As a personal winter break project, this deck is a compilation of various trends I have identified in the music streaming space both locally and globally with special attention paid to the rising competition between Apple Music and Spotify.
4. Rise of Freemium
Arising hand in hand with on-demand economy and growth of
streaming/instantly available media.
Network effect shows tension between artists hoping to
expand reach from free listeners and wanting more royalty
payments from subscribing listeners.
Struggle for profitability even with bulky ad revenue
6. Spotify – KKBox – Apple - MelOn
Spotify KKBox Apple Music MelOn Music
Users: 75M Active
20M Subscribers
Users: 10M Active
2M Subscribers
Users: 15M Active
6.5M Subscribers
Users: 28M Active
Library: 30M
Songs
Library: 10M
Songs
Library: 37M
Songs
Library: 2.6M
Songs
Reach: 58 Markets Reach: South
Asian Region
Reach: 100+
Markets
Reach: South
Korea
Subscription:
$9.99/month
Subscription:
$9.90/month
Subscription:
$10/month
Subscription:
$5.60/month
Valuation: $8.5B Raised: $104M Est.: $2B by
4/2016
Est.: $2.1B
7. Artist/Industry Perspective
Royalties vs Exposure Tension
“Market price” for streaming
services around $10/month
boils down to minimal
royalties for artists with large
cuts going to record labels
Potential for services to provide
multi-dimensional listening
Apps compete on size of
library as well as
secondary/tertiary features
such as artist-created
playlists and personalized
messages
8. Recommendations
International Expansion
Better Use of Database
Artists and Royalties
Ad Revenue
Move to Wearables/Health and Fitness
Purpose of Record Labels
Critical Question:
How can these global or local
services best suit themselves
to face these predicted
changes in the music
streaming industry?
9. Moving Forward
Future of global licensing?
Impact on radio?
Pandora vs Apple Music DJs vs Spotify “radio”
Use streaming data to isolate concert hotspots/seasons
Accessing younger crowds or older crowds
Twitter/Instagram/Vine over Facebook
Distrust in over-curation
10. Index
Changes in Listening Trends
Rise of Freemium
Determining Competitors/Substitutes
Service Breakdown
Artist/Industry Perspective
Recommendations
Moving Forward
This deck is designated as primarily informational, including introductory information regarding the industry and specific firms discussed.
It should come as no surprise that the streaming world is gradually and continually taking over other forms of media consumption, especially with the decline of CDs and other physical forms of music collection.
However, being a music streaming service is far from homogenizing. Above, I have plotted various streaming services according to user flexibility and diversity of features offered. From the user’s perspective, these two play determining roles in which application to use. On the supply side, these two dimensions often drive higher-level decisions related to marketing, backend operations, and more.
For example, 8track’s follower/ing based listening as well as quirky branding make it conducive to launch the forum function as it did, allowing users who are already connected through listening to chat about their tastes and more.
The strength of local competitors must not be overlooked, but for the sake of the + graph they have been excluded.
While Deezer proves competitiveness with around 6.5M subscribed users,
International Expansion
Library and Habits: Bill paying, Karaoke style rolling lyrics, acquisitions by/partnerships with messenger applications
Asian markets: local artists hold 70-85% of market share, Western artists are minority – local services have a clear advantage in negotiating with these various local labels.
also high levels of piracy and lower willingness to pay for streaming and downloads
Better Use of Database
“Discovery” function to provide highest satisfaction of listening, can be good leverage with smaller/indie artists
Artists and Royalties
Stabilize market norms to create profit maximizing strategy for all parties, may need to wait for streaming’s plateau in growth
Ad Revenue
Shift to multi-media and curated ads (location/demographic targeted)
Move to Mobile-Wearable? Health/Fitness
creation of workout playlists, moving towards “lifestyle” takeover
The Purpose of Labels
Will streaming services be able to manage concert/offline interactions? Will record labels still be necessary and if not, how will that affect things like royalties and revenue sharing?
As global and local services compete, how will the future of licensing look? Will global fans be able to listen to local music? If not how will that demand be satisfied?
The on-demand generation must find balance with choosing their own songs and radio/DJ selected playlists – which will win?
Heavy digitalization comes with huge data sets that can be used for high-revenue generating, offline events
Millennial hype aside, how can services better cater to the head and tail ends of their demographic spectrum?
