Future Pulse: Music industry innovation report

Future Pulse: Music industry innovation report

During the latest years, streaming has become the dominant form for consumption of music in many countries around the world. Music streaming services like Spotify, Deezer, Apple Music, Tidal and Soundcloud are now the foundation for revenues to rights owners within the music industry.

A specific form of music streaming is related to businesses that want to use music in different forms of establishments and public spaces, such as shops, restaurants, gyms, malls, cafés, hotels, airports etc. The third use case in FuturePulse concerns such a service for background music.

The obvious benefits of streaming in business music, compared to the former paradigm of playing the radio or using tangible media or á la carte downloads, is the ease of availability as well as the speed by which a music environment can be changed if needed. The market of background music is highly diversified with at least 150 actors around the world. The USA is the largest market with a 32% share of total revenues. Europe has a 29% market share while Japan has a 14% share (QYR Reseach Center).

In Europe, background music has seen a steady revenue growth of 5% for each year since 2012. At the moment, China is the market where the growth has been largest during the latest years, but the market is still limited.

The largest actors are Mood Media, Almotech Media Solutions, Pandora for Business, Imagesound, Playnetwork, NSM Music Group, SiriusXM for Business and Touch Tunes. Some of the other competing actors are Amemusic, Cloudcover Music, DMI Music, Retail Radio, Custom Channels, The Playlist Generation, Screenplay Entertainment, IO Music, Soundreef, RadioSparx, Turnkey Media Solutions, Hotelgrooves, Orchid Music Design, Applied Media Technologies Activaire, NexTune, and MyInStoreRadio Brandwatch (www.brandwatch.com) is a different form of service providing help for brands to make smarter decisions. They have 1 200 clients and relevant products and services are Brandwatch Analytics, which tells the users about the topics, trends, and people that are making an impact on their business. Brandwatch Audiences simplifies finding groups of people based on the interests of the user: demographics, passions, professions, engagements etc.

Different background music players provide different kinds of services, some offer a specific hardware solution that is connected to the internet for either the downloading of music files or streaming solutions. Mood Media does also provide solutions for using CDs and even cassette tapes for clients that wish so. Actors like Sirius XM for Business, or Pandora for Business, are mainly making use of pre-programmed channels for larger business areas (Sirius XM have 85 pre-programmed channels while Pandora has more than 150 channels).

A large amount of research has been conducted on how music influences consumer behavior. In a meta-analysis conducted by Garlin F. and Owen K. of 32 prior studies, they concluded: “Taken collectively, past research demonstrates the capacity for appropriate background music to elicit positive effects on effective, attitudinal/ perceptual, temporal and behavioral variables. A considerable body of work presents evidence for these effects to provide returns to business in the form of sales value and volume, repeat purchase, the rate of spend, quantity purchased and gross margin. Many indirect returns to business are apparent, such as positive perceptions of quality and venue/store brand image.”

The length of customer stay can be influenced, the willingness to pay, the encouragement for repeat business, enhance staff performance as well as building the brand in the customer’s mind, conscious or non-conscious. Although, there is no effective solution for transforming these results into a scalable automated data-driven platform.

46% of managers and business owners believe that what music is played is saying something about the brand (DJS Research). At first glance, this sounds good, but this also means that more than half of the businesses believe that music does not have an impact on customers perception of the brand. This is a challenge that background music providers must deal with by making more advanced and intelligent music recommendations that prove how music increases sales and customer satisfaction.

For press inquires contact Jasmine Moradi

Source: FuturePulse