Mark Mulligan[Posted by Mark Mulligan]

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Forrester has just published a major new report on Social
.  This is a crucial period for
social music and ad supported content more broadly.  The dynamics I discussed in my previous post
(What Happens When the Ad Money Doesn’t Go Round?) apply to social music more
than most other digital content sectors. 
The implications are also pivotal for the music business.


With CD sales continuing to fall off the proverbial cliff
and the paid download market failing to take up the
slack, social music destinations are prospering, utilizing the power of the Web
to a degree that download stores never did.  Social music may not generate much revenue
now, but all stakeholders (i.e. labels, publishers and the services themselves)
most work in concert to ensure that monetization effectiveness significantly improves,
but at sustainable rates for the businesses. 
In doing so, social music it will become a key revenue stream that will
help fill the gaping hole left by lost CD sales.


Forrester identified three tiers of social music fans in the US and Europe:


  • the sophisticated
    users of the likes of imeem, Last.FM and Pandora
  • those who visit
    artist pages on social networks such as MySpace and Bebo
  • those who view music
    video on sites like YouTube


Social music fans are savvy, engaged, and love music.  Our research reveals that preconceived ideas
about them being freeloaders are wide of the mark.  They are in fact much more likely to buy
music than most other consumers (across all formats and channels).  This is an opportunity which is being actively
monetized by many of the services.


In the report we also provided detailed analysis of the competitive
landscape and map the growth of key destinations over the last few years.  A current snapshot of the installed base of
some of the key player is:


  • YouTube:
     344 million
  • Facebook:  175 million
  • MySpace:
    139 million
  • Imeem:  25 million
  • Pandora:  24 million
  • Bebo:
    22 million
  •  20 million


YouTube and MySpace are the heavyweights of social music
(Facebook has scale but the role of music is more limited).  YouTube and MySpace have both built their music positioning upon a foundation
of free music.  YouTube’s current spats
with various license holders illustrates that content owners feel they should
be better compensated for the increased engagement these sites are seeing.  The outcome of the PRS dispute with YouTube
will be pivotal as it will set the rules of engagement for the mid term future
of social music,


The report delves into the above issues and many more in
extensive detail.  Forrester clients can
find it here.


If you are press and would like more detail please email