The Difference Between Music Fans That Pay, and Music Fans That Don’t

Exhibit A: Estimated number of paying streaming music subscribers vs. ad-supported free users (Worldwide, 2015).

Exhibit B: Estimated revenues created by paying streaming subscribers vs. ad-supported free users (Worldwide, 2015).

Last week, the Recording Industry Association of America (RIAA) reaffirmed that vinyl records are generating more revenue than free, ad-supported streaming users.  But that is less of a reflection on how much money vinyl is making, a more a reflection of just how little money ad-supported music streaming actually generates.

These are just estimates, though despite a free, ad-supported streaming music crowd that accounts for approximately 94% of all music streaming users worldwide, the revenues generated by that mass is just 24% of the on-demand streaming music pie (internet radio isn’t included in this analysis).

Based on a running estimate of approximately 50 million, full-paying streaming music subscribers worldwide (with Spotify now contributing 30 million of those), total revenues land at roughly $5.643 billion.

The Methodology.

Here’s the breakdown on how we built these estimates:

I. Total, paying streaming music users.

In 2014, the International Federation of Phonographic Industries (IFPI) estimated a total of 41 million paying, on-demand streaming subscribers.  That likely includes a number of bundled or lower-paying subscribers, though 50 million is now a ‘working average’ based on the following reports from major services:

  • Spotify: 30 million paying (reported last week)
  • Tidal: 1 million (last reported)
  • Apple Music: 11 million (last reported)
  • Deezer: approx. 3 million (based on IPO filings)
  • Rhapsody: approx. 3.5 million reported (with heavy mobile bundling).
  • YouTube Red: unreported (assumed near-zero in early stages)
  • SoundCloud: 0 (just launched Tuesday)

Those numbers, coupled with a few others, brings the working total of paying subscribers to roughly 50 million.

II. Revenues from paying subscribers.

In its 2015 report this month, the Recording Industry Association of America (RIAA) estimated revenues of approximately $1.219 billion based on an average paid subscriber base of 10.8 million (averaged over the year).  Extrapolate that to 50 million, and the revenue figure moves to $5.643 billion.

III. Estimated free streaming users.

This is a bit tricky, and relies on some liberal assumptions, but:

  • YouTube: 1 billion estimated users, with an estimated 40+% of content involving music or music videos (depending on the research report).  A loose estimate of the total users accessing music content is about 500 million (or 50%).
  • Spotify: estimated 70 million free users (picking apart public statements from Spotify executives)
  • Tidal, Apple Music: effectively 0 free users (ignoring trial users)
  • SoundCloud: self-reported 175 million active free users (and currently, 0 paid on the consumer side).

The revenues from free streaming users are based on RIAA figures of $385.1 million for 2015, using the same worldwide extrapolation for worldwide premium revenues.




7 Responses

  1. steve corn

    Believable stats, in my opinion. Even if you are off a bit, it speaks to the necessity of all music streaming services to focus on conversion.

  2. Jonathan Segel

    I just today heard about SoundCloud’s paid subscription level, which immediately made me wonder: did they ever pay artists for streaming to begin with? Are they planning on doing so?

  3. Name2

    Last week, the Recording Industry Association of America (RIAA) reaffirmed that vinyl records are generating more revenue than free, ad-supported streaming users.

    You know the hypebot guy destroyed this assertion with one actual question, right? And that question was: Was the RIAA reporting gross vinyl revenue (incl retail markup) versus net payout to rights-holders on ad-supported streaming.

    And that he wrote it up?

    The RIAA “story of the week” was an easily revealed lie.

    • Name2

      You owe your working-musician readers better.

      A LOT better.

  4. Buddy Zappa

    There needs to be a massive Revolution, and follow artist like Adele, Taylor Swift, & Parrell Williams…. We out number these greedy Piece’s of shit a million to one… We ultimately could sieze control of the market… All We have to do is take down ALL your Youtube, Spotify, & Pandora streaming, and shut these greedy ass fux up for good.
    This is rediculous… WE have the Power…. WE have the Control!!!
    WE gave them Our music For Free, and this is what they do to us???
    We’re Pathetic…. Grow some friggin spine already!!!!!!!

  5. KT Hendrickson | Publicist

    So basically as a paid subscriber I am funding the non-subscribers streaming??

    Kinda sounds like a business model similar to Obamacare health care.

    lets do some math:
    (based on average monthly subscription of $8)
    795,000,000 non-paying / 50,000,000 paying = 15.9
    $8/ 15.9 = .50 (rounded)
    = every paid subscriber is funding 50cents per each of the 15.9 (16) ppl to be non-subscribers