“Streaming subscriptions accounted for over half of all global spend on music last year, a segment which includes packaged music, pay-per-download singles and albums, and streaming music subscriptions,” says David Sidebottom, Principal Analyst at Futuresource Consulting. “In the first half of 2018, the upward trend has continued, tipping the vast majority of key countries beyond the 50% threshold. What’s more, all this growth is not at the expense of the overall market. The momentum is fueling expansion, with consumer spend on music growing by 10% in 2017.”
Uptake of streaming services is being driven across all fronts, due to service competition, growth in family plans, and smart and wireless speaker uptake, alongside a wider, steadily growing acceptance of streaming media in all its forms.
"This growth isn’t restricted to any particular world territory either,” says Sidebottom. “We’re seeing impressive figures coming in from North America and Europe, while emerging markets are also making their presence felt. By 2022, the number of paid music subscriptions will have grown by half as much again, with the APAC region taking a sizable share of the total.”
Beyond the two behemoths Spotify and Apple Music, the market is fragmented, with players like Deezer, Tidal, Napster and Google Play Music/YouTube Music still present in many developed markets, while Amazon has emerged as a player particularly in the USA, UK and Germany.
Looking beyond music streaming, download sales continue to fall, as a direct consequence of the rise in streaming music services. CD sales are also facing double-digit decline in most markets, with the rare exception in some traditionally resilient countries.
“Conversely, vinyl sales continue to post double-digit growth, presenting an oasis of revenue in the packaged media desert,” says Sidebottom. “The sands are shifting, but our forecasts show there is still a short period of growth left before the vinyl market begins to stabilise.”
In amongst all this music market action, Futuresource will host its fifth Audio Collaborative conference in London, on November 8. Bringing together Futuresource analysts and industry heavyweights from professional and consumer audio, the conference will explore all the technologies, markets and strategies that are opening up the opportunities for companies in the audio industry. Click here to read more about the event.
Although the industry continues to experience robust growth, user bases will eventually begin to saturate, and services are already exploring ways to expand their offerings, provide additional value and differentiate their offerings.
“Video could be a differentiator for any music streaming service,” adds Sidebottom, “particularly as YouTube remains the number one streaming music service globally in terms of consumption. The integration of Google Play Music and YouTube Music has been an obvious move, but we need to proceed with caution.
“The industry is watching with bated breath, particularly given that free music videos on YouTube are so engrained within the public’s psyche. Consumption and renumeration do not walk hand in hand. YouTube is estimated to have generated $3 billion in revenue from music videos in 2017. Our own estimates indicate that, every month, over one billion users watch music videos on YouTube. That’s equivalent to less than $3 of revenue per user, across the entire 12 months of 2017. In contrast, streaming music subscriptions generated around 20 times that figure.”