Discussion: Subscription to overtake iTunes within 4 years (worldwide)

Dust2

http://www.ifpi.org/content/library/...nd_figures.pdf

Quote:

The global number of paying subscribers for music services has grown by 65 per cent,
from an estimated 8.2 million in 2010 to over 13.4 million in 2011

2010: 8.2 million paid subscribers
2011: 13.4 million paid subscribers (65% increase)
2012: ?

13.4 million paid subscribers x $100 on average each year = $1.34 billion ---let's be conservative and round this to $1.2 billion

Worldwide breakdown between Itunes and subscription music:

Itunes: $3 billion (71%)
Subscription music: $1.2 billion (29%)

In Sweden, the picture look like this:

Itunes: 16%
Spotify: 84%

Quote:

Subscription has caught on exceptionally well in some markets, particularly in
Scandinavia. In Sweden, for example, subscription accounted for 84 per cent of
digital revenues in the first ten months of 2011, boosted by its national champion
Spotify. Other markets saw sharp growth in subscription revenues, such as France
with growth of more than 90 per cent in the first 11 months of 2011

---------------------------------
Tracking the biggest music subscription service world-wide:

South Korea music subscription service (Melon, Mnet, Bugs, Dosirak,Soribada etc...): over 3,000,000 paid subscribers
Spotify: nearing 3,000,000 paid subscribers
Deezer: 1,500,000 paid subscribers
Rhapsody: 1,000,000 paid subscribers
Wimp: 1,000,000 paid subscribers
Muve Music: 500,000 paid subscribers
Rdio: 100,000 paid subscribers
MOG: 100,000 paid subcribers

Zune: ???
simfy: ???
Music Unlimited (Sony Entertainment Network): ???

KitKat

So they are going the Spotify route?

Dust2

Quote:

Originally posted by Katie

So they are going the Spotify route?

If Itunes is smart, yes......

adapt or die

Moonage Daydream

It's much better than the iTunes model, so no surprise it's already giving it competition.

Achilles.

I still don't understand what Spotify is.

£100

I doubt whether iTunes would change to subscription. The purchase model is highly embedded in the Apple ecosystem. If anything, the App Store and iOS devices cemented this form of consumption.

Services like Spotify and Deezer are proving themselves to be viable alternatives. There can be a market for both.

Dust2

Quote:

Originally posted by £100

I doubt whether iTunes would change to subscription. The purchase model is highly embedded in the Apple ecosystem. If anything, the App Store and iOS devices cemented this form of consumption.

Services like Spotify and Deezer are proving themselves to be viable alternatives. There can be a market for both.

The music subscription services work on smartphone (iphone and Android). I don't see why Itunes Subscription won't benefit Apple since Iphone is owned by Apple.

You're right that there can be a market for both. But one will be more popular than the other. Betting on the wrong horse will mean lower market share.

Look at Sweden. Itunes is at 16% and Spotify is at 84%. Should Itunes wait for a similar % break down in the USA/EU before adapting to a better model?

Kodak went bankcrupt because it didn't adapt to Digital Camera. Its main business was 35mm film camera. It made the transition way too late. Nikon, Canon etc..stole its market share.

chris1991

I tried a free month of spotify and let me tell you it's the sweetest thing ever. However I'm not leaving iTunes behind any times soon.

Spotify literally has all song, albums & artist on it. I don't have to download anything just hit play. I would keep it but I don't want to pay every month.

Fruity

Quote:

Originally posted by £100

I doubt whether iTunes would change to subscription. The purchase model is highly embedded in the Apple ecosystem. If anything, the App Store and iOS devices cemented this form of consumption.

Services like Spotify and Deezer are proving themselves to be viable alternatives. There can be a market for both.

I agree... But if Apple want to stay on top, they should launch their own subscription service too. It could work perfectly in sync with iTunes, and with the launch base that Apple has, it could take the lead market share so easily. It seems so easy for them now,

Of course Apple are known for being innovative so they would somehow need to make their software different from Spotify. They would probably get a lot of criticism for creating a carbon copy product.

£100

Quote:

Originally posted by Dust2

The music subscription services work on smartphone (iphone and Android). I don't see why Itunes Subscription won't benefit Apple since Iphone is owned by Apple.

You're right that there can be a market for both. But one will be more popular than the other. Betting on the wrong horse will mean lower market share.

Look at Sweden. Itunes is at 16% and Spotify is at 84%. Should Itunes wait for a similar % break down in the USA/EU before adapting to a better model?

