Posted by Glen Sears | January 11, 2016 10:26 am | No Comments
Story of the Week
US & UK Streaming Numbers Were Way Up, But At What Cost?
In 2015, overall US music consumption tracked by Nielsen Music grew 15.2 percent to 549.4 million track equivalent albums and streaming equivalent albums, a 93% increase. The UK now follows an increasingly familiar European narrative of strong streaming growth helping bring total markets back to growth. Sales revenue increased 3.5% to reach £1.1 billion while total streams increased by 85% to reach 53.7 billion, with audio stream representing 49.9% of that total.
Crucially for those in the music industry, this rapid increase in streaming doesn’t come without a cost. While streams increased by 257% between 2013 and 2015, download sales decreased by 23%. And of course the vast majority of that streaming volume came from free streams, not paid. There are a number of theories. One from MusicWatch’s Russ Crupnick claims about 50 million of the 120 million people using music audio and video streaming sites won’t pay to stream—the remainder will be difficult to reach.
Another explanation is digital deflation, a term that explains how content loses value when consumption switches from physical to digital formats. (In economics the term refers to the idea that digital technologies lead to greater productivity and cheaper prices.) It’s too early to say if streaming will further the digital deflation in music, but it doesn’t appear to be reversing the effect. But streaming revenue is more complicated than download revenue. Royalties paid to rights holders can depend on a number of factors: streaming activity, label market share, advertising rates, the number of subscribers to premium services and the amounts paid to those services.
The download to streaming transition is an inevitability, whatever business models are wrapped around it. It is part of the fundamental shift from ownership to access of which streaming music is but single component. It comprises consumers progressively replacing one behaviour with another. We all just have to learn how to thrive in that new ecosystem.
Top News Stories
BPI Study Asks Why Fans Pay For Streaming Music, What Makes Them Convert From Free. The study suggests that there are really a variety of factors including exclusive features that motivate users to lay down their credit card.
iHeartMedia Announces Digital Expansion Into Canada. In partnership with Bell Media, the deal will encompass everything from live and televised events to content on car dashboards, handheld devices and consumer electronics, putting Bell Media ahead of its direct media competitors in Canada.
Breakdown: Pandora’s Ticketly Acquisition in Numbers. In 2014, Ticketfly had revenue of $55.0 million, an operating loss of $8.9 million and a net loss of $9.5 million. In the first three quarters of 2015, it had revenue of $52.8 million, a $12.3 million operating loss and a $13.9 million net loss. (See the full figures here.)
SFX Entertainment Explores Bankruptcy, Hires Restructuring Experts. Only 26 Weeks after a $260M IPO, SFX is exploring the protections available in federal bankruptcy, according to a new SEC filing. It has hired restructuring experts TI Consulting to lead the effort.
40% Of Customers Would Change Providers If Music Came With Their Mobile Plan. A new survey suggests that mobile bundling may be a more effective way to gain users, and confirms why mobile carriers need to be more aggressive with their music offering.
Apple Music’s App Has More Users Than Spotify’s. The Apple Music app is allegedly now the 9th largest smartphone app, with 54.5 million users, outpacing both Spotify and Pandora. Whether these users count as actually “active” however, is questionable.
Researcher Claims Labels Still Don’t Get YouTube, And It’s Costing Them. “Record labels and artists can seize some control of their destiny, by taking a more sophisticated view of YouTube and exploring how to build strategies that work for YouTube in 2016.”
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