Music streams are up and downloads are down. Why is that a surprise?
“Streaming music is cannibalising download sales”. A phrase which gets anyone connected with the music industry hot under the collar.
This technological shift causing a lot of panicked flapping about, however it really shouldn’t be this much of a shock. The transition between music downloads to music streaming has been a topic of conversation since the dawn of legal download stores such as i-Tunes.
Big music markets, especially in the US, have been taken by surprise with how quickly download sales appear to have peaked, then tipped into decline.
While many musicians are worried about royalties, some music executives who see this transition as inevitable are fretting at losing control.
They fear that the rising streaming income may not quite balance out the ongoing decline in sales even if it balances out the download decline. Their next task is to find a way to persuade people to pay for streaming rather than getting it for free.
Mark Mulligan, initially an analyst at Jupiter Research, and recently from his own Midia Research company, has kept a close eye on these changes for the past few years.
His latest report, co-authored with Alun Simpson, is ‘The Streaming Effect: Assessing the Impact of Streaming Music Behaviour’, tries to get to the bottom of the transition from sales to streams.
The report claims that by the end of 2014, 37m people around the world will be paying for streaming music, while 210m will be listening for free on advertising-supported services.
He feels that tech- savvy people who were the first to buy “bucket loads” of music from i-Tunes have now realized that they could get better value for their money by paying £9.99 a month for unlimited access to something like Spotify.
Mulligan thinks there are two questions to pose when trying make digital music more successful: first, is how many people are prepared to pay for music, and second, is what price they’re prepared to pay for it.
He suggests that £9.99-a-month subscription services, are “pretty much as good as you can get” for this conversion rate.
“It’s the only way you can do it: the only way labels are going to go near anything at that price. They are terrified of cannibalising the top table, and stealing a load of Spotify customers,” he says. “We need more in the way of mid-market pricing, but the US and UK digital guys at the major labels are the ones that are most cautious and have most to lose.”