Music subscription uptake is low but losing paying users is the real time bomb


NielsenHere are interesting slides from a Nielsen presentation at the recent EDMbiz Conference & Expo in Las Vegas which claims that just over 3% of annual consumer spend on music is on subscription services. It ranks just above “Buying admission to DJ event (specified DJ)” and “Buying admission to DJ event (unspecified DJ)” as the thing music consumers spend least on. Unsurprisingly live music dominates, accounting for almost 35% of spend (or 43% if you add in festivals), followed by buying CDs (12%) and satellite radio subscriptions (9%). (This is America, after all.)

Buying digital tracks and digital albums makes up around 15% of spending. It’s tempting to pounce on this as evidence that streaming is almost invisible to most consumers; but the figures are presented (or they are on Digital Music News anyway) divorced of context. How has that spending changed over the years? How much has spending on CDs and downloads declined? And how much has streaming grown? Yes, 3% of total consumer spend now is tiny. But we need to understand how the needle is moving on all areas of consumer spending and how that might affect things next year or in 2020.

There is a second slide that says only 5% of consumers pay for streaming overall. It finds that 32% of Spotify users pay for it compared to 55% who don’t. This is way above the (roughly) 25% paid conversion rate that has defined Spotify’s public numbers in recent years (currently 20m paying out of 75m users overall). The most intriguing fact is that 13% of Spotify users, 18% of Pandora users and 7% of Rhapsody customers say they used to pay but no longer do. Why? What made them stop paying?

At the moment, many are (rightly) cheering the growth in paying subscribers across all services, but this issue of churn and paying users falling off the radar could be a serious time bomb for services. Getting them to pay for a service is one thing. Keeping them paying is, it seems, another thing entirely.

Eamonn Forde

Read More: Analysis News
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