Part 1 of the blog series highlights that the Scandinavian countries are the world’s music streaming avant-garde due to a well-established broadband Internet infra-structure, a high smartphone penetration rate and domestic business innovations (see also part 2). The most influential Scandinavian business innovation was Sweden’s Spotify, which was launched in October 2008 at the culmination of The Pirate Bay lawsuit. However, several other services early offered music access to music in Scandinavia. In 2009, Finnish smartphone company Nokia launched the Comes-With-Music service, which allowed unlimited music access for a year on special Nokia Comes-With-Music phones. In the same year, Swedish Sony-Ericsson in collaboration with Norwegian Telenor offered the PlayNow plus service on its special edition of Sony Ericsson Walkman phones (IFPI 2009: 8). However, the mobile phone manufacturers failed to meet the music consumers’ convenience. Nokia’s music was DRM protected until 2010 and limited to special Nokia devices, whereas Sony Ericssons’ music was DRM free, but limited in time and to special devices.
In 2011 both services were, therefore, were discontinued,[1] when Spotify, WiMP and TDC Play started to dominate the digital music market. In 2009, the Danish TDC Play was the first ISP music service offering unlimited music streaming from 6.1 million tracks without any additional costs (IFPI 2010: 8). Spotify’s ad-supported unlimited streaming tier was also bundled in ISP TeliaSonora in Sweden and Finland and the premium tier could be directly paid on the broadband bill (ibid.: 9). WiMP’s subscription service also succeeded in Norway due to its bundling in Telenor’s mobile phone contracts (IFPI 2011: 9).
Consumer convenience, therefore, was the key success factor for music streaming services in Scandinavia. It was easier to access music by a streaming services than downloading music from P2P file sharing networks with the risk of malwares and viruses. Music consumption studies in Norway and Sweden highlight this shift from P2P file sharing to music streaming as outlined in the following analysis.
Towards a music streaming economy – Scandinavia
Part 3: Consumer behavior
NORWAY
A representative study by market research institute IPSOS MMI, commissioned by the Norwegian association for rights holders in audio-visual works, tells an interesting story, how music consumption behaviour in Norway has changed since 2005.
Figure 1: Copying music in Norway, 2005-2012
Source: After Ipsos MMI (2013: 17).
In 2005, 922,000 Norwegians (almost a third of the total population) said they have copied music files from different sources (radio, Internet, CDs etc.) in the past 7 days. On average 38.4 music files per person were copied in Norway per week. Thereof 23.4 (61 percent) of all copies were made without authorisation. This equals 1.16bn unauthorised music files that were copied in Norway in 2005. Until 2008 the number of unauthorised copied music files remained high of about 1.1bn despite legal alternatives. Although the number of paid music downloads increased from weekly 1.3 per head in 2005 to 3.3 per head in 2008, unauthorised music downloads peaked at 23.9 copies per head and week. After the launch of Spotify in Norway in October 2008, the number of unauthorized copied music files decreased to weekly 17.5 songs per person (702.5m per annum) in 2009. Three years later in 2012, 131.4 music files per head and per week (4.4bn per annum) were copied. However, just 5 percent or 6.2 music files per week (209m per annum) came from unauthorised sources, whereas 106.9 music files per person – that equals annually 3.6bn music files – were copied each week to offline playlists of music streaming services. The share of respondents downloading music from BitTorrent sites, BearShare, Limewire etc. for free decreased in the same period from 82 to 42 percent. Instead 47 percent or 1.7m respondents said that they have used streaming service such as Spotity and WiMP. Thereof 54 percent or 920,000 respondents stated that they have paid for music streaming. These numbers highlight a tremendous shift from P2P file-sharing to music streaming after the launch of several streaming services in Norway since 2008. In a guest post for digitalmusicnews, the co-founder of digital distributor Indigoboom!, David Gjester, explained the shift from unauthorised music downloading to music streaming in Norway by music consumer convenience and the launch of Spotify, since “(…) no lawsuits against file-sharers, no internet spying of any significance was taking place and the ISPs refused to block the appalling Pirate Bay.”[2]
The study also highlights that paid music downloads were not relevant in Norway at all, despite an increase to weekly 5.0 copies per head in 2012 (this equals 168.0m copies per annum) – literally nothing compared to weekly 106.9 offline copies per head from music streaming services, which equals an overall of 3.59bn copies per year. It seems that paid music downloads were not seen as a useful alternative for CDs by the Norwegians and, therefore, a relevant legal music download could not unfold.
SWEDEN
Sweden’s way to a music streaming economy is closely linked with the home-grown music streaming service Spotify. Spotify was launched as the legal alternative to P2P file sharing at the culmination of the Pirate Bay lawsuit. The introduction of an anti-piracy law followed in April 2009, which was based on the EU Intellectual Property Rights Enforcement Directive (IPRED). Although a GfK study (cited in IFPI 2010: 18), published in June 2009, stated that 60 percent of file-sharers had stopped or reduced file-sharing activity after the introduction of the IPRED law, but even the IFPI Digital Music Report 2010 (ibid.: 27) conceded that “(…) piracy levels in Sweden are believed to have risen again since then (…)”.
