Research: Consumers Are Streaming ‘Marginally Less’ Than Last Year

This is a trend that’s too early to call, but definitely worth watching – especially for those interested in label and artist payouts.

According to recent, streaming-focused research published by the well-respected Mark Mulligan, the amount of streaming per user is edging slightly downward, based on a number of potential factors.

“Across most markets, more consumers are streaming marginally less than they did a year prior.”

Mark Mulligan.

Mulligan used extensive consumer data from EMI’s Global Consumer Insight dataset, a fairly massive body of consumer information (report here).  As usual, it’s very difficult to generalize worldwide, though this seems to be a potential trend in most regions.  “Interestingly, although more and more new consumers are being swayed by streaming services, of those who currently use them slightly fewer are increasing their usage than are actually decreasing usage compared to 12 months previously,” Mulligan noted.  “There are only a few markets where usage is clearly net positive (Norway, Sweden and Japan) while usage is clearly net negative in Spain, France and Denmark.”

  • Save

The stats are early here, just like the streaming space itself.  That said, there are a number of shifting factors that could be pushing per-consumer usage and listening downward.  According to Mulligan, they include:

The novelty factor wearing off.

Restrictions on free usage.

Restrictions on mobile usage on free accounts.

We’d throw increased advertising into that mix as well.  But maybe this is the most important one: newer users are simply less fanatical music listeners, which means they listen to less stuff.  And that’s typically what happens when things go mainstream.  Earlier adopters to a service like Spotify, for example, are undoubtedly pouring through the extensive catalog, creating endless playlists, and taking content with them.  Later-stage adopters may also connect with the streaming concept, but are far less ’24-7′.

And what’s wrong, with this?  The answer is nothing at all, as long as premium subscribers continue to ramp upward.  Which means, per-user and per-stream payouts would increase if this trend continues alongside subscriber gains.  A gym wants its members to come less frequently, and similarly, Spotify loves the more casual – and paying – customer.  And, so do artists and labels, which get a far greater per-stream payout from premium users.

7 Responses

  1. HansH

    True the with less streams the pay rate increases. Good for artists? Let’s do some math.

    Say you are are very succesfull band. 0.1% of all streams are plays of your music.

    Let’s focus on the Premium rate for the sake of simplicity:

    Spotify has 4m Premium users.
    Monthly revenue 4m x $10 = $40m per month
    70% for royalties: $28m

    Premium users stream 25 songs per day in average, that’s 750 songs a month.

    Overall streams by premium users 4m * 750 = 3000m streams

    Rate per stream: $28m/3000m = $0.0093

    Streams of your music 0.1% of 3000m = 3m

    Monthly revenue: 3m * $0.0093 = $27,900

    Now look what happens when users stream less, let’s say 15 songs per day, so 450 per month

    Overall streams by premium users 4m * 450 = 1800m streams

    Rate per stream: $28m/1800m = $0.0156

    Streams of your music 0.1% of 1800m = 1.8m

    Monthly revenue: 1.8m * $0.0156 = $28,080

    Happy with less streams and the better rate?

    • Businessinsider

      These calculations will be an eye opener for many. At least for me they are. All the whining for higher rates seems to be pointless.

      Paul is wrong about the gym model. That doesn’t apply here! This gym has treadmills (songs) that are supplied by others (musicians) They get paid every time someone uses the treadmill.

      • Visitor

        Looking this over, you’re right, that part of the analysis is a bit half-baked. If no one goes to the gym, but pays the membership, the gym is happiest. If the same scenario happens at Spotify, then it’s not optimal for all the parties involved.

        Of course, that’s the extreme. The end result of behavioral shifts will benefit different parties unevenly, depending on all sorts of factors. Vastly simplifying, it seems more obvious that lots of paying and listening consumers is far better for the ecosystem.

        /paul

  2. steveh

    70 % of 30million is not 28million – it’s 21million

    • HansH

      oops. The number of Premium users was supposed to be 4 million. Edited and corrected. Thanks!

  3. mdti

    >>>>
    A gym wants its members to come less frequently,
    >>>>

    This is wrong, even if it means “if people pay the subscribtion, then it doesn’t matter that they do not come”.

    If no subscriber ever comes to the gym, the gym teachers will get bored and will complain or look for another place to go. Or the manager will simply have to lay off excessive worforce. Also, it may be the teachers who are in default for not making their course fine enough to attract people. At the end, the gym looses its value because:

    – People want to go to the gym and see at least a few other people. No one else at the gym will soon be zero person at the gym.
    – Teachers left or were laid off: lost value for the gym who will not be able to propose the same service to future customers. The subscription looses its interest.
    – Combination of the two above = end of the gym on a short/mid term.

    I’ve been close to teachers in Club Med Gym 😉

    They are happy when the course is crowded, and not when it is empty, because it question their skill as animators and is negatively viewed by the gym management.

    🙂

    • MDTI

      and for a gy manager it simply means “failure” and most probably will close down within a year (becaue if no one ever comes, then the shareholder must paximize his profit before the gym naturally shuts down, and will keep this value by accelerating the decline of his business, to stop paying rents and salaries, and get away with the maximum of profits while they are still available.

      😉