Experience population by digital music

When the Internet emerged, online promotion and digital music file-sharing made the Internet become a new channel to enjoy pop music. “Music platform member” and

“population by digital piracy” in the model were people who have listened music on

the network. And the members of music platform were accumulated unceasingly by the music market growth and ADSL users’ base growth rate (see equation 14.A).

“Music platform member” was affected by the “the rate of Taiwan ADSL users’

base growth” and the “market growth rate” in music industry (see equation 16.L). The result of simulation was similar with the historical data. There are about 6.5 million members in KKbox and ezPeer+ (the two largest music platforms in Taiwan) in 2008, and the platform payment percentage is 10%. The initial member “1,400,000” was assumed because Kuro and ezPeer+ claimed they had 700,000 payment members in 2002. Besides the joining of the new members, this study also assumed that there are 1% to 5% members quit. The maximum number of members is limited at 12 million (see equation 17.A). The limited number was assumed by RIT report predicting the population of listening to music (about 8 million) and the government statistical report showed the population was between 15-65 years old (about 17 million).

Through online questionnaire survey, this article found out the majority of population of digital piracy have ever joined the platform as members and used online music platform. Only 13% of the payment members of music platform still used piracy music that was slightly to ignore. Because of the above the reason, the author assumed the consumers who listened to music on the network are either nonpayment of the platform members or piracy users (see equation 19.A). About 10% of music platform members were charged (TIER, 2008) and the other members were the piracy users in the model (see equation 20.A).

“The free effect” which was raised in literature review discussed “free” could

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attract much more consumers than in ordinary circumstance. However, it was unable to figure out how many percentage of population of platform member increase that

“Free” will create every year. Also, if it increased massive member from the beginning, that will make the model lose the factuality because the large initial number could make the population of platform member increase crazily. For the reason mentioned above, this study assumed that “Free” will cause the current population of platform member multiple increases, and further influenced the purchase intention (see equation 21.R).

The system equations and diagram can be schematized as follows, and the purchase intention rates were collected from online questionnaire survey; then calculated the purchase intention (see equations 22.A, 23.A). This study assumed people prefer use music platform because it is free, the rate of purchase intention of platform users is 61.3% (purchase intention of nonpayment member). The rate of digital piracy purchase intention is 59% (purchase intention of nonpayment digital music user).

System Equations

(14.A)

member join = Music Platform Member * (Rate of ADSL user base grow(Time)+IF THEN ELSE(market growth rate>0, IF THEN ELSE(market growth rate>1, 0.2, 0.1), 0))

[Units: population/year] [Data source: Assume]

(15.G)

Rate of ADSL user base grow =

([(2000,0)-(2010,1)],(2000,0.13),(2001,0.13),(2002,0.13),(2003,0.1 1),(2004,0.14),(2005,0.13),(2006,0.07),(2007,0.01),(2008,0.06),(20 09,0.02)) [Units: Dmnl/year]

(16.L) Music Platform Member = INTEG ( member join, initial member) [Units: population]

(16.1.N) Initial member = 1.4e+006 Units: population

(17.A)

Quit=IF THEN ELSE(Music Platform Member>1.2e+007, Music Platform Member-1.2e+007, Music Platform Member*RANDOM UNIFORM(0.01, 0.05, 0.01))*period1 [Units: population/Year]

[Data source: Assume]

(18.R) percentage of payment = 0.1 [Units: Dmnl]

(19.A)

population by digital piracy = IF THEN ELSE(percentage of payment>0,Music Platform Member-Music Platform Member * percentage of payment, 0) * period1[Units: population/year]

(20.A)

population of music platform payment = (Music Platform Member

* percentage of payment + IF THEN ELSE(percentage of payment>0, 600000 * PULSE(2001, 2), 0)) * period1 [Units: population/Year]

(21.R) the effect of free = 0 [Units: Dmnl]

(22.A)

purchase intention by music platform = IF THEN

ELSE(percentage of payment>0, population of music platform payment * The rate of purchasing intention via platform payment, Music Platform Member * the rate of purchasing intention via music platform user base * (1+ the effect of free) * period1) [Units:

population/year]

(23.A)

purchase intention by digital piracy = population by digital piracy * the rate of purchasing intention via digital piracy

[Units: population/year]

(24.R) the rate of purchasing intention via music platform user base = 0.613 [Units: Dmnl]

(25.R) The rate of purchasing intention via platform payment = 0.23 [Units: Dmnl]

(26.R) the rate of purchasing intention via digital piracy = 0.59 [Units: Dmnl]

(27.C) period1 = 1 [Units: Dmnl/year]

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the rate of purchasing intention via platform payment the rate of purchasing intention

via music platform user base

period1

Figure 4-3 The model of experience population by digital music

4.2.3 Purchase intention and behavior

After people enjoyed the music, some of them had the purchase intention for the music (see equation 28.A). Furthermore, the purchase intention became the purchase behavior that meant people actually bought the albums. According to the online questionnaire survey, 52% respondents who had purchase intention had actual purchase behavior (see equation 30.A).

In the music company survey report, the main purchasing group of music albums was between 12 and 24 years old that accounted for 90% (almost students), and the other 10% were the office workers (Huang, 2006). According to the survey information above, the author calculated the average purchasing album volume of consumers by “historical albums sales volume” dividing “population of 12-24 years old in Taiwan” (see equation 34.A). After that, this study could calculate how many albums were sales. The system equations and diagram can be schematized as follows.

System Equations

(28.A)

Increase of Purchase Intention = purchase intention by digital music + purchase intention by digital piracy + purchase intention by traditional channel Units: population/year

(29.L) Purchase Intention = INTEG (+Increase of Purchase Intention - Change to Purchase Behavior, initial intention) [Units: population]

(29.1.N) initial intention = 1.00075e+007

[Units: population] [Data source: Assume]

(30.A) Change to Purchase Behavior = Purchase Intention * change rate * period2 [Units: population/year]

(31.R) rate of purchase behavior = 0.52 [Units: Dmnl]

(32.C) period2 = 1 [Units: Dmnl/year]

(33.A)

Purchase Behavior (album sales volume) = Change to Purchase Behavior * volume of a consumer purchasing album

[Units: volume/year]

(34.A)

consumer average purchase volume = historic album sales volume(Time) * 0.9 / "population of 12-24 years old in Taiwan"(Time) [Units: volume/population]

(35.G)

population of 12-24 years old in Taiwan =

[(2000,0)-(2009,6e+006)],(2000,4.68e+006),(2001,4.57e+006),(20 02,4.5e+006),(2003,4.43e+006),(2004,4.33e+006),(2005,4.26e+00 6),(2006,4.18e+006),(2007,4.105e+006),(2008,4.03e+006),(2009,3 .97e+006)) [Units: population/year]

(36.G)

historic album sales volume =

([(2000,0)-(2009,4e+007)],(2000,2.68e+007),(2001,1.83e+007),(2 002,1.7e+007),(2003,1.53e+007),(2004,1.5e+007),(2005,1.09e+00 7),(2006,7e+006),(2007,6.6e+006),(2008,5.15e+006),(2009,5.35e+

006)) [Units: volume/year]

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Figure 4-4 The model of purchase intention and behavior