Reports Music

Streaming’s next growth phase The necessity of differentiation

Report by Tatiana Cirisano
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20,000 foot view:  DSPs have long been able to grow their subscriber bases despite all offering essentially the same experience. Yet the freemium model is reaching a saturation point, putting slow but steady pressure on DSPs to find new ways to grow subscribers and revenue. Most remaining people who do not already pay for streaming either lack enough interest in music or cannot afford to subscribe. The cost-of-living crisis, the attention recession, and growth of non-DSP streaming as a free alternative will make converting these consumers even more challenging. The path forward necessitates that DSPs change and evolve their offerings, giving way to the format’s first phase of differentiation. 

Key insights 

  • Year-on-year growth            both subscriptions and ad-supported revenue            slow from double to single            within the next four years
  • When asked            costs they would cut if            to reduce entertainment spend,            of            subscribers would cancel a music            subscription and downgrade to the            version
  • There is            much long-term subscription growth to            had in emerging markets, particularly            Pacific, but revenue growth will            offset by those regions’ lower           
  •            of consumers who do not subscribe to streaming would be willing to convert, and            are likely to do so
  • Not all            are addressable; most either do            listen to enough music to            for it            and / or            afford or justify the price           
  • Roughly            of            consumers think music is worth            paying for, compared to            in           
  • Non-DSP revenue            grow            faster than DSP revenue            reach            billion by 2030, driving            subscriptions’ share of total streaming            from            in 2021 to            in           
  • The path            for DSPs will be about            the ad-supported model; converting more            to paying subscribers through new            and expanded tiering; and getting            spend out of existing subscribers            add-ons
  • This combination            financial and cultural pressures will            DSPs to differentiate, with potential            including the Creator Destination, Music            Network, Super-Streamer, Audiophile’s Club, and            Streaming Powerhouse

Companies and brands mentioned in this report: Amazon, Amazon Music, Amp, Apple, Apple Fitness+, Apple Music, Apple One, Audible, Audiomack, Bandcamp, ByteDance, Criterion Collection, Deezer, Dreamstage, Driift, GarageBand, Google, Instagram, iPhone, Logic, Meta, NetEase Cloud Music, Netflix, Peloton, Platoon, Repost, Resso, SoundCloud, Soundtrap, Spotify, Tencent Music Entertainment, TIDAL, TikTok, YouTube, YouTube Music, YouTube Shorts