Until Subscriptions Take Off, Is YouTube the Main Way to Build Emerging Market Audiences?

Streaming has opened previously untapped emerging markets for music due to both heavy piracy and the absent legacy of a robust music industry, but monetisation remains lower in emerging markets because of the less developed digital ad markets. Given consumer spending is lower, the ads served hold less financial clout than ones served in the US, for example. However, to simply frontload a music strategy for financial gain in the short-term ignores the fact that greater monetisation in the long-term will be found by building dedicated audiences in regions that are likely to deliver stronger ad-supported revenues as their economies develop over time, not just in media but outside of the streaming ecosystems. As things stand, those audiences, the young and upwardly mobile of emerging economies, can only meaningfully be reached through one service: YouTube.

YouTube is the most widely used streaming music app globally. Weekly active user (WAU) penetration of YouTube for music videos ranges from 22% in India to 64% in Brazil, with most other markets registering penetration rates in the range of low 30%. More significant from an audience building perspective, however, is YouTube’s penetration among younger users. WAU penetration among 16–19 year olds peaks at 73% in Brazil, falling to 23% in India. Compared to pure streaming services, in most markets YouTube music penetration among 16–19 year olds is higher than that of Spotify, confirming its role as the key platform for reaching young music fans.

The significance of this also goes beyond consumption metrics. YouTube is the main way that consumers aged 16 to 44 discover music, with radio becoming the main method for consumers older than that. However, given that the recorded music business relies on younger audiences to discover and consume its new music, YouTube’s dominant role is for the short-term effectively absolute, and one it is seeking to consolidate through the launch of its standalone music app. In the meantime, the high penetration rates for Brazil and Mexico, while over reporting slightly, reflect the rapid acceleration of streaming adoption in Latin America and point to the importance of free services for reaching mainstream users in these lower income markets.

There are two exceptions: in the UK 16–19 age cohort, WAU penetration sits at 49% for both apps, while in Sweden, unsurprisingly, Spotify is ahead with 69% compared to 46% for YouTube. However, these are developed music markets and to plant the seeds of a meaningful audience that can be monetised for generations to come, YouTube seems to be one of the few ways to build that audience.