In about one month’s time, we’ll know how many people are willing to pay for Apple Music. That number is absolutely critical to the future of streaming music, a sector that is proving ineffective at getting enough people to pay. According to the latest data released by Recording Industry Association of America (RIAA), paying subscribers increased just 2.5 percent in the past year, to 8.1 million by the mid-point of 2015.
The stat bears repeating: paying subscribers only increased 2.5 percent in the past year in the United States, the largest music economy in the world.
The question is critical, because without more paying subscribes, there really isn’t a sustainable streaming music business. a quick look at the data shows that paying subscribers contribute disproportionately large amounts of revenue: in fact, 73 percent of all streaming music revenue comes from paying subscribers (for year 2014). The remaining 27 percent comes from advertising, or ‘freemium,’ which means that most users are contributing very little revenue to companies like Spotify.
And without more of these paying people, there isn’t a sustainable streaming music industry.
Can Apple save this situation? Maybe, but for most users, there are just way to many free options, starting with YouTube, SoundCloud, and iTunes podcasting. According to a report this morning in the New York Post (for what it’s worth), Apple Music now has 15 million people trialling their service, with 7.5 million of those not disabling the automatic rollover setting into paid accounts.
So if every single one of those 7.5 million people ended up becoming long-term subscribers (beyond one month of realizing they’re getting charged), then the US-based streaming music industry just doubled its paid subscriber total. The more realistic number, however, is probably much lower than that.