Monday, April 11, 2005

Amid increased growth in fee-based digital music experimentation and continued strong sales of portable MP3 players, the recent launch of a new generation of portable online music subscription payment methods may require substantial incentives to encourage broad consumer adoption, according to new research from global marketing research firm Ipsos-Insight.

When a new portable online music subscription service (which allows an unlimited number of songs to be transferred to associated portable devices) was introduced to the market scenario at $14.99 per month, the proportion of downloaders who would choose this method was 5%, one-third fewer than the 17% who would choose an a la carte method at $0.99 per song, yet greater than the 4% who would choose an on-demand PC-tethered streaming subscription service. This suggests a potential limitation in rapidly migrating current downloaders to this new method of fee-based online music acquisition.

"With all of the recent media attention surrounding this rapidly changing market, these findings indicate that many downloaders still prefer a transactional payment structure over one that is subscription-based," said Matt Kleinschmit, a Vice President with Ipsos-Insight and author of the TEMPO research. "This suggests that recently launched portable online subscription services may need to encourage broader adoption through ambitious pricing and promotional or incentive -based acquisition strategies, particularly among those downloaders who have previously only had experience with a la carte fee-based methods."