Music continues to become more accessible and more plentiful due to the rise of music streamers in the past decade. Similar to television and movies, popular music streamers offer an abundant library of song choices at your fingertips. There are several music streaming choices on the market, and for the most part, they continue to grow. Globally, there were 304.9 million subscribers up 34 million on the end of 2018 (“Big Four Streamers”, 2019) When looking at all of the streamers, Spotify continues to lead the way once again. Spotify ended 2019 with 108 million total subscribers, and a global market share of 35.6% (“Big Four Streamers”, 2019). In fact, Spotify had a significant lead over Apple Music in second place, which had an 18% market share, with 54.7 million subscribers (“Big Four Streamers, 2019”).
What is interesting is that Spotify continues its’ market growth, even a decade after its’ 2009 launch. One reason may be that Spotify has an excellent business model. In 2019 specifically, Spotify’s income statement showed improvement in three main expenses: sales & marketing, general & administrative, and research & development (Peoples, 2019). Two years ago, those three categories accounted for 36.6% of revenue. But by the third quarter of 2019, that number was down to 24.8%. This gave Spotify enough to pay for recordings and songwriting, and still have money left over (Peoples, 2019). Throughout the first decade of its’ operation, Spotify continued to chase growth at the expense of profit. Nonetheless, Spotify has continued its financials each year, from an operating loss of 12.1% in 2015, to an operating income of 0.1% in the first nine months of 2019 (Peoples, 2019). It’s a small profit, but until 2019, Spotify had sacrificed profit in order to outgrow competitors and build a base of satisfied long-term customers.
On the opposite end of the spectrum, the once popular platform Soundcloud, is struggling to say the least. Years ago, SoundCloud experimented with a variety of business models, including content-related ads and charging the creators for premium accounts that host more audio (Deahl, 2017). But, much of the audio uploaded were materials that Soundcloud did not have rights to, and record companies urged SoundCloud to crack down (Deahl, 2017). The company wanted to develop its paid platform, but experienced other issues as well. Soundcloud’s confusing paid tiers lead to conflict with content creators and their teams, and labels also began to pull music off of SoundCloud against the artist’s will (Deahl, 2017). All of this came at a time where industry competitor Spotify continued to rise up the ranks, and convert Soundcloud users into Spotify users. Spotify also offered record labels the business model that they would come to insist on everywhere else: fully licensed tracks in exchange for guaranteed royalties (Deahl, 2017). Today, Soundcloud doesn’t even appear in the top eight for music streamers in total market share. The platform which was once well-known for its role in helping new music stars emerge, is now in danger of extinction. Conversely, services such as industry leader Spotify, Apple Music, Amazon music, and others, are continuing to flourish.
Big 4 streamers gain market share. (2019, December 12). Retrieved March 11, 2020, from https://www.hiresaudio.online/big-4-streamers-gain-market-share/
Peoples, G. (2019, November 1). Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up? Retrieved March 11, 2020, from https://www.billboard.com/articles
Deahl, D., & Newton, C. (2017, July 21). How SoundCloud's broken business model drove artists away. Retrieved March 11, 2020, from https://www.theverge.com/2017/7/21/15999172/soundcloud-business-model-future-spotify-streaming
Max Marino When it comes to streaming music, us consumers have a few options to chose from. It is like television in the regard that over the past few years, as technology and streaming services continue to grow, our options to access music do as well. Speaking for myself and my family, we have been using Apple Music for a couple of years. However, according to an article called Big Four Streamers Gained Market Share written for High Resolution Audio, the number one music streamer in 2019 was Spotify. Spotify ranked first in Music Subscription Revenue by Service with $1,633,000 in revenue on the year. Out of all the music subscriptions, it ranked first making up a total of 36% out of 304.9 million subscribers. “Spotify was the market leader with 108 million subscribers having a global market share of 35.6% which was the same as in 2017 and 2018,” (“Big Four Streamers Gained Market Share, 2019”). Spotify is in control of the music streaming services. But can they keep their success up? In an article called Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?, says that they can, but it may be difficult. In the article, Glenn Peoples says that Spotify has done all the right things, but if their competitors start to do the right thing also, they can beat them out. “Evercore analyst Kevin Rippey called the quarter a "relief rally" and reiterated his belief that Spotify is a "loss-leader" facing competitors that lack an equal profit motive,” (Peoples). Peoples also mentions towards the end of this article that if Spotify’s competitors such as Amazon and Apple Music grab more market share, they can compete with Spotify and can lead to their revenues to decrease. One music streaming site that is faltering is SoundCloud. This service, once popular, was not even in the top 8 music streaming services in 2019 for either subscriptions or in revenue. Soundcloud is not just for music, as you can post your own content for podcasts as well. However, after using this site for my podcast last semester, it was a bit confusing to use and not always easy to find everything. Casey Newton and Dani Deahl wrote an article for The Verge called How SoundClound’s Broken Business Model Drove Artists Away the two of them highlighted why they think Soundcloud has been suffering when comparing them to their competitors. “Ask the artists who first turned SoundCloud into a premier destination for discovering new music and they’ll tell you that they abandoned it only after years of neglect on the platform,” (Newton and Deahl). Soundcloud, as highlighted in the article, has not fixed or added to their model at all. And in in a fast-changing world, that is a recipe for disaster as their competitors continue to make their platforms better every day.
