With 100 Million U.S. Subscribers, Streaming Services Declare: ‘We Are Fully Part of This Industry’
By the end of 2019, there were 99 million active streaming subscribers — procured from 87.5 million paid users — in the U.S. alone.
The topline stats in the new “Streaming Forward” report from trade group the Digital Media Association (DiMA) are reason enough to sit up and notice. By the end of 2019, there were 99 million active streaming subscribers — procured from 87.5 million paid users — in the U.S. alone. And over the previous two years, paid subs jumped 74.6% and revenue rose 57.7%, fueling optimism for a long-suffering industry and turning streaming services, labels and publishers into hot investments.
It’s no wonder Spotify’s stock is soaring and Warner Music Group had a successful IPO in the pandemic’s early days. Streaming has made music hot again.
But the 43-page report, conducted by MiDIA Research for DiMA, begs the question on why they would fund such a market research study. The D.C.-based trade group has six members — Amazon, Apple, Google, Pandora, Spotify and YouTube — who dominate digital music and were instrumental in pushing the industry into its inevitable future. (Cases in point: Amazon perfected e-commerce, Apple effectively built the legal download business, Pandora reinvented online radio, Google and YouTube revolutionized online video, and Spotify popularized the music subscription service.)
The report is meant to tell “the story behind the economic story,” says Garrett Levin, DiMA’s president and CEO. “There’s a recognition — and I think it’s a long time coming — the streaming services are fully part of this industry. DiMA wanted to be able to tell the story of streaming and the close to 100 million American subscribers to these platforms in a way that has fundamentally changed and revolutionized how fans and consumers find music, how artists and creators connect with their fans.”
This is what trade groups do: release reports that serve a specific purpose. Take the reports the BPI and IFPI routinely release about record labels’ A&R investments to impress on people the considerable expense labels incur to break new artists. The reports’ statistics receive media attention and can show up in documents such as, say, the European Commission’s 2012 decision to approve Universal Music Group’s acquisition of EMI Music. Or testimony before Congress. Or op-ed articles. Or Congressional staffers’ inboxes.
The “Streaming Forward” report could have alternatively been titled, “You Need Us as Much as We Need You.” Throughout the document, the reader is reminded that music streaming companies deserve credit for playing a vital role in the wider industry’s turnaround. MiDIA highlights the tools available to artists, such as analytics dashboards, and the editorial content — especially playlists — that has made today’s streaming services almost unrecognizable to the ones of 2015.
DiMA also points to its members’ roles in helping podcasts’ popularity grow. Apple has carried the medium for over a decade while Spotify has invested greatly in its strategy to broaden its platform beyond music. Smart speakers — led by Amazon — are credited with expanding podcasts’ ecosystem beyond the smartphone; 29% of U.S. households have a total of 71 million smart speakers, the highest penetration rate in the world, according to MiDIA.
The numbers speak for themselves. Streaming has driven the industry’s resurgence while it seeks to surpass the all-time high of $14.6 billion in revenue in 1999, according to the RIAA (unadjusted for inflation). The report finds that streaming alone generated $10.3 billion in 2019, accounting for 80% of total industry revenue, and it is projected that streaming will propel overall revenue to record highs in 2025.
Further, reaching 100 million subscribers in the U.S. is impressive given about 35% of the country’s 330 million populace are outside the prime 14-to-65 demo.
Of course, record labels and publishers have always counted on others for that last mile to the listener, whether it’s brick-and-mortar retail, an ecommerce company selling physical and digital music, and most recently, the streaming service. Other than the Columbia House mail-order business, labels have been responsible for relatively few direct sales. Minor dalliances aside — label-owned Music Farm and PressPlay in the early days of digital music, for example — labels have tasked digital companies with satisfying demand for their music.
But for stats nerds and policy wonks, a thorough market research report is an effective reminder of streaming services’ role in the industry. “I hope it informs some folks around a more comprehensive picture about the services’ role in the industry and the way our fates are intertwined,” says Levin.