GLOBAL ONLINE MUSIC STREAMING MARKET
In an increasingly polarising world full of differing views, very few things have the ability to bring people together like music. Yet music is at the heart of many cultural identities. Music is everywhere, from car stereos and malls to celebratory events, it has been there for a long time. But the way we listen to music has evolved, especially since the beginning of the technological revolution in the 1990’s.
The iconic Sony Walkman (1979) essentially changed the way we listen to music, introducing us to the world of portable players. The Apple iPod (2001) was a monumental success in the digital media players market allowing users to store vast numbers of songs in a sleek device. But the ongoing innovation in ‘music’ isn’t in the audio players. Rather, it is focussed on the personalised streaming of an endless collection of music, curated to the user’s preference and taste.
Online streaming has helped artists to increase their outreach to even remote regions of the world, democratising the music business. Platforms like YouTube and SoundCloud allow users to freely upload their content making it extremely easy for talents to become viral. The tech giants are betting big on music streaming as part of their digital ecosystem.
COVID-19 IMPACT ON ONLINE MUSIC STREAMING MARKET
The global pandemic seems to have had a catalytic impact on the market similar to other OTT services with users tuning into news and podcasts from the comfort of their home.
REVENUE MODEL IN ONLINE MUSIC STREAMING MARKET
80% of the revenue channelled from subscriptions while the rest came from ads and partnerships. While subscribers are growing at a healthy rate, keeping the revenue growth up has been a challenging feat for the companies. Users are willing to pay for ad free, intuitive experiences with original and exclusive content, a strategy adopted by Spotify through partnerships with record labels and content creators.
Streaming platforms have used advertising and referral campaigns to gain free subscribers and then offering attractive subscription plans for premium features. Apple is reluctant to join the free plan strategy, a luxury it can afford thanks to its loyal customer base and its high-end tag.
Amazon offers its music service as part of its prime subscription, and a paid unlimited version separately. Amazon is also pitching its lossless music for high quality audio content as a premium offering, competing directly with Tidal. Google intends to consolidate by shutting play music this year and integrating with YouTube Music.
The tech giants offer their streaming service across a range of their devices, integrating key features such as virtual assistants to boost user experience.
In new markets such as India, where paid subscribers are hard to come by, ads are a common feature, considered a small price to pay for free music by the average user. They also rely on telecos for bundling their product, an alliance to dominate the market.
Local players have attributed their success to a deep understanding of the cultural preferences and a plethora of regional content. In 2018, Tencent invested US$ 115 Million in Gaana to develop an AI tool for personalised content delivery, which they claim to have increased consumption by 24%.
GLOBAL ONLINE MUSIC STREAMING MARKET SIZE & FORECAST
The global online music streaming market is estimated at $XX Million in 2020, growing at –% CAGR till 2025
GLOBAL ONLINE MUSIC STREAMING MARKET COMPETITIVE LANDSCAPE
Spotify is the global market leader with a 23% YOY growth in revenue in 2019. Spotify commanded a 31% share of total revenue and 35% of paid subscribers in 2019, tailed by Apple music (24% Revenue, 19% Subscribers). Amazon Music grew its revenue from 10% in 2018 to 15% in 2019.
However, in culturally distinctive markets, local players have outpaced their global counterparts despite their aggressive strategies.
Market Leader in-
- India – Gaana
- Russia – Yandex
- Arab Nations – Anghami
- China – Tencent
Certain streaming services focus solely on niche segments within the market such as Idagio and Primephonic that exclusively feature classical music, and SiriusXM providing satellite radio services and podcasts. In a global context this segment is merely a sliver of the pie.
THE WAY FORWARD GLOBAL ONLINE MUSIC STREAMING MARKET
Online music streaming is a game of numbers: the one with the most subscribers gets to dictate the market and shape the industry. The next important metric is the user retention for a stable revenue stream. Contrary to popular belief, music licensing is expensive which makes profitability elusive, additionally due to expansion costs. Spotify only recently managed to turn a profit in 2018.
With increasing smartphone penetration and cloud based connected devices aided by reliable internet that is getting faster and cheaper by the day, the stage is set for the market to be dominated, outlined by the following factors for growth as a winning combination:
The market has grown beyond just recorded music to podcasts and live concerts, making it imperative to stand out through exclusive, original content.
- User Experience
Software interface with personalised recommendations enriches user experience making it likely for them to stay with the service, especially in non-homogenous markets.
- Decisive Business Model
A committed strategy focussed on USPs with a clear well-defined vision is likely to be more successful than a cautious approach.
- Following the Youth
The youth of today drive the musical trend. Open to new genres their musical taste is constantly changing. Youth being the largest user base, the streaming platforms must consistently endorse their preference to stay relevant in the market, using data for insights.
- Strategic Partnerships
Music Streaming as a standalone product is harder to sell than a suite of software such as the Microsoft Office. This gives an edge for tech companies that do not solely focus on streaming. Thus, a partnership at the right time could prove beneficial for all the involved entities including users.
While the 2020 projections expect the majority of the revenue to come from the USA, a developed market, it is clear that the long term lucrative interests lie in the emerging markets with massive young populations and increasing income.
|2||Scope of the report|
|7||Insights from Industry stakeholders|
|8||Cost breakdown of Product by sub-components and average profit margin|
|9||Disruptive innovation in the Industry|
|10||Technology trends in the Industry|
|11||Consumer trends in the industry|
|12||Recent Production Milestones|
|13||Component Manufacturing in US, EU and China|
|14||COVID-19 impact on overall market|
|15||COVID-19 impact on Production of components|
|16||COVID-19 impact on Point of sale|
|17||Market Segmentation, Dynamics and Forecast by Geography, 2020-2025|
|18||Market Segmentation, Dynamics and Forecast by Product Type, 2020-2025|
|19||Market Segmentation, Dynamics and Forecast by Application, 2020-2025|
|20||Market Segmentation, Dynamics and Forecast by End use, 2020-2025|
|21||Product installation rate by OEM, 2020|
|22||Incline/Decline in Average B-2-B selling price in past 5 years|
|23||Competition from substitute products|
|24||Gross margin and average profitability of suppliers|
|25||New product development in past 12 months|
|26||M&A in past 12 months|
|27||Growth strategy of leading players|
|28||Market share of vendors, 2020|
|30||Unmet needs and opportunity for new suppliers|