MP3 owners favour CDs over downloads

We are buying the machines, but not the music.

A US survey has shown that over 20 per cent of people over the age of 12 own at least one portable MP3 player. Among teens exclusively, ownership reaches 54 per cent, according to the new study by Ipsos Insight.

That last figure is something the online media industry should be pleased to hear, according to Ipsos analyst Matt Kleinschmit. Multimedia downloads such as TV shows, music videos and movies are most popular among the under-25 crowd, he said.

But while interest in multimedia downloads is rising, more music is being ripped from CDs than downloaded, Ipsos said.

About 44 per cent of all music downloaders use their existing CD collections as their primary source of MP3 player content, while 6 per cent rip from the collections of others. Only 25 per cent use fee-based music downloads, and even fewer use subscription services, the study reported.

"As the music industry starts to look at this, they are realising that the idea of the CD as the only product is an antiquated one," Kleinschmit said. "A product could be a ringtone, bundled with a song, bundled with a music video -- taking a step outside of the CD, and moving into an era where people who are younger have a completely different mindset."

Many predicted that when fee-based downloads took off, they would be driven by young people. That was not the case -- consumers under 25 continued using free file-sharing networks for music downloads, Kleinschmit explained.

Much to the record labels' surprise, the 25-34 and 35-54 age groups were the initial drivers of music download services, he said. Apple's iTunes store, which sells individual songs as well as full albums, last year outsold retail stores Tower Records and Borders Music.

While people are becoming more used to the idea of not owning a label-produced CD, Kleinschmit explained, they are still tied to the idea of owning their music. Among those who have paid for online music, 67 per cent used a download-to-own site. "Only 17 per cent of music downloaders have at one point used subscription-based download sites," Kleinschmit said.

The report also found that 6 per cent of Americans own more than one MP3 player. Kleinschmit believes that shift signals a change in user understanding and the specific application of MP3 devices in general.

This year's data, which was collected between 13 January and 2 May, marks a significant increase in ownership of iPod-like devices. Ipsos' 2005 report showed that 15 per cent of Americans owned MP3 players, while only 8 per cent had one in 2002. A 2005 Pew study placed American MP3 ownership among adults at 11 per cent.

Despite a recent slip in the market, most recently from analyst-predicted iPod delays, Apple remains the market dominator when it comes to MP3 players. From January to April, Apple held a 77.2 per cent share of the MP3 player market, according to US unit sales data from the market research firm The NPD Group.