Record label streaming income progress slowed to six% in 2024 however there was no such slowdown in subscriber progress. In our simply revealed ‘Music subscriber market shares Q4 2024’ report, we reveal that the 85 million web* new subscribers added in 2024 was solely two million lower than in 2023, leading to 818 million subscribers and progress of 12% i.e., round double label income progress.
So, simply what’s going on? How may subscriber and income progress change into so de-coupled? Normally, the reply for music trade questions like that is ‘it’s difficult’ –however this time it isn’t. It may be boiled down to 2 key issues: Global South and incentivised progress.
On to these in a bit, however first market shares:
- Spotify continues to set the tempo: Spotify’s market share (32%) is round the place it was in 2015 and has remained comparatively steady in all of the intervening quarters. That may sound like stasis, however it’s something however. Between 2015 and 2024, the worldwide base of music subscribers grew by greater than 850%. So, to take care of market share, Spotify has needed to develop at the same price. During 2024, Spotify added 28 million subscribers in 2024, that’s greater than the mixed whole variety of subscribers added by the 2nd, third, and 4th largest DSPs (Tencent, Apple, and Amazon). The easy arithmetic is that whenever you command a powerful market lead, it’s important to add much more subscribers than the remaining to take care of your market share. It is straightforward to take Spotify’s success without any consideration. Don’t! This is what a extremely efficient firm that retains an obsessive urge for food for progress seems to be like
- Tencent Music Entertainment: Even although it operates in China, Tencent is the 2nd largest DSP globally, with 120 million subscribers. What is extra, it grew so strongly that it barely elevated world market share in 2024. Though its key competitor NetEase Cloud Music grew even quicker and so gained China market share at Tencent’s expense
- Apple Music and Amazon Music: Apple and Amazon held onto third and 4th spots respectively, however each had underwhelming 2024s, including simply six million subscribers between them
- YouTube making up floor, quick: In proportion phrases, YouTube was the quickest rising world DSP in 2024, rising market share and solely lacking out on knocking Apple off 4th spot by a margin within the low lots of of 1000’s. Spotify and YouTube are those setting the worldwide tempo and although YouTube is much behind Spotify globally, it’s the prime DSP in a lot of key Global South markets, together with India
Now, on to why subscriber progress is a lot quicker than income progress:
1 – The Global South
The Global South (by which we imply areas that aren’t North America and Europe) is now the music trade’s progress engine. Last 12 months we entitled our music forecasts report ‘Rise of the Global South’ and our view was borne out in 2024, with these areas accounting for 78% of all subscribers added in 2024. Let that settle in for a second: 4 fifths of all subscriber progress got here from exterior of Europe and North America. Of course, these two areas nonetheless account for almost all of revenues, however as subscriber progress slows in these markets, it’s lifting off elsewhere. This is nothing lower than a rebalancing of the worldwide music trade.
Which creates a serious uncoupling of progress metrics for Western rights holders. Global South markets have decrease ARPU and Western repertoire share is low there. So, Western rights holders see a double low cost on subscriber worth in comparison with Western markets.
2 – Incentivised progress
In the primary part of streaming progress, advert supported customers acted as the important thing technique of changing subscribers. In mature Western markets, most individuals on free tiers are there as a result of they like free stuff reasonably than being potential subscribers. This is why free trials have change into the important thing device for driving conversion. In saturated Western markets, plainly these trials are getting used liberally to attempt to squeeze out the final pockets of subscriber progress. In flip, denting ARPU.
Consider the case of the US: According to the RIAA’s figures, subscription income grew by 5.3% and ARPU progress was 1.9%. Meanwhile US inflation was 2.9% however the streaming value ‘inflation’ price was 9.1%. So, a $1 value improve resulted in ARPU lowering by one proportion level in actual phrases (ie inflation adjusted).
Foundations for extra progress
2024 was an amazing 12 months for world subscriber progress and was a very good 12 months for Spotify, YouTube, Tencent, and NetEase. The divergence between revenues and customers is clearly trigger for concern, however it’s higher for the long run to be rising subscribers as after getting them monetised you can begin specializing in rising monetisation. Hello supremium.
*All progress figures seek advice from web additions i.e., the distinction between the overall variety of subscribers one 12 months to a different. They don’t account for churn. The whole (gross) variety of subscribers added is considerably greater. The web determine thus refers back to the whole after churned out subscribers have been faraway from the totals.