Consumers Aren’t Buying Most of Their Digital Content, But They Are Buying eBooks and Music. Why?
A new survey from the UK crossed my desk yesterday which shows that consumers are adapting their pre-internet buying habits to the digital content they consumer online.
A couple days ago eMarketer posted the results of an April 2014 consumer survey by Ipsos MORI which showed that far more people consume content online than pay for it. A third of the 1,000 respondents in the survey reported downloading free apps, while only 8% had bought apps. Over a quarter are streaming video online, but only 9% are buying said apps. And 24% were streaming music while only 4% paid for the service.
You can see all the publicly available results here:
All in all this does not look good for anyone trying to sell content online, but as you can see in the chart there are a couple exceptions.
Ipsos MORI found that people were buying ebooks and downloadable music in greater numbers than those paying for streaming services, which makes a lot of sense when you think about it.
I got this piece yesterday, and after thinking about it for a while I concluded that consumers have transferred their buying habits from books and CDs to ebooks and MP3s. Similarly, they’re used to getting broadcast TV and radio for free, so they’re not as willing to pay for the online streaming versions.
OF course, my guesses tend to fall apart when you take apps into account; people used to pay for them, but they’re not as willing to do so anymore. I would bet that comes as a result of the glut of apps and games on the market which drove the price down to effectively nothing (plus in-app purchases).
On a related note, there are similar gluts of videos on Youtube and online news sources, which might help explain why consumers aren’t as willing to pay for those types of content either.
So does this portend a dark future for publishing? After all, more and more ebooks are published every year, which could have the same effect. Does this mean indie authors will have the same trouble as app developers in making a living?
I don’t know, but I am hoping that the trend of buying ebooks tends to stick around. The latest data from Smashwords suggests we’ve already gone through peak "free ebook", with more indie authors now using discount sales to drive their marketing efforts, and that could mean we’ve passed the danger zone and moved on to a real market where consumers continue to pay for what they read.
What do you think?
image by Extra Ketchup
Nathan Lowell August 29, 2014 um 10:48 am
I think free was never as much of a threat as obscurity.
Most indie authors are not taking the time – or learning how – to build audience in the social saturated marketplace. They read a few marketing pieces which generally offer poor advice and then fall on the perma-free sword in an attempt to attract attention.
In the meantime, the market has shifted since the good old days of 2010. The "lower priced spreads" are being handicapped by the Amazon algorithms, readers are discovering that paying 99cents for a book they didn’t like isn’t a bargain, and the Bigs are beginning to price backlist books out of the stratosphere.
No, books aren’t going the way of apps.
Books and apps aren’t the same thing. I need to keep refreshing my reading list but an app is forever…at least until the next update. While I can’t substitute a Stephen King for a James Patterson, there are plenty of indie authors who spin a darn good yarn in every genre at a price that pays the author more while charging the reader less.
As a business model, that’s a different paradigm from apps and streaming content.
Feda August 29, 2014 um 11:59 am
People want to own what they buy. You can do that with music (I’m still sticking with CD’s but storing them is starting to become a problem) and with e-books (as long as you buy DRM Free), but you can’t do that with mobile apps. And culture of owning movies was never as big as renting or going to a movie theater. Ridiculous movie theater ticket prices are pushing people towards streaming services.
And we are seeing a big cultural shift and a whole generation of young people who think that they are entitled to pretty much anything without having to work for it. They want it all now and preferably for free.
fjtorres August 29, 2014 um 12:17 pm
People aren’t as used to buying software as they are books and music.
If you go back to the 90’s, people would buy PCs for home use, despite being much more expensive than the comparable home computers from Atari and Commodore because they could "bring the software home from work". Even if neither the license nor the employer allowed it. It got so prevalent that companies did start licensing to allow home-and-work use.
In more modern times, there is the matter of freeware and free ad-supported phone apps.
So yes, people are more likely to pay for the digital version of something they used to pay for before. No new value system to be learned.
Even in the video arena you’ll likely find that people who used to rent videos tapes and DVDs are more willing to pay for Hulu and Netflix than those who don’t go back that far.
Nate Hoffelder August 29, 2014 um 12:39 pm
This is true. I’ve always bought far less software than books.
fjtorres August 29, 2014 um 1:13 pm
Some people never bought software. It killed Atari and Commodore. Plenty of other companies, too.
Many still don’t and aren’t about to start now.
Thomas August 29, 2014 um 1:56 pm
I don’t think I’ve actually bought software in years. If I need something, I look for an open-source program that will do the job. I’ve donated to a few of them.
