The Streaming Effect: Assessing The Impact Of Streaming Music Behaviour

The 20,000 Foot View

Streaming has arrived and is here to stay, that much is clear.  What is not is how it will impact existing music revenue streams.  Though neither a business model nor a product, streaming is the lens through which the irresistible force of the shift from ownership to access is best understood.  The first shift to digital was as disruptive as it was transformative.  The shift to access based models though represents a more dramatic shift that challenges existing business models to the core.  The first wave of subscribers was harvested directly from the most valuable download buyers, denting music sales in the process.  The next wave must both better compete with free streaming and draw from a more mainstream customer base.

Key Findings (Data Points Are Removed From This Preview Summary)

  • Free streaming is where the heat is: global subscribers will total Xmillion by the end of 2014 but ad supported users will reach X million
  • But free is not yet effectively monetized: ad supported revenue will be $X by the end of 2014, compared to $X for paid subscriptions
  • X% of consumers are music streamers, with a fifth of them paying to stream
  • 25 to 34 years olds have the highest paid-to-free ratio while 18 to 24 year olds have the highest overall streaming penetration at X%
  • X% of music streamers stream audio for free and X% stream music videos
  • Free is impacting willingness to pay: X% of music streamers won’t pay for music because they get all they need for free from YouTube
  • Streaming is denting music buying:  X% of music streamers have stopped buying more than one album a month
  • Download sales will continue to feel the pinch with X% of all music downloaders also music streamers
  • Significant opportunity however remains untapped: only X% of streamers have tried a subscription trial while X% would pay for one
  • Streaming has dented the impact of piracy by creating a hierarchy of free in which consumers have multiple free alternatives

Companies mentioned in this report: Spotify, Apple, Amazon, YouTube, Nielsen, Triton, Adswizz, Beats