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Effect of Audio Streaming Services on CD Usage

The Change in Preference for Various Methods of Music

Consumption Over the Last Ten Years

Student Number: 1034941

PM505 Research Methods A2

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Effect of Audio Streaming Services on CD Usage

Contents

Abstract 3

Literature Review 4

Music Access & Listening Methods 4

Audio Streaming Services 5

Effect of Streaming Services on CD Sales 7

Aim & Hypothesis for this Project 8

Methods 9

Participants 9

Design 9

Evaluation 10

Project Activity 10

Project Findings 12

Survey Results 12

Discussion 15

Conclusion 16

References 17

Appendix 1 – Ethical Consent Form 19

Appendix 2 – Questionnaire 20
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Effect of Audio Streaming Services on CD Usage

Abstract

Aim: This study aims to conclude whether the use of streaming services, such as

Spotify, has had any effect on the sale of physical copies of music (i.e. CD), as well

as whether there has been a change in peoples’ preference for various methods of

music consumption. Methods: A ten-question survey was created and sent out to a

sample of young adults ranging from eighteen to twenty six years of age. Results:

The results show participants’ primary source of music since 2008 changed from

CDs to Spotify. In particular, participants believed their preference for Spotify has

greatly increased since 2008, and that their preference for CDs has greatly

decreased. Conclusions: The findings suggest there has been a clear decline in the

desire to purchase CDs and a clear increase in the desire to stream music instead.

However, the sample size was relatively small, so further statistical research would

need to be conducted with a larger sample group to conclusively say that there is a

significant relationship between streaming services and CD sales.

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Effect of Audio Streaming Services on CD Usage
Literature Review

Since the initial release of Spotify in October 2008 (Parsons 2018) evidence

would suggest that there has been an increase in preference for online streaming

services as a method of listening to music over more traditional methods such as

physical copies (Boorstin 2004). However, there is a clear discrepancy between

research into this topic, and as a result there is no renowned conclusion that free or

paid streaming services have directly affected the general sales of physical copies of

music such as CDs or Vinyl. Although, surprisingly none of the present studies into

the effect of streaming services on CD and vinyl sales question the beliefs and

observations of the consumers, they only look at the facts. Subsequently this study

aims to test whether people believe that their preference for physical copies, such as

CDs and Vinyl, as a method of listening to music has decreased over the last ten

years and whether they believe there has been an increase in their preference for

streaming services.

Music Access & Listening Methods

There have been many innovations in personal music listening technology

throughout the years since the introduction of vinyl in the late nineteenth century.

Following the invention of the vinyl, listening to music independent of live shows

became increasingly popular, and the popularity of different methods of accessing

and listening to music grew steadily until the introduction of other means of listening

such as the Sony Walkman in 1979 and the invention of the compact disc, or ‘CD’, in

1982 (Hasbro 2017). CDs revolutionised the way in which people listen to music as

they were a lot smaller in size and had a lot more space on them than vinyl records,

so could have a much longer run-time and as a result were a clear favourite.
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Effect of Audio Streaming Services on CD Usage
Additionally, Sony’s Walkman was a portable cassette tape player with a headphone

socket that was primarily used for travel, hence the name. The introduction of the

Walkman meant that there was a clear increase in the amount of music people were

purchasing and listening too because it made listening to music easier and more

convenient (Boorstin 2004), In addition, certain attributes of these new, portable,

means of listening to music meant that people became increasingly dependent on

them. Often using personal stereos as a way of controlling interactions with others,

and with being able to listen to music at any given moment, previously meaningless

time was transformed to pleasure through the involvement of easy access to music

(Bull 2006). This prompted the invention and development of MPEG-1 Layer 3 (MP3)

file, which further developed the invention of the CD by providing people with music

files a tenth of the size of previous electronic music files, and the MP3 player as a

means of holding all of these music files and listening to them when at home or

travelling (McCourt & Burkart 2003). With the first successful model being introduced

to the market in 1998, the MP3 player was a similar device to a portable cassette

player or walkman and was designed to hold significantly more content than a

cassette, as well as being able to play other file types. It was the development of the

MP3 player and the invention and development of laptops and smart phones that

initiated the creation of online streaming services as a means of listening to music

without having to download the music unlike MP3 players.

