US Streamers: Not as Happy as you Think
The future of streaming in the US and its challenges
The music streaming industry has been growing rapidly. According to the Recording Industry Association of America, streaming revenue in the US increased by 30% in 2018. In theory, the industry could still grow at double-digit rates for many years, if not decades, to come. Our research shows that most Americans, a notable 52%, are not yet streaming. Of those who do stream, the majority have a free subscription. At present, only 21% of Americans have a paid streaming subscription. Given these numbers, the industry has the potential to grow (volume wise) by up to factor five in the US alone.
Despite historic significant growth, it appears that the major streaming services are not yet ready to capitalize on this massive growth opportunity. Since Spotify’s US launch in 2011, the major streaming services have successfully harvested the ‘low hanging fruit’: young, digitally savvy, pop fans. Now, there is an increasing need to win over the ‘higher hanging fruit’: pickier and typically older listeners, often of niche genres. The current services available in the US market have been unsuccessful in convincing these more demanding potential subscribers to subscribe. To satisfy these more discerning music fans, streaming services will need to develop more compelling propositions, as our survey shows that Americans who do stream are already surprisingly dissatisfied with what they are offered. See Figure 1. According to the survey:
- 73% cannot always easily find what they are looking for
- 85% do not frequently listen to playlists recommended by their streaming services
- 74% do not believe streaming services do an adequate job at introducing them to new music
Many Americans are not that satisfied with their streaming service. Response among streaming Americans:
These frustrations are real. When asked whether these streamers would be willing to pay more than the current $9.99 market price for a streaming service that truly meets their needs, 52% of currently paying subscribers answered yes. Some would even be willing to pay more than $20 a month. See Figure 2. The willingness to pay more than $9.99 is even higher among fans of niche genres like classical music: two thirds of classical music fans indicate their willingness to pay more than $9.99 for a streaming service that truly meets their needs.
More than half of Americans are willing to pay more for a better streaming service
How much are you willing to pay for a streaming service that truly meets your needs?
Thus, the US streaming industry could not only grow by a factor of five in volume, it could also realize higher price realization if its products could better meet consumer requirements. Overall, the US streaming market still has the potential to grow by a factor of 7.
Americans who listen primarily to niche genres like jazz or classical music face a lot of issues when streaming. Often, they cannot find what they are looking for, receive uninspiring recommendations, and find the audio quality lacking. 9% of Americans, or in absolute terms, 25M Americans, would prefer to use a streaming service that specializes in their favorite genre. Assuming a revenue per subscription of $100 per year, this would imply a $2.5M market opportunity.
This is already reflected in the trend of upcoming niche streaming services like GimmeRadio (death metal), Dubstep (remixes), Primephonic (classical music) and Spinrilla (R&B).
GimmeRadio considers itself ‘The Home for Metal’: a streaming radio station hosted by selected DJs who live and breathe radio. Their app is available in the Apple App store and the Google Play Store. Subscribers love how the service takes them out of their comfort zone and allows them to experience music that they have never heard before. GimmeRadio was founded in 2017 in San Francisco and is advertisement free.
Spinrilla is an Atlanta based streaming service that specializes in hip hop mixtapes, featuring emerging and independent hip hop artists.
Primephonic is a Dutch-American start-up that addresses the pain points that many classical music fans experience with major streaming services like Spotify and Apple Music. Primephonic offers a better search engine, more unconventional recommendations, higher audio quality, and detailed album information. It also pays out classical artists more fairly.
According to Primephonic CEO Thomas Steffens, “It has become very clear that the ‘one platform fits all genres approach’ of major streaming services such as Spotify and Apple Music is increasingly causing frustrations with music lovers. They want a streaming service that truly understands and embraces their genre by making relevant recommendations, flawless search, etc.”
He continues, “Major streaming services have ignored the specific needs of niche genres, and classical music in particular. Worldwide around 4% of all music consumption is classical, but classical is only 0.7% of all streamed music. Many classical music fans are ignoring major streaming services because they can’t find the works and recordings they are looking for, do not get recommendations that excite them, are not offered audio quality that classical music fans need, etc. That is why we have developed a streaming service, designed for classical from scratch, offering much better search, recommendations and audio quality.”
To conclude, the growth potential for streaming services remains massive. Theoretically, in the US alone, the industry could grow by a factor of 5 to 7 over the next few decades. However, what current major streaming services propose to their customers is not yet good enough to meet the higher demands of more discerning music fans, particularly among niche genres like classical and jazz. If the major streaming services fail to improve what they offer within these genres, niche streaming services will capture these market pockets.
Primephonic commissioned YouGov PLC – a third party, professional research and consulting organization – to poll the views of 1,000 individuals who agreed to take part. Field work was undertaken online between May 24-27, 2019 and June 10-11, 2019. The figures have been weighted and are representative of all US adults (aged 18+).
Primephonic is the world’s leading classical music streaming service, offering listeners premium-quality audio, optimal search functionality, hand-picked recommendations, and detailed song and artist information.
The streaming revolution saved the mainstream music industry, but it left niche genres like classical behind due to the existing one-platform-fits-all-genres approach applied by the major streaming services. Primephonic is the antithesis of this, designed to support classical music’s complexities to provide fans with an optimal listening experience, and artists and labels with fair compensation through their unique pay-per-second-listened payout model.
Headquartered in Amsterdam with an office in New York City, Primephonic is reigniting passion for classical music by bringing it into the digital age.
For more information visit www.primephonic.com