Today’s Clear Digital Digest reviews a recent survey on changing customer attitudes as well as the latest IPA Bellwether marketing spend report. The MP3 is 25 years old this week and although not widely used these days, as the key tech that paved the way for streaming its influence can often be understated, as we explore below. Plus a look across the Channel at a new, unique way to watch films… CONSUMER ATTITUDES AND MARKETING SPEND Amongst the latest insights that emerged this week, Wunderman Thompson’s “Covid, Commerce and the Consumer” report stood out, based on a survey of 2000 UK consumers in early June. Some key highlights include:
MP3 TURNS 25 There was an important but fairly unheralded digital milestone this week, as the MP3 file turned 25.
AND FINALLY...
With cinemas closed until recently and only gradually re-opening now, one new trend has been the emergence of drive-in cinemas to bring some US retro flavour to cinephiles who are seeking more than another Netflix binge. Venues as varied as Brent Cross Shopping Centre car park and Alexandra Palace will be accommodating such yearnings this summer. However, Haagen-Dazs are adding a new flavour in Paris with their “Cinema Sur L’Eau” concept: a socially distanced cinema where customers will sit in boats rather than cars. Further investigation reveals they will be showing a film entitled Le Grand Bain (English title: Sink Or Swim), about a group of men who start their own synchronised swimming team. Certainly a wiser choice of movie to show in this environment than Jaws or Titanic.
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Today’s Clear Digital Digest looks at the early impact of the lockdown slightly easing last week, some updated ecommerce sales trends, Ofcom’s research regarding online usage habits and perceptions plus perhaps the scariest sports supporters seen for many a year. HAIRCUTS BEFORE HEINEKEN One of the biggest changes in the UK in the last week has obviously been the lockdown easing last Saturday (4th July) for both pubs and restaurants as well as for some other service retailers, most notably hairdressers.
ECOMMERCE SALES UPDATES
ONLINE NATION Ofcom last week released their latest report “Online Nation” that looks at what people are doing online as well as their attitudes to and experiences of using the internet.
AND FINALLY… In the week that cricket was the latest sport to return behind closed doors, its sporting cousin baseball showed off an imaginative replacement for supporters in the stadium. Japanese baseball team Fukuoka SoftBank Hawks unleashed 2 different types of robotic fans for their match against Rakuten Eagles on Tuesday, who arguably look scarier than Millwall fans from the 1980s… Hi and welcome to the first Clear Digital Digest for a while, as the Clear Digital blog returns. More about that here but as before, these summaries will select a range of recent interesting, insightful and sometimes quirky ecommerce, marketing and media stories and break them down into handily digestible form. Today we’re looking at some new research on the world’s largest brands, the increasingly polarised nature of the UK retail market plus a novel way to socially distance ahead of lockdown restrictions further easing this weekend… AMAZON REMAINS THE WORLD’S MOST VALUABLE BRAND, BUT FACEBOOK FALLS
Methodology: Kantar’s BrandZ valuation process takes the financial value created by a brand in US dollars and multiplies it by brand contribution, to calculate its Brand Value: the worth in dollars that each individual brand is tangibly worth.
RETAIL’S CONTINUING DIVIDE It’s been another unfortunately contrasting week of winners and losers in the retail space.
AND FINALLY…
As Clear Digital returns this week, I’ve just published two deeper dives as well, both examining the marketplace sector. This is an area that has actually benefitted to some degree from the present turmoil, with recent stories including Etsy doubling its sales in April and music marketplace Discogs seeing usage levels increase by 65%.
