Business Matters: Nearly A Third of Consumers Using Streaming Services: Report
Business Matters: Nearly A Third of Consumers Using Streaming Services: Report

Nearly 1/3 of Consumers Use Music Streaming Services
Nearly a third of consumers in 25 countries around the world now use a music streaming service. A report at Music Industry Blog, the site of former Forrester analyst Mark Mulligan, taps into EMI Insight data from 850,000 consumer surveys to reveal this and other trends.

You may be saying to yourself, "OK, streaming services are off to a good start. But will they have legs?" In other words, will streaming platforms become a mainstream business model that represents the future of digital music? Mulligan believes so and points to signs that streaming services have advanced beyond the young, male demographic that tends to drive early adoption of new technologies. While adoption hovers around the 46% mark for people aged 16 to 24, adoption sits at 39%, 35% and 31% in the 25-to-34, 35-to-44 and 45-54 categories, respectively. That's not bad for a group of adults more preoccupied with their careers and families than following digital music's every shiny new object. "Although streaming music penetration is still far from mainstream," Mulligan concludes, "current demographic trends suggest the right foundations are being built for broader success."

Some of Mulligan's findings echo what I've written about subscription services here in recent weeks. For example, Scandinavian countries have high adoptions of subscription services: Norway and Sweden stand at 48% and 43%, respectively, according to EMI's data. Spain, a faltering recorded music market if there ever was one, is the other above-40 market at 44%. But as I noted last week in my post about Spotify revenues, the leading streaming markets are small countries with small recorded music markets. The largest markets -- the U.S., Germany, the U.K. -- have far lower subscription adoption but nevertheless represent the bulk of any major music company's revenues. Japan, which just got Sony's Music Unlimited service last week, is the world's second-largest recorded music market but has only 15% penetration of streaming services, according to EMI's data. ( Music Industry Blog)

Musicmetric Expands to U.S. Under Daniel Savage
The data and analytics business might just be more attractive than you thought now that Musicmetric is expanding from the U.K. to the U.S. The company's U.S. presence will be led by Daniel Savage, an industry veteran and former general manager of Maverick Records and the founder of B Major Entertainment, which he continues to run and operate.

"Over the past four years, we've focused our efforts close to our U.K. home to develop Musicmetric, and this year, we've been able to work more with the U.S. market," said Gregory Mead, Co-Founder and CEO of Musicmetric, in a statement. "Having Daniel on the ground there will be a tremendous asset to us. He deeply understands the seismic power of data, and his relationships within the industry will help us quickly expand our American business."

The arrival of Musicmetric in the U.S. adds to an already buoyant market for data and analysis. Next Big Sound has good momentum and recently moved its operations to New York City from Colorado. The veteran in the space, BigChampagne, continues to offer its core data and analysis service after its acquisition by Live Nation in December.

Spotify Vs. Pandora: Catalog Size Is Irrelevant, Says Rob Reid
Rob Reid, founder of Listen.com (which eventually become Rhapsody) had some interesting predictions about Pandora and Spotify in an interview with the Verge. He started with a comment on the disparity between the two services' catalog sizes (Spotify's on-demand catalog is roughly 15 million and Spotify's webcasting catalog is less than one million).

"As for Pandora vs. Spotify, I don't think comparing catalog depth is relevant in their current incarnations, because they represent fundamentally different consumption modes. Pandora is a chauffeured music experience -- you sit back in your chair and the music is picked for you. Spotify is a sports car -- you take the wheel and go wherever you want, very, very quickly. They compete in the same way that CD collections used to compete with radio stations… That said, I expect things to change between the two companies, because if I were Spotify, I'd certainly be angling to get into Pandora's business. If I were Pandora I wouldn't be drooling over Spotify's business because the margins suck in comparison. But I'd probably expect Spotify to target my business, so I'd target Spotify's consumption mode as a defensive measure."

Spotify has indeed targeted Pandora's business -- it launched a free radio service on its mobile app two weeks ago. Don't hold your breath for Pandora to replicate Spotify's "consumption mode," however. For Pandora to offer on-demand access would require negotiation of direct licenses. Say what you will about Pandora's cost of content acquisition (it's around 54%), on-demand music offers even lower margins and requires the service to pay advances to rights owners. No, Pandora will continue to offer a service that is technically webcasting but feels as personalized as a playlist because it knows what you want to hear. Any other innovations will fit its role as webcaster. Maybe someday it will negotiate directly with rights owners (it will have to do so for a launch outside of the U.S.) and will offer some sort of on-demand feature. But that will be many years down the road. ( The Verge)

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