• Spotify, the market leader in online music streaming, had a 32% YoY growth in paid subscriptions during 1H 2019.
• Apple and YouTube Music are very aggressive and are going to disrupt the regionally segmented market.
• While the subscriptions continue to grow in mature markets, the majority of new subscriptions will come from emerging markets especially Brazil, India, and Russia.
Global online music streaming revenues grew 18% year-on-year (YoY) to cross US$11 billion in 1H 2019, according to the latest findings from Counterpoint Research. Monthly Active Users (MAUs) grew 21% YoY in 1H 2019, while paid subscriptions grew 32% YoY. We believe that online music streaming revenues will grow at a rate of more than 20% YoY to reach US$24 billion by the end of 2019.
Commenting on the overall market, Research Analyst, Abhilash Kumar, said, “Online music streaming revenues have grown at an impressive 32% CAGR during 2016-18, which reflects the increased demand for such services by users. Overall, subscriptions account for more than 80% of the industry revenue, while remaining comes from advertisements and partnerships with brands and telcos. We believe the market still has not peaked and will continue to grow at a healthy rate of more than 20% for at least a couple of quarters.”
Spotify leads the chart for 1H 2019 both in terms of total revenue and paid subscriptions. It has a 31% share of the total revenue in the industry and a 35% share of the total paid subscriptions. Apple is close behind with a 25% share of total revenues in the industry and a 20% share of the total paid subscriptions. Meanwhile, Tencent Music has the highest share (31%) of global MAUs, through its subsidiaries QQ Music, Kuwo, and Kugou. However, more than 90% of Tencent users use free services only.
Talking about the top performers, Kumar added, “Strong marketing campaigns, expansion into emerging markets, partnerships with peers of different industries and a focus on podcasts have helped Spotify become the industry leader. Apple is focussing a lot on its services revenue and sees a lot of potential in its music streaming service. Subscription price cuts, partnerships with industry peers, and improvements to the in-app experience have helped Apple. Tencent Music benefits from its social media platform and easy as well as free availability to get a huge user base.”
As of now, music streaming firms are focussing on increasing their paid subscription base through trials and promotional offers, to create loyalty and stickiness. Apple Music’s paid subscriber base grew 55% YoY in 1H 2019. Similarly, the combined paid subscriber base of Google Music and YouTube Music grew 56% YoY. Russian firm Yandex music also grew its paid subscriber base at 89% YoY, albeit a small base.
Commenting on the challenges that the online music streaming industry faces, Senior Analyst, Hanish Bhatia, said, “The music industry still faces various licensing and copyright challenges in different parts of the world. Streaming giants, such as Spotify, Apple, and YouTube, have a significant role to play to harmonize the same. This will be especially important when expanding into emerging markets, where monetization remains a major challenge.”
Looking at the outlook, we believe the competition is going to get more fierce. Increasing the paid subscriber base while at the same time managing costs over the long-term will decide who leads the market.
The comprehensive and in-depth “Global Online Music Streaming Market Tracker 2019 Q2” is available for download here.