Works Cited
Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?” Billboard, 1 Nov. 2019, www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%2BTemplate%2BBB%3A%2BMulti%2BStory%2B-%2B2.0&utm_term=daily_digest
“Big 4 Streamers Gain Market Share.” High Resolution Audio, 9 Dec. 2019, www.hiresaudio.online/big-4-streamers-gain-market-share/
Deahl, Dani, and Casey Newton. “How SoundCloud's Broken Business Model Drove Artists Away.” The Verge, The Verge, 21 July 2017, www.theverge.com/2017/7/21/15999172/soundcloud-business-model-future-spotify-streaming.
The music industry has adapted over time to still be available for consumers even with technology and the way we get our music constantly changing. Music streaming services are like any other video streaming service. The availability of all different types of music and artists is similar to let’s say, a Netflix, which has a wide variety of shows and movies for the consumer. Music streaming services are continuing to grow and have seen a lot of success in the recent years as they continue to gain subscribers every year. According to Emily Blake from Rolling Stone, “On-demand streams grew were up 24.8 percent from 2018 to 1.01 trillion. Streaming on services like Spotify and Apple Music saw the biggest boot, as on demand audio streams grew 32 percent to 706 billion,” (Blake). It is clear that the music streaming is way Americans are consuming their music compared to song sales and album sales, (Blake).
With music streaming growing, there has to be some key defined players in the market. The service with the best business model has to be Spotify. According to the article by High Resolution Audio, Spotify has 36% of the market share when looking at subscribers. This is 36% of the 304.9 million total subscribers in the industry, (High Resolution Audio). Spotify is by far the most dominate service in the game and I believe their business model will keep them on the path to be the most dominate. First off, they have been at the top of the market share for the past 3 years with a nice cushion above the rest of the competition. According to Glenn Peoples from Billboard, “Spotify has improved its financials each year, one plodding step after another: in 2015, its operating loss was 12.1% of revenue. It improved to 11.8% in 2017, 9.2%; and 5.3% in 2018. Then, in the first nine months of 2019, Spotify's operating income -- not loss -- was 0.1% of revenue,” (Peoples). The article continues to show how Spotify has made a change to their business model by lowering the cost of 3 main expenses: sales & marketing, general & administrative, and research & development. Those three accounted for 36.6% of revenue but that number was reduced to 24.8% in just two years, (Peoples). They have continued to find a way of growing subscribers, while reducing internal costs, while paying content owners 70-75%. With this business model, Spotify can continue in their growth stage and continue to become more profitable. They are easily the most dominate player in the industry with a proven business model.
With the winners there are always losers. One streaming service that has been struggling for years is Pandora. Pandora is an ad-supported radio service that has been around since the beginning of music streaming. Even though its once popularity, Pandora has been losing money. According to South China Morning Post, “It reported US$1.4 billion in revenue for 2017 and a loss of US$518 million,” (SCMP). This struggling business model might be because of the ads and the more radio type music. Compared to Spotify and Apple Music, their subscriptions without ads could be more attracted to consumers especially when they want a wide variety of content to listen too. So, even though Pandora has been around since 2000, they are struggling to make a profit and I cannot see them being a player as the music streaming services continue to grow.
Blake, Emily. “Music Hit 1 Trillion Streams in 2019, But Growth Is Slowing.” Rolling Stone, 9 Jan 2020, https://www.rollingstone.com/music/music-news/streams-music-2019-trillion-vinyl-935246/
High Resolution Audio, “Big Four Streamers Gain Market Share,” High Resolution Audio, 19 Dec. 2019, https://www.hiresaudio.online/big-4-streamers-gain-market-share/
Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?.” Billboard, 1 Nov. 2019, https://www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Template%20BB:%20Multi%20Story%20-%202.0&utm_term=daily_digest
SCMP. “As Spotify’s profits stagnate, is music streaming dying out? Enjoy it while you can, experts say.” South China Morning Post, 5 Mar. 2018, https://www.scmp.com/culture/music/article/2135689/spotifys-profits-stagnate-music-streaming-dying-out-enjoy-it-while-you
According to an article from High Resolution Audio, there are currently four top music streaming services taking over the industry. The big four are Spotify, who generated $1.6 million from subscription services in 2019, Apple who generated $1 million, Amazon generating $528 and lastly Google who generated $229 (“Big 4 Streamers Gain Market Share”, 2019). I was not surprised to see Spotify was generating more money than the rest, because in my media users and audience class we talked a lot about the appealing aspects of Spotify and what they provide to their subscribers. High Resolution Audio also says that the big 4 streamers gain market share compared to smaller players according to media and technology analysts. While all four of these streaming services are growing their market share and their number of subscribers, Spotify is significantly ranking higher than the rest of them. I find it interesting that both Spotify and Apple music both cost $9.99 a month for a subscription, yet there is still a large gap between the two. It appears that Spotify has the most sustainable business model. Spotify has been making improvements in three different areas which include sales/marketing, general/administrative and research/development. Their global market share is 35.6% and has been the same since 2017 and 2018 (“Big 4 Streamers Gain Market Share). Billboard published an article in 2019 about the profitability of Spotify and if they could keep it up. The article said, “Spotify is still in growth mode, the phase when a streaming company spends more on expansion than it receives from a subscriber” (Peoples, 2019). The company has seen their number of subscribers reach 113 million as well as their active monthly users reach 248 million. In the third quarter of 2019, Spotify was spending 24.8% of revenue on salaries, marketing and development. With this model they ended up having money left over even after paying for recordings and songwriting. A streaming service that appears to be struggling is Tidal. This streaming service was originally announced by Jay Z back in 2015. An article by The Verge talked about Tidal’s numbers and said, “ A little over two years ago, Tidal announced it had reached 3 million subscribers in a press release celebrating its one year anniversary under a new ownership group comprised of high-profile artists led by Jay Z” (Singleton, 2018). The article later goes on to talk about how the number of subscribers has since stalled. I think this is because Tidal Is a lot more expensive than Spotify or Apple Music and does not provide the same selection of content. “Tidal’s entire market strategy of using exclusives to grow the service has largely been ruled ineffective by the music industry” (Peoples, 2019). From fans perspectives, they do not think the service itself is bad, they just think it was ‘left behind’ in the media streaming conversations.