Audio Streaming Services

The first online streaming service was Napster. Created in 1999, Napster

allowed individuals to search for and share digital copies of music with others,

creating an easy platform for the public to access and listen to unlimited music. This
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Effect of Audio Streaming Services on CD Usage
obviously had detrimental effects for the music industry as a whole. With the number

of users increasing from one million to just under seven million in the space of seven

months, Napster proved to be one of the fastest growing softwares recorded to that

date (Media Metrix, as cited in McCourt & Burkart 2003). However, Napster quickly

went bankrupt after court orders to filter copyrighted material from the site. With

Napster being primarily used for the free distribution of copyrighted material, the

software could no longer gain profits rendering it a failure. However, following this

other companies and sites began looking at ways to stream music without the illegal

distribution of copyrighted material. In 2006, the company Spotify was founded in

Stockholm, Sweden, and revolutionised the way in which people access and listen to

music (Parsons 2018). With an increasing demand for easy access to music due to

the public’s new-found dependency on being able to listen to music at any given time

(McCourt & Burkart 2003), Spotify was an incredibly popular way of listening to

music and the business itself eventually proved to be incredibly successful. Since its

launch in 2008, Spotify now allows instant access to around 30 million tracks for a

set monthly fee (Hasbro 2017), a business plan that initially saw around four million

dollars in loss (Parsons 2018). Regardless, due to such a demand for instant music

access, eventually the company saw its profits and streaming services steadily

reached significant profits and eventually it became the most used way of accessing

and listening to music (Swanson 2013); possibly due to the increase in development

and preference for smart phones and laptops around this time also.

In addition, Spotify also offers a free option by which consumers do not pay

the monthly fee to listen to music but have to listen to advertisements and have a

number of limitations with their service. A technique that the company has used in

order to increase the number of consumers paying to listen to music via the
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Effect of Audio Streaming Services on CD Usage
software. However, the big question is, what effect does this service, and streaming

services in general, have of the sales of physical copes of music, on individual

musician profit and on the music industry as a whole?

Effect of Streaming Services on CD Sales

Statistics show that in comparison to the years in which albums ranked

number one in the charts would reach sales of around 500,000 copies per week,

album sales have now fallen to an average of 65,000 (Smith 2007) and even more

decline to this day (Nielsen 2018). In addition statistics show that there is a 12.5%

growth in audio on-demand streaming each year (Nielsen 2018), suggesting that

there is not only and increase in the usage of streaming services but also a decrease

in CD sales in comparison to previous years. This in combination with the clear

financial struggles of stores that make their profits from selling physical copies of

music (BBC News 2013), indicates that perhaps there is a relationship between

these two factors and may be that the launch and success of services such as

Spotify and YouTube have directly impacted the sale of physical copies of music.

Some researchers also suggest that this change in preference for audio streaming

has limited musicians in their profits, as it means that a track would need at least four

million streams to get a minimum wage equivalent (Kaufman, 2018), a detrimental

impact on the industry as a whole.

In a study conducted by Yoshida and Manabe (2018) results from analyses

indicated that in fact frequent use of video services such as YouTube increased CD

sales in the first week of release, thus concluding these services in particular are

acting as positive advertisement for the musicians. However, results also showed a

marked decrease in sales long term, suggesting that the decrease in sale is because
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the online streaming sites provides consumers with the music they would usually

purchase, but free of charge. Prior to this, research had indicated that file sharing

and free streaming sites had no significant effect on CD sales (Nguyen, Dejean &

Moreau 2013), indicating that perhaps the effect of streaming sites and softwares on

CD sales has increased over the last few years as a result of a possible increase in

preference for these services over physical copies of music. However, these

findings may also be a result of its specific sample, with all participants in the study

being Japanese there is no way of concluding that these effects would be seen in the

United Kingdom or the United States for example. Therefore, the results are limited

in their generalisability.

