Reports Music

Streaming Music Pricing Inelastic Stretching

Report by Mark Mulligan
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20,000 Foot View: Pricing has long been an issue for streaming music subscriptions, with the            price point having the double challenge of reducing the spending of the most valuable music buyers and being higher than the average spend of most music buyers. Streaming services have worked around the issue with a combination of telco music bundles and aggressive price discounts. However, these tactics place long term pressure on the            price point as they create a consumer perception that streaming music should be cheaper. For now, discounts are doing a great job of converting users and of easing consumers into the            pricing but the next phase of the streaming market requires a more sustainable approach to pricing strategy.

Key Findings:

  • Between 2013            2015 the average monthly revenue            music subscriber fell from            in            to            in 2015
  •            of the            subscription opportunity across established markets has already been tapped, rising to            in Sweden and falling to            in Australia
  • At the            of 2016 there were            million            a            million net increase since            compared to a net increase                       million in 2014 and            million            2013
  • Subscriber growth            accelerate further but peak in            culminating in            million commercially active            by 2020
  • Fully featured            streaming and aggressive promotional price            for            services have sucked the            out of the mid-tier opportunity 
  • All You            Eat (AYCE) streaming is price            with a value of just            the range of            to           
  •            is a sizeable opportunity with            of existing subscribers interested in a premium plus, multimedia, high definition audio tier            continues to present the best balance for AYCE streaming music subscriptions with            reducing revenue and only marginally increasing reach
  • A gaping            exists between ad supported and            AYCE premium that can be            with niche services and innovations            as Amazon Echo
  • In the            there are            different streaming video            main price points, ranging from            month to            compared to            for           
  • Though emerging            pricing is more diverse, on            Purchasing Power Parity (PPP) basis            price points are equivalent to            more than           

Companies and services mentioned in this report: Amazon, Amazon Echo, Anghami, Blinkbox, CÜR Music, Deezer, Disciple Media, Facebook, France Telecom, FreqsTV, GigRev, Hulu, MusicQubed, Naxos, Orange, Pandora, psonar, Rokmobile, Spinlet, Spinnr, Spotify, SupaPass, QQ Music, The Overflow, YouTube