Music Australia News

Spotify Gains on Pandora as Apple rounds the corner

Chris Bowen
| March 31, 2015

The big news in music distribution in recent times has been the astonishing growth in streaming services, increasingly led by Swedish company Spotify.  In some European countries, digital’s share of recorded music revenues now ranges from 58% (Denmark) to 74% (Nordic countries) as we recently reported. Australia reached the halfway mark in 2013 and New Zealand is reportedly now at 60%.

For the statistically minded, The Trichordist lists Spotify’s top fifty territories here. They point out all the action is in the top ten: “The Top 10 territories account for 87.10% of all streams and 91.48% of all revenue”. Australia for the record is number eleven.

Spotify is now chasing market leader Pandora. While US service Pandora still leads internationally, with 76.5 million active listeners in late 2014, Spotify is gaining fast and has now reached 60 million users. Forbes’ Trefis Team explains why: “One of the main reasons behind Spotify’s healthy growth is the fact that it operates in over 50 countries as opposed to Pandora, which offers its services only in the United States, Australia and New Zealand.” Spotify is also doing a good job at monetizing its content as Forbes goes on to point out: “Paying users as percentage of active users stands at 25% for Spotify compared to merely 5% in the case of Pandora.”

In the meantime the New York Time reports that Apple, which agreed last year to pay $3 billion to buy streaming company Beats, is giving its digital services an overhaul. A subscription streaming services is planned, along with an iTunes radio service, and NY Times suggests this could be at a lower price than other market offerings. Apple is having to play catch up here, a situation it is not used to finding itself in: “Apple’s turn toward streaming is a matter of necessity, as listeners increasingly shift from music downloads to streaming” say Ben Sisario and Brian Chen of NY Times. They quote Recording Industry Association of America figures which show that downloads, where Apple’s iTunes reigns supreme, generated “$2.6 billion in revenue in 2014, down 8.5 percent from the year before. Streaming made $1.87 billion last year, and overtook CD sales for the first time.”

A sobering reality for writers and creatives is that, despite all this growth, the digital market still represents only 5% of total royalties collected, as reported by CISAC (The International Confederation of Societies of Authors and Composers). As we noted last month, CISAC have identified that it is now vital for fair digital revenue models for creators to be achieved.

Forbes notes that Spotify’s gains aren’t doing Pandora’s stock price much good, suggesting there may come a time when the Swedes become number one, if Apple doesn’t get there first.

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