMRG, 2011-15 projections are Mintel’s own projections based on these figures

Media Multi-taskers

With so much media entertainment available to the 16-24-year-old consumer, competition for time and attention is intense. Rather than simply extending reach through establishing a presence across all media, advertisers are now faced with the challenge of trying to reach the media multi-tasker, who is able to undertake several forms of communication and entertainment simultaneously and therefore shift attention towards whichever media are the more engaging. (Mintel, Oct 2010)

““

Source: eMarketer, Feb 2011

Traffic and Demographic Trends

Music Search Traffic KPIs

Traffic• Searches for clothing generics increased by

+37% between 2009 and 2010

• Searches for clothing generic increased by +15% Oct to Dec 2010 v Oct to Dec 2009.

Insights: • Sales by DIY retailers in 2010 were £10.9

billion, down 2% on 2009 (Mintel)

• Over the last five years there has been a fall of 4 percentage points to about 56% of the adult population, that's 2 million fewer people undertaking DIY projects (Mintel)

1. Microsoft Advertising Intelligence Tool

Home & Garden Demographics and Daily Trends

1.Microsoft Advertising Intelligence Tool – December 2010 to Feb 2011 data

11

Retail & Online Retailers Spend

• For the most part, Retail advertisers tend to spend the most on advertising in the Press and on TV

• On average the industry currently spends around 5% on Internet advertising (not including search). 2010 expenditure has increased +1% from that of 2009

Source: NNR adDynanix : Jan – Nov 2010

Display Advertisement Publisher Location: Reach and Frequency (Retail – Food)

• Microsoft sites delivered both the highest number of impressions and the highest number of unique visitors for Food Retailers in Dec.

Source: ComScore adMetrix : December 2010

Display Advertisement Publisher Location: Reach and Frequency (Retail – Food)

• Microsoft sites also have the highest share of Food Retailers ad impressions, however average frequency is very competitive and far less than eBay, AOL and Glam Media.

Source: ComScore adMetrix : December 2010

Source: ComScore AdMetrix – December 2010

Top Advertiser by Impression and UU by ComScore AdMetrix (Food Retailers)

Industry Insights

Music Online usage

Base: 3,000 internet users aged 16+Source: GMI/Mintel: Youth Media Consumption Habits, October 2010

Internet activity on PC/laptop in last 3 monthsall respondents, by demographics, August 2010

In October 2010 a Mintel report found that:

•65% of 25-34 year olds listened to music online for free between Aug – Oct 2010

•This rose to 77% of users aged 16-24 year olds!

Music Online usage

Base: 3,000 internet users aged 16+Source: GMI/Mintel: Youth Media Consumption Habits, October 2010

Media usage habitsall respondents, by demographics, August 2010

The same Mintel study also found:

Users expect to be able to download music and films free of charge from the internet

Source: nVision Research, 2010 Base: 1,000 online respondents aged 16+, GB

% who agree or agree strongly, by gender, age and social grade

What Do People Buy Online?Goods/services bought online, December 2010

Source: Ipsos MORI/Mintel

Base: 1,025 internet users aged 16+

“Which of the following, if any, have you bought/spent money on via the internet in the last 12 months?”

Source: Mintel Online Spending Habits, Feb 2011

0 10 20 30 40 50 60 70 80 90 100

None of theseMotor vehicles

Online dating membershipOnline subscription for music, video or magazine content

Sports equipmentOnline gambling/casino gaming

Furniture and furnishingsHome appliances

DIY or garden productsPersonal accessoriesPortable electronics

Other housewaresGift vouchers

Household cleaning productsMusic, video/film, software downloads,ebooks

Home electronicsToys and games

Entertainment ticketsHolidays/leisure travel

InsuranceFood and drink

Toiletries/cosmeticsClothing/footwear

Books, CDs, DVDs, video games/softwareAny

% of respondents

What entertainment would you miss most on a desert island?

Source: British Music Rights/UK Music/University of Hertfordshire/nVision, 2009 Base: 1,808 respondents (1,158 in 2008) aged 14-24, UK

By those aged 14-24

“I prefer music which is not mainstream but new and challenging”

% who agree or agree strongly, by gender, age and social grade


Modern pop music no longer addresses social issues and problems as it used to do


By gender, age and social grade

Frequency of listening to music


By gender, age and social grade “Which of these best describes how often you do each of the following activities? Listen to music”