Music is always changing — the way it’s created, distributed and enjoyed advancing with the connected landscape of technology. Since the first music streaming platform was introduced in the late 1990s, how we consume music has become more centralized to web-based services.
Before Spotify, iHeartRadio, and Pandora, there was Internet Underground Music Archive (IUMA), Last.fm and Napster. While the services and sites have been tweaked and updated over the years, the main goal has always been the same: to give people access to on-demand music. In 2016, the United States alone saw 431.7 billion music streams, up nearly 40% from the previous year. 51% of all U.S. music revenue in 2016 was also attributed to online music streaming, racking up $2.48 billion over the year.
Americans are consuming more music than ever before. Of course, as music streaming continues to rise in popularity, traditional album sales (even digital album sales) continue to plummet.
Why Streaming Is “Too Big to Fail”
The music industry has always had a love-hate relationship with music streaming services. On one hand, these platforms make music incredibly accessible and place artists’ music in front of more ears. On the other hand, streaming services are notorious for providing a minimal payout to the musicians themselves.
No matter your personal or professional stance on the debate, music industry and streaming service executives have realized that they need to work together to survive. Recent lengthy negotiations between Spotify and Universal Music Group led to a multi-year licensing deal to benefit everyone:
“This partnership is built on a mutual love of music, creating value for artists and delivering for fans…We know that not every album by every artist should be released the same way, and we’ve worked hard with UMG to develop a new, flexible release policy. Starting today, Universal artists can choose to release new albums on premium only for two weeks, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for all our listeners to enjoy.”
– Daniel Ek, Chairman and CEO of Spotify
The contract has some obvious compromises, like Universal agreeing to lower royalty rates and Spotify allowing Universal to exclude free users from listening to new releases for up to two weeks. These less-than-perfect negotiations show us just how co-dependent the relationship between labels and streaming services has become.
Music Streaming: Today’s Top Services
Last year, Spotify was the reigning leader of streaming services, experiencing the fastest subscriber growth in the entirety of its 7 years in business in the last half of 2015 alone. While the site was worth more than half of the global recorded music industry at the time, industry leaders can quickly change.
It’s easy to see how quickly the streaming industry changes from year to year, and even from month to month. Just last year, Spotify was arguably the most popular, fastest growing streaming service in use. In comparison to this knowledge, the chart below shows the percentage of Americans aged 12+ who listened to the following music streaming services in the past month (February 2017).
As you can see, Pandora has a visible lead at 32%, with Spotify trailing behind at 18% of Americans aged 12+ listening in. Key Pandora statistics for 2017 include:
- 4.39 million subscribers
- 81 million monthly listeners
- $1.55 – $1.7 billion projected revenue
- 18 – 24 years old largest age group of users
Spotify has been through some major ups and downs over the past couple of years. While the number of listeners Spotify sees each month is impressive, the company reported an operating loss of 184.5 million euros ($195.5 million) just 2 years ago. Overall, Spotify is seeing growth and change internationally; the company is expanding efforts and attempting to shift their focus to supporting artists, rather than their own profitability.
- 50 million subscribers
- 100 million listeners
- 20,000 songs added per day
- 60 countries in service and counting
By far the newest to the game, Apple Music has seen relatively consistent growth since launching 2 years ago. While experts banking on Apple’s market share and notoriety in hardware/software speculated that it would surpass Spotify’s number of listeners, Spotify has so far kept Apple Music at an arm’s length away.
This chart shows the steady gap between Apple Music and Spotify subscribers from 2015 to today. As each service releases information on new milestones, we’re curious to see how things look in another 6 months. Key Apple Music statistics for 2017 include:
- 20+ million subscribers
- 30% growth in subscribers in the past year
- $7 billion in revenue in 2016
Who do you think will be dominating the music streaming market at the end of this year? Let us know your thoughts and theories in the comments below!