.Very often, numbers can give a very clear picture. And for music streaming services, that picture is currently very bright, indeed. Just a few facts here. According to MIDiA Research data from 2020, in 2015, there were 76,8 million streaming music subscribers. In Q1 of 2020, that number grew to 400 million! It also turns out that interactive streaming through services like Spotify, Apple Music, YouTube, and Amazon Music “is spearheading industry growth. As it stands, streaming is contributing 75% of the global music industry revenue.”
It is also important to note that the biggest streaming services are the ones that offer a paid subscription. In 2019, paid streaming accounted for 59.4% of the total digital revenue. (IFPI, 2019)
It turns out that the services that offer the free subscription version supported by ads are not really lagging behind. In 2018, the total revenue collected from on-demand streaming platforms supported by ads (including YouTube, Vevo, and Spotify (free version) increased by 15% in 2018 to reach $760 million. (RIAA).
Looking at just these numbers, it is easy to agree with a 2019 report published by soundcharts.com. “The adoption of streaming is by far the most significant shift in the (music) industry in the last ten years — and that’s a shift that is still ongoing. Even today, streaming services are looking for ways to expand their user-base, develop their product, grow the revenues, and find a sustainable long-term business model.”
So, there are a few questions that are of interest, both for the users and those that want to get involved in the music streaming in one way or the other. How did music streaming evolve? What are its current trends? What is in it for everybody involved?
This post has been updated in September 2021.
The (r)evolution of music streaming services
More than 20 years ago (1999) so-called peer-to-peer music sharing services were all the rage. Led by Napster, the key media that was transferred was music. RIAA called it piracy and fired a lawsuit against Napster, with the sharing service ending up at the short end of the stick ($300 million in settlements). But, Pandora’s box was opened. As the above source says, “the content of P2P music sharing is out in the open.” The pirate music services grew like mushrooms, and are still around in numbers.
The legal approach proved fruitless, and revenues were plummeting across the recording industry. Various legal download-to-own alternatives entered the market in the early 2000s, with the most notable example of iTunes, integrated into Apple’s ecosystem — but even it couldn’t match the appeal of free pirate services. By 2008, by IFPI estimations, 95% of all digital music was downloaded illegally (Soundcharts)
Looking for counter solutions, the music industry found it sometime around 2007. It bears the name of Music as a Service, Open Music Model, or simply music streaming. The starting point might have been the launch of YouTube back in 2005, or Pandora’s interactive radio service.
But the music streaming model that was the closest to what it looks like today came with the advent of Spotify. Currently, the largest music streaming service was founded in 2006 in Sweden and was launched in Europe in 2008 as “the first legal streaming service with an extensive, all-encompassing catalog.”
The current key trends in music streaming
Let us resort to numbers again. Streaming is now the primary source of recording revenue around the globe. The recording industry revenues, raising another 9,7% in 2018, seems to be on its way to match or even top the 2000–2001 pre-piracy peak — and the power behind that growth is the rapid development of streaming (above).
In 2017, 85% of the markets were digital-first, and for all of those countries, streaming is the primary source of digital revenues. And according to the latest report by Mordor Intelligence, the global music market is expected to witness a CAGR of 8.5% in the forecast period (2021 – 2026).
Currently, the share of the market looks as follows (source, Statista):
- Spotify 35%
- Apple Music 19%
- Amazon 15%
- Tencent 11%
- YouTube 6%
- Others 14%
So what are the current key trends in music streaming? According to the Soundcharts report above, there are five such trends:
- The streaming music market is maturing. “The lion’s share of the streaming growth we see today is due to the new consumers, making a switch from the previous generations of music distribution — whether its physical sales or digital downloads. Once that shift is completed, the growth is bound to dial down.”
- Streaming services are trying to find a sustainable financial model. There’s every reason to believe that not just Spotify, but all major western services are yet to reach profitability. The question isn’t how will streaming services turn a profit — it’s how will they keep the momentum. Some big providers like Apple Music see that in providing high-quality streams.
- Global expansion of streaming. While more developed streaming markets are reaching the max adoption rate, some of the potential big markets are yet to expand. That includes China, Japan, and India.
More on trends
- The role of smart speakers and voice-controlled devices. “The latest forecasts project that by 2022, smart speakers will reach 66,3 million households or 167,7 million people in the U.S. alone — matching projected streaming user base for the same year. Smart speakers are one of the hottest topics in the music industry right now, promising a shift in music consumption which will surely make an impact on the streaming market.”
- Streaming vs. radio. The streaming services compete with other mediums for the users’ attention. Their biggest competitor is still radio. “Radio still holds substantial power on some of the markets. Take the U.S. for example, radio is both the first channel for music consumption and the most powerful medium in the U.S., reaching 92% of Americans every week. In that sense, the radio audiences are a massive opportunity for the streaming market. However, winning over the radio listener is not an easy task.”
