Music Streaming Archives

Global Online Music Streaming Growth Slowed Down in Q2 2020

While the market continues to grow annually, the growth rate dipped on a quarterly basis.
Average Revenue Per Paying User (ARPPU) dropped 12% YoY.
Spotify’s revenue remained flat QoQ but grew 14% YoY.

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego – October 6, 2020

Global online music streaming revenues declined 2% QoQ but grew 13% YoY in Q2 2020 at $6.7 billion, according to the latest findings from Counterpoint Research. This is the first-ever QoQ decline in terms of revenues as music streaming has been gaining strength with every passing quarter. Paid subscriptions grew 29% YoY compared to 35% YoY in the previous quarter.

Research Analyst Abhilash Kumar said, “The growth slowed down in the second quarter and, for the first time, the revenues declined sequentially. There are a couple of reasons for the same. The music streaming platforms came up with some discount offers (like free subscription for some months) and also lowered the prices for paid subscriptions to dissuade consumers from leaving the platform or shifting to a free plan. Also, the advertisement revenues saw a dip since many companies opted to cut expenditure in view of the COVID-19 pandemic. However, podcasts related to different genres were able to keep people glued, offsetting some of the decline.”

In terms of monthly active users (MAUs), Tencent Music (with its subsidiaries QQ Music, Kuwo and Kugou) led the chart in Q2 2020 with 26% share, followed by Spotify and YouTube Music with 12% and 10% shares, respectively. However, in terms of paid subscriptions, Spotify continued to lead with 34% share, followed by Apple Music (21%) and Amazon Music (15%).

Talking about the top performers, Kumar added, “The social media platform and free availability of music help Tencent Music maintain the No. 1 spot in terms of total MAUs. For similar reasons, YouTube Music is also one among the top three. Strong brand presence, attractive offerings, presence in more than 90 countries, continuous product improvisation and focus on podcasts have helped Spotify. In Q3, Spotify entered Russia, which gives it an opportunity to tap more than 250 million music fans there. Also, its family plan continues to attract users. Apple Music’s free six-month subscription offering in 52 countries helped maintain its market share. Regional players like Anghami in MENA (Middle East and North Africa), Melon Music in South Korea and Yandex Music in Russia reported almost flat growth QoQ. On the other hand, India’s largest platform, Gaana, grew 19% QoQ to reach more than 180 million monthly listeners. Interestingly, while the listening hours plunged for global platforms, they grew for regional brands due to the presence of local content.”

The music streaming industry was almost immune to the ill-effects of COVID-19 in Q1. In fact, the streaming hours increased as people stayed at home. Starting Q2, the market witnessed a slowdown in growth, driven by sequential decline in both paid revenues (people switching from a paid plan to free plan) and ad-based revenues (decline in traffic and companies withdrawing ads). Starting June-end, the growth is slowly coming back on track and the traffic has started to rebound. We believe the growth will be back to pre-COVID-19 levels by Q4 2020.

Our comprehensive and in-depth ‘Global Online Music Streaming Market Tracker, Q2 2020’ is available for download here.

Please feel free to reach out to us at press(at)counterpointresearch.com for further questions regarding our latest research and insights, or for press enquiries.

Background

Counterpoint Technology Market Research is a global research firm specializing in technology products in the TMT industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contacts:

Abhilash Kumar

Hanish Bhatia

Podcast: Global Pandemic Makes The Right Pitch for Podcasts

Online music streaming entered a golden era in 2019, with paid subscriptions crossing 350 million users. Moving to 2020, the year started with a global pandemic where the COVID-19 virus outbreak was seen in several countries. As a result, lockdowns were imposed in most countries, and that turned out to be a silver lining to accelerate the growth of the music streaming market. Global subscriptions hit 394 million in Q1 2020, with podcasts continuing to drive growth.

Podcasts have seen big growth as even individual content creators are trying to cater to this segment of the audience. In the current challenging environment due to the coronavirus, health-, wellness- and meditation-related podcasts have grown. Other genres include personal finance and entertainment. The lockdowns have even caused a shift in listening patterns. Earlier, people would listen to podcasts when commuting. Now, as people are spending more time at home, listening has increased on devices like smart TVs, smart speakers, and more.

