Are You Hooked on Paid Music Streaming?: An Investigation into the Millennial Generation

Are You Hooked on Paid Music Streaming?: An Investigation into the Millennial Generation

Charlie C. Chen (Department of Computer Information Systems, Walker College of Business, Appalachian State University, Boone, NC, USA), Steven Leon (Walker College of Business, Appalachian State University, Boone, NC, USA) and Makoto Nakayama (College of Computing and Digital Media, DePaul University, Chicago, IL, USA)
Copyright: © 2018 |Pages: 20
DOI: 10.4018/IJEBR.2018010101


The proliferation of free on-demand music streaming services (e.g., Spotify) is offsetting the traditional revenue sources (e.g., purchases of downloads or CDs) of the music industry. In order to increase revenue and sustain business, the music industry is directing its efforts toward increasing paid subscriptions by converting free listeners into paying subscribers. However, most companies are struggling with these attempts because they lack a clear understanding of the psychological and social purchase motivations of consumers. This study compares and contrasts the two different phases of Millennial generation consumer behaviors: the alluring phase and the hooking phase. A survey was conducted with 73 paying users and 163 non-paying users of on-demand music streaming services. The authors' data analysis shows two separate behavioral dynamics seen between these groups of users. While social influence and attitude are primary drivers for the non-paying users in the alluring phase, facilitating conditions and communication control capacity play critical roles for the paying users in the hooking phase. These results imply that the music industry should apply different approaches to prospective and current customers of music streaming services.
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Music streaming service is an intriguing business phenomenon at the cross-section of entertainment and mobile commerce (m-commerce). Music streaming service providers typically let consumers enjoy an unlimited amount of music and/or video content, primarily through mobile devices, for a flat monthly subscription fee. According to the IFPI Global Music Report 2016 (IFPI, 2016), music streaming revenues have grown four-fold since 2011 and reached US $2.9 billion in 2015. This makes up 43% of digital music revenues, whereas the non-digital revenues have decreased by 4.5% and download revenues are down by 10.5%. Such a growth compels us to closely examine the driving factors of its business model.

Using digital subscription business models is potentially volatile and requires a firm understanding of consumers’ behavioral psychology. As an example, Netflix is one notable firm that used the subscription business model. The firm’s success story was prominently featured in information systems (IS) research and teaching outlets (Fichman, Dos Santos, & Zheng, 2014). However, since its initial success, the firm has been met with crises, but is thriving again with a focus on the video streaming business and creating original content (Favaro, 2016). Given that such a new form of subscription business model is evolving, it is timely and critical to understand consumer behaviors specifically for the music streaming business.

There are several research streams on music streaming, none more voluminous than digital music piracy. Piracy research topics include consequences and attitudes (Chiou, Huang, & Lee, 2005), ethics (Gopal, Sanders, Bhattacharjee, Agrawal, & Wagner, 2004), motivations (Borja, Dieringer, & Daw, 2015; Cesareo & Pastore, 2014; Hampton-Sosa, 2017; X. Wang & McClung, 2011), piracy deterrence (Casidy et al., 2017; Levin, Dato-on, & Manolis, 2007; Robertson, McNeill, Green, & Roberts, 2012; Sinha & Mandel, 2008; van Rooij, Fine, Zhang, & Wu, 2017), the impact on future music sales and economic impacts (Aguiar & Martens, 2016; Das, Mukhopadhyay, & Bagchi, 2014), and pricing incentives (Rayna, Darlington, & Striukova, 2015; Sinha & Mandel, 2008).

Other digital and streaming music research streams include consumer value of digital music (Bounagui & Nel, 2009; Chu & Lu, 2007), consumer behavior surrounding purchasing music downloads and purchasing from online stores (Amberg & Schröder, 2007; Bounagui & Nel, 2009), the impact of digital music streaming on physical and downloaded music sales (Aguiar & Martens, 2016; Trefzger, Rose, Baccarella, & Voigt, 2015; Wlömert & Papies, 2016), and the “freemium” pricing strategy to turn non-paying users to paying users (Hsiao & Chen, 2016; Hsu & Lin, 2016).

Related extant studies to streaming music are those pertaining to m-commerce and digital subscription business models. M-commerce studies range from its general nature and taxonomy (Balasubramanian, Peterson, & Jarvenpaa, 2002) to a user satisfaction model (Y.-S. Wang & Liao, 2007), behavioral intentions and acceptance (Kalinic & Marinkovic, 2016; Liébana-Cabanillas, Marinković, & Kalinić, 2017), and channel comparisons (Amoroso & Ogawa, 2013; Maity & Dass, 2014). Past studies also examined digital subscription business models for digital TV (Medina, Herrero, & Etayo, 2016), real estate business (Cherif & Grant, 2014), online news and online music (Lim, 2016; Swatman, Krueger, & Van Der Beek, 2006), as well as start-up newspaper business (Enkel & Mezger, 2013).

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