The Digital Music Revolution continued in earnest in 2005, with an ongoing influx of new and refined online music offerings and an increasingly-experienced consumer base. Within this maturing digital music marketplace, a new study from global marketing research firm Ipsos Insight reveals that the battle for mass market consumer awareness remains essentially a two-horse race between Apple’s iTunes and Napster 2.0. However, Ipsos’ TEMPO Digital Music Brandscape study also provides encouraging news for other digital music providers, with American downloaders showing significant increases in awareness of a wide variety of digital music services, and only nuanced brand differentiation among them.
iTunes and Napster 2.0 Remain Current Awareness Leaders The second annual TEMPO Digital Music Brandscape study is an in-depth examination of fee-based online music brands, and is part of TEMPO, the company’s quarterly study of digital music behaviors.
Key findings include:
• American downloaders aged 12 and older are nearly equally as likely to be aware of Napster 2.0 and Apple’s iTunes on a top-of-mind basis (31% vs. 27%, respectively).
• However, when prompted with actual brand names, more than four out of five (79%) downloaders recognize the Napster brand, while roughly three out of five (57%) are aware of iTunes.
• While top-of-mind awareness remained relatively consistent with what was seen in 2004, aided awareness of iTunes significantly increased in 2005 (from 46% to 57%) while aided awareness of Napster 2.0 remained constant.
• There are also signs of increased awareness for a broader set of online services and music download stores, with Yahoo! Music (49%), RealPlayer Music Store (45%), Rhapsody (41%) and MTV.com (37%) all enjoying strong aided name recognition among American downloaders. Most noteworthy new entrants into the fee-based arena include Yahoo! Music and MySpace.com.
“Over the course of the past year, and even more recently with high-profile moves from Microsoft and MTV, we’ve witnessed the introductions of numerous legitimate online music services, as well as the growing influence of Apple’s iPod on the broader fee-based digital music market,” said Matt Kleinschmit, Vice President of Ipsos Insight and author of the TEMPO study in a statement. “These data indicate that while consumers remain most likely to be aware of iTunes and Napster, other fee-based services are benefiting from the mainstream growth in digital music and iPod in particular, and remain viable options for consumers seeking fee-based online music outlets moving forward.”
iTunes solidifies ‘Best’ Positioning
For several widely known brands, strong name recognition has not automatically translated into perceptions of leadership within the fee-based digital music community.
• While Napster currently holds a premium competitive position in terms of overall consumer awareness, downloaders were more likely to rate iTunes as the “best” fee-based digital music service, followed by Napster (33% vs. 22%, respectively).
• iTunes’ position of being perceived as the “best” became more pronounced in the past year (24% to 33%), suggesting that consumers increasingly view iTunes as the pre-eminent online music brand.
• In addition, brands with notable total name recognition levels such as Rhapsody, Walmart.com and MusicMatch received more moderate “best” ratings within the downloader community (7% for each).
• Rhapsody in particular experienced significant gains in this critical ‘best’ rating (7%, up from only 3% in 2004),
Similar to consumer leadership perceptions, iTunes and Napster 2.0 also boast the highest reported usage levels among American fee-based downloaders. iTunes again edges Napster 2.0 for the No. 1 position, as roughly two out of five (43%) of fee-based downloaders report using iTunes, while one-quarter (26%) report Napster 2.0 usage. Following these services are Walmart.com (16%), Music Match (13%) and Rhapsody, which also showed the most noteworthy increase in usage over past year (8% to 13%).
“In 2005, iTunes and Napster continue to hold unique and distinct advantages in terms of awareness and usage, yet there is still an opportunity for competitors to emerge and be successful in the digital music market. In order for competing services to establish and maintain a stable user audience in this increasingly crowded and commoditized market, it will be critical to distinguish themselves from the dominant players, possibly by focusing on service elements and 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.”
Consumers Find Sound Quality, Ease of Use and Search, Music Selection and Good Value Most Important
In addition to specific digital music service brand affinities, the TEMPO 2005 Digital Music Brandscape also found that those who have downloaded music are most likely to value good sound quality, ease of searching for music, a broad music selection, ease of use and perceptions of a good value as specific traits of a digital music service. In contrast, less importance is placed on the service offering extras like Podcasts, album artwork and promotional songs or the ability to exchange ideas or recommendations with other service users. Many of the most familiar fee-based online music brands are strongly associated with these valued service traits, with iTunes most closely positioned as enabling seamless Portable MP3 Player integration and allowing the user to take music with them. Meanwhile, brands such as MTV and Myspace.com are more closely associated with music discovery, sharing between users and being hip or cool.
“These findings support the notion that while consumers may have still-developing perceptions of individual services and brands, experienced downloaders clearly know what they want in terms of functionality,” said Kleinschmit. “In late 2002, TEMPO revealed that downloaders identified five core digital music service attributes – value, selection, flexibility, portability and ease of use. Despite dramatic fee-based digital music marketplace shifts in the past two years, these critical attributes have remained relatively constant. As digital music services are forced to compete in not only an increasingly crowded music market, but an expanding digital entertainment market as well, the ability to match service attributes and associated brand imagery with consumer desires and clearly define these benefits is critical to staying in the game. Indeed, those services that can blend this expected core functionality with differentiated brand imagery and unique service enhancements could prove a successful alternative to the current dominate online music providers.”
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 around the world.
Data for this release were collected between August 11 and 22nd, 2005, via a representative online U.S. sample of 1,088 downloaders aged 12 and over. With a total sample size of 1,088, one can say with 95% certainty that the results are accurate to within +/- 2.97%.
To learn more about the methodology of TEMPO: http://www.ipsosinsight.com/tempo.cfm
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