To attract more customers, music streaming platforms like Spotify have been bringing promotional offers in key markets like India. The company is offering a yearly subscription plan for just INR 699 (around $9). Apple Music, on the other hand, has expanded to 52 new countries, offering free subscriptions for six months. In terms of revenue share, Spotify leads the pack, followed by Apple Music and Amazon Music.

In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne and research analyst Abhilash Kumar discuss the growth of the music streaming market in Q1 2020. We also deep-dive to understand factors that are driving the growth of podcasts and touch upon the revenue share of the music streaming platform.

Our detailed report on the Global Online Music Streaming Market in Q1 2020 can be found here.

Hit the play button to listen to the podcast

Also available for listening/download on:

Video Streaming is the Highest Spending Smartphone App Category in the US

75% of the respondents in our survey pay a monthly subscription for video streaming.
One in every five respondents spends $20 or more per month on music streaming.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – July 22, 2020

Video streaming is the highest spending app category in the US. As many as 75% of the respondents in our latest Consumer Lens Survey pay a monthly subscription for video streaming. Monthly average spending in the US on video streaming is around $13. Students spend the highest, about 18% more than the overall average, followed by salaried employees. We have recently seen a global spike in the usage of different apps due to the COVID-19 lockdowns. The global pandemic forced many people to work from home and limit their outdoor activities. The US is one of the most affected countries with partially or fully enforced lockdowns in many areas. As a result, consumers are spending more time on entertainment through mobile devices.

Commenting on this trend, Counterpoint Research Senior Analyst Pavel Naiya said: “Lockdown has given an opportunity for the digital entertainment industry to thrive and expand more quickly than before. We have seen many leading video streaming platforms aggressively launching original content to attract more customers towards subscription plans. As a result, many trial customers are moving to a paid subscription plan. At the same time, many subscribed users are upgrading from the basic plan to premium streaming options (HD and UHD). This significant movement is pushing revenue of these streaming services more than the earlier projected growth. With more revenue coming in, video streaming platforms are expanding their search for new content. This new trend is providing low-budget productions a platform to get a bigger audience, which was not possible earlier.”

Mobile gaming and music streaming captured the second and third spots, respectively, in consumer app spending. The average spending on music streaming is $9 in the US. One in every five respondents spends $20 or more per month. Male respondents spend more on music apps than females. The highest spenders are in the 16-24 age group and are self-employed.

Exhibit 1: USA: Paid Consumers Penetration by Smartphone App Category

Source: Counterpoint Consumer Lens

Counterpoint Research Associate Arushi Chawla elaborates on this new trend: “Music streaming platforms are differentiating themselves mainly on two parameters — original/exclusive content and overall user experience (like recommended streaming and better UI). As a result, more money is allocated to acquire new albums or get exclusive content deals. With more money coming in, we are seeing frequent albums being published by leading artists. At the same time, popular artists are getting more exclusive content deals.”

Chawla added: “Spending pattern for music streaming apps signifies that subscribers are using multiple paid platforms at the same time. This is mainly due to personalized music, genre preference, and exclusive fan following of different artists. As the music streaming universe is expanding, lesser-known indie artists are becoming mainstream. Instead of a full album, artistes are preferring releases of singles. This trend will further encourage a new-generation artiste to come on board and find the audience.”

Some of the other key findings of this study are:

Female respondents are spending more on mobile games as compared to males. Respondents who are not working are spending more on games as compared to any other category.
The average spending on social media and dating apps is $10 per month. About 35% of the self-employed spend $20 or more per month. Students are the second-highest spenders in this category.
Productivity apps are more popular among males and self-employed.
Digital newspapers and magazines mostly run on advertisements. As a result, average spending in this category is the lowest among all categories.

If you are interested in a detailed analysis of app spending and other smartphone consumer behavior, the full report is available for our subscribed clients on our research portal.

Methodology:

The Consumer Lens survey was conducted among smartphone users in seven countries during May-June 2020. The consumer opinions are drawn from a heterogeneous group in terms of age, monthly income, gender, and occupation. Data points were selected which abided with all the logical checks throughout the analysis section and gave a better representation of the ongoing smartphone trends and future purchase intentions.

Analyst Contacts:

Pavel Naiya

Arushi Chawla

Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our latest
in-depth research, insights, or press inquiries.

COVID-19 Accelerates Music Streaming Market Growth, Global Subscriptions Hit 394 Million in Q1 2020

Spotify continued its good run, growing 30% YoY in terms of music streaming subscriptions
Music streaming platforms are focusing on increasing reach by making their services available on different platforms through initiatives like device partnerships and browser availability.
Podcasts continue to drive growth.