Aim & Hypothesis for this Project

As a result of the conflicting findings of researchers we cannot conclude that

streaming services are a direct cause of the decrease in CD sales. However, there is

still some research that suggests that there is definitely some kind of relationship

between the launch of streaming services such as Spotify and general CD sales.

This study aims to extend on the research of Yoshida and Manabe (2018) which

suggested YouTube to play a role in the decline of CD sales, and the work of

Boorstin (2004) that suggests an increase in preference for online streaming

services as a method of listening to music over more traditional methods such as

CDs. This study aims to prove that the is a distinct change in preferences for

streaming services. More specifically, a change in preference for the use of Spotify

due to the wealth of research suggesting its increasing popularity and success

(Swanson 2013), as well as a change in preference for the purchasing of physical

copies of music (i.e. CDs and Vinyls) over the last 10 years (since Spotify was
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Effect of Audio Streaming Services on CD Usage
initially launched in 2008). I hypothesise that there will be a large increase in

preference for the use of Spotify between 2008 and present day, as well as a strong

decrease in preference for the purchasing of CDs between 2008 and present day.

Methods

Participants

30 voluntary participants completed a questionnaire. Of these, 18 were female

and 12 were male, with 27 of White/Caucasian ethnicity, 1 Asian/Asian American,

and 1 “Other”. The age range of participants was 18 to 26 years, with the average

age being 21.03 years (SD = 1.829).

Design

The independent variable in this study was the year of reference. Participants

answered questions regarding their music usage with reference to the year 2008 and

with reference to the present year (2018). The music usage behaviour was then

compared between the years.

The dependent variable is this study was the primary way of accessing music,

the awareness and usage of the streaming software ‘Spotify’, and also the change in

preference for different methods of accessing music (according to the belief of the

participant).

The study used a repeated measures design, so all participants completed all

10 questions (see appendix 2), with no time constraints and no environmental

controls.
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Effect of Audio Streaming Services on CD Usage
Evaluation

One of the main issues with this methodology is that the sample is extremely

unrepresentative of the general population. This is due to the fact that the majority of

this sample are of White/Caucasian ethnicity. This is not a true reflection of the

diversity within society at present, limiting the study’s validity to only a population of

similar demographic characteristics. Similarly, the sample only consists of people

ageing from 18 to 26 years, limiting any findings to only people of this age range.

In addition, the sample is made up of predominantly musicians. This implies

the results would be skewed in favour of the hypothesis, resulting in a bias.

Musicians will be well aware of Spotify, as well as other methods of accessing music,

because softwares such as this provide an unlimited database of music, something

that musicians particularly favour. This specialised sample does not account for

people who, for example, do not listen to music frequently and therefore are less

likely to be aware of music streaming softwares; resulting an unrepresentative

sample.

The questionnaire design itself also poses a number of methodological

issues, such as a lack of reliability, caused by a reliance on participant self-report

and memory. With questions requesting responses relating to the usage of music in

2008, there is no question that participants will struggle to provide a completely

reliable response, especially as there is no statistic or fact to suggest their response

is accurate.

Project Activity

For this study, I created a ten-question survey using SurveyMonkey.

Questions four and six were based on the work of Yoshida and Manabe (2018),
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Effect of Audio Streaming Services on CD Usage
which suggested that the use of Youtube, as a means of accessing music, implicated

CD sales. As a result, the questions requested information surrounding participants’

primary method of accessing music; including YouTube and CDs as methods due to

the findings of the related study.

Questions five and seven were created as a result of the work of Swanson

(2013), that suggested Spotify usage has increased since it’s initial launch in 2008. I

focused on Spotify, as opposed to other audio streaming services such as Apple

Music, due to the fact that it has the largest number of users, implying that it is the

most likely audio streaming service to implicate the sale of physical copies of music

such as CDs. Questions eight, nine and ten all requested a participant response to

whether they believe their preference for certain methods of listening to music has

increased of decreased since 2008. The questions used a 5-point Likert scale, which

provided a neutral mid-point option if participants did not feel positively or negatively

with regards to the provided responses.