Peoples, G. (2019, November 1). Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up? Retrieved March 18, 2020, from https://www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter Template BB: Multi Story - 2.0&utm_term=daily_digest
Big 4 streamers gain market share. (2019, December 9). Retrieved March 18, 2020, from https://www.hiresaudio.online/big-4-streamers-gain-market-share/
Singleton, M. (2018, June 28). Three years later, Tidal is still waiting for its big wave. Retrieved March 18, 2020, from https://www.theverge.com/2018/6/28/17510390/tidal-streaming-service-subscribers-spotify-apple-music
Reflecting on the past two decades, Spotify has ultimately revolutionized and saved the music industry. The introduction of Napster in 1999, paved the way for streaming services to later emerge. It allowed users to fall in love with a model of unlimited access to millions of songs, the industry quickly realized there would be no going back (Suskind 2017). As technology started to evolve, brands like Spotify and eventually Apple Music began to capitalize on this model. I think Spotify has the most sustainable business model not only for allowing users to have access to a large bank of music and podcasts but because of the two-tiered service levels as a subscription service and a free advertisement-supported model. According to Stephen J. Dubner of Freakonomics Radio, Spotify has roughly 100 million paid subscribers, with another 100 million-plus listening free on an ad-supported model (Dubner 2019). Spotify’s two-tiered service levels allow the platform to reach a larger audience and fit all types of consumer’s needs. I think being able to cater to reach a bigger demographic and giving the option for a subscription plan is what sets Spotify above Apple Music.
Looking from the outside in Spotify and Apple Music are extremely similar, they are the top two leaders in global music subscription streaming. “Spotify was the market leader with 108 million subscribers having a global market share of 35.6% which was the same as in 2017 and 2018. Apple and Amazon both grew market share with 18% and 12.6% respectively” (High-Resolution Audio 2019). Among all of the streaming platforms, Spotify and Apple Music are the top leaders because of their access to millions of songs and exclusives both on and offline. Spotify can grow its users' numbers with the inclusion of podcasts on their platform. Unlike Spotify, Apple Music does not include podcasts in the subscription package, Apple podcasts are featured separately in their own podcasting app that is accessible to all users who have an Apple ID. For Spotify, podcasts are their next big venture, they have recently announced their plans to spend up to $500 million on podcasting after just acquiring Gimlet Media and Anchor (Carman 2019). Spotify has the most sustainable business model because they are keeping up with what is relevant and continuing to push that content. Spotify realizes that many people still do not listen to podcasts that is why they are trying to create the ‘Netflix for podcasts’ by using its data to greenlight the right shows (Carman 2019). With Spotify’s innovation and growth in the market, there is only a bright future ahead for them.
While everyone loves free services, unfortunately, the freemium music model SoundCloud is extremely struggling compared to the other streaming services. SoundCloud is a platform that allowed an average user to create and share original music. The platform allowed anyone to become a musician by uploading their music to the site. Stars such as Post Malone, Kehlani, Bryson Tiller, Kygo, and Lil Pump were discovered off of SoundCloud and yet the platform is still struggling (David 2018). SoundCloud allowed upcoming artists to be removed from the notion of being in the right place at the right time because now it was all in the fate of clicking a button. One of the biggest struggles that SoundCloud faces is not being able to upload licensed music. For users who just want to listen to their favorite hit songs, the platform is deemed unsuccessful. In the 2019 Global Streaming Music Subscription Market, SoundCloud is not even mentioned (High-Resolution Audio 2019). The three lowest revenue ranking subscription services (MelON, Tencent, Deezer) are platforms that I have never even heard of before. It is a shame to seem SoundCloud be unsuccessful in the advancement of times when all they wanted to was to give upcoming artists a chance. I am interested to see how long it will be until another artist emerges out of SoundCloud and rises to fame like Post Malone.
Work Cited: Carman, Ashley. “Spotify's Grand Plan for Podcasts Is Taking Shape.” The Verge, The Verge, 5 Mar. 2019, www.theverge.com/2019/3/5/18243729/spotify-podcast-strategy-gimlet-media-anchor-purchase.
David, . “5 Famous SoundCloud Artists That Came Out Of Nowhere.” Top Hot Muzik, 23 Nov. 2018, www.tophotmuzik.com/5-famous-soundcloud-artists-that-came-out-of-nowhere/.
Dubner, Stephen J. “How Spotify Saved the Music Industry (But Not Necessarily Musicians).” Medium, GEN, 25 Nov. 2019, gen.medium.com/how-spotify-saved-the-music-industry-but-not-necessarily-musicians-473f01e37136.
High Resolution Audio, . “Big 4 Streamers Gain Market Share.” High Resolution Audio, 9 Dec. 2019, www.hiresaudio.online/big-4-streamers-gain-market-share/.
Suskind, Alex. “15 Years After Napster: How the Music Service Changed the Industry.” The Daily Beast, The Daily Beast Company, 6 June 2014, www.thedailybeast.com/15-years-after-napster-how-the-music-service-changed-the-industry.