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego – 8th July 2020

Global online music streaming subscriptions spiked 35% YoY in Q1 2020 to reach 394 million subscriptions, according to the latest findings from Counterpoint Research. This was driven by increased usage of the OTT platforms as people stayed at home amid the COVID-19 outbreak. Promotional offers like free trials and subscription price cuts in emerging markets added to the growth. Increase in podcast genres on the music streaming platforms was another big factor for people to tune in.

Research Analyst Abhilash Kumar said, “The growth in paid subscriptions (35% YoY) was once again more than the 20% YoY growth in monthly active users (MAUs). This indicates that people from the free MAU universe are upgrading to become premium subscribers for an improved experience. This also indicates that it is relatively difficult to bring users into the system, but once they come in, it is relatively easy to make them upgrade.”

Spotify continued to lead the charts for Q1 2020 with a market share of 30% in revenue terms and 33% in terms of paid subscriptions. Apple Music followed with 25% revenue share and 21% subscription share. Amazon Music subscriptions grew a strong 104% YoY to capture the third spot. However, in terms of total MAUs, Tencent Music (with the help of QQ Music, Kugou and Kuwo) emerged the winner with a strong hold in China, accounting for 657 million MAUs.

Talking about the top performers, Kumar said, “Spotify growth was driven by strong performances in Asia Pacific and Latin America. It has come up with attractive promotional offers in the emerging markets. To talk about its key market India, which it entered recently, it has made a big price cut on its yearly plan – from INR 1,189 (around US$16) to INR 699 (around US$9). Also, it kept its research game strong to tap different segments. It came up with a new service Spotify Kids, targeting parents with small children, besides podcasts and playlists for pets. Apple Music expanded to 52 new countries and offered 6 months of free subscriptions there. Also, it is adding new features continuously on its platform, like with the iOS 13.4.5 release, users can now share their music on Instagram and Facebook stories, thus increasing social media engagements. The reason for Amazon Music’s 104% YoY growth is that its HD arm Amazon Music HD offered 90 days of free lossless music streaming in Q1 2020.”

Discussing the Q1 impact of the COVID-19 pandemic on the OTT industry, Kumar said, “Like we said in our Q4 2019 release, the OTT industry experienced an uptick as people stayed at home. However, the listening patterns have changed from listening while commuting to listening at home. Radio, news channels and podcasts related to wellness and meditation have grown. On the devices side, streaming time on smart audio devices and television grew even as listening hours on Android Auto and Car Play declined amid less commute.”

The race for subscriptions is heating up with every passing quarter. While the COVID-19 outbreak proved to be negative for most of the industries, it improved the overall scenario for the music streaming segment. Consumers getting some extra time to explore these platforms accelerated the user growth rate.

The comprehensive and in-depth “Global Online Music Streaming Market Tracker Q1 2020” is available to help track the market. Please contact press(at)counterpointresearch.com for further questions on our research or other press inquiries.

Background

Analyst Contacts:

Abhilash Kumar

Hanish Bhatia

Latin America and Asia Drives Growth for Spotify in Q1 2020

Spotify met its business expectation on all major parameters despite the COVID-19 outbreak. Both the MAUs and premium subscribers grew 31% YoY to reach 286 million and 130 million respectively. This is driven by strong regional performances in Latin America and Asia Pacific. MAUs grew 36% YoY in Latin America while it grew 65% YoY in the Rest of the World (the Asia Pacific and Middle East Africa ) due to the good performance of Mexico, Brazil, and India.

Impact of COVID-19

The only metric which did not perform in line with the guidance is ad-supported revenues. This is because the pandemic has curtailed many advertisers budgets and have withdrawn ads from the platform. However, this revenue accounts for only 10% of Spotify’s overall revenue so this is not making a big dent in Spotify’s revenues. On the other hand, premium revenue grew 23% YoY and 4% sequentially in Q1 2019. Interestingly, this indicates that the growth in premium subscribers is not just because of free trials given by the company, but that people are willingly paying to subscribe to the service.

Amid the COVID-19 outbreak, on the global level, there is hardly any impact on paid subscribers and MAUs. In fact, both new and reactivated MAUs grew during lockdown periods in markets including North America, Latin America, and Asia Pacific, etc. Notably, for the quarterly average, the ratio of daily active users (DAUs) to monthly active users (MAUs) was higher than Q1 2019.

