Divining Music Fans\' Habits

With the growth of streaming music services like Pandora and Spotify, which let people listen to millions of songs free or by subscription, a critical question for the industry is how these habits will affect users' spending and listening habits. Yet the more the issue is studied, the more complicated the answer.

Last week, the NPD Group, a market research firm, said that the growing popularity of streaming music was cutting into the amount of time that listeners spent with CDs and downloads. Among Pandora fans, for example, the number of people also listening to CDs and downloads has dropped 21 percentage points since 2009, the study said.

A few months ago, however, NPD reported that Pandora users bought 29 percent more music than they did last year. At first glance these findings would seem contradictory. But Russ H. Crupnick, an NPD analyst, said they revealed that Pandora users might be spending more money on CDs and downloads but listening to them less.

Music industry experts are divided on the larger question of whether streaming services cannibalize music sales. But there is a growing sense that instead of having one answer to that question, there are several, depending on the type of consumer.

Last year, NPD and the National Association of Recording Merchandisers, an industry group, found that when people had access to music anytime - through a streaming service, for example - additional spending by average fans fell much more than among the most passionate ones.

(Average fans, or “converts” in the study, are defined as “good listeners, but modest spenders,” and make up 35 percent of the marketplace; the biggest fans are only 10 percent of the market but account for almost half the spending.)

“If you are an average music fan, there's a higher chance that listening will just lead to relistening,” Mr. Crupnick said in an interview last week. “On the other hand, if you're a superfan, ther e's a higher probability that discovery will lead to a purchase.”

These patterns have been changing quickly, though, and the studies may already be out of date. The merchandisers association's study with NPD, for example, was based on a survey in August 2011, barely a month after Spotify was introduced in the United States. Since then, Spotify's subscriber ranks have more than doubled.