Advantages of music streaming services for users
But let us look at the music streaming services from the aspect of their users. Where is the appeal? As National Public Radio puts it, “streaming services offer music fans a tantalizing premise: Instant, limitless access to music from all over the world and across history, for a small monthly fee. Or for free, as long as you’re cool with advertisements cutting into the experience.”
In listing the pros of music streaming for users, Hocking College names the following:
- Streaming makes music more accessible to everyone anywhere on the planet.
- Many times the sound quality of streaming music will be far superior to that of songs on CDs.
- Subscribers will have access to out-of-print recordings.
- Streaming doesn’t take up space on the user’s hard drive.
- Streaming services offer customers a vast selection of music to choose from.
- Subscribers can easily create their own playlists.
- New artists and genres of music are more accessible to customers.
- Streaming services make customers aware of new releases from their favorite artists.
- Up and coming artists stand a much better chance of being discovered.
- Subscribers can use their playlist to help make new releases potential hits.
- Streaming gives new artists the chance to create their own marketing campaigns.
- New artists have a greater chance of making profits off their music.
Comparison of music streaming services – Spotify and Apple Music
There are quite a number of music streaming services comparisons available to look at. Some look at the services, from the technical side, others from the content side. Sites like Consumer Reports and Reviewed give a more general overview.
We have narrowed down this comparison to the services with the biggest market share. Also, we have included one specialist service on the rise mentioned by most reviewers (Tidal), as well as one of the first services around (Pandora). The basis is reviewed by Consumer Reports.
- Spotify – Currently the largest streaming service is best for users who want to hear plenty of music on a variety of devices. The free tier is also one of the better options for users who don’t mind ads and want to listen to songs on demand. Spotify is making a bid for the podcasting market as well and hosts some exclusive shows such as podcasts from Michelle Obama and Joe Rogan.
Spotify works with a variety of connected devices, including the Sonos One and Google Home Max smart speakers, as well as the Sony PlayStation 4 game console. Desktop apps are available for macOS and Windows, and mobile apps are available for Android and iOS.
- Apple Music – Apple Music has a library of 60 million songs that can be accessed on devices running macOS, Windows, iOS, or Android. Human curators create a variety of themed playlists that help users discover new music. Apple Music sometimes has exclusive early releases of new music from popular artists. For now, Apple Music is the only service that will stream directly from a HomePod (Apple’s smart speaker) without needing to connect your phone. It also has a novel feature that lets you search for songs using lyrics, which is useful if you can’t remember the title.
Amazon, YouTube, Pandora, and Tidal
- Amazon Music HD – In addition to the library of tracks you get with Amazon Music Unlimited, Music HD provides the option to stream files at a higher bit rate, which can make for better sound quality. The latter is audible by using high-quality audio equipment.
- Amazon Music Unlimited & Prime Music – Both are ad-free, on-demand services. Amazon Music Unlimited gives you access to 60 million songs, thousands of hand-curated playlists, and personalized stations. If you have an Amazon speaker, you can summon songs using Alexa and get some additional content, such as commentary from selected artists.
- YouTube Music – This service is best suited for users that rely on all other Google services. Particularly those who spend a lot of time listening to music or watching videos on YouTube. The free version of YouTube Music is one of the few options for users who want to listen to songs on demand. What sets YouTube Music apart is users’ ability to upload up to 100,000 of their own audio files to stream from the cloud. Also, this is free of charge. Like other services, YouTube music also grants access to a large library of songs, personalized playlists, and music videos available via mobile and desktop apps.
- Pandora – One of the earliest streaming services is useful primarily for US users. There are limitations to the use of this service outside the US. Paid subscribers can stream specific tracks, as they can on any other service. But Pandora works best for those who want tailored recommendations. Also, for the kind of hands-off listening experience you get with a live radio station. You don’t need to scroll through lists of songs or do a lot of searches. You just sit back and listen to what the service picks for you.
- Tidal – This is the service for users that favor high-quality audio. (including high-res audio) and offline listening. The service is also great for hip-hop and R&B fans; its offerings are particularly comprehensive, including some exclusive material.
Benefits for businesses
The numbers we mentioned above should serve as a solid indicator of the business advantages of music streaming services. From the ability to place audio ads on any and most of those, to music podcasts, and specially curated playlists that can be tailored for specific workplace situations.
But how to create audio ads, podcasts, or even specific music playlists that will work? In most cases, this will require the help of dedicated professionals. Most often, you can find these among the ranks of freelancers.
In that respect, BunnyStudio, offers a wide range of carefully selected freelance and marketing professionals that can offer a wide range of services, from audio to content writing. We would be glad to help you in that respect.