How Streaming Is Changing the Music Industry
Posted on 29th August, 2014 by Mark Mulligan
Today we announced the launch of an important new MIDiA Research report:
Streaming Effect: Assessing The Impact Of Streaming Music Behaviour’. The
report reveals how streaming music is now firmly established, with
significant growth potential but how it is also contributing to declining
download sales. MIDiA Research clients can get immediate access to the report, the
entire data set and the full presentation.
To find out more about how to become a MIDiA Research client click here.
Here are some of the key findings of the report:
Consumers Are Buying Fewer Albums
30 percent of consumers are music streamers and a
fifth of these consumers pay to stream.*
Streaming has driven new market growth in countries such as Sweden but
in larger markets such as the US it is denting digital music buying. The first wave of subscribers was harvested
directly from the most valuable download buyers, denting download sales in the
process. 23% of music streamers used to
buy more than one album a month but no longer do so. Download sales are
affected most and will continue to feel the pinch with 45% of all music
downloaders also music streamers.
Thus although streaming and subscriptions will grow by
238% on 2013 levels to reach $8 billion in 2019, download revenue will decline
by 39% - only five percent less than the rate at which CD revenues will fall -
leaving streaming and subscriptions representing 70% of all digital revenue.
Potential For More Growth
significant subscription growth potential: only 15% of all music streamers have
yet tried a subscription trial and 22% say they would pay for a $9.99 service. The next wave of adopters will be more
mainstream than the first. These will be
consumers that spend less on music and so the cannibalistic impact on download
sales should be less. However the fact
they are lower spending means lower priced subscriptions will be key to
converting them. Apple’s next
move will be key. The acquisition of
Beats and its streaming service was a statement of intent and a strategic shift
of gears. Whatever Apple does could
reshape the entire streaming market.
Going digital was the first phase of the digitization
of the music industry. Moving from
ownership to access is the next. It won’t
be an easy journey and many labels, artists and even music services will feel
things get worse before they get better.
But make no mistake, we are on the cusp of a new era for the music
industry, indeed we are on the cusp of a new industry. The disruptive transformations that have
taken place since the late 1990’s were the shifting of the sands. Consumer behaviours changed, perceptions of
value of music monetarily and culturally changed, technology changed.
We now have new foundation stones upon which the next
music industry can be built. For
artists, labels, publishers, tech companies and others that have come into
being in the last five years, this is the only world they know. They are learning how to make sense of
streaming, of what it means to move from ownership to access. These are the
people that shape the future of music and of the music industry. Streaming is changing forever how consumers interact
with music. Now the task is to define
the industry in which these changes can make sense.
*Consumer data refers to UK, US and Brail