In a new report, Juniper Research says the global subscription market will increase 40% this year. Western Europe will account for nearly half that revenue, and most of the remainder will be evenly split between North America and the Far East & China.
Juniper’s estimate of $1.73 billion for the subscription market may seem low, but it counts only mobile-related revenue. After all, Juniper does market research for mobile markets. The IFPI’s figure for last year’s subscription market is $2.1 billion value. The two figures are actually further apart than they might seem. Juniper’s figure represents consumer spending. The IFPI’s figure represents trade value, or the amount that is actually received by record labels.
Although Juniper’s forecast leaves out some PC-based subscription revenue, it captures the bulk of subscription revenue and focuses on what creates the most value. While some PC-based usage is free — Spotify has an ad-supported tier, for example — subscription services charge for mobile usage.
The report comes out just as Apple is about to debut an Internet radio service — that revenue is not included here because iRadio will be a free, ad-supported service. Juniper believes Apple will eventually launch a subscription service, but does not provide a timeline for its entry into the market. It says the same of Google without noting the company has already launched its subscription service, Google Play Music All Access.
The company cites three trends on its free white paper http://www.juniperresearch.com/shop/download_whitepaper.php?whitepaper=210 : personalization, the shift from purchases to access models, and participation of mobile carriers. Juniper believes services need to deliver personalized services that compete with FM radio (equipped in many mobile devices, although not the iPhone or iPad) without using a mobile subscriber’s data (that’s less of a problem in the US because unlimited data plans are common). The shift to access models is an obvious and known trend in the marketplace. The involvement of mobile carriers is an important development that deserves more attention.
Juniper notes carriers have been unsuccessful as direct retailers. Vodafone closed 360 in 2011. Verizon shut down VCAST in January. But carriers are partnering with third-party music services to bundle music with mobile plans.
Aside from the revenue forecast, which could confuse people, the rest of the report makes for insightful reading. As for the numbers, it’s best to apply Juniper’s growth estimate to the more familiar IFPI market number.