Streaming has become the primary way in which people listen to music. With endless access to countless musicians, bands, albums and songs, it's understandable why the vast majority is turning to streaming methods for their music consumption. However, there’s a pretty limited array of options when it comes to choosing a platform to stream on.
When determining which streaming network has the most sustainable business model, it's pretty clear to see that Spotify is in the lead by far. According to High Resolution Audio, in 2019, “Spotify was the market leader with 108 million subscribers having a global market share of 35.6%,” a statistic that has remained consistent since 2017 (High Resolution Audio). Because of this obvious success, “Spotify's share price jumped 19% on Oct. 28, adding $4 billion of market capitalization” (High Resolution Audio).
One of the reasons Spotify has been able to maintain a growing success, particularly amongst subscriber growth and popularity, is because of its business model—specifically its focus on expansion. Spotify has a way of sacrificing revenue in order to gain as much subscribers as possible. In fact, according to Billboard, Spotify has put revenue growth to the side because “profit can be sacrificed in order to outgrow competitors and build a base of satisfied, long-term customers” (Peoples). By expanding and spending its money, Spotify can ensure its subscribers are getting the best experience possible. This paves the way for a strong relationship in the future between the company and its millions of users.
Even though Spotify barely breaks even, and some market analysts question the company’s ability to maintain its profits, the company has a massive leg up over its competitors. Two of the streaming companies fighting against Spotify’s reign are Apple and Amazon, both of which have had impressive global market shares in 2019 alone (High Resolution Audio). A streaming service that has not been as successful is Pandora.
With the introduction of several on-demand streaming services, the once popular self-tailored music app quickly died out. As the Rolling Stones puts it, “Why would you sit and wait for individual songs to be played when you could get all of them at a single tap, whenever you wanted, without limits?” (Rolling Stones). Though Pandora has made a slight comeback in recent years, their success is fractional compared to Spotify, Amazon, Apple and even YouTube Music. Pandora’s success has come after the company decided to target the “hundreds of millions of people who listen to terrestrial radio a week in this country,” since they are unlikely to switch completely over to streaming services (Wang). Though this population is a reasonable target for Pandora, it is a very specific one. Even if this population does download the app, Spotify’s enormous subscriber base would make it unlikely for Pandora to thrive when it comes to investors and advertising revenue.
High Resolution Audio, “Big Four Streamers Gain Market Share,” High Resolution Audio, 2019. https://www.hiresaudio.online/big-4-streamers-gain-market-share/ Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?.” Billboard, 2019. https://www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Template%20BB:%20Multi%20Story%20-%202.0&utm_term=daily_digest Wang, Amy. “The Spectacular Existential Crisis of Pandora.” Rolling Stones, 2018. https://www.rollingstone.com/music/music-features/pandora-media-radio-siriusxm-and-crisis-725663/
Just like every other type of media, music also has its fair share of platforms on which to stream content. This means that consumers have multiple options to choose from when they want to listen to their favorite songs. The article “Big Four Streamers Gain Market Share” makes it seem like there are four streaming giants when it comes to music. In reality, Spotify surpasses all other platforms. In 2019, their subscribers came in at 108 million, with a revenue of $1,663.9 million.
In the past, Spotify has run into trouble when it came to paying artists. This is a problem for all streaming services on which content is available for free. However, in 2019, Spotify was able to cut costs from “sales & marketing; general & administrative; and research & development” so that they are able to offer more to “content owners” (Peoples). This, in turn, allows Spotify to house more popular content on their platform, which makes more people want to subscribe to their service.
However, Spotify may need to rethink their strategy as unseen forces affect musicians’ revenue streams. According to The Guardian, artists are asking streaming platforms to increase their royalty rates as they cannot hold concerts due to the coronavirus (Snapes). It’s possible that we will see artists pulling their music from streaming services until they can be compensated properly.
On the other hand, a platform that is currently struggling is Pandora. Among the other music streamers, Pandora only makes up for 2% of the market share. This streamer was popular at the very beginning of streaming services, but failed to keep up with the changes and innovations of other services. Although it allows users to listen to music for free with minimal ads, it does not allow the instant gratification of being able to choose which songs you want to listen to. In this day and age, complete access and control is extremely important in order for a streaming service to be successful. Pandora’s radio-like model is also available through Spotify, meaning it’s not necessary to use both services if you’re already paying for a premium Spotify account. With the current standards that users have for streaming music, I don’t believe that Pandora will be able to surpass other services anytime soon.
“Big 4 Streamers Gain Market Share.” High Resolution Audio, AceIT Publishing, 9 Dec. 2019, www.hiresaudio.online/big-4-streamers-gain-market-share/.
Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?” Billboard, Prometheus Global Media, LLC., 1 Nov. 2019, www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%2BTemplate%2BBB%3A%2BMulti%2BStory%2B-%2B2.0&utm_term=daily_digest.
Snapes, Laura. “Musicians Ask Spotify to Triple Payments to Cover Lost Concert Revenue.” The Guardian, Guardian News and Media, 19 Mar. 2020, www.theguardian.com/music/2020/mar/19/musicians-ask-spotify-to-triple-payments-to-cover-lost-concert-revenue.
