The Streaming Effect Assessing The Impact Of Streaming Music Behaviour

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The 20,000 Foot View

Streaming has arrived and is here to stay, that much is clear.  What is not is how it will impact existing music revenue streams.  Though neither a business model nor a product, streaming is the lens through which the irresistible force of the shift from ownership to access is best understood.  The first shift to digital was as disruptive as it was transformative.  The shift to access based models though represents a more dramatic shift that challenges existing business models to the core.  The first wave of subscribers was harvested directly from the most valuable download buyers, denting music sales in the process.  The next wave must both better compete with free streaming and draw from a more mainstream customer base.

Key Findings

• Free streaming is where the heat is: global subscribers will total        million by the end of 2014 but ad supported users will reach        million
• But free is not yet effectively monetized: ad supported average revenue per user will be        by the end of 2014, compared to        for paid subscriptions
       of consumers are music streamers, with a fifth of them paying to stream         to        years olds have the highest paid-to-free ratio while        to        year olds have the highest overall streaming penetration at               of music streamers stream audio for free and        stream music videos
• Free is impacting willingness to pay:        of music streamers won’t pay for music because they get all they need for free from YouTube
• Streaming is denting music buying:        of music streamers have stopped buying more than one album a month
• Download sales will continue to feel the pinch with        of all music downloaders also music streamers
• Significant opportunity however remains untapped: only        of streamers have tried a subscription trial while        would pay for one
• Streaming has dented the impact of piracy by creating a hierarchy of free in which consumers have multiple free alternatives

Companies mentioned in this report: Spotify, Apple, Amazon, YouTube, Nielsen, Triton, Adswizz, Beats, Bandpage, Topspin