Study: Streaming Music Continues To Rise, But Fallout Among Services Expected
January 18, 2016 at 12:05 PM (PT)
Global analyst firm OVUM reveals the shift in consumer spending towards accessing music rather than owning it is "an unstoppable trend that has resulted in the one of the biggest shake-ups in recorded music distribution for a century."
OVUM's latest report, "2016 Trends to Watch: Music," points out that it is important to remember that no music subscription service is anywhere near breaking even, and the need for scale is far more important than profits or losses.
Head of Music Practice and author of the report SIMON DYSON insists, “The recorded music sector of yesterday is quite simply that, a bygone era that is being swept away by shiny new industry players.. Music retailers will never sell as many CDs or downloads as they did last year and so services along the music value chain that want to be part of this rapid evolution in recorded music must simply embrace the change and make access work for their business.”
The trends to watch for music in 2016 include:
• Streaming will drive digital music growth in 2016, but will not offset the fall in sales of CDs and downloads.
• Intense competition in the music streaming sector will result in more service casualties.
• Controversy over who benefits most from music streaming will continue to make headline news and remain a divisive issue.
The report said that, despite the fact that spending on music subscriptions is on the up, there will be no growth in overall consumer spending on recorded music in 2016. According to OVUM’s latest forecasts, global retail sales of recorded music will edge down 0.5% in 2015 and will fall a further 0.2% in 2016. In 2015, subscriptions alone will account for 28% of digital spending and 15% of the combined digital and physical spending total. Five years ago, barely 3% of retail spending on recorded music came from subscriptions.
Another thing to note is how big an impact streaming will make in markets that until now have contributed next to nothing to the recorded music industry pot thanks to widespread piracy. Countries such as CHINA and INDIA will start to live up to that tag.
Along with the growth in streaming revenue, OVUM expects the sector to consolidate. Given the amount of services offering what is essentially the same product to a limited number of customers, company closures and acquisitions are inevitable.
Concluded DYSON: “The shift from music ownership to access is not an overnight proposition and consumers will take their time to change the habits of generations. But it remains the recorded music industry’s best bet for returning consumer spending to levels not seen for more than 15 years.”