Anthony Galler
ReplyDeleteMusic continues to become more accessible and more plentiful due to the rise of music streamers in the past decade. Similar to television and movies, popular music streamers offer an abundant library of song choices at your fingertips. There are several music streaming choices on the market, and for the most part, they continue to grow. Globally, there were 304.9 million subscribers up 34 million on the end of 2018 (“Big Four Streamers”, 2019) When looking at all of the streamers, Spotify continues to lead the way once again. Spotify ended 2019 with 108 million total subscribers, and a global market share of 35.6% (“Big Four Streamers”, 2019). In fact, Spotify had a significant lead over Apple Music in second place, which had an 18% market share, with 54.7 million subscribers (“Big Four Streamers, 2019”).
What is interesting is that Spotify continues its’ market growth, even a decade after its’ 2009 launch. One reason may be that Spotify has an excellent business model. In 2019 specifically, Spotify’s income statement showed improvement in three main expenses: sales & marketing, general & administrative, and research & development (Peoples, 2019). Two years ago, those three categories accounted for 36.6% of revenue. But by the third quarter of 2019, that number was down to 24.8%. This gave Spotify enough to pay for recordings and songwriting, and still have money left over (Peoples, 2019). Throughout the first decade of its’ operation, Spotify continued to chase growth at the expense of profit. Nonetheless, Spotify has continued its financials each year, from an operating loss of 12.1% in 2015, to an operating income of 0.1% in the first nine months of 2019 (Peoples, 2019). It’s a small profit, but until 2019, Spotify had sacrificed profit in order to outgrow competitors and build a base of satisfied long-term customers.
On the opposite end of the spectrum, the once popular platform Soundcloud, is struggling to say the least. Years ago, SoundCloud experimented with a variety of business models, including content-related ads and charging the creators for premium accounts that host more audio (Deahl, 2017). But, much of the audio uploaded were materials that Soundcloud did not have rights to, and record companies urged SoundCloud to crack down (Deahl, 2017). The company wanted to develop its paid platform, but experienced other issues as well. Soundcloud’s confusing paid tiers lead to conflict with content creators and their teams, and labels also began to pull music off of SoundCloud against the artist’s will (Deahl, 2017). All of this came at a time where industry competitor Spotify continued to rise up the ranks, and convert Soundcloud users into Spotify users. Spotify also offered record labels the business model that they would come to insist on everywhere else: fully licensed tracks in exchange for guaranteed royalties (Deahl, 2017). Today, Soundcloud doesn’t even appear in the top eight for music streamers in total market share. The platform which was once well-known for its role in helping new music stars emerge, is now in danger of extinction. Conversely, services such as industry leader Spotify, Apple Music, Amazon music, and others, are continuing to flourish.
Works Cited
DeleteBig 4 streamers gain market share. (2019, December 12). Retrieved March 11, 2020, from https://www.hiresaudio.online/big-4-streamers-gain-market-share/
Peoples, G. (2019, November 1). Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up? Retrieved March 11, 2020, from https://www.billboard.com/articles
Deahl, D., & Newton, C. (2017, July 21). How SoundCloud's broken business model drove artists away. Retrieved March 11, 2020, from https://www.theverge.com/2017/7/21/15999172/soundcloud-business-model-future-spotify-streaming
Max Marino
ReplyDeleteWhen it comes to streaming music, us consumers have a few options to chose from. It is like television in the regard that over the past few years, as technology and streaming services continue to grow, our options to access music do as well. Speaking for myself and my family, we have been using Apple Music for a couple of years. However, according to an article called Big Four Streamers Gained Market Share written for High Resolution Audio, the number one music streamer in 2019 was Spotify. Spotify ranked first in Music Subscription Revenue by Service with $1,633,000 in revenue on the year. Out of all the music subscriptions, it ranked first making up a total of 36% out of 304.9 million subscribers. “Spotify was the market leader with 108 million subscribers having a global market share of 35.6% which was the same as in 2017 and 2018,” (“Big Four Streamers Gained Market Share, 2019”).
Spotify is in control of the music streaming services. But can they keep their success up? In an article called Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?, says that they can, but it may be difficult. In the article, Glenn Peoples says that Spotify has done all the right things, but if their competitors start to do the right thing also, they can beat them out. “Evercore analyst Kevin Rippey called the quarter a "relief rally" and reiterated his belief that Spotify is a "loss-leader" facing competitors that lack an equal profit motive,” (Peoples). Peoples also mentions towards the end of this article that if Spotify’s competitors such as Amazon and Apple Music grab more market share, they can compete with Spotify and can lead to their revenues to decrease.
One music streaming site that is faltering is SoundCloud. This service, once popular, was not even in the top 8 music streaming services in 2019 for either subscriptions or in revenue. Soundcloud is not just for music, as you can post your own content for podcasts as well. However, after using this site for my podcast last semester, it was a bit confusing to use and not always easy to find everything. Casey Newton and Dani Deahl wrote an article for The Verge called How SoundClound’s Broken Business Model Drove Artists Away the two of them highlighted why they think Soundcloud has been suffering when comparing them to their competitors. “Ask the artists who first turned SoundCloud into a premier destination for discovering new music and they’ll tell you that they abandoned it only after years of neglect on the platform,” (Newton and Deahl). Soundcloud, as highlighted in the article, has not fixed or added to their model at all. And in in a fast-changing world, that is a recipe for disaster as their competitors continue to make their platforms better every day.
Works Cited
Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?” Billboard, 1 Nov. 2019, www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%2BTemplate%2BBB%3A%2BMulti%2BStory%2B-%2B2.0&utm_term=daily_digest
“Big 4 Streamers Gain Market Share.” High Resolution Audio, 9 Dec. 2019, www.hiresaudio.online/big-4-streamers-gain-market-share/
Deahl, Dani, and Casey Newton. “How SoundCloud's Broken Business Model Drove Artists Away.” The Verge, The Verge, 21 July 2017, www.theverge.com/2017/7/21/15999172/soundcloud-business-model-future-spotify-streaming.
