One slide in a presentation by Internet analyst Benedict Evans should really stand out to people in the music business: Ecosystem sizes. The chart shows the growth in the ecosystem sizes over the last three years of Apple iOS, Google Android, Amazon and Facebook. (Evans calls these “The Four Horsemen.”) The first three are important players in the music business. Facebook has an important, but less direct, role in the music business because it does not license music for sale or streaming.
Evans’ chart shows Google Android has topped 600 million users, about 50% more than Apple iOS (400 million) and three times the number of Amazon accounts (200 million). Amazon has grown roughly 50% over three years, while Google Android has gone from zero to 600 million over that time. Apple iOS has grown a bit over fourfold.
Why does the battle for ecosystem share matter? As Evans explains a few slides later, the ecosystem is the “key leverage point” for market share, revenues and profits. Apple’s ecosystem (iOS, iTunes, iCloud et al) sells hardware. Amazon and Google use their core user experiences to engage consumers on other services. Amazon leverages ecommerce to sell digital goods and hardware, which result in incremental ecommerce. Google uses search and other services to encourage adoption of its broader ecosystem, which drives additional use of search and other revenue-generating services.
Share of ecosystem also carries an impact on adoption of stores and services. Apple has a base of 400 million iOS devices for its upcoming Internet radio service (and more, including PCs, for iTunes and iTunes Match). Google has a potential base of 600 million for Google Play music store and Google Play All Access subscription service (I use the word potential because music is not part of Google Play in all countries).