2016 has just turned to 2017 and many people are reevaluating. One of the keys to this is throwing out ‘clutter’. For many, this takes the form of throwing out hundreds of CDs that have done nothing except gather dust for years. They were replaced almost a decade ago by MP3 downloads and since then streaming has become the preferred medium for a growing number of music listeners.
The growth of those using streaming services over the past 12 months has been huge, with revenue increasing by 57% in the first half of 2016 alone whilst revenue steeply declined for downloads (down 14%) and physical albums (down 17%). It has seen what was once viewed as an inevitable cause for stagnation and the possible destruction of the music industry by the internet as a lifeline. Warner Music, the third largest music label in the world, recorded revenues of $3.25 billion, its highest in 8 years, with $1 billion coming from streaming alone.
Today there are around 90 million people who use music subscription services across the world, but this number is steadily increasing and a huge market has developed. Apple Music had added 4 million subscribers between April and September and Spotify has averaged 2 million new subscribers every month across the majority of 2016.
The business side of this is huge too, streaming companies now have both paid subscribers who don’t hear adverts and make up a slightly smaller portion of total users, and free users who have limited access to services but have to listen to adverts. According to a report from GroupM, this represents a $220 million opportunity for advertisers. This is due to 60% of streaming activity taking place on mobile devices, where musical choices are more often linked to moods and emotions.
It is here that the real value in streaming comes, not only in terms of monetisation but in the huge potential it has to understand an audience. At present there is a considerable risk in new acts for record labels, for every multi millions selling Taylor Swift there are thousands of Courtney Stoddens who fell into musical oblivion. When you look at the popularity of specific genres or styles, it is possible to see what is popular or what is likely to be popular in 6-12 months.
Music, like fashion, is generally cyclical which works well for data analysis as there are predictors that can help to show music labels what is going to be popular in the future. They can then concentrate resources on specific acts that fit within these trends, increasing the chances of success and decreasing risk. We have similarly seen that the move to digital has opened up new opportunities for artists, with global superstars like Justin Bieber and the Arctic Monkeys getting noticed after growing their fanbase online before being signed to a label. Through monitoring of traffic and taking more of a data-driven approach to finding new acts, labels can identify these artists earlier, meaning that bands can grow much faster through having the support of labels at an earlier stage.
However, music is not all about music labels and the digital revolution has meant that more artists now have the opportunity to go it alone. This isn’t something that only small obscure bands do either, with some of the biggest acts in the world representing themselves, such as Radiohead, Chance the Rapper and NOFX, all of whom have sold tens of millions of records between them. The uptake in streaming and the data it creates allows these artists to draw insights about their performance directly, rather than relying on secondary reporting from record companies. It also allows them to see considerably more detail in a much shorter timeframe. Suddenly weekly sales and monthly chart positions don’t matter as much, because they can see a minute-by-minute update of how their songs are performing.
Music streaming is growing at an impressive rate and it is giving companies and artists opportunities with data that they’ve never had before. We have already seen how this has impacted industries across the world, now the doom and gloom is lifting it will be fascinating to see what happens in music.