A representative study by Olle Findahl for the Swedish Internet Foundation (Internetstiftelsen, iis) also highlighted that “[t]he percentage of those engaging in file sharing has never been greater, while the percentage of those streaming music using the Spotify music service is even greater.” (iis 2011: 7).[3] It seems that the introduction of the anti-piracy law had a just short-term effect. However, the Swedish recorded music market grew for the first time in 2009 since 2000. The digital music sales were the main driver of the growth of 98.6 percent, whereof 46.1 percent came from streaming services (IFPI 2010: 27).
In 2009, 60 percent of the Swedish population older than 12 years listened to music on the Internet – 17 percent on a daily basis. Nine years later 86 percent listened to music on the Internet – thereof 45 percent daily. Internet music consumption is the domain of younger generations. 78 percent of the 12-15 years old, 85 percent of 16-25 years old and 63 percent of the 26-35 years old listen daily to music on the Internet, whereas just 14 percent of the 66-75 years old and just 9 percent of the generation 76+ did (iis, 2018: 83).
Figure 2: Music listening on the Internet in Sweden, 2007-2018
Source: iis, 2018, Svenskarna och Internet 2018, p. 82
Spotify is, therefore, the most preferred way listening to music on the Internet. In 2018, 69 percent of the Swedes used Spotify sometimes and 38 percent even daily. In 2011, only 20 percent listened to music on Spotify on a daily basis (iss 2018: 83).
Figure 3: Spotify usage in Sweden, 2011-2018
Source: iis, 2018, Svenskarna och Internet 2018, p. 83; the figures for 2012 and 2013 are not available.
Paid subscription is the main way of music streaming consumption in Sweden. In 2018, 55 percent of the Swedes paid for a music subscription service – compared to 4 percent in 2010 (iss 2018: 85). Paid music consumption correlates with household income. 74 percent of all Swedish households with an overall income of more than annually 750,000 SEK paid for music, whereas only 35 percent of all households in the income group from 150,000-300,000 SEK per year spent money for listening to music on the Internet (iss 2018: 85).
Figure 4: Paying for music consumption in Sweden, 2009-2018
Source: iis, 2018, Svenskarna och Internet 2018, p. 85; figures for 2013 are not available.
The shift from P2P file sharing to music streaming in Sweden can be explained by the following factors:
- a higher perceived convenience of music streaming over file sharing/music downloading
- an early domestic music streaming business model innovation by Spotify bundled within mobile contracts
- an Internet-affine population with older generations also involved in music streaming consumption
- a high level of disposable household income to afford music subscription
- ubiquitous broadband Internet access and a high smartphone penetration
Conclusion
The summary for Sweden holds also true for the other three Scandinavian countries with gradual differences. In Norway and Sweden the music streaming took off earlier than in Finland where the market was still dominated by the physical product and in Denmark where music downloads were relevant in 2011. In the period from 2011 to 2017, however, the aggregated growth of the streaming market in Denmark (+728.8 percent) and in Finland (+593.2 percent) was higher than in Sweden (+225.1 percent) and Norway (+319.5%). This indicates a tendency to a more mature streaming market in Sweden and Norway. The annual growth rates for all four countries from 2012 to 2017 show a tendency to market saturation.
Figure 5: Annual growth rates for music streaming markets in Scandinavia from 2012-2017
Source: After Recording Industry in Numbers 2015 (IFPI 2015) and Global Music Report 2018 (IFPI 2018)
Sources:
IFPI, 2009, Digital Music Report 2009. London: IFPI.
IFPI, 2010, Digital Music Report 2010. London: IFPI.
IFPI, 2011, Digital Music Report 2011. London: IFPI.
IFPI, 2012, Recording Industry in Numbers. The Recorded Music Market 2011. London: IFPI.
IFPI, 2015, Recording Industry in Numbers. The Recorded Music Market 2014. London: IFPI.
IFPI, 2018, Global Music Report 2018. London: IFPI.
iis – Internetstiftelsen, 2011, Svenskarna och Internet 2011 by Olle Findahl for the Swedish Internet Foundation.
iis – Internetstiftelsen, 2018, Svenskarna och Internet 2018 by Pamela Davidsson, Matti Palm and Åsa Melin Mandre for the Swedish Internet Foundation.
Ipsos MMI, 2013, Kopiering av opphavsrettslig beskyttet innhold i 2012. Musikk – Lydproduksjoner – Audiovisuelt innhold, study commissioned by Norwaco, 20 February 2013.
Endnotes
[1] For Nokia “Comes-With-Music” see AdWeek, “Nokia Pulls Plug On Comes With Music”, August 17, 2010, (accessed 13.05.2019); after the complete acquisition of Ericsson by Sony Corp. the Play Now service was not available anymore.
[2] Digitalmusicnews, “Guest post by David Gjester: This Is the Story How Convenience Killed Piracy In Norway”, July 31, 2013 (accessed: 06.03.2019).
[3] Olle Findahl authored the “Svenskarna och internet” (“The Swedes and the Internet”) studies for the International Internet Stiftelsen (iis) from 2007 to 2016. In 2015 and 2016 Pamela Davidsson was Findahl’s co-author and she also co-authored the 2017 study (with Anders Thoresson) and the 2018 study (with Matti Palm and Åsa Melin Mandre).
See also:
Towards a music streaming economy – Scandinavia part 1: market analysis
Towards a music streaming economy – Scandinavia part 2: technological and business model innovations
Music Business Research 
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