Zach LoCicero
ReplyDeleteBlog #6
The music industry has adapted over time to still be available for consumers even with technology and the way we get our music constantly changing. Music streaming services are like any other video streaming service. The availability of all different types of music and artists is similar to let’s say, a Netflix, which has a wide variety of shows and movies for the consumer. Music streaming services are continuing to grow and have seen a lot of success in the recent years as they continue to gain subscribers every year. According to Emily Blake from Rolling Stone, “On-demand streams grew were up 24.8 percent from 2018 to 1.01 trillion. Streaming on services like Spotify and Apple Music saw the biggest boot, as on demand audio streams grew 32 percent to 706 billion,” (Blake). It is clear that the music streaming is way Americans are consuming their music compared to song sales and album sales, (Blake).
With music streaming growing, there has to be some key defined players in the market. The service with the best business model has to be Spotify. According to the article by High Resolution Audio, Spotify has 36% of the market share when looking at subscribers. This is 36% of the 304.9 million total subscribers in the industry, (High Resolution Audio). Spotify is by far the most dominate service in the game and I believe their business model will keep them on the path to be the most dominate. First off, they have been at the top of the market share for the past 3 years with a nice cushion above the rest of the competition. According to Glenn Peoples from Billboard, “Spotify has improved its financials each year, one plodding step after another: in 2015, its operating loss was 12.1% of revenue. It improved to 11.8% in 2017, 9.2%; and 5.3% in 2018. Then, in the first nine months of 2019, Spotify's operating income -- not loss -- was 0.1% of revenue,” (Peoples). The article continues to show how Spotify has made a change to their business model by lowering the cost of 3 main expenses: sales & marketing, general & administrative, and research & development. Those three accounted for 36.6% of revenue but that number was reduced to 24.8% in just two years, (Peoples). They have continued to find a way of growing subscribers, while reducing internal costs, while paying content owners 70-75%. With this business model, Spotify can continue in their growth stage and continue to become more profitable. They are easily the most dominate player in the industry with a proven business model.
With the winners there are always losers. One streaming service that has been struggling for years is Pandora. Pandora is an ad-supported radio service that has been around since the beginning of music streaming. Even though its once popularity, Pandora has been losing money. According to South China Morning Post, “It reported US$1.4 billion in revenue for 2017 and a loss of US$518 million,” (SCMP). This struggling business model might be because of the ads and the more radio type music. Compared to Spotify and Apple Music, their subscriptions without ads could be more attracted to consumers especially when they want a wide variety of content to listen too. So, even though Pandora has been around since 2000, they are struggling to make a profit and I cannot see them being a player as the music streaming services continue to grow.
Works Cited
DeleteBlake, Emily. “Music Hit 1 Trillion Streams in 2019, But Growth Is Slowing.” Rolling Stone, 9 Jan 2020, https://www.rollingstone.com/music/music-news/streams-music-2019-trillion-vinyl-935246/
High Resolution Audio, “Big Four Streamers Gain Market Share,” High Resolution Audio, 19 Dec. 2019, https://www.hiresaudio.online/big-4-streamers-gain-market-share/
Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?.” Billboard, 1 Nov. 2019, https://www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Template%20BB:%20Multi%20Story%20-%202.0&utm_term=daily_digest
SCMP. “As Spotify’s profits stagnate, is music streaming dying out? Enjoy it while you can, experts say.” South China Morning Post, 5 Mar. 2018, https://www.scmp.com/culture/music/article/2135689/spotifys-profits-stagnate-music-streaming-dying-out-enjoy-it-while-you
According to an article from High Resolution Audio, there are currently four top music streaming services taking over the industry. The big four are Spotify, who generated $1.6 million from subscription services in 2019, Apple who generated $1 million, Amazon generating $528 and lastly Google who generated $229 (“Big 4 Streamers Gain Market Share”, 2019). I was not surprised to see Spotify was generating more money than the rest, because in my media users and audience class we talked a lot about the appealing aspects of Spotify and what they provide to their subscribers. High Resolution Audio also says that the big 4 streamers gain market share compared to smaller players according to media and technology analysts. While all four of these streaming services are growing their market share and their number of subscribers, Spotify is significantly ranking higher than the rest of them. I find it interesting that both Spotify and Apple music both cost $9.99 a month for a subscription, yet there is still a large gap between the two.
ReplyDeleteIt appears that Spotify has the most sustainable business model.
Spotify has been making improvements in three different areas which include sales/marketing, general/administrative and research/development. Their global market share is 35.6% and has been the same since 2017 and 2018 (“Big 4 Streamers Gain Market Share). Billboard published an article in 2019 about the profitability of Spotify and if they could keep it up. The article said, “Spotify is still in growth mode, the phase when a streaming company spends more on expansion than it receives from a subscriber” (Peoples, 2019). The company has seen their number of subscribers reach 113 million as well as their active monthly users reach 248 million. In the third quarter of 2019, Spotify was spending 24.8% of revenue on salaries, marketing and development. With this model they ended up having money left over even after paying for recordings and songwriting.
