Can the Music Industry Bounce Back on Paid Streaming Services?
The online music streaming market is fast growing, thanks to the likes of Apple, Inc. AAPL, Spotify Technology S.A. SPOT and Amazon.com, Inc.’s AMZN Amazon Prime Music that have been playing a key role in reshaping the music industry. According to a recent research by MusicWatch that was provided to Billboard, the number of people paying monthly subscription for music has almost doubled since the end of 2016.
Paid subscription definitely has been helping the domestic music industry’s fourth consecutive year of growth after almost two decades of decline. The online music streaming market holds immense potential and is poised to grow over the long term given that an increasing number of people are ready to pay monthly subscription for the services.
Paid Music-Streaming Market Grows
Per a recent report by MusicWatch, the number of people paying a monthly subscription for music streaming in the United States is around 51 million. MusicWatch had last reported 26 million subscribers for on-demand music streaming in 2016, which marked a 150% increase from the prior year.
Also, over and above the 51 million people paying monthly subscribers is another 20 million users, who share an account with a paid subscriber, and a further 29 million, who are on free trails or bundled deals. In 2017, streaming music services accounted for 65% of recorded music revenues in the United States.
Understandably, music streaming companies are helping in reviving the domestic music industry that was struggling for decades. Per MusicWatch, one of the biggest reasons behind the growth in paid subscription is the ability to access unlimited number of songs on demand and the removal of ads.
Apple, Spotify Lead the Race
Apple has played a pivotal role in revolutionizing the music streaming business. Together, Apple and Spotify dominate nearly 80% of the total domestic music streaming market, with each having more than 20 million subscribers in the United States. According to a study by research company MIDiA, Apple Music’s global share increased 2% in the first half of 2018, reaching 19% of the total global streamers.
Apple at present has 43.5 million subscribers globally. Spotify on the other hand holds 36% of the share, comprising 83 million subscribers. Per the report, of the 9.2 million subscribers added by Apple in the first half of 2018, majority was in the United States. Apple has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Rivals Follow Apple, Spotify
Apple and Spotify may be way ahead in the race but the music streaming war is fast intensifying with an increasing number of players trying to grab more market share. Per the research, Amazon Prime Music and Amazon Music services command 12% of the market share, with 27.9 million subscribers globally at the end of the first half of 2018. The company is relying on the sale of its Echo devices to drive music subscription. It has also been ramping up its ad campaigns with the help of artists like Kane Brown and Ariana Grande.
Pandora Media, Inc. P too has been making efforts to grab more market share. Pandora has the third highest number of paid subscribers in the United States. The music streaming service provider has 6 million paid subscribers and 65.4 million free users. Also, Alphabet, Inc. GOOGL owned Google’s YouTube revamped its premium music offerings in June and has added millions of subscribers since then.
Summing Up
Understandably, the music streaming war is heating up and an increasing number of players are trying to grab more market share. The robust growth in monthly paid subscription only attests to the fact that the music streaming market has immense potential and is poised to grow in the long run.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.
See This Ticker Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Pandora Media, Inc. (P) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Spotify Technology SA (SPOT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
