According to a survey from British Music Rights, 80% of kids are willing to pay for a legal P2P system. The group surveyed U.K. youths aged 14-22 about their music habits–from uploading their own original songs, illegal downloads, and how they feel about digital music.

Young people today are already using P2P to get their music, so it makes sense that they are comfortable with using a legal P2P system. About 63% of respondents said that they download music using P2P file-sharing networks.

Unfortunately, there is no legal, pay P2P system available now. So kids are doing what they know: downloading lots of music illegally with P2P. The survey found that respondents had an average of 1770 tracks, of which half were downloaded illegally. They also share music by trading CDs, or copying music from their friends’ hard drives. Seems pretty hard for the RIAA to stop this kind of piracy, isn’t it?

Music labels should take a long look at this study. It shows how kids’ habits about digital music are much different than adults, simply because they’ve grown up with things like P2P, social media and the decline of CD sales. If they don’t heed what kids are already doing today, how can they hope to stay relevant in the future? Labels need to start realizing that their old business models are changing rapidly and they need to adapt with different business models.

Interestingly, the study found that 60% of young people would still purchase CDs. even with a legal file-sharing service. Primarily, that’s because they want to own something physical.

Some highlights:

• 90% of respondents own an MP3 player
• 58% have copied music from a friend’s hard drive to their own
• 95% said that they copy music in some way
• 42% have allowed P2P users to upload music from their computer.
• Money spent on live music exceeds that spent on recorded music

Bonus: Press release from BMR here.

Bonus #2: Article from Ars Technica.

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According to Juniper Research, the worldwide mobile music market will hit $17.5 billion by 2012. Much of the growth will be by rental music services as well as downloads.

Juniper also said that Asia will be the largest marketplace for mobile music over the next five years, accounting for around 43% of sales per year. Ringtone saless, they say, will fall; they currently account for 62% of the mobile music market but by 2012, Juniper expects it to account for only 38%.

The company said that the popularity of the iPhone is pushing the mobile music business. But I wonder how many people use the iPhone as their music player. As a phone, it works well but as a music player it’s not quite a replacement for your 160GB iPod Classic. Although it does come with 8GB ($399) and 16GB ($499) versions, it can’t hold all your music. So many people will have both an iPhone and an iPod.

I would buy an iPhone tomorrow if it had at least 80GB for my music. My current phone, the Spring Mogul, also acts as a music player, but I’ve never treated it as one. I do hold a handful of songs, but it’s mostly for fun and showing off to friends and family. It only has a 512MB mini SD card, so it doesn’t hold very much. But I use my phone as a phone and Internet-enabled device. And I have a separate iPod for my music.

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Want another sign that digital music is growing? Apple is now the second largest U.S. music retailer, behind Wal-Mart. According to NPD, which tracks music sales, Apple’s iTunes jumped over Best Buy and become number two last year.

That a digital music service is now beating many brick and mortar retailers is pretty big news. I think consumers are finally understanding that buying digital music is a perfectly acceptable alternative to buying CDs.

In fact, Apple said that it now has over 50 million iTunes Store customers, and has sold over four billion songs. If each song costs 99 cents, then that’s about $4 billion in revenue since Apple launched iTunes.

Not only does that mean that Apple is dominating physical stores, but it is also dominating online music retailers. According to Point Topic, there are about 500 online music services operating in over 40 countries. Point Topic says that consolidation is inevitable and smaller companies will be acquired by the big services.

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A report by the NPD Group found that 50% of Mac owners are have paid for online music compared to 16% of PC users. Mac users were also more likely to purchase regular CDs than PC owners.

Guess that means that Mac people either a) love music more or b) don’t mind paying for music.

I think the main reason for PC owners not buying digital music is because they don’t use iTunes.

I use a PC and I’ve recently switched my digital music library over to iTunes just recently, but I still don’t have an iTunes Music Store account. I just don’t need one. I don’t like buying DRM crippled music from Apple and I don’t use my iPod often enough. Call me old-fashioned, but I still like to buy CDs and burn them onto my computer. If iTunes sold more DRM-free music, I’d definitely buy digital music more.

On the other hand, perhaps PC users just want to get music illegally and not pay for it.

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A year end report from SoundScan found that digital music sales increased 45% in 2007, while physical album sales were down 15% from a year ago. Overall, U.S. music album sales dropped 9.5% in 2007 yet 23% of music sales were derived from digital purchases.

So who’s to blame? The music industry for not putting out great records? Music pirates for stealing money from artists and record labels? Consumers for just not buying enough music last year? Or maybe it’s a combination of these three.

Whatever the case, it can’t be denied that digital music sales are increasing every year. Consumers are getting more comfortable with digital music and that’s a trend that will continue. Overall, 50 million albums were downloaded in 2007, which is 53% more than 2006. The holiday season once again spurred a large number of sales. Online music company Emusic said that subscribers downloaded almost 500,000 tracks and audio books on Christmas Day alone.

Last year saw Radiohead release an online-only album (called “In Rainbows) for a “pay your own price”. And it was a big success for the band. Industry estimates were that there were 1.2 million digital downloads on first day of the album’s release. However, there are no official numbers on downloads or sales released by the band. In an interview in Wired magazine, band members said that Radiohead’s profits from “In Rainbow’s” digital downloads were more than all of the band’s other studio albums. Mostly that’s because Radiohead owned all the rights to their recordings with “In Rainbows”, unlike their previous albums that were split with the record labels.

In 2012, online music sales will grow to $2.8 billion, predicts Jupiter Research, making up 34% of U.S. consumer spending on music.

Technorati Tags: music, digital music, Radiohead, online music

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