![]() The addressable market is much bigger and the vast majority of it remains untapped. Most significantly Pandora currently only represents about 10% of all US radio listening time. Music radio listening by contrast has near ubiquitous reach. The percentage of consumers that have the inclination to pay 9.99 a month for music is inherently limited, thus constraining subscriptions to a niche addressable audience. This more accurate view of the US streaming market shows us that free is even more important than many thought.įree streaming also has much bigger growth potential. subscriptions) is always going to be smaller (in reach terms at least) than its role as a radio channel (i.e. The music industry is beginning to get its head around the fact that the role of streaming as a retail channel (i.e. None of this is to suggest that subscriptions aren’t making great progress but it does show us that free is more than an inconvenient truth, it is both the most widely adopted behaviour and the largest revenue source in the US (which accounts for 48% of global digital revenues). Subscriptions had grown much faster in 2013 (76% compared to 25%) but Pandora and co found their mojo again in 2014. Semi-interactive radio revenues grew by 40% in 2014 compared to 35% for subscriptions. Which means that however fast subscriptions grew Pandora, Slacker, Rhapsody UnRadio and co grew even faster in order to offset the decline in on demand ad supported income. While that share is down from a high of 66% in 2012 it remained flat in 20. Once Pandora is added into the mix it emerges that 56% of US streaming revenues are from free, ad supported services. Extracting the semi-interactive radio revenues that count as label trade revenues wasn’t the most straight forward of tasks but it was worth the effort. The IFPI has Pandora hidden away with cloud locker services, SiriusXM and a mixture of other revenues in ‘Other Digital’. Except that those numbers ignore a major part of the equation: Pandora (and other semi-interactive radio services). Which points to the success of subscriptions. In fact free is much bigger than some would like to admit.Īccording to the IFPI ad supported streaming accounted for just 19% of all US streaming revenues in 2014, down from a high of 30% in 2011. The net result is that freemium has almost become the inconvenient streaming truth that no one really talks about. Though their tones have softened, major label execs retain an at best sceptical view of free streaming. ![]() The labels had however made it very clear to Spotify who held the whip hand. The outcome of the Freemium Wars was actually less dramatic, resulting instead in an effective continuation of the status quo. Late 2014 a minor crisis emerged in the music industry, with major record labels at one stage looking like they were going to kill off freemium.
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