Spotify To Hold 32% Of 29-Mil. Music Streaming Subscribers Forecasted For End-2013

Consumers paying for on-demand music streaming services will total 29 million worldwide at the end of 2013, show the latest forecasts from ABI Research. Accounting for 32% of the premium subscribers, Spotify is expected to close the year as the leader, trailed by Deezer, SK Telecom’s MelOn, and rounded out by Rhapsody and Sony. The subscriber base is forecasted to reach 191 million by end-2018.

Senior analyst Aapo Markkanen comments, “The past two years have seen a remarkable international expansion of streaming as a distribution model, but in terms of its long-term potential we’re still only scratching the surface.”

Markkanen continues, “That’s also something to stress when discussing streaming’s role as a source of artist income. At end-2013 the cumulative revenue from premium subscriptions will amount to less than $5 billion, yet we expect this all-time pot to exceed $46 billion in the next five years. Some two-thirds of it will be going to the rightholders; although how they will split it is then a whole another matter.”

As regards the streaming providers’ competitive landscape, ABI Research anticipates some level of consolidation to take place once the current land grab stage starts slowing down. Streaming is a high-volume, low-margin industry, so to become and stay profitable the providers need scale. Further competitive pressure will come from the consumer technology giants investing in cloud music.

Practice director Dan Shey explains, “Google’s and especially Apple’s moves in this space have been cautious, for a number of strategic reasons. Microsoft and Sony have been bolder, mainly because of their involvement in gaming consoles. Sony, in particular, makes an interesting case with its future cloud strategy. Obviously threatened by its position as a pure-play hardware firm, Sony could use the cloud as the fabric for its own services ecosystem.”

Source: ABI Research