Zuora and YouGov study shows that pricing of music services is a barrier to widespread growth in the UK Subscription Economy
London, UK – 19 October 2016 – More than 5.2 million people (10% of the UK adult population) already subscribe to paid music streaming services and half of these subscribers don’t plan to ever buy a CD again, according to new research findings published by YouGov and Zuora, Inc., the world’s leading provider of subscription commerce, billing and finance solutions. Music streaming revenues in the UK grew by 49% to £251 million last year (UK Music), yet streaming providers still have pricing hurdles to overcome in convincing the remaining 90% of the UK population to sign up for a paid subscription. Almost half (48%) of non-subscribers still think music streaming services are too expensive.
Currently, the average UK subscriber pays £7.07 per month on music streaming services. The UK-wide study conducted for Zuora® by YouGov demonstrates the rising preference of UK consumers to pay a recurring fee for ongoing access to music. Nearly four million people (3.7 million or 71% of music streaming subscribers) said music streaming services have changed how they listen to music forever.
Half of Brits who subscribe to music streaming services like Spotify or Apple Music (52% or 2.7 million) don’t plan to ever buy a CD again. More than a third (37%) ‘rarely’ listen to the radio anymore due to music streaming services, which have become ‘an integral part’ of their lives (66%). When asked about the benefits of music streaming, Brits overwhelmingly cited the ability access a huge collection of artists and songs at their fingertips (88%) and to discover new artists and bands suited to their taste (83%).
The consumption shift from products to subscriptions has far-reaching implications for not only consumers but for also for service providers. To reach the huge greenfield available to them – the 90% of UK adults yet to adopt streaming music services – companies must continue to deliver personalised, curated and customized experiences enabled via innovation in pricing and packaging of subscription music.
Music isn’t the only industry being transformed in the Subscription Economy®. The most widely used digital subscription service in the UK is video streaming, with more than a quarter (27%) of consumers subscribing to the likes of Netflix, Amazon Prime or Sky Go. Other popular subscription services include media publications (17%), software and online storage (15%), financial services (12%) and food and drink services (5%).
Overall, the Zuora report, A Nation Subscribed: 2016 State of the UK Subscription Economy, found that 40.2 million Brits (78% of the adult population) are now subscribing to at least one product or service. As the notion of paying regular fees for curated access to goods and services becomes mainstream across all age groups, British subscribers now spend on average 12% of their disposable income on subscription services.
You can find out more about the Subscription Economy® at Zuora’s annual Subscribed UK event, taking place on 15th November 2016 in London. Hear first hand from start-ups and enterprises such as British Gas, Sage or Symantec about how they are mastering the consumption shift from products to subscriptions. Register here for your free ticket.
Comments on the news:
- Tien Tzuo, CEO of Zuora: “Subscription-based music consumption is clearly gaining maturity, with well-established services such as Spotify and Apple Music, and new entrants like Amazon, offering endless access to content. However, with only 10 percent penetration in the UK music market, there is a lot more room to grow. Modern consumers are looking for outcomes, more personalised experiences to match the value they get from their ongoing streaming music investment. The winner in this race will succeed by delivering the most compelling experiences matched with tailored pricing models that meet consumer expectations.”
- Leah B., 19, Lincolnshire (subscriber to a music-streaming service): “Buying and owning products isn’t that important to me. I just want the value in what they deliver, rather than the item itself. For example, once I’ve read a book I don’t keep it, I’ll pass it on to friends or donate it to charity. Otherwise it would just be gathering dust sitting on the shelf. Similarly, it’s much more convenient to just stream movies online than buying DVDs, as I get access to the same experience but without the physical product. It’s perfect for what I want! I’m also in the process of moving into my own place where there will be little space and storage options, so I need to be very smart about what products I keep and what I don’t.”
- Consumer Psychologist Kate Nightingale: “Ownership is a physical and psychological extension and expression of our identity. If we didn’t own anything, we would feel like we don’t exist. Materialism has however risen to an unhealthy level, especially in the Western world. Consumers therefore started to look for fulfilment and identity expression via experiences and things they believe in rather than physical products. The growing need for individuality additionally generates a requirement for personalised and authentic experiences and services. Renting and subscription-based companies deliver consumers precisely that: personalised, authentic, fulfilling, and individual experiences.”
Additional Resources
Go to https://www.zuora.com/resource/nation-subscribed-uk for the full UK Subscription Report, including data on the popularity of specific subscription services available in the UK.
“The Subscription Economy: A Business Transformation” by Tien Tzuo, CEO of Zuora
SlideShare: “Drivers of Success in the Subscription Economy”
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About Zuora, Inc.
Zuora’s Relationship Business Management (RBM)™ solution helps enable businesses in any industry to launch or shift products to subscription, implement new pay-as-you-go pricing and packaging models, gain new insights into subscriber behavior, open new revenue streams, and disrupt market segments to gain competitive advantage. Headquartered in Silicon Valley, Zuora also operates offices in Atlanta, Boston, Denver, San Francisco, London, Paris, Beijing, Sydney and Tokyo. Zuora clients come from a wide range of industries, including media, travel services, consumer packaged goods, cloud services, and telecommunications. Clients include Financial Times, Schneider Electric, Box, Honeywell, NCR, RTL, The Guardian, YP.com, BlueJeans, Shutterfly, TripAdvisor and Vivint.
About YouGov
YouGov Plc is an international market research firm, headquartered in the UK. With over 3.3 million people participating in their panels to produce the largest daily updated record of people’s habits and opinions in existence, it is the most quoted source in the UK. It was founded in 2000, and now employs 591 people worldwide.
About the research
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,115 adults. Fieldwork was undertaken between 27/04/16 – 04/05/16. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 16+).
All population figures are based the most recent ONS statistics, which cites a total UK adult population (aged 16 and over) of 51.5 million people.