The Digital Music Supply Chain:

How Streaming is Catalyzing a Transformation

Kathleen McReynolds

MBA 5220 – Spring 2012

Appalachian State University

 Table of Contents

Title Page……………………………………………………………………………………………………………………………………1

Table of Contents ………………………………………………………………………………………………………………………2

Executive Summary……………………………………………………………………………………………………………………3

Introduction……………………………………………………………………………………………………………………………….5

The Traditional Music Supply Chain and Music Royalties……………………………….……………….6

Emergence of New Media: Music Streaming………………………………………………………………….8

How Does Streaming Change the Traditional Supply Chain?.........................................................9

The Flow of Goods………………………………………………………………………………………………………...9

The Flow of Information……………………………………………………………………………………………….11

The Flow of Funds………………………………………………………………………………………………………..12

Industry Reactions to the Changing Landscape………………………………………………………………………..14

Technological Solutions………………………………..………………………………………………………………15

Future Opportunities and Obstacles…………………………………………………………………………………………16

References……………………………………………………………………………………………………………………………….19

Appendix 1: Summary of Graham’s (2004) “The Transformation of the Music Industry Supply
Chain: A Major Label Perspective.”………………………………………………………………………………………….21

Appendix 2: Spotify Features……………………………………………………………………………………………………22

Appendix 3: Percentage of Minutes for Audio Sources by Location from Center for Research
Excellence……………………………………………………………………………………………………………………………….23

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Executive Summary

Media and entertainment firms have been some of the businesses most drastically

affected by the rise of digital technology. The music industry in particular has struggled to

reorganize itself to capitalize on digital channels of distribution like song downloads and music

streaming. While digital downloads may be more relevant in terms of revenue value, the scope

of this paper will lie in investigating music streaming technologies and their impact on the

digital supply chain. The rapid growth of streaming within the last three years has made it a

more interesting topic for scrutiny, as many hail it to be the “future” of the music industry. This

investigation will not seek to support or refute this possibility. Rather, it will investigate the

impact that streaming technologies have already had on the traditional supply chain, as well as

some issues we can expect to face in the future.

This research on music streaming is written through the lens of supply chain

management analysis— in particular using Crandall’s (2010) framework of supply chains as

including a flow of goods, information, and funds. The evolution of music consumption

channels has drastically affected each of these system flows in several ways. The flow of goods

has changed because music files are decreasingly permanent products and consumers are

currently demanding different value propositions (i.e. accessibility and APPS). Consumers have

also found ways to steal or record these digital files, making product leakage (piracy) a huge

issue. The flow of information is becoming more voluminous as hundreds of streams replace

several downloads. The applications of massive stores of data are becoming available (targeted

digital marketing) yet more burdensome (computing tiny royalty payments on millions of

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streams by thousands of artists). Finally, the flow of funds has become something of a hot topic

in the industry because artists and record companies are not confident that the tiny royalty

payments (regardless of quantity of payments) will add up to a feasible business model. In all,

the confusion and complexity surrounding this new form of music consumption make it a very

intriguing topic for further reflection.

In general, the music industry has been somewhat slow to embrace this new form of

distribution, possibly because it has not yet proven itself a feasible replacement for other forms

of consumption. However, several technological solutions like Accenture and Oracle’s Incentive

Compensation have been designed to aid the supply chain members in organizing and

communicating transparent information.

In assessing the feasibility of streaming’s future, I believe that one of the largest hurdles

will be overcoming the impatience of rights holders. In order for streaming to generate massive

revenues, companies like Spotify need time to generate massive user bases. This requires a

legal and technological infrastructure that simply has not materialized yet. The potential for

music streaming lies in scalability, but if major industry participants are not willing to build that

foundation or wait until it unfolds naturally, we as consumers may truly lose out on what could

have been a great system of legally receiving and enjoying music from around the globe.

