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Portable MP3 players - Digital Index summary

Portable MP3 player penetration is unchanged at 48%.

headphones

Behind the number

Portable MP3 player penetration is unchanged at 48%. Deloitte’s MP3 penetration figure is based on the number of dedicated players and mobile phone music players in active use. Penetration has grown only slowly since the second half of 2007. Given that MP3 player penetration has moved little in the last 2 years, it may be that the majority of consumers who want one already have one.

MP3 players are significant for the ease with which they have enabled consumers to access digital music.

Digital Britain and MP3 players
Although the Digital Britain report acknowledges that today around 7.5% of total UK music album purchases are digital (1), it describes a broken business model, in which a significant proportion of consumers are choosing to access digital content unlawfully, principally via unlawful peer-to-peer file sharing, and points to the BPI claim that P2P file-sharing costs the UK music industry £180m pa (2008) (2).

The report states that the Government’s objective is to see the creation of an effective online download and streaming market of scale, providing content that is highly affordable, and easily and conveniently accessible to consumers (3). The Government will therefore legislate to provide an underpinning for market models which can deliver this and create an enforcement climate that will focus consumers on legal sources of content rather than unlawful ones (4).

The next three months

Music subscription services to continue to face challenges. The music industry has responded to consumers’ desire - to discover what they want and decide how they want to consume it – by offering subscription models and various forms of ‘all-you-can-eat’ streaming models. However, consumers so far have struggled to understand the value proposition of subscription models and subsidised ‘all you can eat’ services are not proving more successful than an earlier generation of online subscription (5).
Bottom line: Music services may need to merge consumer features and benefits, such as a subscription service that comes with other deliverables e.g. portability and CDs, for consumers to believe that a music service is worth paying for.

Continued debate on the responsibility of ISPs for illicit peer-to-peer file sharing. The Government is receiving responses to its legislative proposals to address illicit peer-to-peer file sharing until the 15 September 2009. This may remain one of the most contentious aspects of the Digital Britain report. One ISP has already stated that it does not believe that it should have to fund a process of maintaining the records of those “most frequently accused” of infringement (6). Until ISPs have an incentive to actively engage in this process, conflict is likely to continue.
Bottom line: ISPs may continue to explore the potential of charging content owners more for privileged access to bandwidth, in return for managing illicit file sharing.


Sources:
(1) Ofcom 2008, quoted in Digital Britain, Final Report, June 2009 (Page 109).
(2) Digital Britain, Final Report, June 2009 (Page 109).
(3) Digital Britain, Final Report, June 2009 (Page 109).
(4) Digital Britain, Final Report, June 2009 (Page 110).
(5) SpiralFrog goes belly up, Washington Post, 20 March 2009.
(6) UK delays tough action in file-sharing fight, ScreenDaily.com, 9 July 2009.