1. 1 Digital Music Survey Prepared for Demos: 19 th October 2009

2. 2 Background & Methodology 1,008 online interviews conducted in October 2009 amongst GB adults aged 16-50 years Representative of online population Covering: –Awareness and usage of official digital music services –Awareness, usage and attitudes towards file-sharing websites used to access music –Barriers to using illegal file-sharing websites for accessing music –Potential actions to deter the use of illegal file-sharing services –Interest, drivers and barriers for subscription to digital music download service

3. 3 Definitions All adults –GB adults aged 16-50 years representative of online population Official services –the main official music services (e.g. YouTube, iTunes Store, internet radio) Unofficial services –peer-to-peer/file-sharing websites/BitTorrent/Limewire or Rapidshare or Google/other search engines to find albums/tracks to download for free File-sharing/search engine users –all using unofficial services as listed above Illegal downloaders –file-sharing/search engine users downloading without the permission of the copyright holder File-sharing/search engine users but NOT illegal –file-sharing/search engine users who say they do not download without the permission of the copyright holder

4. 4 Summary (1) Widespread use of legal internet services to download and stream music (and watch music videos) –7 in 10 (69%) use one or more of the main official music services – most commonly YouTube, iTunes Store and internet radio Key motivators for legal music services are ease of use, convenience and listening while using a computer A third of adults use file-sharing sites such as BitTorrent or Rapidshare to access music or use Google and other search engines to find albums/tracks to download for free –however, only 9% of adults specifically admit to downloading music illegally (without copyright holder’s permission) Those who download music illegally typically also pay for music and use official internet services for music and other content –two-thirds also access other content (movies/games/software) illegally The availability of new, appealing legal services and various punitive measures would encourage those downloading music illegally to stop

5. 5 Summary (2) Apart from those downloading illegally, almost all believe it is not ‘fair use’ to file-share tracks that you have paid to download Those who do not download music illegally say it is because they have concerns about the legal consequences, they worry about viruses and have moral objections to it There is a high level of interest in an official paid music download subscription service –Overall, 47% interested (this rises to 72% amongst those who download music illegally) –Key features would be appealing price and content, plus ability to transfer to all their music devices –Revenue will be maximised at around £5 per month subscription fee

6. 6 Official services Section 1

7. 7 Q1b/Q1c Which, if any, of the following have you done in the past 12 months? How much have you spent on music in the past 12 months in each of these ways? 7 % buying music in last year Amount spent on music in last year (amongst those using each method) Music bought in the last 12 months (amongst all adults) £51 £41 £24 Mean Three quarters of adults have bought music in the last 12 months A third have paid for downloads of albums or tracks Base (n=1,008)

8. 8 Q2a/Q3b-c Which of the following, if any, have you heard of or do you personally use for music? Which Spotify service do you use? Which last.fm service do you use? 8 Half of all adults access YouTube for music / music videos Over a quarter have paid for downloads of albums or tracks from iTunes store Awareness and usage of official music services (amongst all adults) last.fm users: 90% use free service Spotify users: 91% use free service 69% use one or more of these services… Base (n=1,008)

9. 9 Q2a Which of the following, if any, have you heard of or do you personally use for music? Usage of any official music services by age and gender (amongst all adults) Over two-thirds of adults use any of the main official music services 16-24 years olds, particularly females 16-24, are more likely to use these services Base (n=1,008)

10. 10 Q4/Q3b/Q3c Please indicate why you use each of these services to access music. Reasons for using official music services (amongst users of each official service) Key motivators are ease of use, convenience and listening while using a computer Spotify scores strongly on these key features 7digital and eMusic bases are too low to analyse Which Spotify service do you use? Which last.fm service do you use?