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INTRODUCTION

Following the tumultuous 2000s, the global music industry seems to have finally

regained some foothold in the market, particularly in the digital music arena. According to IFPI’s

Digital Music Report 2012, global digital music revenues have been on the rise for several years,

reaching $5.2 billion in 2011 (IFPI, 2012). See Figure 1 Below for digital revenue growth figures

since 2009.

Figure 1: Digital Music Trade Revenues (Global)

2009 2010 2011

Trade Revenues (US$) 4.6 Billion 4.8 Billion 5.2 Billion
Growth 10% 5% 8%

Other figures also indicate positive growth for the digital music market on a global scale.

2011 brought an unprecedented number of digital downloads (singles and albums combined),

with global purchases reaching 3.6 billion in 2011—a 17% increase over equivalent downloads

in 2010. The number of paid subscriptions to music services grew by a stifling 65%, rising from

8.2 million in 2010 to nearly 13.5 million in 2011. In terms of revenue generation for record

companies, digital music consumption has actually surpassed physical channels in several

countries (IFPI, 2012). See figure 2 below for a list of countries that obtain over half of their

record company revenues by digital transmission.

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Figure 2: Record Company Revenues from Digital Sources

Country % of Record Company Revenues from Digital Sources

China 71
South Korea 53
USA 52

According to Nielson SoundScan, US digital music sales are growing even more quickly

than worldwide digital sales. Digital album sales and digital single sales rose 19.5% and 8.5%

respectively from 2010 to 2011. Sales figures for January 2012 show even more promising

growth, as the same figures rose another 17.4% and 6.3% respectively compared to January

2011 sales (Glenn, 2012).

With the worldwide proportion of digital music sales to total music sales averaging 32%,

it is clear that digital consumption has become more significant than ever (IFPI, 2012).

Consequently, those who have a vested interest in music industry value chains must

understand and anticipate this evolution of music distribution in order to remain competitive.

The Traditional Music Supply Chain and Music Royalties

In the past, the “big five” record labels (now the “big four”) dominated the music

industry, capturing about 80% of the global market. Activities were performed in a structured

sequence and artists generally used a record company, distributor, and retailer as

intermediaries to reach final consumers. See figures 3 and 4 for Graham’s Traditional and

Industry Models in terms of value activities and the actors involved.

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Figure 3: Graham’s Traditional Music Supply Chain (Activities)

Reproduction
Composition A&R Recording & Packaging
Marketing Distribution Retailing Consumer

Figure 4: Graham’s Traditional Music Supply Chain (Actors)

Record
Artist Distributor Retailer Consumer
Company

However, the digital era is changing the dynamics of music supply chains. According to

Graham (2004), the upstream supply chain is least effected, progressing from (1) music

composition to (2) A&R, and (3) recording. However, the later activities (reproduction &

packaging, marketing, distribution, and retailing) are now divided between the online model

and the offline model, with trends favoring online prominence. Traditional vertical integration

has now been replaced by a “complex constellation” of participants who engage in

simultaneous, parallel activities of value creation. Resources, capabilities, and information are

shared more readily among transient, virtual partners who interact as a network rather than a

sequential assembly line. Artists and record companies can now reach customers more directly,

making intermediaries (physical distributors, retailers) less necessary (Graham, 2004). See

Appendix 1 for more detailed information on several supply chain changes implied by Graham.

One of the supply chain issues not covered thoroughly in Graham’s model is the

payment of royalties to rights holders in the digital era. Performers, songwriters, publishers and

record companies receive income through a complex system of royalties, which are essentially

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rates of compensation that are due to an individual or group when their copyrighted material is

used. These rates vary widely depending on the nature of the use and the contractual terms

that the rights holders operate under. Each royalty transaction differs in the amount paid and

the split between recipient parties, but it is important to understand that copyright owners’

royalty income depends on the contractual terms and also the quantity of uses of the

copyrighted material and these parties receive royalties for every music download or stream

(Krasilovsky, 2007).