Beginning late February, Spotify saw the negative effects of the outbreak as there was a notable decline in DAUs and consumption in highly affected Spain and Italy. However, the market has started to rebound in these markets over the last week of March.

As people continue to stay at home, the usage in cars, wearables, and web platforms has dropped, however this gap is filled with increased traction on smart TVs and gaming consoles which is up by over 50%.

There is a shift in pattern from listening while commuting to listening at home. Podcasts related to wellness and meditation have seen an uptick. The freemium model of Spotify has turned out to be successful in the pandemic time compared to the premium model of Apple Music and Amazon Music. Apple is well aware of this fact and this is one of the reasons it has given 6 months free trials to people in 52 new markets that it recently entered.

Podcast in focus

Spotify is moving from a music first to an audio first company, as podcasts have been gaining user engagement for over a year now. The company has clear plans to keep investing in podcasts with an aim to ace the exclusive content category. It acquired The Ringer in Q1 2020 giving it a total of four studio operations.

Outlook

Entering India has been a good move for Spotify. There is still a lot of scope for it to shine in the Indian market due to cheap 4G data and around half a billion smartphones capable of installing the app. Also in 2020, Spotify will focus on increasing its share in other countries. In the webcast, Spotify made it clear that it sees Russia and South Korea as having good potential. There it will be competing with regional giants like Yandex Music in Russia and Melon in South Korea.

BONUS PODCAST: Music Streaming Services Entering a Golden Era

Podcast: What Drove Paid Music Subscription Growth to 350 Million Users in 2019?

The demand for online music streaming services has grown rapidly with data becoming faster and affordable. The services can be accessed from multiple platforms such as smartphones, PCs, and even smart speakers. But what is interesting is that the number of paid subscriptions is also growing. According to the latest findings from Counterpoint Research, global online music streaming grew 32% YoY, with paid subscriptions crossing 350 million in 2019.

Spotify leads the paid subscription market with a share of 35%, followed by Apple Music with a share of 19%. Amazon Music takes the third spot with a market share of 15%, followed by Tencent Music, YouTube Music, and others. Some factors driving global online music streaming services include exclusive content like originals and podcasts.

In the latest episode of “The Counterpoint Podcast” host Maurice Klaehne and research analyst, Abhilash Kumar discuss the factors that are driving the growth of music streaming services. The discussion also covers strategies that are helping music streaming providers gain more subscribers in the emerging markets. We have also touched upon topics like COVID-19 and how it is impacting the music streaming platforms. Lastly, Abhilash also shares his thoughts on Apple Music expansion in 52 new countries, and our growth expectations in 2020.

Hit the play button to listen to the podcast

Also available for listening/download on:

Global Online Music Streaming Grew 32% YoY to Cross 350 Million Subscriptions in 2019

Spotify continues to be the market leader and recorded a 23% YoY growth in total revenue during CY 2019.
Music streamers are focusing on creating exclusive content with podcasts continuing to feature strongly in 2020.

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego – 3rd April 2020

Global online music streaming subscriptions grew 32% year-on-year (YoY) reaching 358 million subscriptions in CY 2019, according to the latest findings from Counterpoint Research. This is driven by the availability of exclusive content like podcasts, originals which attracted people towards the platform and eventually turned them as subscribers. Also, promotional activities like price cuts in subscriptions in emerging markets, bundled offers from telcos added to the growth. We expect that online music streaming subscriptions to grow more than 25% YoY to exceed 450 million subscriptions by the end of 2020.

Commenting on the overall market, Research Analyst, Abhilash Kumar, said, “Paid subscriptions grew 32% YoY compared to 23% YoY growth of total MAUs. This suggests people are ready to pay for music streaming for a hassle-free experience. However, this is not completely user-driven. Music streaming platforms are following a two-step approach to gain subscribers, first registering them to their platform as free users by means of excellent advertising campaigns and secondly pitching them with attractive offers to transfer them to become paying subscribers.”

Spotify topped CY 2019 grabbing a 31% share of the total revenue and a 35% share of the total paid subscriptions. The runner up, Apple Music, follows with a 24% share of total revenues in the industry and a 19% share of the total paid subscriptions. Due to Apple’s high focus on its services segment which includes Apple Music, its subscription base grew 36% YoY in CY 2019. Amazon Music subscriptions reached a 15% share in 2019 compared to 10% in 2018.

