Consumer Watch: Music lovers go with the flow

Kiwi consumers are flocking to apps allowing access to free music on their computers, tablets and smartphones.

Better data plans and new devices have made streamed music more accessible and providers such as Spotify, Pandora and iHeartRadio have seized the opportunity.

The services offer huge databases of music that consumers can access as a direct stream, either as predetermined playlists, "stations" organised by genre or a library from which they can pick and choose.

Pandora has already accumulated about 215,000 users in New Zealand since it launched 18 months ago. iHeartRadio has about 180,000.

Spotify is believed to lead with about a quarter of a million users but would not give a number.

Almost half of New Zealanders who have smartphones say they listen to music on them.

Last year, digital music provided 51 per cent of recorded music revenue — the first time it accounted for the majority of money returned to rights owners. Digital sales, including streamed and downloaded music, were valued at $27.9 million.

Streaming accounted for 9 per cent of music revenues last year, up from just 3 per cent in 2012.

Recorded Music NZ chief executive Damian Vaughan said it was growing exponentially, which was good for musicians but still had a way to go as customers became better at understanding how the streaming offerings worked.

"Music is always at the forefront of technology and as our industry is in a state of transition it's encouraging to see the growth and take-up of streaming services," he said.

Over the past 10 years people had moved from buying CDs to downloading tracks. Now it is transitioning again, to access models rather than downloads.

Peter Griffin, of the Science Media Centre, said the offerings available had improved in recent years. "The options are now as fulsome as in other parts of the world. "

Griffin said it was a way for the music industry to combat piracy and leave people with no reason to download illegally.

"But it's been a long time coming. You used to pay to download tracks from iTunes but that's in decline and now streaming is the way music-listening is going."

Telecom has been offering deals including premium Spotify accounts with some of its phone plans.

Chief operating officer Jason Paris said Telecom had been successful. "We've doubled the numbers on our $29 prepaid plan on the back of it."

Griffin said listening to music via an app such as Spotify would not use much data. He estimated it might take one megabyte for each minute of audio, unless it was really high quality. "Compared to video, it's just nothing."

Pandora commercial director Melanie Reece said Pandora was being installed by a new user every 30 seconds and there was huge opportunity for growth. "The potential is enormous because it's a fairly immature digital music market." She said 70 per cent of Pandora's customers were listening on mobiles.

"Consumers are only just scratching the surface of what content delivery on their smartphone can give them."

Reece said only about 2 per cent of Pandora's customers opted for a paid subscription.

"It is aimed at people with sophisticated sound systems because the quality is higher, or consumers who are vehemently opposed to commercials."

Pandora uses an algorithm to determine tracks that are similar to those selected by a user, to hone what it suggests. Griffin said he had found it accurate. "It keeps refining, depending on what you're listening to."

On Spotify, he said users were encouraged to share music and follow others, creating playlists as they went.

"That's one of the best aspects, when someone with similar tastes to you has assembled a massive playlist, it saves time. The socialisation of music is a big trend."

Spotify said Lorde was the most-streamed local artist. Six60, Shapeshifter, Stan Walker and Fat Freddy's Drop were also popular.

iHeartRadio's Carolyn Luey said people would be likely to have accounts with more than one provider, choosing something like Spotify when they wanted a specific artist or track and iHeartRadio when they wanted to stream music with minimal effort.