Emergence of New Media: Music Streaming

Although global digital downloads are on the rise, they have not yet managed to match

the level of revenues that firms enjoyed in the days of physical product. Consequently, the

digital delivery age of music is still in a state of unrest as companies attempt to configure the

optimal system for exploiting recorded music.

One of the most quickly growing types of digital music in the U.S. is streamed music,

with Sweden-based Spotify leading the way (Knopper, 2012). Spotify, which entered the U.S.

market in July 2011, boasted 2.5 million premium (paying) customers by November of that

year, and gained another half of a million by the following January (Peoples, 2012). The

company aims to have 50 million total U.S. users (at least 7.5 million paying) by the end of

2012. Several other streaming services exist in the market (Pandora, Rdio, Rhapsody), but none

have purely on-demand content, which is what truly differentiates Spotify. In fact the

technology is so new that the U.S. Copyright Office has not even written legislation to govern

on-demand streaming and charge providers a statutory rate for the use of protected material

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(Krasilovsky, 2007). As such, music streaming is a very tumultuous and current phenomenon

that is interesting to examine through the lens of supply chain management. This state of

disharmony as well as its effect on supply chain flows will be discussed in detail below.

How Does Streaming Change the Traditional Supply Chain?

Crandall, Crandall, and Chen (2010) describe supply chains as involving “various

participants who perform a sequence of activities in moving physical goods or services from a

point of origin to a point of consumption.” The authors further posit that supply chain

transactions exist in the context of physical flow (flow of goods), information flow, and funds

flow. This descriptive framework will be used to analyze the ways in which music streaming has

already begun to alter the industry’s traditional supply chain.

The Flow of Goods

Digital distribution methods and ever increasing bandwidth have made the transfer of

digital files all but effortless.Furthermore, Spotify and other providers add value that exceeds

that of the music tracks in isolation. Sharable playlists, countless music Apps (See Appendix 2

for a list of Spotify features), and seamless integration with other social websites have made

the music streaming experience much more than just accessing a series of tracks. Users derive

value from these features and are able to create even more value for themselves by investing

time and effort into amassing playlists and becoming members of the many interactive web

spaces related to music streaming. In this respect, the stream of a music track has become just

one pixel in the larger picture that is online leisure.

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 The flow of goods is certainly a critical aspect of any supply chain. However, music

streaming is changing more than just how goods flow downstream –it’s affecting the

composition of the goods themselves. One could argue that the “good” in question is still the

recorded music that is being transferred (however ephemerally). However, a Spotify user would

certainly be perturbed if he logged on to the system only to find that his newly-designed, 30-

song playlist were missing. He may be equally upset if his inbox of music suggestions was

empty. The point is that consumers are not solely consuming the sound recordings. They have

come to value the infrastructure that allows easy sharing of playlists, recommendations, and

customized stations. In that respect, the “good” that is being purchased is accessibility to a

network of media that is easily customizable to one’s own taste.

One could argue that providers of music streams have avoided nearly all of the risks

associated with supplying physical music products like CDs, cassettes, and vinyl records.

Providers face no breakage, inventory costs, or demand forecast issues—factors that were once

dominated the distribution manager’s time. Today, however, distributors of digital music

streams face a whole new batch of woes.

Since ownership of a sound recording copy is not transferred to the user during music

streaming, consumers must return to the provider every time they wish to access specific

content. Instead of delivering the product to a user once (i.e. the user downloads a track),

streaming services are expected to deliver this content seamlessly to a user possibly hundreds

of times over the span of the customer’s relationship with the company. Even with the

abundance of internet technology, this is a major challenge for any firm. Any hiccup in the

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delivery system could leave users angry and annoyed, particularly if they are paying for

premium services.