Talking about the top performers, Kumar added, “Spotify maintained its top spot with the help of promotional activities like free Spotify Premium for three months, price cuts, customized campaigns like Spotify and a focus on exclusive content. Tech giants like Amazon, Apple, Google have started focusing on music streaming and have sufficient cash at their disposal to give stiff competition to Spotify. Apple Music is making improvements in its app like the introduction of night mode, curated playlists to target a group, etc. Similarly, Amazon Music has been trying lossless music and is creating its own niche where it competes with Tidal.”

Despite global players strongly pushing their music streaming platforms, regional players stand strong in their respective regions, primarily because of regional exposure and high focus on local content. Gaana continues to be the no.1 player in the Indian market, Yandex Music is leading in Russia. Similarly, Anghami leads the Arab world. Tencent Music Group leads the China market with the help of its apps QQ Music, Kugou and Kuwo.

Discussing the impact of the COVID-19 pandemic on the OTT industry, Kumar added, “We expect the OTT sector will experience an uptick as people stay at home actively tracking the latest updates. During this outbreak, audio OTT consumption has switched from music streaming to the radio. People in highly affected areas are worried about the outbreak and are therefore continuously tuned to news on TV/radio for updates. The traction of news channels and podcasts saw an upswing while that for music streaming dropped.”

What’s common is that both the regional and global players are focusing a lot on building exclusive content. Acquiring podcast companies and creating their own channels are all being undertaken. It’s often exclusive content that drives paid subscription growth.

More than 80% of music streaming revenue came from paid subscriptions. The rest came from advertisements and partnerships with brands and telcos. Therefore, increasing paid subscriptions is of prime importance for music streaming platforms.

The comprehensive and in-depth chain of reports on Global Online Music Streaming Market for Q4 2019 is available to help track the market in terms of MAUs by region, paid subscriptions by region, revenues, and ARPU. To view the global report in terms of users, revenues and ARPU, click here. For regional analysis on MAUs and paid subscriptions, click here. Please contact press(at)counterpointresearch.com for further questions regarding our in-depth research, insights or other press inquiries.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contacts:

Abhilash Kumar

Hanish Bhatia

Spotify Q4 2019: Podcasts Continue to Drive Growth

Spotify’s Q4 2019 results show podcast streaming jumped by 200%YoY, helping the company register healthy growth in monthly MAUs and premium subscribers. Notable points from its results:

Growth in MAUs and premium subscribers

MAUs grew a healthy 31% YoY and 9% QoQ, reaching 271 million.
Premium subscriptions too grew 29% YoY and 10% QoQ exceeding 124 million subscribers.
Growth re-accelerated in North America, Europe, and Latin America, while the rest of the world which includes APAC, MEA (where Spotify entered recently) continued to be the fastest-growing in terms of MAUs. This growth was driven by promotional activities like free Spotify premium for the first 3 months, price cuts, customized campaigns, etc. One such successful customized campaign is Spotify Wrapped which gives a personalized playlist of songs to its users based on what they have listened the most throughout the year. Spotify claimed that it engaged more than 60 million total users which equate to around 22% of the total Spotify user base.
Spotify offering 3 months free premium subscription was expanded to the family plan compared to individual and student plan last quarter.
Partnerships with other industry players and the lower subscription price in emerging markets also bolstered growth.

The podcast continues to grow

Podcasts are enjoying good uptake across all platforms – especially Apple Podcast. Spotify had been a laggard but is now catching up and saw strong growth in Q4 2019. 16% of MAUs engage in podcast consumption on the platform. Spotify has more than 0.7 million podcast episodes available. To capitalize on global consumption trends, 26 global podcast shows were launched in Q4 2019. As claimed by the streaming giant, podcasts have helped the company lower the churn rate by 80 bps annually and 50 bps sequentially and therefore Spotify is continuously acquiring popular podcast brands.

2020 is again an investment year

2020 will continue to be an investment year for Spotify. The management has decided to invest in podcasts, and technologies to make the product even better. We expect Spotify will continue spending on promotional offers to attract more users. These investments have helped Spotify grow revenue 24% YoY but at the same time, there is a little compromise on the profit margins.

In terms of user acquisition, Q4 2019 has been a good quarter for Spotify. It exceeded its high level of guidance in MAUs, subscribers, and revenue.

