Streaming's New Era

5 Big Changes Coming for Streaming

Author

Rob Abelow
June 02, 2024

Welcome, artists & builders.

On my MusicBiz panel, I was asked “How will streaming change now that growth is slowing in the West?” Here’s my answer…

Inside Issue #33

💡 Idea: Streaming’s new era
 🛠️ Tools: The largest music resource directory
🤔 Breakdown: Sony calls to end free streaming

Streaming’s New Era

All we’ve known so far has been about growth.

→ One low price.
→ All the songs in the world.
→ Same experience for everyone.

There was no concern about fandom or segmentation or squeezing out every dollar. All that mattered was getting as many people in the system as possible.

And that worked pretty damn well.

We’re up to over 2B global users & 740M paying subscribers.

But, times have changed.

Yes, subscriber growth is slowing in the west. In the US, it’s down from 29% in 2019 to under 6% in 2023.

Falling steadily each year:

2019: 28.8%
2020: 25.0%
2021: 11.3%
2022: 9.1%
2023: 5.7%

We’re closer to the ceiling than the floor in the West — and we're about to see an entirely different version of streaming.

Because it's time to get profitable.

Here's what that looks like:

5 KEY CHANGES COMING FOR STREAMING

Some of it’s already here…

1. PRICE HIKES: After 12 years at $9.99, every streamer raised prices last year. More are coming for 2024. Get used to it.

2. A STRONGER PUSH TO MOVE FREE USERS TO PAID: A Spotify premium user was worth 13x a free one in Q1, 2024. They just quietly paywalled lyrics & Sony just called for an end to free music streaming altogether..

My thoughts:

→ No more than 3 months free
→ Very limited access + more hooks to upgrade
→ Then, require ~$4/mo for ad-supported

If people really want to get around paying, they'll find a way. But, they were never going to pay anyway.

3. NO MORE ONE-SIZE-FITS-ALL: Previous tiers offered the same experience at lower prices to get more people in (Family, Duo, Student).

New ones aim to drive revenue & segment fans:

→ Free
→ Music-only
→ Audiobooks-only
→ Music + Audiobooks
→ Music Pro add-on (fka supremium, rumored)

Expect direct artist subscriptions soon. Likely as cross-platform add-ons offering exclusive content & access.

4. CHASING NEW TYPES OF REVENUE: Spotify’s going hard after monetizing listener attention by selling it back to artists & labels desperate for reliable ways to reach audiences with tools like Marquee & Showcase.

They call it a 2-sided marketplace:

→ Artists become the customer
→ Listeners become the product

Sound familiar?

Better ideas will pursue interactivity, creation & fandom. But, let’s see who can pull it off.

5. PENNY-PINCHING: We’re seeing the pinch as Spotify looks to make the model viable. First, they traded reduced royalties for increased exposure with Discovery Mode. Now, they’re forcing reduced royalties by re-classifying Premium tiers as ‘bundles’.

Anything to make the margins work, right?

Right?

This is the beginning of a new streaming era

After years of subscriber growth at all costs, it's time to get profitable.

→ Belts are tightening.
→ Shivs are out.
→ Enshittification may be under way.

One thing is for sure: the model is changing.

Not all of these are bad. In fact, I’d pursue some if I ran Spotify. But it’s up to streamers to not only extract more value, but deliver it.

Both to fans and artists.

I hope they do.

- Rob

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