Study: The Masses Will Not Pay For Streaming Music

April 6, 2016

That’s according to a study of 500 people between the ages of 17 and 59 done by Kelly Music Research. The company says fewer than 8% of the respondents they surveyed were using the paid versions of Pandora, Spotify, or SoundCloud, and advertiser-supported free is still preferred among those who have embraced streaming. And, according to the Kelly Research study, if free were no longer an option, few said they would ante up.

The Kelly Music Research showed that, not surprisingly, Pandora leads the pack among streamers with 64% saying they’ve used some form of the service. The number jumps to 75% of the younger 17-34 demographic. Spotify was the service more likely to earn paid users with 4.6%, followed by Pandora’s paid version with 2.4%.

And, according to the Kelly Research study, if free were no longer an option, few said they would ante up. “Assuming the are other services out there that remain free, the vast majority would rather switch than pay. Only 12% say they would pay for their favorite stream if it were no longer free. Men are more likely to pay (14.2%) than women (10.5%). Younger streamers are the most willing to pay — 22% of 17-24, 16% of 25-34, 11% of 35-44, and 8% of 45-59. The remainder would refuse to pay and just find a free service.”

What would listeners do if they had to pay for their favorite radio station? “Only 9.7% said they would pay to listen to their favorite AM/FM station. Compare this to 12% who say they’d pay for their favorite stream choice.”

Can Project Indigo Save iHeartMedia?

A hearing over iHeartMedia’s debt began in State District Judge Catherine Striker’s court in San Antonio Monday. iHeart is suing 15 bondholders who, the company says, are trying to force it into bankruptcy by triggering bond defaults that would require $15 billion of its $20 billion debt to be repaid quickly. The bondholders do not like that iHeart set up a subsidiary called Broader Media and transferred 100 million privately traded shares of Clear Channel Outdoor. They say its a shell company and they want the shares returned to the Outdoor division. At the hearing, iHeartMedia Senior VP and Treasurer Brian Coleman said the transfer is part of a strategy called “Project Indigo.”

The San Antonio Express-News reports that Project Indigo is the code-name for iHeart’s long-term strategy to study alternatives to decrease debt. And Coleman says Project Indigo continues despite the company not being able to pursue debt activities under the temporary restraining order.

Bruce Bennett, One of the lawyers representing the bondholders told the court that Broader media is a shell company with no operations. “When money goes into a cookie jar with an intent to make a possible investment later, is it an investment? No. Bloomberg reports Bennett said the bondholders are not trying to push iHeartMedia into bankruptcy. “Nothing could be further from the truth. We want the shares to be returned to Clear Channel Outdoor. It’s where they belong. We then want the company to abide by its indentures and pay their debts.”

iHeart attorney Kevin Huff told the court disallowing the transfer “guts the flexibility of the company and that the company had done this before and nobody objected.” The News-Express quotes Huff and Coleman telling the judge that the share transfer was an allowable investment because it would have made a profit for the company by reducing its outstanding debt. And they say the company needs this flexibility to mange its debts.