Revenue generated through ad-based music streaming is set to exceed US$1 billion by 2017, up from US$782 Million in 2015, despite the declining numbers of players offering ‘freemium’ services.
New data from Juniper Research reports that many key players are opting to exclude full-featured freemium services, with offerings restricted to, at most, basic radio style features, as exemplified by Apple Music and Amazon Prime Music.
Nonetheless, ad-based revenues are still expected to see strong growth as consumers continue to migrate to streaming services.
The new research, Digital Music - Subscriptions, Ad Revenues & Download Services 2015-2020, found that while freemium services will continue to entice a growing number of users, the model will enjoy a greater influence in funnelling consumers towards the more profitable subscription options.
Hence, with the drive of ad-based services coupled with the growing impact of key players, streaming is expected to be brought to the forefront of the market with a significant global growth in user numbers.
Unsurprisingly the entrance of Apple Music is expected to act as a major catalyst in driving the expansion of subscription-based streaming services, with significant growth expected across all major markets.
Indeed, the company has already reported a user base of 11 million trial subscribers.
“With convenience, accessibility and curation having become the defining elements of the music landscape, the potential of the streaming industry will revolve around the levels of which providers can convert free customers to paying customers,” notes Joe Crabtree, Research Author, Juniper Research.
Juniper also found that the music industry has reached a critical point in its digital evolution with the download market experiencing its first decline in 2014.
The download market has long been at the forefront of the digital transformation; however, following its recent struggle, the market is forecast to continue its global decline with the music industry instead turning to the potential of streaming.
In addition, Crabtree says that subscription streaming revenues will overtake download revenues in 2018 while the digital music industry will continue consistent growth despite the declining download market.
Meanwhile, the wealth of investment in music discovery is rapidly gaining importance in provider differentiation and equally gaining traction in promoting the appeal of digital music.