Product leakage is another issue. Since music streaming subscriptions are often free to

begin with, it would be fair to assume that users of such services would have little incentive to

take part in music piracy. However, Anderson (2011) points out in his article, Stream Capture:

Returning Control of Digital Music to the Users, that users of online streaming services are

easily able to record streamed content and save the resulting MP3 files locally. Technologies

already exist to capture streamed music in this format with little or no loss of sound quality,

making this additional consumption method attractive to many users. This leakage of product

presents a major problem for everyone but consumers, who are easily able to obtain music

goods at no charge.

The Flow of Information

The migration away from physical or even digital ownership has important implications

on the flow of information. One benefit is that the lack of ownership reduces the need for

suppliers to collect demand information, with the exception of extreme conditions (i.e. extra

bandwidth needed for a highly anticipated streamed event). The bullwhip effect is of little

concern to members of the supply chain due to the absence of physical inventory, making

demand forecasts less critical in terms of logistics.

Also advantageous to streaming servers is the wealth of consumer information that is

readily available from users. Data is often willingly provided to streaming servers as users

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update their profiles and become more entrenched in the system’s features. Artists are also

given intricate reports of their listenership on streaming services, which can be a very powerful

marketing tool. Unfortunately, this massive base of information can become overwhelming

when needed for purposes outside the scope of internal market research. For instance, royalty

payments for a user’s every stream depend on other company information like user

membership status and ad revenue for the period. This integration of user data, ad sales data,

and contractual data is endlessly convoluted.

The Flow of Funds

Under the Digital Millennium Copyright Act of 1998, SoundExchange became the sole

collector of digital transmissions of sound recordings over non-interactive streaming sites.

However, no such organization was ever set up for interactive streaming sites (services in which

the user controls the upcoming music). Furthermore, no statutory rates were set by the

government for these on-demand streams (Krasilovsky, 2007). Out of necessity, artist

aggregators began to negotiate contracts with the interactive streaming sites to collect

royalties on behalf of their artists (who would then pay a fee for the collection service).

According to their website, Spotify currently contracts with thirteen artist aggregators

(including CDBaby, TuneCore, and AWAL) who upload independent artists’ content and then

distribute royalties earned from streams and other e-stores. In some ways, the artist

aggregators seem to be a replacement of previous intermediaries like the record company and

distributors. However, this process is more streamlined (the aggregators contract with nearly all

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major outlets) and independent artists are able to exercise more control over their copyrighted

works.

Even after the four largest record companies decided to cooperate with Spotify, some of

the artists on those labels bluntly refused to do so. Commercial successes like Adele, Coldplay,

and The Black Keys have all prohibited their new albums from being released on streaming

services. Instead, these individuals and many similar artists will only offer their latest albums for

purchase for some window of time. Eventually (presumably once demand for the album has

leveled) these artists may offer their back catalogue as well as new albums on streaming

services. This practice mirrors the strategy of Hollywood movie companies that wait to offer

DVDs until long after movies have left theaters (Fixmer, 2012).

Artists like the aforementioned feel that revenue from streaming is not fair

compensation for their musical goods. Spotify and other streaming services do not disclose

their exact contractual terms with copyright owners; however, several journalists have

attempted to estimate the royalty rates that are used to pay for music streams. Glenn Peoples

(2012) of Billboard Magazine states that “at 0.3 cents per stream, a four-minute song would

need to be played for 22 hours to equal the revenue from a single $1.29 track purchase,” which

is particularly troublesome for album-centric bands who cannot expect a “hit” to be played on

repeat. Peoples (2012) also calculated that it takes about 275 stream royalties to equal one

download and 1,845 stream royalties to equal one digital album. These comparisons are

sobering indeed, but they are derived under the assumption that streaming and purchasing are

mutually exclusive activities. This “either-or” mentality has not yet been grounded in research.

