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 internet* 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 might subscriber and income progress develop into so de-coupled? Normally, the reply for music business questions like that is ‘it’s sophisticated’ –however this time it’s not. 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 secure in all of the intervening quarters. That would possibly 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 keep up market share, Spotify has needed to develop at an analogous charge. During 2024, Spotify added 28 million subscribers in 2024, that’s greater than the mixed complete variety of subscribers added by the 2nd, third, and 4th largest DSPs (Tencent, Apple, and Amazon). The easy arithmetic is that once you command a robust market lead, you need to add much more subscribers than the remainder to keep up your market share. It is simple to take Spotify’s success as a right. Don’t! This is what a extremely efficient firm that retains an obsessive urge for food for progress appears 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 international 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 share phrases, YouTube was the quickest rising international DSP in 2024, rising market share and solely lacking out on knocking Apple off 4th spot by a margin within the low a whole bunch of hundreds. Spotify and YouTube are those setting the worldwide tempo and although YouTube is way behind Spotify globally, it’s the prime DSP in numerous 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 business’s progress engine. Last yr 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 business.
Which creates a significant 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 section 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 fairly than being potential subscribers. This is why free trials have develop into the important thing instrument for driving conversion. In saturated Western markets, evidently 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 worth ‘inflation’ charge was 9.1%. So, a $1 worth improve resulted in ARPU lowering by one share level in actual phrases (ie inflation adjusted).
Foundations for extra progress
2024 was a fantastic yr for international subscriber progress and was a very good yr 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 consult with internet additions i.e., the distinction between the entire variety of subscribers one yr to a different. They don’t account for churn. The complete (gross) variety of subscribers added is considerably larger. The internet determine thus refers back to the complete after churned out subscribers have been faraway from the totals.