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MBW Reacts is a series of comments from Music Business Worldwide. They are analytical (and sometimes dogmatic) reactions to recent major entertainment events and news stories.
Spotify and other music streaming platforms have seen tremendous growth in the US in recent years, but that growth may now start to slow.
US was home, according to RIAA 92 million Number of music streaming subscribers in 2022.
the number was up 8 million Year-over-year (vs 2021), but this annual jump was smaller than the previous year (+8.5m 2021; +15.1m 2020; +13.5m 2019; see below).
Meanwhile, RIAA data shows that U.S. paid subscription streaming revenue is +$616.2 million In 2022, +$1.59 billion Growth to be seen in 2021 (see below).
Simply put, we are in the US market, can Paying to stream music already does.
That is, everyone except for one notable demographic: baby boomers.
Baby boomers remain a largely untapped market for music streaming, and a recent report from Edison Research (“The Infinite Dial”) underscored the fact that U.S. citizens over the age of 55 I have also found that it consumes much less online audio. I’m not particularly fond of Spotify (for now).
In a study conducted in January 2023 (based on a national telephone survey of 1,500 people), Edison found: 75% of US respondents say they have listened to online audio in the past month.
However, among respondents over the age of 55, the figure was only a fraction. 53%.
compared to 89% between the ages of 12 and 34; and 85% Between the ages of 35 and 54.
The percentage of people over 55 listening to digital audio in the US is growing, but not as fast. 1 point YoY (52% to 53%) In Edison’s latest research.
Between 34 and 54 audiences, listener numbers skyrocketed 4 points YoY.
It will be interesting to see how all of this holds up for Spotify ahead of its quarterly results tomorrow (April 25th).
Edison reports that Spotify is already very well positioned among young listeners in the US. 56% Eight people between the ages of 12 and 34 (who have used an online audio brand before) said SPOT is their most frequently used audio brand.
However, between the ages of 35 and 54, the proportion is 26%.
And in a crowd of 55+, it stands low. 17%.
Remember: Almost 9 out of 10 under According to Edison research, 55-year-olds in the US already listen to online audio.
Growing this market will therefore inevitably become harder for companies like Spotify in the coming years.
but less than half that’s all People aged 55 are now using online audio, suggesting the market is ripe for expansion.
Among the users over 55 who participated in Edison’s survey, the most popular streaming platforms are: YouTube music (For “most frequently used online audio brands”, 28%).
Back in 2019, professional services company Deloitte noticed Boomers’ reluctance to enter the streaming world and offered a potential solution.
“Although only 25% of baby boomers own smart speakers, they tend to value smart speakers more than the average consumer,” Deloitte said in a report.
“The implications are clear: Music streaming companies can grow their subscriber base by working with smart speaker makers to target baby boomers.”
Of course, many of the most famous smart speakers, such as Amazon’s Echo, Apple’s HomePod, and Google’s Nest, are made by companies with their own music streaming services.
Could this be a factor in YouTube Music taking the lead among US baby boomers?
not a long term solution
I’m not suggesting that attracting a Boomer crowd is the only model for Spotify’s success going forward. Rather, it is a strategy that DSPs can adopt to ensure continued subscriber growth in the medium term.
One need only look at Spotify’s competitor Pandora to understand why this strategy may not last long term.
Edison’s report makes Pandora’s user base look like the opposite of Spotify’s.
A crowd of 55 or more represents its strongest demographic. twenty two% Three online audio users in that age group say they use Pandora more than any of its competitors.
the number is 18% 35-54 year old group, and 14% 12-34 in groups.
But generally speaking, Pandora’s situation is far more dire than Spotify’s right now: Witness that Pandora’s monthly listener base has nearly halved in the six years since Q4 2016. (81.0m) to Q4 2022 (47.6m).
Arguably, Pandora’s bleak prospects not only reflect stiff competition from Spotify and ambitious smaller players like Amazon Music and Apple Music, but also the inevitable consequences of an aging user base. It may reflect the result.
Spotify, by contrast, is well positioned to convert free users into paying subscribers as its younger demographic ages and incomes rise.
Nonetheless, insider intelligence/emarketer forecasts for 2021 predicted a significant slowdown in Spotify’s user growth in the US. 12.1 million users from 2019 to 2020 3.2 million New users from 2024 to 2025.
The winning formula here seems to balance Spotify’s success with the younger demographic and Pandora’s success with the older demographic.
One thing is clear from this data. That said, any DSP that can convince baby boomers to adopt streaming music will have a major edge over the next few years.global music business
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