Technology research company Technavio predicts that the global music streaming market will grow at a CAGR of 14% during 2017-2021, bolstered by mobile advertising.
According to the company’s latest report, the global music streaming market is seeing a positive growth largely due to new features being provided by streaming services, including free access to songs at low subscription fees.
Similarly, the IFPI reports that streaming revenues increased 60.4% during 2016 and over 100 million users were on paid subscriptions worldwide. Streaming now makes up the majority of digital revenue, accounting for 50% of total recorded music revenues.
Technavio attributes growth to three main factors: high growth in mobile ad spend, the increase of mobile apps and an increase in subscription services.
Mobile ads are currently the most popular advertising format across music streaming apps. Increased device penetration is a core driving factor with ever more users listening to music on their mobile devices.
Ujjwal Doshi, a research analyst at Technavio, explains:
“In addition, mobile devices and tablets are now being equipped with more personalized services, such as location-based mobile technology, which can help in segmenting potential customers for marketing purposes. This will help vendors to target their audiences with customized music playlists.”
Indeed, Smaato has previously shown that mobile ad revenue growth in terms of eCPM was highest for the music content genre. Music now accounts for 59% of mobile ad revenue with arts and entertainment apps generating half of global ad spend for apps.
In addition to mobile advertising, the increased usage of mobile apps is also pushing the growth of the industry. This has led to most streaming providers developing their own apps to provide subscription services. Uijwal adds:
“Online music streaming applications and services are also adopting the freemium business model that aims at converting free users to premium services while ensuring sustainability. Free users usually migrate to access unlimited and uninterrupted content, which leads to an increase in subscription services and results in the growth of the market on the whole.”
The top providers for mobile music streaming services are Apple, Deezer, Google, iHeartMedia, Pandora Media and Spotify.
According to Midia, YouTube is another powerful platform for music listening and discovery – largely because it is free. Spotify ranked second in terms of active users per week, followed by Amazon and Apple.