Canadians enjoy online music services but most don't want to pay
Published Sunday, February 3, 2013 10:39AM EST
TORONTO -- A slew of streaming music services have come to Canada, and more are likely on the way, but while tech-savvy consumers seem to enjoy listening to music online, relatively few want to pay.
There are more than a dozen competitors to choose from in Canada, including free radio-style options such as CBC Music and Songza, and fee-based a la carte listening platforms with millions to songs to access, such as Deezer, HMV's The Vault, Rara and Rdio.
A recently released report by the Media Technology Monitor suggests listening to music online is catching on with large numbers of Canadians. About 59 per cent of anglophones and 46 per cent of francophones said they listen to streaming audio, with YouTube being the most commonly cited source for seeking out tunes.
Another recent report, this one released by the Department of Canadian Heritage, also suggested many Canadians are interested in streaming -- but most want it to be free.
About one in three poll respondents said they were very or somewhat likely to subscribe to a free online music service, while just 17 per cent said they would likely pay a monthly fee for a subscription-based service. Canadians who owned a smartphone were more likely to express interest in streaming services. About 43 per cent said they would likely subscribe to a free site while 25 per cent said they'd likely shell out for a paid service.
Last week, U.S.-based company Rdio announced it was offering up to six months of free streaming in Canada in a bid to hook music fans on the service and then convert them into paying subscribers.
But the offer comes with some murky fine print. Yes, users can use the service for up to six months for free on their computers, which would usually cost $5 a month -- the freebie doesn't work on mobile phones, access that normally costs $10 a month -- but a meter at the top of the screen indicates how much they can listen to before getting cut off. Users who binge on music will find the free offer will expire before six months is through. But Rdio refuses to disclose just how much music users can listen to before the free ride is up.
"There's a point at which we basically say to you, 'You obviously used this a lot, you really like it, please subscribe,"' says Rdio CEO Drew Larner.
"We're in this to make money and we believe we're offering a great service that people ultimately should be happy to pay for. And we're willing to give them (a free trial) and subsidize them for a good amount of time, but from an economic standpoint, it can't be perpetual given that we're not forcing them to look at ads or listen to ads while they're doing that."
Larner says the company felt compelled to expand its free trial to Canada based on the cut-throat competitiveness of the industry, which has a number of competitors who all charge the same price, for almost the exact same service, offering nearly identical catalogues.
"Free is something that's sort of become table stakes at this point, meaning that in order to have a large amount of people coming into the top of the funnel, meaning registered users, people expect a free offering," Larner says.
"The ability to allow people to use Rdio over a longer period of time (as a trial) and really get hooked on it just increases the chances that they're ultimately going to subscribe."
The battle the entire industry faces is in convincing the music-loving public that $5 or $10 a month is a bargain to gain access to a huge, growing catalogue of songs, Larner says, and is a much better deal than the old way of paying to own individual albums or tracks.
"Our goal is to move people away from the idea of ownership and being more comfortable with accessing cloud-based music. We believe we're on our way to doing that but there's still a long way to go," he says, "no question."