LOS ANGELES, April 29 — Times are tough for subscription video streaming services as Netflix saw its subscriber base shrink for the first time in 10 years. This is a source of concern for music streaming providers, who fear that their growth will slow after two years of the pandemic.
The news came as a shock ― Netflix lost 200,000 subscribers in three months, while analysts expected to gain 2.5 million. The leader in video streaming explains this collapse by the war in Ukraine, but above all by structural factors such as account sharing and competition from new market entrants.
Experts now fear that the same phenomenon could affect music streaming. This market was booming until now. In fact, streaming is now the main way to listen to music all over the world. Of the $25.9 billion in revenue generated from recorded music in 2021, $16.9 billion (RM73.6 billion) will come from streaming, or 65% of the total, as detailed by the International Federation of the Phonographic Industry (IFPI) in its latest annual report. Between 2020 and 2021, revenues from this mode of music consumption have increased by 24.3%.
This increase is mainly due to paid subscription streaming, with revenue growth of 21.9%. And ― good news for Spotify, Apple Music and others ― subscribers to paid music platforms are steadily increasing their listening time. They now spend 1 hour and 33 minutes listening to music, up from 1 hour and 26 minutes, according to a recent GWI media consumption study. This trend is visible in all regions of the world, although it remains mainly driven by the Americas (Latin and North) as well as Africa and the Middle East. This is good news for players in the sector who are multiplying initiatives to develop in these territories ― Spotify in the lead. In November, the Swedish group launched in the Republic of Congo, the Democratic Republic of Congo, Libya and Iraq.
The music resists
The impressive health of music streaming may come as a surprise compared to that of its video counterpart. But it testifies to the preponderant place that music ― and more generally audio content ― now occupies in our lives. For many, music has been a real source of comfort during the pandemic. Video streaming platforms have performed the same function, but this effect is starting to fade in the face of recent price increases. In response, many households are reducing their spending on entertainment. This trend is particularly visible in the United Kingdom, where the number of households subscribing to at least one streaming service fell by 215,000 during the first quarter of 2022, according to Kantar. “In times of financial uncertainty, services must be indispensable in the minds of subscribers,” Dominic Sunnebo, director of global vision at Kantar Worldpanel, told the Guardian. “As a result, it is now more essential than ever that SVoD providers demonstrate to consumers how much their services are essential at home in what has become a fiercely competitive market.”
But music streaming platforms still seem spared. The appetite for this form of entertainment persists for several reasons, such as the need to disconnect and the ability to listen to millions of songs whenever (and wherever) you want. “The beauty of audio is that it can be consumed in combination with other media or behaviors, and often is,” GWI explains in its latest research. Another advantage for Spotify, Deezer and others, music streaming is a mode of consumption adopted by everyone, regardless of age. Generation Z and Millennials are particularly fond of it. They devote respectively 1h55 and 1h43 to this activity per day. This is significantly more than baby boomers, who clearly prefer radio (1h5 minutes against 40 minutes for music streaming).
While music streaming is generally doing well, it remains an extremely competitive market. The Swedish Spotify still reigns supreme, even if it is now closely followed by emerging players such as Chinese Tencent Music and NetEase Cloud Music. They represent 18% of subscribers in the global market, even though they are only available in the Middle Kingdom, according to the analysis company MIDiA Research. Another (modest) competitor is Deezer, the French pioneer in online music listening. The platform recently reached “a definitive merger agreement” with listed company I2PO as it prepares to go public. He abandoned a previous attempt in 2015, citing “adverse market conditions”. The conditions now seem much more favorable, perhaps proof that music streaming does not (yet) have the same fate as Netflix. ― Studio ETX