Part of this is me being a cheap sort, but most is that I prefer those kinds of programs. They just what they need to do without adding a lot of useless bells and whistles to attract new customers. I have more than a few pieces of old software that I bought and no longer use because a freeware alternative does the job easier.
Nate Hoffelder August 29, 2014 um 2:06 pm
Most of the software I’ve bought over the past 10 years have been games (aside from the apps purchased for blogging purposes).
But aside from games, you’re right. Web browser, office apps, and pretty much everything else can be found as a decent quality freeware.
Amber August 29, 2014 um 10:27 pm
I think people also tend to buy more books/music because there is a face to these products. The singer/writer that is making a living off of it, the celebrity that people want to support. There isn’t that with the software developer or movie/tv program were the profits are going to the movie company. Most people couldn’t name the person who actually made the software. Nobody feels all warm and fluffy supporting a multi-million dollar movie corporation or a nameless programmer, were many people do feel great about supporting their favorite artist.
Angela Booth August 30, 2014 um 1:38 am
I agree with Nathan Lowell. Free’s not a threat. Vanishing in the tsunami of material that flows onto Amazon is a big threat.
"Free" was built into the Web from the get-go. I started blogging way back in 1999, and until 2004, bloggers shrieked in horror at the idea of anyone selling anything on a blog.
I thought that was total BS, so I happily sold. And then snickered to myself a few years later when all the "pure" bloggers started selling.
No one will pay for things he can get for free. People only drag out their credit card to get what they really want.
As Nathan says, "free" isn’t the problem for indies. Wanting a quick marketing fix is the real challenge. It’s the Cinderella syndrome. Indies want to be "discovered", but that takes real marketing effort.
That’s why many writers will stick with traditional publishing — having someone take care of all the stuff writers don’t want to do.
While I appreciate free stuff, I value my time. So I buy software — too much software — because it saves me time. I also subscribe to Spotify’s premium service, because the free streaming music sounds horrible. Music helps me concentrate, so it’s worth every cent.
I also buy lots of ebooks. I’ve gone off paper books in a big way. I like being about to look up things as I read — put my finger on a word, and have Google and Wikipedia pop up.
When Kindle Unlimited arrives in Australia, I’ll subscribe to that, too.
However, I’m running a business.
Straight consumers are different. They’re buying entertainment and information with ebooks. Entertainment-wise, a $5 ebook gives hours of it.
So, I’m hoping consumers see the value, and that they continue to buy ebooks too. 🙂
Bormasina August 31, 2014 um 8:37 am
I’m not much of an e-reader, but I do consume music and software, so I can add my perspective on how I see the trend.
I am audiophile, I own expensive set of speakers, amplifiers and players. I will never buy anything compressed, so streaming services are of no use to me. People that are asking me for advise on what to buy, I always answer that there is no better way to consume music than trough cd’s; you can rip the disk and put the music on devices.
As for software, I own PC, Apple laptop, smartphones and I differentiate between apps and software. I think of software as something that get installed on traditional desktop or laptop; apps are installed on smartphones and tablets. I buy software but I do not buy apps. I used to use my smartphone as a computer replacement, meaning I used to access my bank with it, managed my expenses with it, did lots of things with it. I read arstechnica regularly, they have lots of articles on security and they provided me with the real perspective on what the apps can do with people privacy. Now you could argue that those apps I had on my phone already scraped and indexed all of my thing on the internal storage of the phone and now is too late to think about privacy and security. Well, they would not get a dime from me anymore. Now I have the phone dialer app, the sms app and the email app on the phone. Everything else is turned off or disabled.
I think people started to understand that one cannot go nuts and install whatever is available on the app store. I think people will stop trying new apps because they like their privacy.
Caleb September 1, 2014 um 7:21 am
Anything that advances our lives, our enjoyment, our spontaneity, will be paid for. I just bought the "album" Woodstock on my phone lying in the grass by the ocean gazing at a perfectly blue sky with sea gulls floating freely above. Was listening to Richie Havens Freedom within minutes. Progress. Who knew?
Dan Meadows September 10, 2014 um 10:27 am
I think we have to be careful using the software licensing scheme with digital books and music. I believe people will buy so long as they own what they pay for. I’ve long argued in favor of first sale protections being in place on digital goods in some form, at the very least, the ability to use the product anywhere and anyway you like, if not outright resale, which is more problematic but I’m ultimately in favor of as well. If consumers don’t have have appreciably more control over what they buy they they do over free/cheaper subscription or streaming options, they will stop buying. First sale is absolutely crucial, in my opinion, to any sort of long term continuation of people buying books, music and the like.