The one parameter where it continues to struggle is net profit. Despite double-digit growth in revenue, it made a loss of € 77 million (approx. USD 85 million). The major expense for the Swedish giant comes in the form of royalties to music labels, investment in the product and podcasts, and the unavoidable social costs which the company had to pay in the form of payroll taxes associated with stock-based compensation. Spotify can improve on this parameter by improving consistently on the gross profit margin with every passing quarter.

Music streaming has come a long way now. We believe this era to be the golden period for the music streaming industry the competition will likely drive innovations in the music streaming space in the years to come.

US music streaming accounts for 80% of the total US music industry, compared to just 5% ten years ago. Consequently, the competition is also getting fiercer. Tech giants like Amazon, Apple, Google have entered and having sufficient cash in hand, are experimenting and innovating to create USPs for themselves. Amazon is trying lossless music. Apple Music is making technological improvements in the app like the introduction of night mode, curated playlists to target a group, etc. Similarly, YouTube Music has the advantage of its video service plus a huge Android installed base it can leverage. Regional players like Gaana in India, Anghami in MEA have a strong grip in their respective regions.

The important point to note here is that both the global and regional players are focusing on creating exclusive content by either launching their own channels or by acquiring podcast companies. Seeing the growing exclusive content opportunity, music streaming platforms are in the process to become the audio streaming platforms and podcasts will continue to feature strongly in 2020.

Global Online Music Streaming Revenues Cross US$11 Billion in 1H 2019

Spotify, the market leader in online music streaming, had a 32% YoY growth in paid subscriptions during 1H 2019.
Apple and YouTube Music are very aggressive and are going to disrupt the regionally segmented market.
While the subscriptions continue to grow in mature markets, the majority of new subscriptions will come from emerging markets especially Brazil, India, and Russia.
Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego – 10th October 2019

Global online music streaming revenues grew 18% year-on-year (YoY) to cross US$11 billion in 1H 2019, according to the latest findings from Counterpoint Research. Monthly Active Users (MAUs) grew 21% YoY in 1H 2019, while paid subscriptions grew 32% YoY. We believe that online music streaming revenues will grow at a rate of more than 20% YoY to reach US$24 billion by the end of 2019.

Commenting on the overall market, Research Analyst, Abhilash Kumar, said, “Online music streaming revenues have grown at an impressive 32% CAGR during 2016-18, which reflects the increased demand for such services by users. Overall, subscriptions account for more than 80% of the industry revenue, while remaining comes from advertisements and partnerships with brands and telcos. We believe the market still has not peaked and will continue to grow at a healthy rate of more than 20% for at least a couple of quarters.”

Spotify leads the chart for 1H 2019 both in terms of total revenue and paid subscriptions. It has a 31% share of the total revenue in the industry and a 35% share of the total paid subscriptions. Apple is close behind with a 25% share of total revenues in the industry and a 20% share of the total paid subscriptions. Meanwhile, Tencent Music has the highest share (31%) of global MAUs, through its subsidiaries QQ Music, Kuwo, and Kugou. However, more than 90% of Tencent users use free services only.

Talking about the top performers, Kumar added, “Strong marketing campaigns, expansion into emerging markets, partnerships with peers of different industries and a focus on podcasts have helped Spotify become the industry leader. Apple is focussing a lot on its services revenue and sees a lot of potential in its music streaming service. Subscription price cuts, partnerships with industry peers, and improvements to the in-app experience have helped Apple. Tencent Music benefits from its social media platform and easy as well as free availability to get a huge user base.”

As of now, music streaming firms are focussing on increasing their paid subscription base through trials and promotional offers, to create loyalty and stickiness. Apple Music’s paid subscriber base grew 55% YoY in 1H 2019. Similarly, the combined paid subscriber base of Google Music and YouTube Music grew 56% YoY. Russian firm Yandex music also grew its paid subscriber base at 89% YoY, albeit a small base.

Commenting on the challenges that the online music streaming industry faces, Senior Analyst, Hanish Bhatia, said, “The music industry still faces various licensing and copyright challenges in different parts of the world. Streaming giants, such as Spotify, Apple, and YouTube, have a significant role to play to harmonize the same. This will be especially important when expanding into emerging markets, where monetization remains a major challenge.”

Looking at the outlook, we believe the competition is going to get more fierce. Increasing the paid subscriber base while at the same time managing costs over the long-term will decide who leads the market.