And finally, with (some) pubs set to reopen this weekend – and mixed views as to what this will bring – I did like this novel solution from across the Channel that I discovered on Twitter this week… Hi and welcome back to the Clear Digital blog, my newly reborn space to talk, discuss, review and speculate about the worlds of digital, ecommerce, marketing and media. Clear Digital was originally set up in late 2015 as an interim project before I then re-entered the world of permanent work in June 2016, as Head of Ecommerce at Wyevale Garden Centres. The blog has lain dormant since then, but having left Wyevale last year due to its break up and sell-off by its private equity owners, I’ve now decided to bring back Clear Digital. As before, I’ll be focusing in particular on my main personal areas of interest in the digital world, filtered through the lens of my 15 years working in the industry with brands such as Argos, Bupa and Wyevale. Of course, one significant change from four years ago is the tumultuous times we are living through in 2020, so this will obviously have some impact on what I cover. Generally, these will be the main themes explored by Clear Digital:
To kick things off, I’ve just published two pieces of related research looking at the UK marketplace sector. Covid19 has led to steep recent online sales growth, and marketplaces (including the twin headed Amazon/eBay beast) have also benefitted from this significant change in customer behaviour. However, this hasn’t been just due to the forced closure of many traditional shops, but also because a growing number of marketplaces offer a real sense of community, usefulness and fun – with a personal favourite of mine being Discogs, the record collector hub and marketplace. Therefore, I’ve taken a look at the UK marketplace sector as a whole, as well as a deeper dive on Discogs and the UK music sector, including the significant size of the under-reported used records market… The UK marketplace sector – and the role of community The UK marketplace sector is responsible for a third of all ecommerce sales - and 2020's unfortunate events have seen a large rise in sales and sellers. This blog examines the sector's size, dynamics and the increasing success of community-driven marketplaces. Discogs – the digital success story of the vinyl revival Discogs is a digital brand with a difference; it’s thriving in the hugely competitive music sector, by catering to a niche but dedicated sector of music enthusiasts and record collectors. This blog reviews the current music market as a whole, delves deeper into the second hand vinyl market and then examines Discogs’ offering and recent success. All future posts will be shared via the @clrdigital Twitter feed, as well as my personal LinkedIn account, so please follow to get all the latest updates too… CLEAR DIGITAL CONSULTING Another reason for re-establishing the Clear Digital blog is more pragmatic; I’m also currently personally available for new assignments, having started searching for fresh opportunities at the worst such time in living memory. Therefore, as well as being open for permanent roles, I can assist on an interim and consulting basis, utilising my past experience but also a wider network of contacts out there if necessary, specialising in a wide range of ecommerce, digital and marketing disciplines. My Consulting section has more details on how I can help, particularly in these areas: I’d love to hear from you and catch up to see if there’s anything I can help you with or even just share and exchange some thoughts…
Discogs is a digital brand with a difference – it’s thriving in the hugely competitive music sector, not by taking on streaming behemoths such as Spotify or Apple, but instead by catering to the niche but dedicated sector of music enthusiasts and record collectors that value the tactile and artistic value of the traditional LP or CD. From its origins as a community based purely around electronic music, Discogs has steadily evolved to encompass all genres. As well as serving as an IMDB meets Wikipedia resource for music fans, Discogs’ increasingly popular Marketplace allows collectors to buy and sell online, with nearly 15m records traded in 2019, up 34% on the year before. So far in 2020, usage of Discogs has rocketed still further, as we have all needed to focus on home-based leisure activities plus the temporary closures of all record stores. Having previously taken a detailed look at the “vinyl revival” in late 2015 when I focused on the “record shop renaissance” and how these establishments were diversifying in order to survive and thrive, I thought I’d take another look at the music sector, but this time with the specific focus on a recently growing niche digital specialist, i.e. Discogs. Therefore, this blog reviews the current music market as a whole, before delving deeper into the second hand vinyl market, a much under-researched area. Discogs’ offering is then examined, reviewing how Discogs’ recent success has been achieved as well as a typical Discogs customer journey.