11. 11 Unofficial services Section 2

12. 12 Q6 Thinking now about other services that are available, which, if any, of the following do you use to access music? 15% net used P2P / Rapidshare Usage of ‘unofficial’ music services (amongst all adults) A third of adults use one or more ‘unofficial’ music service A quarter have used Google or another search engine to find free album/tracks Base (n=1,008)

13. 13 Q2a Which of the following, if any, have you heard of or do you personally use for music? Q6Thinking now about other services that are available, which, if any, of the following do you use to access music? Over two-thirds of adults use one or more official service vs. a third using unofficial services Usage of official and unofficial music services (amongst all adults) 16-34 years olds, particularly females 16-24, are more likely to use these unofficial services Base (n=1,008)

14. 14 26% buying more (net) 93% have bought CDs/ vinyl or paid for downloads in the past 12 months -78% bought CDs/vinyl -54% paid for downloads Impact of using unofficial music services (amongst all file-sharing/search engine users) A quarter of those using unofficial services claim to buy a little/lot more music as a result 10% claim to buy a lot more music Base (n=325) Q7a Does using these services for music mean that you….?

15. 15 Unofficial services - illegal downloaders Section 3

16. 16 Downloading illegally (amongst all using unofficial music services) Rapidshare and P2P users are more likely to admit downloading music illegally (without permission of the copyright holder) Base (n=325) Q7b Thinking now about other services that are available, which, if any, of the following do you use to access music?

17. 17 Downloading illegally (amongst all adults) One in ten of all adults admit downloading music illegally Males 16-34 are most likely to admit doing this Q6/Q7b Thinking now about other services that are available, which, if any, of the following do you use to access music? Base (n=1,008)

18. 18 Characteristics of illegal downloaders Slight male bias (57% male) 7 in 10 aged under 35 9 in 10 own an iPod/iPhone or other mp3 player (including mp3 phones) Active music buyers, with 8 in 10 buying CDs/vinyl or downloads in the past 12 months –two-thirds have bought CDs spending an average of £75 each Just over half have home broadband speed at over 4Mb 9 in 10 use at least one of the main official internet music services High usage levels for internet services such as YouTube (87%), catch-up TV (72%) and Skyplayer (24%) Two-thirds also access other content (movies/games/software) without permission Base (n=88) Amongst all those downloading illegally...

19. 19 Q7c Thinking about your use of these services to access music without the permission of the copyright holder, what reasons would you give for using these rather than commercial legal services that are already available? 19 42% like to use them to try out new music and a third look for music not available elsewhere Reasons for downloading illegally ( amongst illegal downloaders) Just under half say that they download music illegally ‘because they can’ Base (n=88)

20. 20 Q7D Were you aware before today that services such as peer-to-peer (P2P) or file sharing sites are used by some people to distribute music illegally without the permission of the copyright holder? Awareness of music being shared illegally (amongst all except illegal downloaders) Awareness of music being shared illegally is highest amongst those who use ‘unofficial’ sites but claim not to access illegal content (or choose not to answer) *caution: low base Base (n=920)

21. 21 Q8 How likely would the following be to encourage you to stop accessing music without the permission of the copyright holder? Q9b How likely do you think the following would be to encourage people who have accessed music without the permission of the copyright holder to use legal music services instead? 21 Reasons that would encourage people to stop using unofficial services for accessing music without permission 73% of non-users think the threat of receiving a fine would deter users Base (n=920) Base (n=88) The availability of new, appealing legal services and various punitive measures would encourage those downloading without permission to stop

22. 22 Q9 Which, if any, of the following reasons for NOT using these services to access music without the permission of the copyright holder apply to you? Please select all that apply. Reasons for not downloading music without permission (amongst all except illegal downloaders) The main barriers to downloading without permission are legal concerns, worries about viruses and moral objections Base (n=556)

23. 23 Q9C What role, if any, do you see for government in encouraging people to only use legal ways of downloading music? How the role of government is perceived (amongst all adults) Encouraging the growth of legal websites/services is seen as an appropriate role for government across all segments Base (n=1,008) Non-users are more likely to also see the role of government to enforce ISPs to take action against offenders

