Streaming’s next growth phase The necessity of differentiation
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20,000 foot view: DSPs have long been able to grow their subscriber bases despite all offering essentially the same experience. Yet the freemium model is reaching a saturation point, putting slow but steady pressure on DSPs to find new ways to grow subscribers and revenue. Most remaining people who do not already pay for streaming either lack enough interest in music or cannot afford to subscribe. The cost-of-living crisis, the attention recession, and growth of non-DSP streaming as a free alternative will make converting these consumers even more challenging. The path forward necessitates that DSPs change and evolve their offerings, giving way to the format’s first phase of differentiation.
Key insights
- Year-on-year growth both subscriptions and ad-supported revenue slow from double to single within the next four years
- When asked costs they would cut if to reduce entertainment spend, of subscribers would cancel a music subscription and downgrade to the version
- There is much long-term subscription growth to had in emerging markets, particularly Pacific, but revenue growth will offset by those regions’ lower of consumers who do not subscribe to streaming would be willing to convert, and are likely to do so
- Not all are addressable; most either do listen to enough music to for it and / or afford or justify the price
- Roughly of consumers think music is worth paying for, compared to in
- Non-DSP revenue grow faster than DSP revenue reach billion by 2030, driving subscriptions’ share of total streaming from in 2021 to in
- The path for DSPs will be about the ad-supported model; converting more to paying subscribers through new and expanded tiering; and getting spend out of existing subscribers add-ons
- This combination financial and cultural pressures will DSPs to differentiate, with potential including the Creator Destination, Music Network, Super-Streamer, Audiophile’s Club, and Streaming Powerhouse
Companies and brands mentioned in this report: Amazon, Amazon Music, Amp, Apple, Apple Fitness+, Apple Music, Apple One, Audible, Audiomack, Bandcamp, ByteDance, Criterion Collection, Deezer, Dreamstage, Driift, GarageBand, Google, Instagram, iPhone, Logic, Meta, NetEase Cloud Music, Netflix, Peloton, Platoon, Repost, Resso, SoundCloud, Soundtrap, Spotify, Tencent Music Entertainment, TIDAL, TikTok, YouTube, YouTube Music, YouTube Shorts