This could actually be good news for streaming services, which for the past two years have been pouring money into podcasts, which cost them less. Streaming companies don’t have to share as much revenue on podcasts — a growing number of which they own — as they do on streams of music, most of which they don’t. But for record labels, publishers, songwriters and artists, this may be the calm before the storm. In the short term, at least, the lack of growth in the number of streams won’t impact the music industry’s aggregate streaming revenue — if subscribers are added and consumption stays flat, rights holders just make more per stream. But a move toward podcasts could cost rights holders leverage in licensing negotiations.
Perhaps more important, with some 55,000 new tracks being uploaded onto streaming services every day — up from the 40,000 reported in April 2019 — you have a dilemma: more songs (and more users) competing for a fixed number of streams.
Has streaming volume really peaked in the U.S., though, or is the current growth freeze just a blip?
A number of factors seem temporary. Label sources point to the previous year, where cyclical trends in the release schedule led to finite periods of flatness. The presidential election also appears to have cut into music time, given the sharp dip in streaming during election week itself. Thanksgiving has also historically seen a 2% to 3% dip in music streaming. (The U.K., by comparison, where neither occurred, saw streaming dip 5% when the pandemic hit but regained momentum in three weeks and has continued to edge upwards since.) Another obvious factor limiting music streaming time for now is the lack of commuting, with most offices still closed.
Other forces are putting permanent pressure on streaming volume, though. Gaming is competing for attention with music. Market research firm IDG Consulting reports increasing average gameplay hours per user across the board. Counter Strike Global Offensive play increased 40% since the pandemic started and Defense of the Ancients is up 38%. Roblox, which appeals to kids 9 and up, hit 120 million global monthly active users in June 2020, and IDG Consulting now puts that figure at about 160 million — a fifth of which are likely in the U.S. That’s a 33% increase in just the past five months.
TikTok is also giving music streaming platforms a run for their money. The company claimed 100 million U.S. daily active users in September. For context the U.S. online population under the age of 29 is only 110 million, meaning TikTok may have already soaked up its addressable market. The app has been installed more than 66 million times this year, according to app analytics company Sensor Tower, and 37% of that activity happened between April and June. The company estimates that 40% of TikTok’s U.S. growth was accumulated in 2020. (From July to September, installs dropped by 31%, possibly indicating a saturation point.)
Tom Silverman, founder of Tommy Boy Records, views kids' obsession with swiping 30-second clips on TikTok as a new era of the sub-song, asking, "If a single used to be an ad or trailer for an album, is a sub-song a trailer or ad for a single?"
If young kids are hooked on Roblox, and older kids are TikToking, then their parents may increasingly be listening to podcasts. Between 2014 and 2019, time spent with music was down 5% and time spent with spoken word was up 20%, according to a report by NPR and Edison Research. The lack of authoritative data on podcast consumption, however, makes it difficult to gauge its impact on music streaming. Measurement is difficult: a download of a podcast on the Apple app does not constitute a listen, while Spotify claims that 22% of its users engaged with podcast content in the third quarter, up from 21% the prior quarter, but does not define what that means.
When artists resume touring and releasing big albums to drive ticket sales, music streaming could still return back to growth, but the new attention economy guards against such complacency. With these three “attention merchants” competing for consumers’ increasingly scarce time, it’s likely that music streaming will struggle to grow even when things return to normal. We know that songs are getting shorter, and without more songs being consumed, music is already losing the battle for attention.
Will Page is a visiting fellow at the London School of Economics who previously was the chief economist at both Spotify and PRS for Music. His book, Tarzan Economics, will be published by Little Brown and Company in the United States in early 2021. He would like to thank Ally Glerum, Product Manager at MRC Entertainment, as well as Podnews, MIDiA, IDG Consulting, Sensor Tower and Chartmetric for providing data and helpful suggestions.
A version of this article originally appeared in the Dec. 19, 2020 issue of Billboard.