June 10, 2014 0 Comments
Is music streaming a false economy?
Music fans’ ever-growing appetite for streaming services has made music streaming the hottest segment in the music industry today. It’s a segment that is exploding at the moment with major developments making the industry even more competitive: in March, IPO-bound Spotify bought Echo Nest to enhance its data and recommendation capabilities; Apple acquired Beats Electronics to boost its streaming service; Amazon, not to be outdone, recently announced that it will soon make on-demand music available to its Prime members; and just over the weekend, sources revealed that Google is now quietly shopping for a music streaming service. Even so, with all the money pouring in, there’s a downside to the industry. Studies have shown that the music streaming industry will have 1.7 billion users by 2017 but only ~125 million paying users. With companies paying out nearly 70% of their revenue in royalties, it will be a long time before these companies begin to realise substantial profits. We expect to see continued investment into these services as they strive to acquire market share.
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