Streaming Constraints – Facing The Wall
Admitting sales will keep collapsing, can streaming made up for this loss despite its constraints? In previous chapters, we mentioned the music industry peaked at $38 billion in 1999, streaming reached a billion in 2013 and estimates are around 3 billion for 2015, there is still a massive way to go.
Streaming mostly depends on internet connection and people mostly listen to music while moving. The junction of those two factors implies streaming evolution deeply depends on smartphone propagation.
Standard price for a streaming subscription is $10 per month with 70% of the amount going to music industry. A quick calculation tells us it would take 450 million paying subscribers to tie the all-time peak of 1999. In the same time, smartphone penetration is exploding. From under 10% of the population owning such a device in 2011, to over 30% by 2015 and more than 2 billion distinct users, the potential is huge. This still mean over 20% of smartphone owners would need to subscribe a streaming platform to come back to our best form. A pretty optimistic scenario.
Additionally, the 600 million buyers of music in 1999 spend an average of $64. In the digital era, that amount decreased as average iTunes user was spending $48 a year. Independently of the period, spendings were always close to those two figures. Hence, how would we expect people to spend $120 a year on streaming? This system is twice as expensive as it buying music used to be, despite downloads largely devaluated music worth.