Jones+B+Final+Report

Jones B


 * Executive Summary**

As everyone has witnessed in the past, trends change periodically throughout history. Music has evolved exponentially just in the last 2 decades. As a child i remember popping cassette tapes into the car or portable stereo system whenever i wanted to listen to music. As a teenager acquiring music consisted of going to a local best buy or Circuit City and purchasing CD's, cassettes were a thing of the passed. Downloading and peer to peer sharing of music was introduced to the world along with the internet in the mid 90's. Napster was the first of it's kind. With the ability to download and share any music file and burn the music onto a blank disc, people quickly forgot about buying CD's at stores. The music industry took such a tremendous dive in sales revenue, Napster was shutdown and locked in lawsuits almost immediately. Once the public got a taste of having the power to access whatever digital media they wanted, it completely revolutionized the music industry.

Even with the shutdown of Napster and threatening of lawsuits for sharing digital media, it did not deter Gen Y in the least. Many new "underground" peer to peer sharing applications surfaced, including Kazaa, BearShare, Pirate Bay and LimeWire. Kazaa and BearShare fell short after a few years and were quickly forgotten. For the past decade LimeWire and Pirate Bay have been the application of choice for users looking to download and share digital media. Internet radio services such as Pandora, Last.FM, and Spotify have also made their mark in the fight for digital media access, targeting Gen Y users who may be reluctant to use peer to peer sharing due to viruses, malware, and lawsuits. This report discusses the top applications of each digital media genre, Spotify's possible release in the U.S, the effect it may have on established U.S corporations, and the focus group results digital media pertianing to Gen Y.


 * Digital Media at its Finest**

Limewire, the worlds number 1 torrent for Gen Y users looking for peer to peer sharing. With over 50 million unique monthly users, the software is downloaded hundreds of thousands of times every day and boasts millions of active users at any given moment. LimeWire uses the BitTorrent protocol and the Gnutella network to provide unparalleled searches and download speed to the user. As always, LimeWire takes the security of its users very seriously and offers the world's most technologically advanced peer-to-peer software.

Pandora leads in the Internet Radio Service category. Created by the Music Genome Project, users input an artist or song and the application automatically selects other songs of the same genre and plays them in a continuously until disabled. Users provide feedback on whether they like or dislike a song that Pandora has selected for them and is then taken into consideration for later song selection. Pandora's media player is based on Openlaszlo, an open source / public platform for the development and delivery of internet applications (Wikipedia). Over the last 2 years Pandora has expanded from Personal computers to mobile devices. The mobile software is compatible with the iPhone, iPod touch and other Android phones. Pandora offers two subscription options, all users are eligible for 40 hours of free music, users who reach the 40 hour limit have the option of paying $0.99 for unlimited use for the rest of the month. Otherwise they must wait until the beginning of the next month for another free 40 hours. There is also a fee-based subscription that removes unwanted advertisements and increases your song selection. Pandora offers a wide variety of music genre's and it also gives you the option of buying songs or albums at online retailers.

Spotify is a virtual digital jukebox and has been Europe's largest legal online music website for quite some time. Spotify has 325,000 users paying a monthly 9.99 pounds ($14.48) for the service ad-free and is partially owned by the biggest record labels. The site has had more than 10 million euros in ad turnover since starting in October 2008 and users are buying “tens of thousands” of tracks each week through a third party Upon entering the third quarter of the fiscal year Spotify will open it's doors to the U.S. Spotify has revolutionized the way consumers acquire music. It gives you instant access to all your favorite bands and songs, with over 8 million tracks in it's digital library. Create and share your own customized playlists with anyone else who uses it. Spotify also offers mobile services so you can listen on the go.


 * Spotify Targets the U.S**

The Stockholm-based company, which has 7 million users in Europe, is in talks with unnamed U.S. Internet and mobile-phone service providers about partnerships, Senior Vice President Paul Brown said. “We’re buying server space in random parts of the states and there are licensing discussions too...But they are going fine because we’re in a long-term partnership with the labels and publishers.” Digital sales of music accounted for 27 percent of revenue, or $4.2 billion, at the biggest record companies last year, according to the International Federation of the Phonographic Industry. In the U.S., Spotify would compete with online music services like MOG and Rhapsody. Spotify already has an application for its paying customers on Apple Inc.’s iPhone and the operating systems of Google Inc.’s Android and Nokia Oyj’s Symbian. Bonanos identifies Spotify as "the latest potential Itunes killer". Mobile caching, will essentially fulfill long-awaited dream of any song, anytime, anyplace, on demand. Recent controversy has arose around the fact of paying a subscription fee for the service since customerse are techincally only renting the music through streams. "Is the ace in the hole-unlimited access to on-demand mobile music-really worth $10 per month, especially if consumers won't own their songs if they stop paying?" (Bonanos).

Spotify's biggest edge coming into the American market will undoubtedly be it's partnership with Google. As Google continues to expand far past a basic search engine, Spotify is just what Google's looking for to get it's foot in the "peer-to-peer digital music" door. The two companies sketched out a plan where Spotify’s excellent Android application would be build into the 2.1 version of Android and would launch in the U.S. with the Google Nexus One phone. The application is available in Europe and allows for offline syncing of songs, which would give Google a much needed competitive answer to Apple’s iTunes. The Android could realistically be seen as a media consumption device, like the iPhone, with things like Spotify built into it (Arrington). When Spotify does launch in the U.S., look for a new version of the player that adds social elements – like social playlists, to aid in the discovery of new music. Spotify will also supposedly let you play songs that you have on your hard drive (like via iTunes) that they don’t have in their library. As the European company moves to unleash its sleek user interface on the American market, Spotify could prove to be as game-changing as the original Napster, the turn-of-the-millennium file-sharing service that caused music sales to crater as it taught consumers not to pay for songs.


 * Focus Group Analysis**

The internt has completely changed the music industry. Because music can no longer be protected with copyrights and more poeple than ever are downloading music for free, the old business models are becoming ineffective. Our focus group sessions were designed to determine exactly how Gen Y consumers are getting their music. Information from these sessions will allow us to advise proximity clients on how to best use music sites to connect with Gen Y.

The topics covered during the sessions were:
 * What is the most common way you buy new music?
 * Do you regularly illegally download music or share files you have bought?
 * Has the music industries actions (lawsuits) toward illegal downloading affected how you obtain your music?
 * Should the music industry embrace free music downloads as a means for promoting smaller, unknown bands and musicians?
 * Do you go to concerts? Do you support artists by purchasing merchandise and CDs?

Findings:
 * threat of prosecution not a deterrent to illegal downloading
 * participants frequently buy music to support favorite artists
 * digital files have replaced CDs
 * Limewire is the preferred music sharing site for both males and females
 * Legal alternatives do not reduce illegal downloading

Both genders and all age ranges preferred to download their music over purchasing it legally. No stipulations can be made whether or not a certain demographic favors one way of getting music over the other. Although purchasing CD's was not an option, there was a large variety of ways they acquired music, whether it be ITunes, LimeWire, bittorents, or internet radio services.