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 The threat of piracy (via illegal downloading or recording of streams) also had obvious

implications on the flow of funds. Since royalty calculations are based on the number of

streams from the provider’s system, consumption of music off the system (legally or illegally)

accrues no income for writers, publishers, or record companies. Furthermore, off-site

consumption precludes the generation of ad revenue, throwing the whole value chain off

balance. Although this issue could become a serious threat to the industry, its prevalence could

be mitigated by increasing portability of streaming services. In principal, the threat of recording

streams differs little from traditional music piracy in that both depend on the extent to which

consumers insist on owning their music library, rather than gaining access to a music library.

In a quest for additional revenue streams, product developers are expanding

streaming’s compatibility with other mediums for delivery, like smart phones and tablets. Alex

Farber (2009) of the magazine New Media Age suggests that mobile applications may be a

better source of income than many think because “culturally, people are more used to paying

for things on their mobile and having things available for free online.” If this is true, the

increasing population of individuals owning a smart phone or similar electronic device may

provide the needed boost in streaming revenue in the near future.

Industry Reactions to the Changing Landscape

In general, the reaction of the major US record labels to streaming services has been

somewhat slow and stubborn. Music Week author Robert Ashton (2014) uncovered evidence

that major labels were actually trying to re-design Spotify for their own benefit before signing

any licensing deals. One insider commented, “The majors have been trying to shape how the
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service should look in the US, but Spotify has been successful in rebuffing them.” The majors

also took “large advance payments from Spotify before its US launch,” once the company won

them over (Fixmer, 2012). However, many indie record companies like Merlin, Sub Pop, and

Nexos were eager to contribute to Spotify’s catalogue of music (Ashton, 2011).

Sellers of recorded music must embrace changes in consumer preference and move

away from the traditional notion that one track is worth a fixed $0.99. Suppliers and rights

owners should be more concerned with adding more value to this infrastructure of virtual

media access. Monetization of this system will flow to the extent that upstream supply chain

members make the consumption experience indispensable to users. Major players need to be

more future-oriented instead of taking a myopic view of the market and trying to maximize

profits by stubbornly enforcing outdated contract terms. The Copyright Office must also get

involved in laying the legal groundwork that is needed for this system to flourish.

Technological Solutions

In terms of fully integrated supply chains, music streaming services are nowhere near

perfect. In fact, the emergence of this new business model has almost put these streaming

companies right back at square one—determining which entities to include in the supply chain,

negotiating the compensation system, etc. However, several companies have designed

software programs to ease the transition into the digital music world.

Accenture, a product based on Microsoft Dynamics AX, includes a Rights & Royalties

Service Center (RRSC), which manages all facets of rights management from “end-to-end.” The

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software follows transactions from acquiring the rights and selling the licenses to collect fees all

the way to paying the original rights holders. One of the key advantages of this is that it truly

facilitates information transparency among all parties to the transactions. Clients like music

publishers and songwriters can actually access real-time data about usage of their copyrighted

material. This is a definite step toward integration.

HCL Technologies has also developed a system that manages artists’ royalties as a

derivative of their sales commission payment software. The program, Oracle’s Incentive

Compensation (OIC) module inputs artists as salespeople and then calculates payment on a per-

use basis. Record companies and artists can then view online statements, pay online fees, and

request reports at will (HCL Technologies, 2012). While this system may be useful for a start-up

company in the entertainment business, it does not seem feasible on a global scale because it is

not integrated with the rest of the supply chain. There is definitely an urgent need for

innovative supply chain management software in this complex and rapidly evolving market.

Future Opportunities and Obstacles

In terms of market potential, I think music streaming is extremely promising, but the

infrastructure needed for it to flourish is not yet available. In order for streaming to be

profitable for all members of the supply chain, streaming services need to be the providers of a

large percentage of all music consumption, meaning they need to minimize the amount of time

that users spend listening to music off of the streaming system. In a 2009 report entitled “How

U.S. Adults Use Radio and Other Forms of Audio,” the Council for Research Excellence found

that U.S. consumers source 12.6% and 6.7% of audio using a digital streaming service while at

