This survey was the first of two planned surveys of the INDICARE project and was focused on digital music. This focus allowed us to ask detailed questions about current behaviour and preferences, rather than giving just a broad overview over different usage forms. The survey was conducted on the Internet in February 2005 among 4852 Internet users in seven European countries: Germany, United Kingdom, Spain, France, Hungary, The Netherlands, and Sweden. These seven countries account for about 70 % of the GDP and for 64 % of the total population in the 25 member states of the European Union (Eurostat 2005). The seven countries were chosen to cover various dimensions such as large and small countries, countries from east and west, as well as from north and south. The level of broadband penetration was taken as another decisive factor. The survey results are representative for all Internet users in the respective countries from age 10 with respect to age, gender, education and Internet usage frequency.

A large share of Internet users has experience with digital music
The results of the INDICARE survey show that large parts of the population have already gained first experience with digital music. 69 % of all Internet users have experience with music on a computer and 40 % use MP3 players. Particularly younger Internet users frequently use their computers or mobile devices to listen to music. But the older age groups also show strong interest in digital music and intend to try this new form of music in the future.

Survey results reveal, however, that digital music is not equal to downloads from the Internet. By far the most important source for digital music are CDs that consumers have either purchased themselves or CDs from family members and friends. Online music stores do not yet play a major role as a source for digital music: 29 % of the European digital music users have obtained music from online music stores, but only 9 % frequently use them.

Information about DRM and copyright is urgently needed
With digital music being so popular, one would expect that consumers have at least a basic understanding of the legal and technical foundations of digital music.

Our survey results disclose, however, that the majority of digital music users do not have the basic knowledge that seems necessary to make informed decisions. The majority of users is not well informed about the legality of their actions with respect to digital music. More than half of the digital music users either do not care whether the music they download onto their computers is copyrighted or do not know exactly what copyright means. This holds true especially for young Internet users who are at the same time the most frequent users of digital music.

The survey results also illustrate that a very significant knowledge gap about DRM exists in Europe. 63 % of the European users of digital music have never heard of Digital Rights Management, an additional 23 % does not exactly know what DRM is.

It can be concluded that significant information efforts are needed to ensure that consumers have a basic understanding of DRM, copyright, and the legal foundations for the usage of digital music. Such understanding seems necessary not only to prevent illegal behaviour, but also to defend consumer rights against possible violations.

Online music stores have to improve their information policy and customer care
The lack of information does not only concern digital music users in general but also users of online music store in particular. 79 % of the users of digital music stores did not know whether the music they purchased was DRM-protected or not. In addition, most users did not know whether any usage restrictions applied. Of those that knew about usage restrictions, the majority did not know the details of the restrictions.

It can be concluded that the information policy of online music stores about the application of DRM systems and/or the application of usage restrictions needs to be significantly improved. Online music stores that apply DRM technologies at least have to inform their customers that certain restrictions apply and how they are implemented. This is not only necessary for the sake of informed consumers. It is also necessary for the sake of satisfied customers, since a lack of knowledge about usage restrictions often results in problems when consumers want to use their purchased music files.

This is confirmed by survey results showing that about half of all digital music store users are not sure what they are allowed to do with the purchased content and have technical difficulties when using it.

Consumers are not willing to give up flexibility
The survey identifies device interoperability as the key demand of consumers. In addition, consumers frequently burn, share, and store music files. They will therefore hardly accept digital music offerings that do not support this behaviour. Commercial digital music offerings have to make sure that their applied DRM systems support these demands of consumers. Otherwise they might lose customers to services that allow, for example, the easy transfer of files between devices or the sharing with others.

Our survey results also confirm that consumers "don’t want all for free but they want value for money". The majority of users is, for example, willing to pay for music files that offer them more flexible usage rights, the ability to transfer files between devices, and the ability to share. Obviously, users are not willing to give up their flexibility in the use of digital music, even if restricted content were offered at half the price. It follows that DRM systems have to aim at supporting device interoperability and sharing features and apply relatively relaxed usage rules in order be accepted by consumers.

