Digital-Music-Report-2014

a sign that the global digital radio businessis going to start to heat up. There are agreat number of consumers who listen toradio and are casual buyers of CDs anddownloads, and digital radio will provide ahuge opportunity for us to better targetand reach these fans.”“We’ve always thought that digitalradio is a category that has greatpotential around the world.”Stephan Bryan, Warner MusicUS internet radio service Pandora, alsoavailable in Australia and New Zealandis the best-known standalone internetradio service with more than 70 millionusers. Subscription services such as Rdio,Rhapsody and Spotify also provide freead-supported, radio-based services toattract new users.Engaging in emergingmarketsWith underdeveloped payment systems,high piracy rates and little tradition ofpaying for music, many large globalmarkets are yet to reach their vastpotential. The growth of smartphonesand licensed music services, however,is starting to change that and emergingmarkets are a key focus for internationalrecord companies in 2014.Dennis Kooker, president, globaldigital business & US sales at Sony MusicEntertainment, says: “We see growth inemerging markets significantly outpacingthe rest of the world with the frictionaround distribution and reaching theconsumer removed because of mobiletechnology and properly licensed musicservices. Tackling piracy and making theshift to licensed consumption remainsvery challenging in some of the marketswith the highest potential. Expansionof services focused on pre-paid billingmechanisms is also critical as the vastmajority of consumers are accustomed topaying bills by pre-paid methods versususing credit cards.”isps leverage the valueof music: kpn-SpotifyMusic services looking for access to the massaudience can partner with ISPs to offer a musicservice bundled with phone and data packages.These are commonplace in Europe and North America,offering streaming services access to a vast audience,an established and convenient payment system andadding value to ISP services. Spotify’s partnership withKPN in the Netherlands is often held up as a textbookexample of a successful ISP agreement.For ISPs, a successful partnership in musicstreaming brings considerable rewards. One ofthe most talked-about successes of 2013 has beenSpotify’s cooperation with ISP KPN. Marnix Laurs,head of content and partnerships at KPN, says thecooperation between the ISP’s “Triple Play” service,which bundles Spotify’s premium tier for free in thetop two propositions, has exceeded expectations.The partnership is one of the measures KPNhas taken to increase customer acquisition, andadvance customer loyalty. With that, it helps KPN tocompete with its two larger competitors, Ziggo andLiberty Global. Customer acquisition and stimulatingloyalty are the key metrics of success for any ISP.“There is fierce competition among ISPs, not justin the Netherlands but everywhere. We partneredwith Spotify because we were looking for a way todistinguish ourselves from the others. We looked athow we could engage music subscriptions to boostcustomer acquisition and grow customer lifetimevalue. We wanted something that was innovative, thatcovered the whole Dutch market and that showed offthe strength of our network. Putting all that together,we saw music streaming as the answer.”The Netherlands is one of the fastest-growingmarkets for music streaming services, with overalldigital revenues up 56.1 per cent in 2013, with muchof the credit going to success of the KPN-Spotifypartnership.“KPN definitely believes that the Spotify service,and streaming services in general, can be appealingto all customer target groups”, Laurs says. “Forthe over-45 age group we are convinced we canestablish a high level of penetration. This will grow ascustomers use, and start to love, the service. Youngertarget groups are growing up in a world in which theopportunities they are being offered now will be onesthey use for the rest of their lives — that is why KPNthinks there is a huge potential for streaming services.”21