The comprehensive and in-depth “Global Online Music Streaming Market Tracker 2019 Q2” is available for download here. Please feel free to reach out to us at press(at)counterpointresearch.com for further questions regarding our in-depth latest research, insights or press inquiries.

Background:

Analyst Contacts:

Abhilash Kumar

Hanish Bhatia

Spotify Q2 2019: Product Innovations Boost Performance

Spotify is riding on innovations and reported healthy numbers during Q2 2019. We believe this is a result of its tweaks around product mix and geographical mix. Here are some of the key points that we believe helped its strong financial performance in Q2.

Counterpoint View:

Spotify Lite – a light app which can work smoothly in low connectivity zones, was rolled out. This helped the company to penetrate the rural segments. Presently, this service is available in 36 markets. With this initiative, Spotify is getting an early mover advantage as no global music streamer has come up with such an offering. We believe this is a major reason for an uptick in its monthly active users (MAUs) and subscriber base.
Podcasts – Spotify has been very aggressive about podcasts since Q1. They have made and are continuously acquiring podcast production companies. They have been focussing on original content, and this led to its podcast audience growing more than 50% since Q1. Spotify’s platform delivered more than 30,000 new podcasts. It also announced a multi-year partnership with former US President Barack Obama and Michelle Obama’s production company Higher Grounds to create exclusive content for the Spotify platform.
Spotify also launched on PlayStation Music. This helped it tap gamers and convert them into subscribers.
Emerging markets – Spotify entering India has been a good move. With a focus on local content and aggressive advertising through Bollywood celebrities, Spotify has made a name in the market in a very short time.

Key Data Highlights:

Monthly Active Users grew 29% year-on-year (YoY) to 232 million from 180 million in Q2 2018. The increase was 7% quarter-on-quarter (QoQ) basis.
Premium Subscribers grew 31% YoY to 108 million. This growth rate exceeded that of MAUs, which is a healthy sign.

Total Revenue grew at a healthy rate of 31% YoY and 10% QoQ to €1.66 billion.
Gross Profit grew 32% YoY and 16% QoQ to reach €434 million. Gross margin stood at 26%.
Operating Loss narrowed to €3 million compared to €47 million in the previous quarter.

The overall scenario looks good for Spotify. The financials are improving, and most importantly, the net loss has come down significantly. This is a good sign for Spotify, and if Spotify continues to innovate across its product and geographical mix smartly while keeping a control on expenses, we believe the company can finally become profitable in the short-to-mid term.

Top

Insights Tag： Music Streaming

Global Online Music Streaming Growth Slowed Down in Q2 2020

Related Posts

Podcast: Global Pandemic Makes The Right Pitch for Podcasts

Hit the play button to listen to the podcast

Also available for listening/download on:

Related Posts

Video Streaming is the Highest Spending Smartphone App Category in the US

Related Posts

COVID-19 Accelerates Music Streaming Market Growth, Global Subscriptions Hit 394 Million in Q1 2020

Related Posts

Latin America and Asia Drives Growth for Spotify in Q1 2020

Impact of COVID-19

Podcast in focus

Outlook

BONUS PODCAST: Music Streaming Services Entering a Golden Era

Related Posts

Podcast: What Drove Paid Music Subscription Growth to 350 Million Users in 2019?

Hit the play button to listen to the podcast

Also available for listening/download on:

Related Posts

Global Online Music Streaming Grew 32% YoY to Cross 350 Million Subscriptions in 2019

Related Posts

Spotify Q4 2019: Podcasts Continue to Drive Growth

Growth in MAUs and premium subscribers

The podcast continues to grow

2020 is again an investment year

Global Online Music Streaming Revenues Cross US$11 Billion in 1H 2019

Related Posts

Spotify Q2 2019: Product Innovations Boost Performance

Coverage

Insights

Social media

Contact us

Top

Related Posts

Hit the play button to listen to the podcast

Also available for listening/download on:

Related Posts

Related Posts

Related Posts

Impact of COVID-19

Podcast in focus

Outlook

BONUS PODCAST: Music Streaming Services Entering a Golden Era

Related Posts

Hit the play button to listen to the podcast

Also available for listening/download on:

Related Posts

Related Posts

Growth in MAUs and premium subscribers

The podcast continues to grow

2020 is again an investment year

Related Posts

Coverage

Insights

Social media

Contact us

Term of Use and Privacy Policy