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work or at home respectively. However, while these consumers are in the car or in other

locations (restaurants, stores, etc.), less than 1% of their audio consumption is sourced from

digital streams (Council for Research Excellence, 2009). This indicates that users are not yet

comfortable or able to stream to their cars and other locations. Spotify and other streaming

services may need to become involved in development of products that easily allow customers

to stream directly to the car’s speakers without loss of audio quality (much like HDMI cords or

the Roku allow users to stream Netflix and other media providers directly to a TV). Car

manufacturers could even build this type of feature into the car’s stereo system in the future if

consumer demand for streaming were high enough. This notion is supported by the fact that US

consumers listen to far more broadcast radio while in the car (74.2% of minutes) than they do

while at work, home or in other locations (53.8%, 46.4%, and 23.3% respectively) (Council for

Research Excellence, 2009). It stands to reason that broadcast radio dominates consumers’

time in a car more markedly than in other locations because digital audio is largely unavailable

in that venue. See Appendix 3 for more detailed results from this study.

On a similar note, users would probably be more likely to stream directly from their

phone if it were equipped with higher quality speakers that did not significantly contribute to

bulkiness. Essentially, in order to increase the quantity of streams, technological and

infrastructural advances must eventually make streaming to all locations as seamless and easy

as streaming to a computer.

In the short-term, artists and rights holders should put more effort in to ancillary

sources of revenue. A recent study conducted on over 2,000 French participants suggests that

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music streaming has no effect on offline music purchases, but it actually has a positive effect on

online music purchases. Streaming music also correlates positively with attending concerts of

national or international stars (Dang, 2012). Yet many label executives fear music streaming is

strangling the industry. Clearly more research is needed on how streaming affects users’ other

music consumption habits, like attending concerts and purchasing merchandise. But early

studies like the one mentioned above indicate that music fans are still willing to spend money

on music products. Thus executives may need to shift their efforts to other areas like touring

and merchandising. Some labels have already starting doing this by contracting new artists

under 360-deals, in which the label involves itself in all aspects of the artist’s career

development, rather than simply the exploitation of recorded music.

In general, the potential for market penetration is high. Technological advances are

contributing to the widespread adoption of computers, smartphones, and cars around the

globe. I believe that interactive streaming sites have a place in the future, but leaders need to

build the phenomenon from the ground up – starting with a legal and technological

infrastructure and ending with market domination.

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REFERENCES

Anderson, J. (2011). Stream Capture: Returning Control of Digital Music to the Users. Harvard

Journal of Law, 25(1), 160-176.

Ashton, Robert. "Indie Gold Rush for Comprehensive Service." Music Week, 23 July 2011. Web.

Council for Research Excellence. "How U.S. Adults Use Radio and Other Forms of Audio." The

Nielson Company, 29 Oct. 2009. Web. 22 Apr. 2012.

Crandall, R. E., Crandall, W., & Chen, C. C. (2010). Principles of Supply Chain Management.

Boca Raton: CRC Press/Taylor & Francis Group.

Dang Nguyen, Godefroy, Dejean, Sylvain and Moreau, François (2012), “Are Streaming and

Other Music Consumption Modes Substitutes or Complements?”

Farber, Alex. "Double Dipping." New Media Age 9 July 2009: 22. Web. 23 Mar. 2012.

Fixmer, Andy. "Spotify Doesn't Sound So Great to Some Artists." Bloomberg Business Week.

Bloomberg, 05 Jan. 2012. Web. 3 Apr. 2012.

Graham, G., Burnes, B., Lewis, G. J., & Langer, J. (2004). “The Transformation of the Music

Industry Supply Chain: A Major Label Perspective.” International Journal of Operations

& Production Management, 24(11), 1087-1103.

IFPI Digital Music Report 2012: Key Statistics. IFPI.org. Ed. IFPI. Institute for Policy

Innovation, 23 Jan. 2012. Web. 14 Apr. 2012.

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Knopper, Steve (2011). “Digital Music’s Cloud Revolution.” Rolling Stone, 1146, 16.

