With UMG main the cost to reshape the music business right into a extra label-friendly type, 2023 could, with hindsight, go down as the yr at first modified. Whatever lies forward although, new fashions will take time to ship advantages. Music subscriptions are due to this fact going to stay the bedrock of music rightsholder revenues for the foreseeable future. So, it’s a good factor that music subscriptions had such a superb yr in 2023.
As of Q3 2023, there have been 713.4 million music subscribers globally, which was 90 million up on the 623.4 million one yr earlier in Q3 2022. This issues for 2 causes:
- We are already almost three quarters of the best way to having one billion music subscribers globally. That isn’t any small achievement. For context, as just lately as 5 years in the past, we had solely simply handed the quarter of a billion subscriber mark
- The 90 million subscribers added within the 12 months to Q3 2023 was extra, sure extra(!), than the 83.5 million added one yr earlier. In reality, the quantity added was almost as many as these added in 2020. Not dangerous for a maturing class with key markets hitting near-saturation
However, there’s a little bit of an issue with trying on the world market: it’s more and more now not a world market, however as a substitute, considered one of two halves: the West and the Global South, with every area throwing off dramatically totally different metrics and progress narratives.
Nowhere is that this higher illustrated than out there share rankings:
- Spotify dominated the worldwide music subscriber base in Q3 2023 with 31.7% market share. More than that, it really elevated its share from 0.4 factors from Q3 2022. So, for all of the flak Spotify has thrown at it, it outgrew the market in 2023. Newer, rising market territories have been central to this progress, but it surely was Spotify’s conventional heartland (North America and Europe) that drove the bulk (59%) of its subscriber progress. Compare and distinction this with the all-DSP image, the place North America and Europe drove simply 29% of subscriber progress, with Asia Pacific accounting for almost two thirds of all non-Western subscriber progress
- China, a market by which solely Apple of the Western DSP operates, underpins this non-Western progress, and the clearest manifestation of that is Tencent Music Entertainment (TME). With 102.7 million subscribers in Q3 2023, TME represents 14.4% of all world subscribers, regardless of this being an successfully China-only quantity. NetEase Cloud Music (6.1% share and China-only) and Yandex (3.4% share and Russia-only), additional signify the dynamic progress from areas the place Western DSPs largely don’t function. This is the brand new, bifurcated nature of the world music subscriber market
- Apple Music (12.6%), Amazon Music (11.1%) and YouTube Music (9.7%) signify the rest of the main Western DSP pack. Along with Spotify, these three DSPs signify 65% of the worldwide market, however solely 59% of 2023 progress. Western DSPs are nonetheless the core of the market, however they’re collectively shedding share. But, even inside these 4, there’s a diverging image, with YouTube Music and Spotify gaining share in 2023 whereas Amazon and Apple misplaced share. Between Q3 2022 and Q3 2023, Spotify added extra subscribers than all three different main Western DSPs mixed
2023 was a powerful yr for music subscriptions, delivering extra progress than maybe had been anticipated in such difficult macro-economic and geo-political circumstances. Even North America and Europe grew barely quicker in 2023 than in 2022. But, as commendable as squeezing extra progress out of in any other case mature markets is, the inescapable paradigm shift is the emergence of the Global South as the expansion driver of tomorrow’s music subscriber base.
For extra information electronic mail stephen@midiaresearch.com