Some tips that will impact positively the number of streaming paying subscribers which are estimated over 70 million as of 2015 pending official numbers:
- The number of smartphones in use will keep booming
- 3G/4G connections are booming as well
- The industry is just getting started in promoting streaming platforms
- Industry catalogs are still not completely available on streaming platforms
- Sector giants like iTunes and Youtube just ended to jump into the bandwagon
- Current streaming platforms are of mostly bad quality. Songs are poorly sorted, repeated in each album etc.
- Offline mode is not fully developed and awareness of it is low
At the very start of this series, I mentioned I initially wrote this piece in French in early 2014. At the time, I wrote about Apple and Youtube not operating in the streaming sector so far – ironically they both did so one year later. Upcoming IFPI Digital Music Report 2016, expected to be released in a few weeks, will show how much of an effect they are doing. I’ll be posting an appendix to this report once it drops.
All factors mentioned ahead result into promising expectations. There have been 250 million iTunes buyers, with 50 to 100 million likely purchasing a subscription before 2020. That’s about at least five times the current count. Assuming the same increases for the full sector would mean 400 million subscribers. As Spotify keeps growing fast while new local Asian services will explode as well, this is a very realistic target. Additional revenues from ads supported streaming would generate the last billions needed to top the all-time 1999 record. Then, there will still remain some casual physicals purchases and performance rights for radio airplay. All in all, forecasts of an $60 billion industry isn’t out of reach, about four times more than 2014 results.
A last point remain which is the good old formula Start cheap & Go Up. This well-known industry technique consists in providing a service relatively cheap, get users usage to turn into a habit, and then increase the price of the service, just like it happened with internet connection. Applying this principle to our case would set subscription prices to $15-20 in the future. This is without mentioning specific subscriptions which will necessarily appear in the future like an additional $2/3 for each family member, or $5 more to couple streaming service with a unlimited download functionality.
I’ll be taking a risky bet to conclude by saying an overall gross of $100 billion within’ ten years is possible. There is only one thing to do if you want to make this expectation a reality – let the music play! Oh, wait, this is about streaming, that’s right, but what about other formats? How will they perform in the upcoming years?