Krasilovsky, M. W., Shemel, S., Gross, J. M., & Feinstein, J. (2007). This Business of Music:

The Definitive Guide to the Music Industry (10th ed.). New York: Billboard Books.

Peoples, Glenn (2012). “Turn On The Jets.” Billboard, 124(5), 5.

"Royalty Management." HCL Technologies: Transformational Global Services for IT and

Engineering. Web. 24 Apr. 2012. <http://www.hcltech.com/enterprise-application-

services/oracle/royalty-management>.

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Appendix 1: Summary of Graham’s (2004) “The Transformation of the Music
Industry Supply Chain: A Major Label Perspective.”
(1) The structure of activities
Traditionally
Physical product
Sequential Supply Chain (A&R, recording,
production, packaging, promoting,
distributing)
(2) The Choice of Actors
Traditionally
High vertical integration with limited
choice of participants (static).
Three intermediaries between the music
and consumer: Record company,
distributor, and retailer.
(3) The Governing Mechanism
Traditionally
Vertical integration (growth through
acquisition) gave some record companies
power because they didn’t need to
negotiate contracts with the other links
that they owned.
(4) The Coordination Structure
Traditionally
Dyadic coordination between links, but
they did use some systems like point-of-
sale scanning.
Sequential communication
After Internet
Digital product and communication
Supply chain is more of a network and less
sequentially structured.
After Internet
Flexible relationships of varying length;
high choice of members (dynamic),
Outsourcing is prevalent for companies
who do not specialize in a task.
Direct contact possible between music and
consumer, and among all chain members.
After Internet
Even artists with the majors can be more
self-sufficient, so the record companies
have less power. Artists can also omit the
record company altogether. Consumers
are getting more power because they have
options to contract with any number of
providers of the service they need.
After Internet
Real-time constellations of open
information, reduces bullwhip effect.
Direct communication with all partners
AND consumers.
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Appendix 2: Spotify Features
Free Accounts:

*Seamless creation of playlists (click-and-drag)

*Inbox for sharing playlists, bands, songs with other users

*Integration with Facebook and other social and music-related sites

*Personalized recommendations of music

*Sound Drop: Genre-specific, user-managed music rooms (users vote songs to be played next)

*Moodagent: Creates playlist based on the tempo and mood of a song you like

*Personalized concerts calendar based on your playlists

*Charts and playlists from Billboard and other media companies

*Tunewiki: provides lyrics synched to the songs you play, so you can sing along

*Easy import of your iTunes library or other music files saved locally

*Home page that advertises new additions to the music catalogue

Paid Accounts

*Storage of songs offline

*No commercials

*Mobile Service (Premium)

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APPENDIX 3: Percentage of Minutes for Audio Sources by Location

Other
Own Home Audio
2%
Portable Audio
8%
Digital Audio
(Streamed)
7%

Digital Audio
(Stored)
9% Broadcast Radio
46%

CDs & Tapes

21%

Satellite Radio
7%

Work
Portable Audio
1% Other
Audio
Digital Audio 11%
(Streamed)
13%

Digital Audio Broadcast Radio

(Stored) 54%
5%
Satellite
CDs & Tapes
Radio
4%
12%

Reproduced from:
“How U.S. Adults Use Radio and Other Forms of Audio” by the Council for Research Excellence

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 Portable Audio
Digital Audio 4%
Car Other Audio
(Streamed) 1%
0%
Digital Audio
(Stored)
1%
CDs & Tapes
16%
Satellite Radio
5%
Broadcast Radio
73%

Other Location

Broadcast Radio
23%
Other Audio
43% Satellite Radio
8%

CDs & Tapes

Portable Audio 18%
Digital
Digital Audio 4% Audio
(Streamed) (Stored)
1% 3%

**Note the sharp decline in use of streamed audio from Own Home and Work to Car and Other

Location. Use is comparatively very low in the latter two, almost at zero.

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