A survey (pdf)¬†of music fans in the UK suggests that pricing at Apple’s iTunes music store may be keeping people from buying more legal music downloads, and could be driving people to file-sharing sites. Equally surprising, the survey suggests that most music fans don’t know or care about DRM (Digital Rights Management software).

iTunes Pricing Slowing Growth of Legal Downloads

• The survey identifies a slowdown in the increase in the population of legal downloaders, with a¬†40% growth rate in users in 2006 reduced to some 15% in 2007.
• The survey reveals a marked decline in the perceived price advantage of legal downloads over CDs.¬†In 2007, only 31% see pricing as an advantage of digital music downloads.
• iTunes’ one-price-fits-all approach to music pricing appears to be a barrier to purchasing. 84% of consumers said that older digital downloads should be cheaper, while 48% claimed they would be prepared to pay more for newly released tracks.
• After a decline in 2006, unauthorised downloading increased in 2007 to its highest level to date
• 2005 = 40% incidence
• 2006 = 36% incidence
• 2007 = 43% incidence

DRM Not Big Factor In Purchasing Decisions For Most

• Most people don‚Äôt know enough about DRM to care about it.
• Among those that know about DRM, there are conflicting opinions. 63% said that it was useful for protecting music against file sharing, but 68%¬†said that music¬†downloads are ‚ÄúOnly worth purchasing if free of DRM.‚Äù
• Of those that care about DRM, most are willing to pay a little extra for tracks free of DRM.

Social Networking & Music

• The survey reveals the massive importance of music in social networks.
• For those under 35, MySpace is clearly the most important site for music, but its importance is correlated with age.
• 2 in 5 social networkers (39%) have embedded music into their profile.
• 59% agree with the statement ‚ÄúI can tell a lot about someone by the music they have on their MySpaceprofile‚Äù.
• Social networks are impacting the way consumers discover, share and purchase music.
• 27% regularly discover music on the social network they love (33% MySpaceusers, 30% Bebo, 26% YouTube)
• 17% of social networkers state using such sites has had a ‚Äúmassive‚Äùor ‚Äúbig‚Äùimpact on the way they purchase music.

Massive Penetration Of Portable Media Players

• The survey found massive increases in penetration of portable media players
• 2005 = 37% own
• 2006 = 57% own
• 2007 = 77% own
• The growth of the personal digital player market hasn‚Äôt yet reached saturation
• Penetration has increased across all demographics
• The biggest increases in brand share taken by mobile phone mp3 players
• Nokia -up from 4% in 2006 to 15% in 2007
• Samsung -up from 6% in 2006 to 14% in 2007

Source:  Entertainment Media Research (pdf); More discussion at ARS