24. 24 Q10 What do you consider to be FAIR USE of the music that people have paid to download from legal sources? Consideration of what is ‘fair use’ for paid music downloads (amongst all adults) Base (n=1,008) Apart from those downloading without permission, very few believe it is ‘fair use’ to file-share tracks that you have paid to download

25. 25 Those paying for downloads have a wider perspective on what is deemed ‘fair use’ of paid downloads Consideration of what is ‘fair use’ for paid music downloads (amongst all adults) Q10 What do you consider to be FAIR USE of the music that people have paid to download from legal sources? Base (n=1,008)

26. 26 QC2b Which, if any, of the following do you do on your computer at home? Please select all that apply Regular activities on computer (amongst all adults) Only illegal downloaders show any sign of actions specifically designed to hide their activities such as changing their IP address Base (n=1,008)

27. 27 Interest in digital music concepts Section 4

28. 28 Interested Not interested Interest in downloading tracks for portable devices Two-thirds of adults are interested in paying to download individual tracks over the internet Amongst those aged 16-24 75% Amongst illegal downloaders 80% Amongst those who have paid for downloads 91% Q11a Assuming the price and choice of tracks were appealing to you, how interested would you be in the following way of accessing music from LEGAL sources? Base (n=1,008)

29. 29 Interested Not interested £ Revenue Curve The optimum price for revenue from downloading individual tracks is 45 pence Interest in downloading tracks for portable devices Q11b At what price would you consider the following to be TOO EXPENSIVE for you to be interested? Q11a Assuming the price and choice of tracks were appealing to you, how interested would you be in the following way of accessing music from LEGAL sources? Base (n=654) Base (n=1,008)

30. 30 Interested Not interested Interest in a monthly subscription service is high, particularly amongst illegal downloaders Pay subscription fee unlimited downloads Amongst those aged 25-34 58% Amongst those who have paid for downloads 62% Base (n=1,008) Q12a Assuming the price and choice of tracks were appealing to you, how interested would you be in the following way of accessing music from LEGAL sources? Amongst illegal downloaders 72%

31. 31 I wouldn’t use it enough47% I would rather pay for tracks 36% I would prefer a CD34% I like to have the packaging /case20% I prefer shopping in stores16% I don’t want to pay15% Barriers to entry Interested Not interested Pay subscription fee unlimited downloads £ Revenue Curve Revenue will be maximised at a subscription fee of around £5 per month Q12b At what price would you consider the following to be TOO EXPENSIVE for you to be interested? Base (n=458) Q12a Assuming the price and choice of tracks were appealing to you, how interested would you be in the following way of accessing music from LEGAL sources? Base (n=1,008)

32. 32 Q12c Thinking about what would make such a service appealing to you, how important would the following features be to you if you were considering subscribing to this type of service? 32 Importance of features for a monthly music subscription service (amongst all interested in concept) Features ‘very important’ for illegal file-sharers: Price: 66% Transfer to players: 51% No restriction on downloads: 51% Motivators for using a monthly subscription service for music downloading include an appealing price, transferability to other music players and offering a selection of relevant music Base (n=458)

33. 33 Appendix

34. 34 Q1a Which of the following, if any, have you heard of or have you personally used in the past 12 months? 34 High levels of usage for YouTube and catch-up TV services Awareness and usage of entertainment services (amongst all adults) Base (n=1,008)

35. 35 Q7c2 Apart from music, which other content, if any, have you accessed using these services without the permission of the copyright holder? Other types of unofficial downloads (amongst illegal downloaders) 57%44% 39% 38% Net users… Around two-thirds of illegal downloaders also access other content types without permission 66% doing one or more of these (net) Base (n=88)

36. 36 Demographic profile of key groups Source: S1/S2/S3 Are you.....? Please type in your age. Which of the following shows your total household income per year from all sources, before tax and other deductions? Base (n=1,008)