A streaming service that appears to be struggling is Tidal. This streaming service was originally announced by Jay Z back in 2015. An article by The Verge talked about Tidal’s numbers and said, “ A little over two years ago, Tidal announced it had reached 3 million subscribers in a press release celebrating its one year anniversary under a new ownership group comprised of high-profile artists led by Jay Z” (Singleton, 2018). The article later goes on to talk about how the number of subscribers has since stalled. I think this is because Tidal Is a lot more expensive than Spotify or Apple Music and does not provide the same selection of content. “Tidal’s entire market strategy of using exclusives to grow the service has largely been ruled ineffective by the music industry” (Peoples, 2019). From fans perspectives, they do not think the service itself is bad, they just think it was ‘left behind’ in the media streaming conversations.
Peoples, G. (2019, November 1). Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up? Retrieved March 18, 2020, from https://www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter Template BB: Multi Story - 2.0&utm_term=daily_digest
DeleteBig 4 streamers gain market share. (2019, December 9). Retrieved March 18, 2020, from https://www.hiresaudio.online/big-4-streamers-gain-market-share/
Singleton, M. (2018, June 28). Three years later, Tidal is still waiting for its big wave. Retrieved March 18, 2020, from https://www.theverge.com/2018/6/28/17510390/tidal-streaming-service-subscribers-spotify-apple-music
Lisa Ferrara
ReplyDeleteReflecting on the past two decades, Spotify has ultimately revolutionized and saved the music industry. The introduction of Napster in 1999, paved the way for streaming services to later emerge. It allowed users to fall in love with a model of unlimited access to millions of songs, the industry quickly realized there would be no going back (Suskind 2017). As technology started to evolve, brands like Spotify and eventually Apple Music began to capitalize on this model. I think Spotify has the most sustainable business model not only for allowing users to have access to a large bank of music and podcasts but because of the two-tiered service levels as a subscription service and a free advertisement-supported model. According to Stephen J. Dubner of Freakonomics Radio, Spotify has roughly 100 million paid subscribers, with another 100 million-plus listening free on an ad-supported model (Dubner 2019). Spotify’s two-tiered service levels allow the platform to reach a larger audience and fit all types of consumer’s needs. I think being able to cater to reach a bigger demographic and giving the option for a subscription plan is what sets Spotify above Apple Music.
Looking from the outside in Spotify and Apple Music are extremely similar, they are the top two leaders in global music subscription streaming. “Spotify was the market leader with 108 million subscribers having a global market share of 35.6% which was the same as in 2017 and 2018. Apple and Amazon both grew market share with 18% and 12.6% respectively” (High-Resolution Audio 2019). Among all of the streaming platforms, Spotify and Apple Music are the top leaders because of their access to millions of songs and exclusives both on and offline. Spotify can grow its users' numbers with the inclusion of podcasts on their platform. Unlike Spotify, Apple Music does not include podcasts in the subscription package, Apple podcasts are featured separately in their own podcasting app that is accessible to all users who have an Apple ID. For Spotify, podcasts are their next big venture, they have recently announced their plans to spend up to $500 million on podcasting after just acquiring Gimlet Media and Anchor (Carman 2019). Spotify has the most sustainable business model because they are keeping up with what is relevant and continuing to push that content. Spotify realizes that many people still do not listen to podcasts that is why they are trying to create the ‘Netflix for podcasts’ by using its data to greenlight the right shows (Carman 2019). With Spotify’s innovation and growth in the market, there is only a bright future ahead for them.
While everyone loves free services, unfortunately, the freemium music model SoundCloud is extremely struggling compared to the other streaming services. SoundCloud is a platform that allowed an average user to create and share original music. The platform allowed anyone to become a musician by uploading their music to the site. Stars such as Post Malone, Kehlani, Bryson Tiller, Kygo, and Lil Pump were discovered off of SoundCloud and yet the platform is still struggling (David 2018). SoundCloud allowed upcoming artists to be removed from the notion of being in the right place at the right time because now it was all in the fate of clicking a button. One of the biggest struggles that SoundCloud faces is not being able to upload licensed music. For users who just want to listen to their favorite hit songs, the platform is deemed unsuccessful. In the 2019 Global Streaming Music Subscription Market, SoundCloud is not even mentioned (High-Resolution Audio 2019). The three lowest revenue ranking subscription services (MelON, Tencent, Deezer) are platforms that I have never even heard of before. It is a shame to seem SoundCloud be unsuccessful in the advancement of times when all they wanted to was to give upcoming artists a chance. I am interested to see how long it will be until another artist emerges out of SoundCloud and rises to fame like Post Malone.
Work Cited:
DeleteCarman, Ashley. “Spotify's Grand Plan for Podcasts Is Taking Shape.” The Verge, The Verge, 5 Mar. 2019, www.theverge.com/2019/3/5/18243729/spotify-podcast-strategy-gimlet-media-anchor-purchase.
David, . “5 Famous SoundCloud Artists That Came Out Of Nowhere.” Top Hot Muzik, 23 Nov. 2018, www.tophotmuzik.com/5-famous-soundcloud-artists-that-came-out-of-nowhere/.
Dubner, Stephen J. “How Spotify Saved the Music Industry (But Not Necessarily Musicians).” Medium, GEN, 25 Nov. 2019, gen.medium.com/how-spotify-saved-the-music-industry-but-not-necessarily-musicians-473f01e37136.
High Resolution Audio, . “Big 4 Streamers Gain Market Share.” High Resolution Audio, 9 Dec. 2019, www.hiresaudio.online/big-4-streamers-gain-market-share/.
Suskind, Alex. “15 Years After Napster: How the Music Service Changed the Industry.” The Daily Beast, The Daily Beast Company, 6 June 2014, www.thedailybeast.com/15-years-after-napster-how-the-music-service-changed-the-industry.
