If you’ve signed up recently for Spotify, Apple Music, Tidal, or one of the other streaming audio services that now account for more than half of all music consumption, you may have noticed that your listening habits have changed. Now that you don’t have to pay for each CD or digital download, it could be that you’re venturing away from your longtime favorites and checking out the likes of Trombone Shorty, rockabilly chanteuse Wanda Jackson, or some obscure punk band from Finland whose name you aren’t even sure how to pronounce.
If that’s the case, it wouldn’t surprise Bart J. Bronnenberg, a Stanford Graduate School of Business marketing professor who’s been researching consumer demand for musical variety and how it influences their choices.
“The thing with CDs and iTunes is that when you bought a title, more variety would cost you more money,” explains Bronnenberg, whose own eclectic musical tastes range from blues to classical. “With streaming, that’s not the case. Once you buy a subscription, the incremental variety to you is free. We were interested in figuring out the consequence of this cost shock on consumers.”
In a study recently published in the journal Marketing Science, Bronnenberg and coauthors Hannes Datta and George Knox, both of the Netherlands’s Tilburg University, found a way to discern the effect on consumers when they switched from purchasing individual songs or albums to subscription streaming. They analyzed more than two years’ worth of data from a popular online service that tracks members’ listening history across a wide variety of platforms, ranging from iTunes and Windows Media Player to streaming services like Spotify. The tracking app, which the researchers promised to keep anonymous, then makes music recommendations to its members based on their consumption across multiple platforms.
The researchers could identify when users switched from purchasing music by the song or album to streaming, and then could track what happened to their music consumption–including the total number of songs, unique artists, and distinct genres they listened to.
While it may seem intuitive that subscribers freed of economic limits on consumption would consume more, the sheer magnitude of the shift was startling. In the first week, the number of songs played by new converts to streaming increased by 132%, while the number of unique artists heard jumped by 62%.
What’s even more surprising is that those trends persisted, even after the novelty wore off. Six months after the switch to streaming, users’ music consumption on digital platforms was still 49% higher than it previously had been, and the number of unique artists that they listened to was 32% higher, according to Bronnenberg.
“All these effects are very sizable, and they actually seem to represent a long-run behavioral shift,” Bronnenberg explains. “You end up listening to more music and, on balance, the variety expansion is quite large–you tend to listen to the same thing less often.”
At the same time, users’ consumption of music by superstar artists actually declined slightly, by 7%. Instead, the researchers observed users trying many new artists and songs. “There’s a lot more discovery going on,” Bronnenberg says. Most of the additional music was only listened to once, since “when you get more venturesome, you also end up trying things you don’t like.” But because those choices didn’t cost anything except users’ time, they continued to explore. And in the process they also discovered new songs and artists that they did like, which they continued to listen to repeatedly.
Bronnenberg emphasized that the research looked at streaming music from the demand rather than the supply side. But he suspects that the changes in consumer behavior that he and his colleagues observed could have important implications for an industry that is already being transformed by streaming services.
Smaller producers benefit
Spotify, the largest of the streaming providers, now has 40 million paying subscribers worldwide. For $10 a month, the customers have access to a library of more than 30 million songs. The company has another 60 million members who can listen for free but have less control over what they can listen to. The musicians and their labels get paid based on the number of times a song gets streamed.
“The shift from ownership to streaming potentially levels the playing field to the benefit of smaller producers,” the researchers write. “Our results point to a more fragmented market, potentially more amenable to smaller artists and labels.”
Bronnenberg also thinks that the advent of curated lists on streaming services—a phenomenon that the study didn’t examine—could create value for consumers by guiding their musical exploration. “For a company like Spotify, which has a catalog of millions of songs, consumers are also appreciating and probably willing to pay for good curated lists,” he says.
This article was originally published on Stanford Business and is republished here with permission.