Kodak went bankcrupt because it didn't adapt to Digital Camera. Its main business was 35mm film camera. It made the transition way too late. Nikon, Canon etc..stole its market share.

iTunes never really broke into Scandinavia. Hence, the homegrown product Spotify has been more successful. If and when Spotify eats into the iTunes base in the US, then there is a problem. Kodak isn't a good analogy because Kodak didn't adapt to a new technology. Apple innovated the consumption of digital music. Spotify and Apple provide similar products but use different methods of delivery. At a time when mobile operators are clamping down on data consumption, locally stored media makes more sense. iTunes has that market cornered, and it doesn't appear its customers are
leaving for Spotify. Apple has already rejected the subscription model in the past. Perhaps in the future they will reconsider, but I certainly disagree that their current product is universally inferior to Spotify's.

Dust2

Quote:

Originally posted by £100

iTunes never really broke into Scandinavia. Hence, the homegrown product Spotify has been more successful. If and when Spotify eats into the iTunes base in the US, then there is a problem.

Itunes still dominate USA music market. But subscription service in the USA is growing while Itunes sales is flat.

http://www.billboard.biz/bbbiz/other...05173082.story

Quote:

1. iTunes 32.98% USA Market is $6.9 billion.

Itunes share is $6.9 bil x 32.98% = $2.27 billion

USA subscription service:

Quote:

Rhapsody: 1 mil.
Spotify 0.5 mil
Muve Music 0.5 mil
emusic 0.5 mil,
rdio/mog = 0.25 mil

2.75 mil x $100 a year = $275 mil

---------------------------------------------
Itunes: 2.27 billion (89%)
Subscription: $275 mil (11%)
Total: $2.545 billion

---------------------------------------------

If you look at the above, you would think Itunes has nothing to worry about. But you would be wrong. Subscription will overtake download just like downloads is overtaking CDs. Just like CDs overtook cassette.

£100

Quote:

Originally posted by Dust2

Itunes still dominate USA music market. But subscription service in the USA is growing while Itunes sales is flat.

http://www.billboard.biz/bbbiz/other...05173082.story

USA subscription service:

2.75 mil x $100 a year = $275 mil

---------------------------------------------
Itunes: 2.27 billion (89%)
Subscription: $275 mil (11%)
Total: $2.545 billion

---------------------------------------------

If you look at the above, you would think Itunes has nothing to worry about. But you would be wrong. Subscription will overtake download just like downloads is overtaking CDs. Just like CDs overtook cassette.

You glossed over the point of my post: you are setting up a faulty analogy. First of all, you are speaking of different forms of possessing music. In this regard, Spotify can never succeed iTunes because you never own the music you listen to on Spotify; it isn't your property. In addition, your stats don't show that iTunes users have left for Spotify, which is what Apple would be worried about. Subscription music is not the "next generation" technology, like what the disk was to vinyl and cassettes. They are just different formats of digital music consumption.

Dust2

Quote:

Originally posted by £100

You glossed over the point of my post: you are setting up a faulty analogy. First of all, you are speaking of different forms of possessing music. In this regard, Spotify can never succeed iTunes because you never own the music you listen to on Spotify; it isn't your property.

If you're talking about possessing music, then Spotify will be forever stuck at 0%. Because you don't own it. You're renting it.

I'm talking about revenue. Right now, Itunes is at around $3 billion worldwide. Subscription music is anywhere from $1 billion to $1.5 billion worldwide. However, subscription service is growing (65% increase from 2010 to 2011) from 8.2 million paid subscribers to 13.4 million subscribers.

Worldwide:

Itunes: $3 billion (71%)
Subscription music: ~$1.2 billion (29%)

Quote:

In addition, your stats don't show that iTunes users have left for Spotify, which is what Apple would be worried about. Subscription music is not the "next generation" technology, like what the disk was to vinyl and cassettes. They are just different formats of digital music consumption.

If more people consume music through "renting" instead of "owning", Itunes will lose users. It's simple logic.

lawmak

How would the charts work with Spotify?

Dust2

Quote:

Originally posted by lawmak

How would the charts work with Spotify?

Right now, streaming is worth about 5% of Billboard Hot 100.

In the future, maybe

1 download = 200 streams (right now 200 streams pays around $1 USD).

200,000 downloads = 200 points
150 Audience Impression (radio) = 150 points
20,000,000 streams = 100 points

Streaming in USA from VEVO, Spotify, Rhapsody, Muve Music, Rdio, MOG etc...