The Internet is an excellent tool to promote new music
Findings from the INDICARE survey also indicate that digital music on the Internet is an excellent tool for musicians and their labels to promote new works and foster sales. This is particularly true for less known musicians, since many digital music users discover new music and unknown artists over the Internet.

Even more interesting is that many Internet downloaders spend money on music after they have discovered new music: 64 % of the digital music users who have discovered a new artist on the Internet have subsequently bought a CD by this artist, 31 % have visited a concert, and 16 % have bought more digital music by this artist. The music industry should, therefore, aim at making it easy for consumers to discover new music on the Internet, e.g. by supporting sharing and recommendation features.

Older usage groups offer potential for online music stores
An interesting finding of the INDICARE survey is that older users are a very interesting target group for the providers of digital music. While young Internet users are currently the most frequent users of digital music, older age groups show strong interest in using e.g. MP3 players in the future. Digital music users above 40 download music from P2P networks less often, but purchase music from online music stores as often as younger user groups do. Older users often (more often than on average) spend money on digital music and CDs after having discovered new music.

The efforts of digital music stores should therefore not only focus on teenagers but particularly target older Internet users who are most inclined to spend money on new music. They typically care more about copyright and are better informed about DRM and legal issues than younger users.

Opinion on subscription services differs between countries and age groups
Subscription services are attractive to less than half of the users of online music stores. The opinion on subscription services differs quite considerably across countries and age groups. Subscription services are most attractive to Hungarian and French users. They are least attractive to teenagers.

We also find that the willingness to pay for music files that expire after a subscription period is limited: 80 % would rather pay 1 € for a song that they can listen to for as long as they like than paying only 20 Cents for a song that they can listen to for only a month. Accordingly, services where DRM technology makes songs expire after a certain subscription period are only attractive to a limited share of users. Providers of subscription services, therefore, carefully have to identify their specific target groups and pricing policies.

Frequent P2P users are also paying customers for the music industry
A more detailed analysis of frequent users of P2P networks reveals that the common perception of file sharers that generally do not want to pay for music is too simplified. Frequent P2P users are generally very active users of digital music, they use portable audio players or their mobile phone more often than the average Internet user does. And many of those who do not use those devices yet, consider doing so in the future.

We find that P2P users who have discovered new music on the Internet, subsequently buy CDs or purchase music from online music stores almost as often as the average digital music user does. The share of frequent P2P users who have bought music from online music stores or used subscription services over the past 6 months is even above average. We can conclude from these results that P2P users are not just free riders, but also an interesting target group for the music industry.

Highest share of frequent digital music users in Sweden
If we look at results on the country level, no consistent picture about trends in different countries emerges. Some selected results are nevertheless interesting to observe. The survey results reveal, for example, that the highest percentage of frequent digital music users can be found in Sweden. At the same time, however, Swedish Internet users have the lowest level of information on DRM and copyright.

Hungary has the highest share of users that know about DRM and has, at the same time, the lowest share of frequent P2P users. The highest percentage of frequent P2P users can be found in Spain and the Netherlands.

Internet users from Germany and the UK are most inclined to spend money on digital music: Germany and the UK have the highest share of online music store users and the highest share of users who bought digital music or CDs after they had discovered new music on the Internet.

Bottom line
Despite the popularity of digital music in Europe, most digital music users do not know what DRM is, do not know or do not care about copyright and are not well informed about the legality of their actions with respect to digital music. This lack of knowledge and awareness can have a number of consequences: First, it might result in illegal behaviour when using digital content. Second, the lack of knowledge often results in problems when consumers want to use music files they have purchased in digital music stores. And, third, when consumers do not have a basic understanding of the legitimate rights they have when using digital music, they will hardly be able to defend these rights against possible violations.


About the author: Nicole Dufft is a senior analyst at Berlecon Research. She has been analysing a variety of ICT topics ranging from mobile computing and application service providing to DRM. Currently, she works in the field "digital consumer". She is a member of the INDICARE project team.

Status: first posted 30/05/05; included in INDICARE Monitor Vol. 2, No. 3, 30 May 2005; licensed under Creative Commons