NPD Finds Interest In Cloud-Based Subscription

Recently much music industry talk and speculation has been devoted to the concept of digital retail music sales evolving into some type of cloud-based subscription model. Market researchers NPD Group conducted a study of iTunes, iPod, iPhone and iPod Touch users to gauge their interest and reactions to such a plan. The study found that more than a quarter of the respondents expressed “strong interest in a free cloud-based music option to access their own music libraries from multiple devices and platforms and many were willing to pay a subscription fee.”

The study ranked consumer interest in a music service that allowed free streaming of content from the consumer’s own iTunes library, plus a few paid options combining streaming, downloads and more. The research found that 7-8 million U.S. iTunes users would have “strong interest” in one of the paid options and showed a willingness to pay a minimum monthly fee of $10 or more. NPD  estimates there are about 50 million total U.S. iTunes users and that 13-15 million would be interested in free access to their own music libraries.

“After the service’s launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music,” said Russ Crupnick, VP/Sr. Entertainment Analyst for The NPD Group. “If the consumers who indicated strong interest in a paid subscription actually adopted one of those services at $10 per month, the market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per-download model.”

Note: The NPD Group’s iTunes Usage Report, is based on an online survey fielded to members of NPD’s online panel in May 2010. The report is based on 3,862 completed surveys from qualified respondents (age 13 and older). Each respondent reported using iTunes at least once in the past three months.