In 2016, streaming accounted for over half of U.S. music sales. By the end of 2017, with download sales continuing to fall, it could be close to two-thirds. But what this biz’s future looks like -- and whether it will be shaped by music-centric companies like Pandora and iHeartRadio or digital giants like Apple and Amazon -- depends on what happens in the next few months.
Right now, the paid on-demand business driving streaming revenue is dominated by Spotify and Apple, which this summer announced that they have 60 million and 27 million respective subscribers worldwide. While the RIAA has not released subscription numbers since April, MusicWatch analyst Russ Crupnick estimates that, in the States, there are now between 32 million and 34 million on-demand music service subscribers. Amazon has never announced subscriber numbers for Amazon Music Unlimited, although most analysts now believe it is, or will soon emerge as, No. 3.
“The question now is, who’s going to win the middle,” says Crupnick. As TIDAL, Pandora, iHeartRadio and SoundCloud all try to gain traction among more serious music fans, they must also battle for casual listeners. “From here on out, every day is hypercritical,” says Amazon Music director Ryan Redington. “The players need to establish themselves.”
The fall’s biggest buzz will be around Spotify’s expected stock market debut, reportedly through direct listing. Though this probably won’t occur until early 2018, speculation about Spotify’s success could stimulate investment that would help smaller companies in need of cash infusions to keep operating. Months ago, Spotify started adding video to its immensely popular Rap Caviar playlist -- traditional clips and artist freestyles -- “and that has been really successful,” says chief content officer Stefan Blom. “You can expect us to do more of that before the end of the year.”
In December, Apple will introduce the voice-activated HomePod speaker. At $350, it’s more expensive than Amazon’s Echo and, at least initially, will only stream songs with Apple Music. But Apple is promoting the device as better-sounding, and it will allow the company to compete with Amazon in voice-activated streaming.
Amazon plans to focus on the millions of U.S. consumers who don’t yet have a streaming subscription but might have an Amazon Prime membership. Analysts believe that by the end of the year, over half of U.S. households will have Prime, which gives the company a marketing advantage in music. Redington won’t say when or how, but Amazon plans to experiment with different prices and services.
Making its own play for a mass audience, Pandora -- which recently sold a 19 percent stake to SiriusXM and brought in new CEO Roger Lynch -- plans to keep expanding its on-demand subscription service, which now has 390,000 subscribers (out of the service’s 76 million active monthly users). iHeartRadio has never disclosed subscriber numbers, but the size of its online and traditional radio businesses gives it an advantage as well. TIDAL -- which recently hired former Kobalt Music Group president Richard Sanders, its fourth CEO in four years -- remains focused on exclusives: It offered JAY-Z’s 4:44 a week before other services, and it’s still the only place to legally stream Beyoncé’s Lemonade. And SoundCloud? In August, a last-minute injection of capital saved it from extinction. The only sure winner here is the overall music industry, which expects another year of significant growth as streaming becomes mainstream.