UNIVERSITÀ CATTOLICA DEL SACRO CUORESEDE DI PIACENZA

FROM VINYL TO STREAMINGHOW TECHNOLOGY IS SHAPING THE MUSIC INDUSTRYAND AFFECTING CONSUMER BEHAVIOR

CORSO DI LAUREA MAGISTRALE IN GESTIONE D’AZIENDAINTERNATIONALMANAGEMENT

RELATORE

CHIAR.MO PROF. Eugenio TacchiniTESI DI

Michele Roverselli

© SPOTIFY

From vinyl to streaming | 2

agenda

© MANNERS.NL

rationale

music INDUSTRY

consumer BEHAVIOR

conclusions

the ANALYSIS

the SKIP

the PLAYBACK experience

focus on ROYALTIES

focus on the FLAT MODEL

ownership vs. ACCESS

From vinyl to streaming | 3

rationale

study a sector in whichtechnology

has always played a crucial role

THE MUSIC SECTOR

how technology affected consumer behavior?

how technology shaped the music industry?RESEARCH QUESTIONS

From vinyl to streaming | 4

how technology shaped the music industry?

technology induceda LOSS inrecorded musicperceived VALUE

From vinyl to streaming | 5

ownership VS. access

the analog era

PHYSICALLYOWNMUSIC

average PRICE

album $ 8.00 ~ 20.00per album

the digital era

PERMANENTLYDOWNLOADMUSIC

average PRICEalbumSINGLE

$ 0.99 ~ 9.99per single or album

the streaming revolution

DIGITALLYACCESS TOMUSIC

average PRICE

catalogue $ 9.99per month

From vinyl to streaming | 6

focus ON THE flat model

DISRUPTED the so far music fruition concept

pay a FIXmonthly fee

$ 9.99

NEWmusic

experience

all you can stream

access ≠ OWNERSHIP

OWN it andLISTEN to it

once users DON’TPAY the monthly

FEE ANYMORE

ACCESS to a catalogue of

30+ millionsongs

From vinyl to streaming | 7

focus ON royaltiesPAYMENT to artists for the USE of their INTELLECTUAL PROPERTY

$TO

ARTISTS

#OF PLAYED

SONGS

SPOTIFYMONTHLYREVENUES

ACCESSFLAT

MODEL

access ownership

$TO

ARTISTS

# OF SOLDALBUMS &

SONGS

CDSOLD IN A

STORE

SINGLEDOWNLOADED

ON ITUNES

TRACKPIRATED ON

THE WEB

From vinyl to streaming | 8

how technology affected consumer behavior?

technology influencedUSERS’ APPROACHto music

From vinyl to streaming | 9

the PLAYBACK experience

a click or a tap on each of these buttonsis NOW MEASURABLE

they measure the degree of INTERACTIONand ENGAGEMENT of each user to a player

focus on the one indicating how much USERSaccept the new access business model

From vinyl to streaming | 10

the skipDEFINITION

every time a USER doesn’t finishto listen to a song, for whatever reason

consumer interaction and consumer behavior

30+ million unique potential skips

UNLIMITED

skip everywhere and anytime from whatever device connected to the Internet

COMFORTABLE

specific, reliable and precise indicator

MEASURABLE

From vinyl to streaming | 11

the analysis

number of users in the dataset

5,035validation sample

number of users in the dataset

undisclosedpotentially 40,000,000

aggregated data of users from 18 to 70 years old

EMPIRICAL ANALYSIS18 - 35MILLENNIALS

36 - 55GENERATION X

55 - 70BABY BOOMERS

age

clus

ters

From vinyl to streaming | 12

spotify DATASET

statisticsPEARSON

-0.68002

P-VALUE

1.0 E-8

ages comparisonM

43.75%

X

39.73%

BB

37.02%

30%

35%

40%

45%

50%

55%

60%

18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70

skip

-ra

te (s

kips

per

hou

r)

age

SKIP-RATE SPOTIFY AVERAGE MILLENNIAL AVG GENERATION X AVG BABY BOOMERS AVG

AVERAGE

40.3316%

From vinyl to streaming | 13

statisticsPEARSON

-0.58841

P-VALUE

1.8 E-6

ages comparisonM

47.98%

X

38.87%

BB

36.81%

mentor.fm DATASET

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70

skip

-ra

te (s

kips

and

dis

likes

on

play

ed so

ngs)

age

SKIP-RATE MENTOR.FM AVERAGE MILLENNIAL AVG GENERATION X AVG BABY BOOMERS AVG

AVERAGE

41.3827%

From vinyl to streaming | 14

conclusions

recorded musicLOST perceived value

section two

consumer behavior

millennial SKIP-RATEis GREATER than the average and other

generations

section one

music industry

$9.99 a month30,000,000 tracks≈ $0.00000033 a song

TECHNOLOGY led to a change in music companies’ business model

TECHNOLOGY led younger users to discover and EMBRACE the digital streaming revolution

thank you for your attention