Dust2

http://blogs.wsj.com/tech-europe/201...l-downloading/
Half of Scandinavian Music Streamers Say They Stop Illegal Downloading

Quote:

Across all three Scandinavian countries, the survey also shows that over half the people who previously downloaded music illegally no longer do so after they have been given access to a streaming service.

And look at Spotify and Muve Music growth:

January, 2010:------------ 250,000 paid subscribers
March 17, 2010:----------- 320,000
July 20, 2010: ---------------- 500,000
December 8, 2010: ------ 750,000
March 8, 2011:--------------- 1,000,000
July 14, 2011: -----------------1,600,000
Sept 21, 2011: ---------------- 2,000,000
Nov 23, 2011: ------------------2,500,000
Feb XX, 2012: -------------------3,000,000 paid subscribers

Muve Music (USA only) from a regional prepaid phone carrier (wait until the BIG carriers do the same thing)

Muve Music: 100,000 paid subscribers (July 7th, 2011)
Muve Music: 200,000 paid subscribers (Sept 8th, 2011)
Muve Music: 500,000 paid subscribers (Dec 31st, 2011)

Graduation

Quote:

Originally posted by JakeKills

I still don't understand what Spotify is.

It's iTunes but much cheaper. You have access to so much more music with Spotify too.

Dust2

Nielsen now tracks streaming of these sites for Billboard Hot 100 Chart

-VEVO
-Slacker
-MOG
-Thumbplay
-Akoo
-Cricket (Muve Music)
-AOL
-Napster
-Rhapsody
-Verizon Wireless
-Yahoo!

(March 2011):

The Nielsen Company Expands its Music Streaming Measurement to Include Vevo, Slacker, MOG, Thumbplay, Akoo & Cricket

Quote:

Nielsen Captures more than 1 Billion Streams in the First Six Weeks of 2011

NEW YORK--(BUSINESS WIRE)--The Nielsen Company (NYSE:NLSN), a global leader in providing insights into what consumers watch and buy, today announced a significant expansion of its streaming panel, adding well known services including Vevo, Slacker, MOG, Thumbplay, Akoo, and Cricket. Data from these services, and from the existing reporting panel consisting of AOL, Napster, Rhapsody, Verizon Wireless and Yahoo!, is now included in the Nielsen BDS Encore system.

“Adding Vevo, Slacker, MOG, Thumbplay, Akoo and Cricket, allows us to offer weekly aggregated streaming charts and analytics better representing all online activity.”

During the first six weeks of 2011, Nielsen tracked more than 1.1 billion music streams through online music streaming services. More than 165 million streams per week are captured and nearly 26 million weekly song downloads are tracked. The week following the GRAMMY Awards, Nielsen captured more than 192 million streams; an increase of 22% over the previous week.

“Over the past six months, we have actively added more Internet-based music services to the BDS streaming panel, providing clients and the music industry with a ever more comprehensive view of online music consumption,” states Chris Muratore, Vice President of Merchant Services and Emerging Growth for Nielsen Entertainment. “Adding Vevo, Slacker, MOG, Thumbplay, Akoo and Cricket, allows us to offer weekly aggregated streaming charts and analytics better representing all online activity.”

Nielsen is the only company able to provide weekly trending information on streaming activity, as well as a more granular understanding of from where consumers stream music. Nielsen also provides insights on the type of streams; on-demand streams, those songs/videos that consumers choose to listen to, versus programmed streams, or when songs are not chosen by the consumer.

Additionally, only Nielsen provides the music industry with comprehensive physical and digital music sales information, radio airplay as well as streaming activity.

Nielsen BDS has tracked streaming activity from AOL and Yahoo! for the past three years and added Napster and Rhapsody April 2010.
Nielsen SoundScan is the only service measuring all digital music sales from every major digital service in the U.S. and Canada, as well as all full-track downloads purchased through mobile devices in the U.S. Nielsen SoundScan tracks physical sales in the U.S. and Canada, digital sales in U.S. and Canada as well as in 30+ countries worldwide including most major music markets around the world. Nielsen BDS & Music Control currently monitor music from more than 1,700 terrestrial and satellite radio stations in real time in the U.S. and Canada, and more than 700 stations across 20 European countries and Mexico.

DvnR

iTunes need to switch to the Spotify route like said before, or at least make it an option. $9.99 a month for x amount of songs, and they'd be set. It would severely hurt digital album sales, though.

Cheers

Can you put those songs in your iPod though?