Upon informed consent, participants responded to the ten questions provided

to them via an access link distributed via social media. Responses were

anonymously recorded via survey monkey, before frequency of responses were

transferred over to Excel for the creation of comparison graphs which were analysed

accordingly.

The primary issues encountered in this process was the difficulty in

recruitment of participants. Without an incentive to participants, people were

reluctant to take part, resulting in a limited sample size of 30. I made repeated

attempts to resolve this issue through the consistent distribution of the access link to

people. However, without face to face recruitment this issue still posed a problem

and the study still has a small and non-diverse sample.

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Effect of Audio Streaming Services on CD Usage

Project Findings

Survey Results

Figure 1 shows that there is a clear increase in the number of participants that

use of Spotify from 2008 to present day. Specifically, only 2 participants said their

primary source of music was Spotify in 2008, in comparison to the 22 participants

that use Spotify as their main music listening method today. As well as, a slightly

smaller decrease in the use of YouTube as a source of accessing music (from 11

participants in 2008 to 3 at present). What is very clear from participant responses is

that at present none of the participants used CDs as a primary method of listening to

music, whereas 10 participants reported using it as the main music access point in

2008. This suggests that in comparison to 2008, more people are using Spotify as

their primary source of music, and less people are using YouTube and CDs.

Figure 1. Participants’ Primary Source of Music in 2008 and Present Day.

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In support of this, Figure 2 indicates that at present the majority of people

(approximately 93% of the participants in this study) are aware of and have used

Spotify as a means of accessing and listening to music, with the remaining 2

participants being aware of Spotify but not necessarily using it as a means of

listening to music. In comparison to the 73% of participants that had never heard of

Spotify in 2008. This indicates that not only has everyone in this sample heard of

Spotify in comparison to the large percentage that had not in 2008, but also a larger

percentage have used Spotify in comparison to the percentage that have just heard

of it.

Figure 2. Participants’ awareness and usage of Spotify in 2008 and Present Day
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Figure 3 shows that 76% of the participants believe that their preference for

Spotify has greatly increased since the initial launch of Spotify in 2008, and 57%

believe that their preference for CDs has greatly decreased since 2008. Interestingly

though, out of the whole sample the majority felt that their preference for purchasing

and using Vinyl has neither increased nor decreased since 2008, highlighting

relationship between Spotify and CD usage since 2008 because this relationship is

not seen with other methods of accessing and listening to music (i.e. Vinyl).

Figure 3. Participants’ Perceived Change in Preference for Spotify, CDs, and Vinyl

from 2008 to Present Day.

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Effect of Audio Streaming Services on CD Usage

Discussion

The results showed that not only did preference for CDs as a primary source

of music decrease since 2008, but also that awareness and usage of Spotify has

increased since 2008 and that people believe their preference for Spotify has greatly

increased since 2008. Overall, the results did backup the presented hypothesis. With

the sample of participants surveyed there has been a clear decrease in the

preference of purchasing music CDs and a clear increase in the preference of using

audio streaming sites. The results support the work of Boorstin (2004) and both

share the common theme of newer streaming technology becoming more popular

since it’s introduction, and older technology starting to decline in popularity or

preference.

Positively, the research project provided a clear comparison between music

listening methods then and now, meaning that contradicting researchers cannot

argue that there is no difference because the difference is so prominent in the

findings. However, unfortunately the study was conducted on a very small number of

participants and with this sample also demonstrating a lack of diversity this is a

significant flaw. It means that although the findings are very prominent in the results,

they are barely conclusive as the sample is unrepresentative of the general

population. Additionally, the small group of eighteen to twenty six year olds with

similar interests in music (an active musician/musical theatre interests), which again

is simply not representative or broad enough. As the research project was arguably

their area of specialism, the results will almost certainly not show a true reflection of

a much wider sample. With such a small non-diverse sample it is difficult to draw

reasonable conclusions because differences may have been down to other

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Effect of Audio Streaming Services on CD Usage
confounding variables such as the unreliability of memory and there is nothing to say

the differences weren't down to chance. However, with the present study indicating

that there is a relationship between the increase in Spotify usage and the decrease

in cd sales over the last ten years, further studies would need to look at whether