THE UK MUSIC MARKET When Clear Digital last reviewed the music market, we quoted BPI figures that vinyl sales were up 56% in the first half of 2015 and on track to hit 2m records sold for the year, which would be the highest figure since the early 1990s; although still a small fraction of the 80m routinely sold during the late 1970s. Vinyl sales did indeed exceed 2m in 2015, with sales of 2.1m and have continued to rise since then, more than doubling in the subsequent 5 years to reach 4.3m in 2019; albeit growth has slowed considerably during the last 3 years as the graph below demonstrates: The big news in the music industry over the last 5 years has of course been the rise of streaming services, spearheaded by Spotify with Apple Music, Amazon Music, Deezer et al. Streaming in the UK passed a significant milestone last year, with over 100bn tracks streamed for the first time, a total of 114bn, up 26% on 2018’s 91bn. The dominance of streaming this decade has seen the music industry create a new metric in order to compare distinct formats: the Album Equivalent Sale (AES). AES equates 100 streams as equivalent to purchasing one single “track” and 10 “tracks” as equivalent to an album, thus meaning that 1000 individual songs streamed is viewed as equivalent to one physical album purchased. As the graph above shows, 2019 was a strong year for music consumption, with 153.5m annual AES, +7.5% on the prior year and the highest of the decade. Streaming drove this increase, with 114.2m AES streams (+26% YOY), while 28m physical albums were sold (-23% YOY). These 28m include the 4.3m vinyl LPs (+4% YOY) mentioned earlier as well as 23.5m CDs, a format which continues to rapidly decline, with annual sales down 26.5% YOY. And having found a way to generate revenue from streaming services, record label revenues have also increased steeply in recent years, from a low of £825m in 2014 to £1.07bn in 2019, the highest such figure since £1.17bn was recorded in 2006. Streaming income of £629m accounted for 59% of total record label revenue in 2019 – with subscription revenue by far the most significant chunk generating £568m, with ad-supported streaming revenue contributing £25m and video streaming providing £35m. Physical sales of £216m made up just 20% of industry revenue, with CD sales of £142m down 20% YOY. However, vinyl revenue of £66m grew by 16% YOY, despite unit sales of 4.3m growing by just 4% YOY. CD revenue of £142m declined by 20%, meaning that while still the dominant traditional format, vinyl is taking an ever larger proportion of the amount spent on physical music. However, the total amount that consumers actually spend on physical records (and especially LPs) is grossly under-reported by industry bodies and most media as Bill Rosenblatt states in an excellent Forbes article: “Vinyl is bigger than we thought. Much bigger”. THE SECOND-HAND/USED VINYL MARKET Bill Rosenblatt mentions the vinyl revival of the last decade, but also highlights that “vinyl sales are actually much larger than what industry figures report, because they don't count used vinyl sales and they under-count new vinyl sales. Now, thanks to some new data, we know that the true size of the vinyl market is more than double those industry figures”. As revenue from second-hand records does not go to record labels or artists, the industry does not count them, prompting Ron Rich, SVP of Discogs Marketplace to say “Given the size of the overall market, I am always shocked that these numbers are ignored when reporting sales”. It is indeed challenging to obtain data on second-hand sales, but Forbes managed to secure sales figures from the two leading online players, namely eBay and Discogs, as well as work with a chain of independent record stores to calculate overall store sales. As the graph above demonstrates, second-hand unit sales in 2017 matched the 16m vinyl records reported by the RIAA, the US equivalent of the BPI. And this figure would increase further had Amazon (the third biggest player in online second-hand records) provided data for the used records comparison. Discogs’ recently published “State Of Discogs 2019” report states that Discogs sold 14.6m items globally in 2019, 34% on the prior year. Vinyl accounts for an ever growing lion’s share of Discogs’ sales, with vinyl sales of 11.6m units, +41% YOY. Breaking this down into the UK, we can estimate that Discogs sold 2.3m vinyl records in the UK last year, creating total sales revenue of £42.7m (with £3.4m commission for Discogs, at their 8% rate). In total, it is estimated that some 7.7m vinyl records were sold second-hand last year, 80% higher than the volume of new records quoted by BPI (4.3m). Further validation on volume is provided by eBay stating that they sold 4 vinyl records per minute in 2017, equating to 2.1m units in total and a 34% market share that year. These 7.7m records generated an estimated used revenue of £90.5m, well above the £66.3m spent