Should music streaming fear the same future as Netflix?

(ETX Daily Up) – Times are tough for video subscription services. Netflix has seen its subscriber base crumble for the first time in a decade. Something to worry about music streaming players. They fear seeing their growth slow down after two years of the pandemic. Decryption.

The announcement came as a shock: Netflix lost 200,000 subscribers in three months, while analysts expected it to gain 2.5 million. The leader in video streaming explains this collapse by the war in Ukraine, but above all by structural factors such as account sharing and competition from new market entrants.

Experts are now worried that the same phenomenon is affecting music streaming. This market has so far been booming: streaming now represents the main global vector for listening to music. Of the $25.9 billion in music revenue in 2021, $16.9 billion came from streaming, or 65% of the total, as detailed by the International Federation of the Phonographic Industry (IFPI) in its latest annual report. . Between 2020 and 2021, revenues from this mode of musical consumption have thus increased by 24.3%.

This growth is mainly due to paid subscription streaming, with growth of 21.9%. Good news for Spotify, Apple Music and others: subscribers to paid music platforms are constantly increasing their listening time. They now spend 1 hour and 33 minutes on this activity, compared to 1 hour and 26 minutes, according to a recent study by GWI on multimedia consumption. This trend is visible in all regions of the world, although it remains mainly driven by the Americas (Latin and North) as well as Africa and the Middle East. This is good news for players in the sector, who are multiplying initiatives to deploy in these territories. Spotify in the lead. The Swedish group thus deployed in November in Congo-Brazzaville, the Democratic Republic of Congo, Libya and Iraq.

The music resists

The sassy health of music streaming may come as a surprise compared to that of its video cousin. It testifies to the preponderant place now occupied by music, and more generally by audio, in our lives. For many, the fourth art has been a real source of comfort during the pandemic. Video streaming platforms have served the same function, but this effect is beginning to erode in the face of the recent price spike. To cope with this, many households are reducing entertainment spending. This trend is particularly visible in the United Kingdom, where the number of households subscribing to at least one streaming service fell by 215,000 during the first quarter of 2022, according to Kantar. “In times of financial uncertainty, services must be essential in the minds of subscribers,” Dominic Sunnebo, director of global studies at Kantar Worldpanel, told the Guardian. “Therefore, it is more essential than ever that SVoD providers demonstrate to consumers how their services are essential at home in what has become a highly competitive market.”

Music streaming platforms still seem spared. The appetite for this form of entertainment persists for several reasons: the need to disconnect and the ability to listen to millions of songs when (and where) you want. “The beauty of audio is that it can be consumed alongside other media or while doing other things, and it often is,” says GWI in its latest study. Another advantage that Spotify, Deezer and others have: music streaming is a mode of consumption adopted by everyone, regardless of their age. Members of Generation Z and Millennials are particularly fond of it. As proof, they devote respectively 1 hour and 55 minutes and 1 hour and 43 minutes to this activity per day. This is significantly more than baby boomers, who clearly prefer radio (1 hour and 5 minutes against 40 minutes for music streaming).

While music streaming is doing well, it remains an extremely competitive market. The Swedish Spotify still reigns supreme there, even if it is now closely followed by emerging players such as the Chinese Tencent Music and NetEase Cloud Music. They represent 18% of subscribers in the global market even if they are only available in the Middle Kingdom, according to the analysis company Midia Research. Another (modest) competitor: Deezer, the French pioneer of online music listening. The platform recently concluded “a definitive merger agreement” with the listed company I2PO, in order to prepare for its IPO. She had tried the experiment in 2015 before giving up on it, citing “unfavorable market conditions”. They seem to be much less so now, proof that music streaming does not (yet) have a Netflix-like future.