Spotify and cd sales statistically correlate, as this would confirm that the relationship

between Spotify and cd sales is significant. As a result of further research musicians

would be able to confidently limit their production of physical CDs and increase their

use of streaming services safe in the knowledge that it wouldn't implicate their

profits.

Conclusion

In conclusion, the aim of this study was to explore whether the introduction of

streaming services, particularly Spotify, had any impact on the want for physical

copies of music (i.e. CDs). From the results, it is implied that there is a clear negative

correlation between the rise in popularity of streaming services, and the decrease in

popularity in physical forms of music (CDs in particular). With the present study

indicating that there is a relationship between the increase in Spotify/streaming

usage and the decrease in CD sales over the last ten years, a further study that

looked into whether Spotify and CD sales are statistically correlated would confirm

whether the relationship between Spotify and CD sales is significant, benefiting the

music industry by proving that the production of physical CDs has no significant

effect on profits and that increasing the use of an audio streaming platforms would

only have a positive effect on profits. Implying that further developing the audio

streaming industry would significantly benefit the music industry in general.

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References

BBC News. (2013). HMV: A tragedy or fresh start?. [online] Available at: http://

www.bbc.co.uk/news/entertainment-arts-21030442 [Accessed 26 May 2018].

Boorstin, E., 2004. Music sales in the age of file sharing. Senior thesis, Princeton

University. (pp. 59)

Bull, M., 2006. Investigating the culture of mobile listening: From Walkman to iPod.

In Consuming music together (pp. 131-149). Springer, Dordrecht.

Hasbro (2017). How the evolution of technology changed the way we listen to music

(Hasbro Dropmix). [online] Mashable. Available at: https://mashable.com/

2017/09/01/how-evolution-of-technology-changed-music/?europe=true&

[Accessed 26 May 2018].

Kaufman, M. (2018). Will Spotify and Apple Music soon be forced to jack up their

prices?. [online] Mashable. Available at: https://mashable.com/

2018/01/31/copyright-court- rules-streaming-companies-have-to-pay-

artists-more/?europe=true&

McCourt, T. and Burkart, P., 2003. When creators, corporations and consumers

collide: Napster and the development of on-line music distribution. Media,

Culture & Society, 25(3), pp.333-350.

Nguyen, G., Dejean, S. and Moreau, F. (2013). On the complementarity between

online and offline music consumption: the case of free streaming. Journal of

Cultural Economics, 38(4), pp.315-330.

Nielsen (2018). 2017 U.S. Music Year-End Report. [online] Available at: http://

www.nielsen.com/us/en/insights/reports/2018/2017-music-us-year-end-

report.html [Accessed 26 May 2018].

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Parsons, J. (2018). History of Spotify: how the Swedish streaming company changed

the music industry. [online] Mirror. Available at: https://www.mirror.co.uk/tech/

history-spotify-how-swedish-streaming-12291542 [Accessed 26 May 2018].

Smith, E., 2007. Sales of music, long in decline, plunge sharply. Wall Street Journal,

p.1.

Swanson, K., 2013. A case study on Spotify: exploring perceptions of the music

streaming service. MEIEA Journal, 13(1), p.207.

Wlömert, N. and Papies, D., 2016. On-demand streaming services and music

industry revenues—Insights from Spotify's market entry. International Journal of

Research in Marketing, 33(2), pp.314-327.

Yoshida, K. and Manabe, T., (2018). Video streaming service and CD sales. In

Information Networking (ICOIN), 2018 International Conference on (pp.

464-469). IEEE.

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Appendix 1 - Ethical Consent Form
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Appendix 2 - Questionnaire
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