New forecasts by eMarketer for the US music streaming market suggest that most kingpin services will continue to rise until 2025, but a steady decline is the fate of Block’s oldest child.
Due to the details of how Spotify operates (a limited free tier that runs on advertising revenue alongside the paid premium version), eMarketer’s numbers show the music streaming sector through two different lenses. And total subscribers.
Spotify dominates both, but that the entire model is based on using free access (with certain restrictions and restrictions) as the primary way to attract users and convert them to paid subscribers. When you think about it, it’s not surprising. According to eMarketer, Spotify currently has 83.1 million users in the United States, of which 44.7 million pay subscribers. By 2025, it has grown to 106 million users, more than half of which (52.2 million) are paying.
Apple Music will also grow from 36.9 million subscribers this year to 40.6 million by 2025, albeit not so rapidly.
Launched as a consumer service in 2005, Pandora, the longest-serving brand here, may be looking at the bad news rather than the good news. Like Spotify, it runs on a “freemium” model (from limited access for free users to unlimited access for full subscribers). According to eMarketer, total users will drop from 54.2 million this year to 46.1 million in 2025. However, the number of subscribers will increase slightly, which could increase from 6.5 million to 7 million over the same period.
However, it is much more difficult to determine the service figures for the two largest companies in the world, and there are certain important caveats to forecasting them.
Another service with warnings is YouTube Premium, which will jump from 29.5 million subscribers this year to 46.6 million by 2025 on eMarketer’s project. This makes it a bigger player than Apple Music and the second largest player on the market after Spotify. However, there are many provisions for this forecast.
“YouTube Premium isn’t dedicated to audio listening, but we’ve included it in this forecast because most users who pay for YouTube use it to listen to music and podcasts at least once a month,” eMarketer said. I am. “YouTube Premium metrics are a combination of YouTube Premium and YouTube Music. YouTube Premium quotes cover all users of the product, including those who use it for purposes other than audio listening. . “
Forecasting the market growth of the music business has always been an incredibly risky business. They often shatter when holding forecasts from more than a decade ago to today’s light.
But instead of dismissing all predictions as a destined company, it’s probably better to stand the veins of a particular sector of business as a marker of ongoing confidence (or lack of confidence). They are as a snapshot of the optimism or pessimism that defines today’s business, and certain brands continue to shine for consumers, while others begin to become less relevant or blunt. As a matter of fact, it will be approached more appropriately.
Ultimately, these numbers only provide one perspective on market growth here. In other words, focus on pure users, not total revenue. For freemium services, ad-supported parties tend to lower the ARPU (Average Revenue Per User) for all users. Then, taking into account discounts, telco bundles, and multi-user accounts (such as family packages), ARPU will plummet even further.
The elephants in the room are priced. More specifically, the service is reluctant to increase the cost of basic subscriptions.
Today’s default market price was effectively set by Rhapsody (now renamed Napster) in the early 2000s for $ 9.99 per month. Since then, all competing services on the market have maintained (more or less) the same price range for their core single-user products. That is, the price of subscription streaming hasn’t risen for 20 years. (Historical note: 20 years before Rhapsody was released, the CD is still idea Following inflation, the $ 9.99 subscription in 2001 should be $ 15.43 today.
The service isn’t raising prices as a possible way to cover this, even though artists are looking for better rates from streaming. Mainly because if one service goes down in rank and goes up in price, competitors’ services are more likely to go down in price and try to trick users. This is not price competition, but price inertia caused by fear. Therefore, the pricing impasse continues.
More clearly interesting is to model the growth curve here, as opposed to the growth curve if the service in question raises the price.
If so, the optimism that underpins such numbers may not shine so brightly.