Industry heavyweights debate how to get “millennials” to pay for music

Executives from CTV, Rogers Media and Universal Music Canada were among the industry executives who appeared at last week's Rogers Canadian Music Week to tackle one of toughest challenges in commerce: how to get the generation born after 1980, a.k.a. millenials, to pay for music. Millennials are voracious consumers of music, but their relationship to the music industry is radically different from previous generations. In a recent survey, 48% of millennials said they hadn't bought a single CD in 2007. "Many of these kids have never set foot in a record store," said Alan Cross, program director at radio station 102.1 The Edge. "The shift in access to music is a profound change." The old model of packaged albums is anathema to them, he said. And the kind of musical tribalism that caused metalheads to beat up punkers is also different today. "People invested money in a genre then and felt they had to defend it," added David Kines, SVP at CTV. "And an album was an experience - kids didn't have 100 other things they could do online." Kids still want an experience, but in a different way, said David Ewing, a manager at Rogers Media. They experience it by sharing it with their communities via social media, and they rely on peers for recommendations, and they spend big bucks on devices such as iPhones to play their music. "They may not value CDs, but they still value music - and they're still going to concerts and paying for it," added Jodie Ferneyhough, managing director at Universal Music Canada. "People will pay to be cool," said Trevor Doerksen, CEO of Mobovivo, pointing out virtual futons sell for $5 in the online world Second Life. So how to get kids to pay for music they can mostly acquire free? In the eyes of consumers, there's a big difference between free and cheap, said Kines. Millennials still spend an average of $40 annually acquiring songs and they're prepared to pay for concerts and merchandise that enhances their experience of their favourite bands. But a service model rather than a sell model is needed to successfully market to millennials he added. "You must look at all the by-products of the music experience, and not just look to sell music." A range of prices is needed to appeal to them based on quality, for example, $10 for a basic download, $20 for a CD, $30 for a deluxe package, said Cross. Panellists bemoaned the use of classic songs of yore in television commercials, such as the Beatles' Revolution to sell Nike shoes. "But millennials don't perceive this as selling out. It's new content to them and it exposes them to music they might not have heard before," said Ewing. Physical media still rules some music genres People need to be more critical of all the received wisdom about online music, said David Basskin, president of the Canadian Musical Reproduction Rights Association (CMRRA). "It's a myth that all music is available online. If your taste is not mainstream, there's lots of music that's hard to find," he said, pointing to jazz as a major example. "And it's hard to find much beyond the top 10 hits." Basskin also said it's a myth there are only one or two hit songs per CD that people are interested in hearing. "If you really love a band, you want to hear everything they've done." There are opportunities to monetize non-mainstream music, but the challenge is to expose millennials cocooned within their iPods to new genres, he said. Another wrong-headed assumption is the idea that mobile consumers are the same as online consumers, said Trevor Madigan, head of entertainment and communities at Nokia. "Mobile has a snacking nature. People multi-thread on the go when they use their handhelds. And we see significant music downloads on mobiles." Millennials want to be constantly connected to their communities, and they don't want to go home to their PCs to download music. If mobiles are snack food, then the PC experience is a square meal, added Gary Schwartz, CEO of Impact Mobile. "Mobiles are for doing stuff on the fly. And then consumers go home to a long meal on their PCs where they don't have to pay for the experience." A service model for mobiles makes sense, but the wireless industry has created complex plans around usage to make more money, said David Neale, VP of enhanced services at Telus. "It's like buying gas by the molecule." Plans don't have to be unlimited to be successful. "This is a user-pay culture. A perpetual monthly $20 plan would work, but it depends on the content."

Industry heavyweights debate how to get “millennials” to pay for music

Broadcast | March 11, 2008

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