on new vinyl. This leads to total vinyl sales revenue of £157m, of which only 42% is generated by the new music industry and directly reported on. This split reflects the US market as previously outlined by Bill Rosenblatt at Forbes: “thanks to some new data, we know that the true size of the vinyl market is more than double those industry figures”. Total physical new and used records (i.e. CDs plus vinyl) together generated sales of £302m in 2019, an extra £94m above the combined BPI reported figure of £208m, with £91m of this accounted for by second-hand vinyl. In 2019, 64% of vinyl records purchased were second-hand (7.7m, 58% of total spend) meaning that the widely reported figure of 4.3m vinyl LPs sold last year is severely under-stated; the true figure is more in the region of 12m. REVIEWING DISCOGS’ RECENT SUCCESS A potent mixture of Wikipedia, IMDB, eBay and Pokemon for music fans, Discogs was originally established in 2000 by Kevin Lewandoski purely to catalogue dance records but now describes itself as “the world's foremost Database, Marketplace, and Community for music”. From an initial 2200 users in its first year, Discogs now has over 7m active users and a database of over 12.6m releases listed. Originally focused purely on electronic records, Discogs gradually increased its remit, with rock releases becoming the dominant genre in 2016. Adding to the collection can be theurapetic and also addictive, but it was the launch of the Discogs marketplace in late 2005 that really planted the seed for Discogs’ future success. The cornerstone of Discogs is its Collection feature that allows users to easily create their own online record collection, from the 12.6m existing releases in the Discogs database. Users can opt to search via the Discogs website or app, which has a built-in barcode scanner, making this a much simpler process to locate your particular record (for those that have barcordes anyway!). Similar to Wikipedia, Discogs is reliant on its users to add new releases, as well as providing further information (e.g. extra pictures, song videos etc). 11.6M records were added to their collection in April 2020 by 306K users, well up on the more recent annual average of 7M per month due to lockdown. By way of comparison, the average submission in 2014 was just 2M per month. This collection spurt is also helped by the addictive/gamified nature of adding records, as you are able to get an updated total of how much your collection is worth based on recent sales in the Discogs Marketplace. Discogs will look at the most recent 10 sales of the relevant release and show its lowest, median and highest selling price. This then feeds up to your personal collection homepage with a min/med/max estimated value, thus encouraging the user to add as many records as possible to see this figure increase and increase… The Discogs Marketplace was launched in late 2005, due to user demand – as CEO Kevin Lewandoski has stated: “The users asked for it. There was already a "collection" and "want list" feature, and a lot of people asked for a "sell" list, just to have a list of things that they were selling…Amazon and eBay were around, but they weren't really what they are today.” There are over 50M records available globally on the Marketplace, with 9M from sellers in the UK. Sellers vary from individuals selling off unwanted/spare items from their collection to sole traders to established second-hand record shops. As outlined in the music industry section, the Discogs Marketplace has become an increasingly prominent player in the second-hand market, selling 14.5m records in 2019. Of these, 11.6m were vinyl, which increased sales by 41% on 2018. DISCOGS – CLOSING THOUGHTS Discogs has recently experienced strong growth, both commercially (with Marketplace sales +34% in 2019) and general usage, with 11.6m records added to users’ collections in the first month of lockdown, 65% above the usual monthly average of 7m. And despite the marketplace sector being dominated by Amazon and eBay, with 90% share between them (as the complementary “The UK Marketplace Sector – And The Role Of Community” Clear Digital research explores), Discogs managed to grow sales faster than either in 2019. 3 key dynamics helping to drive Discogs’ success are:
Breaking down the Discogs customer journey as shown below, we can see how customers move from “lurkers” to the more profitable “buyers”, and in some cases “sellers”, all underpinned by the strong Discogs community of half a million contributors, essential to the richness of its experience… Please note that this blog is a summary of the accompanying deeper dive on “Discogs: the digital success story of the vinyl revival” which is available to download here
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Jim ClearLead blogger and founder of Clear Digital: talking about ecommerce, digital, marketing and media. Categories
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