Streaming has become the primary way in which people listen to music. With endless access to countless musicians, bands, albums and songs, it's understandable why the vast majority is turning to streaming methods for their music consumption. However, there’s a pretty limited array of options when it comes to choosing a platform to stream on.
ReplyDeleteWhen determining which streaming network has the most sustainable business model, it's pretty clear to see that Spotify is in the lead by far. According to High Resolution Audio, in 2019, “Spotify was the market leader with 108 million subscribers having a global market share of 35.6%,” a statistic that has remained consistent since 2017 (High Resolution Audio). Because of this obvious success, “Spotify's share price jumped 19% on Oct. 28, adding $4 billion of market capitalization” (High Resolution Audio).
One of the reasons Spotify has been able to maintain a growing success, particularly amongst subscriber growth and popularity, is because of its business model—specifically its focus on expansion. Spotify has a way of sacrificing revenue in order to gain as much subscribers as possible. In fact, according to Billboard, Spotify has put revenue growth to the side because “profit can be sacrificed in order to outgrow competitors and build a base of satisfied, long-term customers” (Peoples). By expanding and spending its money, Spotify can ensure its subscribers are getting the best experience possible. This paves the way for a strong relationship in the future between the company and its millions of users.
Even though Spotify barely breaks even, and some market analysts question the company’s ability to maintain its profits, the company has a massive leg up over its competitors. Two of the streaming companies fighting against Spotify’s reign are Apple and Amazon, both of which have had impressive global market shares in 2019 alone (High Resolution Audio). A streaming service that has not been as successful is Pandora.
With the introduction of several on-demand streaming services, the once popular self-tailored music app quickly died out. As the Rolling Stones puts it, “Why would you sit and wait for individual songs to be played when you could get all of them at a single tap, whenever you wanted, without limits?” (Rolling Stones). Though Pandora has made a slight comeback in recent years, their success is fractional compared to Spotify, Amazon, Apple and even YouTube Music. Pandora’s success has come after the company decided to target the “hundreds of millions of people who listen to terrestrial radio a week in this country,” since they are unlikely to switch completely over to streaming services (Wang). Though this population is a reasonable target for Pandora, it is a very specific one. Even if this population does download the app, Spotify’s enormous subscriber base would make it unlikely for Pandora to thrive when it comes to investors and advertising revenue.
High Resolution Audio, “Big Four Streamers Gain Market Share,” High Resolution Audio, 2019.
Deletehttps://www.hiresaudio.online/big-4-streamers-gain-market-share/
Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It
Up?.” Billboard, 2019. https://www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Template%20BB:%20Multi%20Story%20-%202.0&utm_term=daily_digest
Wang, Amy. “The Spectacular Existential
Crisis of Pandora.” Rolling Stones, 2018. https://www.rollingstone.com/music/music-features/pandora-media-radio-siriusxm-and-crisis-725663/
Just like every other type of media, music also has its fair share of platforms on which to stream content. This means that consumers have multiple options to choose from when they want to listen to their favorite songs. The article “Big Four Streamers Gain Market Share” makes it seem like there are four streaming giants when it comes to music. In reality, Spotify surpasses all other platforms. In 2019, their subscribers came in at 108 million, with a revenue of $1,663.9 million.
ReplyDeleteIn the past, Spotify has run into trouble when it came to paying artists. This is a problem for all streaming services on which content is available for free. However, in 2019, Spotify was able to cut costs from “sales & marketing; general & administrative; and research & development” so that they are able to offer more to “content owners” (Peoples). This, in turn, allows Spotify to house more popular content on their platform, which makes more people want to subscribe to their service.
However, Spotify may need to rethink their strategy as unseen forces affect musicians’ revenue streams. According to The Guardian, artists are asking streaming platforms to increase their royalty rates as they cannot hold concerts due to the coronavirus (Snapes). It’s possible that we will see artists pulling their music from streaming services until they can be compensated properly.
On the other hand, a platform that is currently struggling is Pandora. Among the other music streamers, Pandora only makes up for 2% of the market share. This streamer was popular at the very beginning of streaming services, but failed to keep up with the changes and innovations of other services. Although it allows users to listen to music for free with minimal ads, it does not allow the instant gratification of being able to choose which songs you want to listen to. In this day and age, complete access and control is extremely important in order for a streaming service to be successful. Pandora’s radio-like model is also available through Spotify, meaning it’s not necessary to use both services if you’re already paying for a premium Spotify account. With the current standards that users have for streaming music, I don’t believe that Pandora will be able to surpass other services anytime soon.
“Big 4 Streamers Gain Market Share.” High Resolution Audio, AceIT Publishing, 9 Dec. 2019, www.hiresaudio.online/big-4-streamers-gain-market-share/.
Peoples, Glenn. “Spotify In the Black: What Would a Profitable '19 Mean for the Streaming Giant -- and Can It Keep It Up?” Billboard, Prometheus Global Media, LLC., 1 Nov. 2019, www.billboard.com/articles/business/8541702/spotify-profitable-streaming-service-analysis-impact-music-industry?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%2BTemplate%2BBB%3A%2BMulti%2BStory%2B-%2B2.0&utm_term=daily_digest.
Snapes, Laura. “Musicians Ask Spotify to Triple Payments to Cover Lost Concert Revenue.” The Guardian, Guardian News and Media, 19 Mar. 2020, www.theguardian.com/music/2020/mar/19/musicians-ask-spotify-to-triple-payments-to-cover-lost-concert-revenue.