The IFPI’s global sales figures for 2018 were, once again, all about streaming driving the industry’s recovery. The overall market was up 9.7% (both downloads and physical declined sharply), while streaming jumped 34% and now makes up 46.9% of revenues globally. The jostling for dominance in this booming market is something that will continue apace, but some new figures, developments and rumours combined give us a decent picture of where we are now and why regionalisation will be key.
The Wall Street Journal (via CNBC) is reporting that Apple Music now has more paying subscribers than Spotify in the US; that’s 28m versus 26m as of February. This is according to unnamed sources as neither company has confirmed or denied the numbers. On a global level, Spotify (207m users, of which 96m are subscribers) is still far ahead of Apple Music (56m subscribers) but it has obviously had a head start for several years. At the heart of this rivalry is how each service is luring in subscribers – Spotify via its free tier and Apple through its massive iPhone and iPad audience as well as their key telco partner bundles and family plan discounts that can boost numbers.
While music is the main draw of both Spotify and Apple Music, podcasting is also proving to be the next battle to be fought and won. Apple is the dominant podcast player globally, but new data from Voxnest suggests Spotify is gaining ground in a number of European and Asian markets but is also dominant in the vast majority of Latin America. It is Spotify’s dominance in Spanish-language markets that is perhaps most interesting (especially given Spotify’s acquisition of multiple podcasting companies in recent months), revealing how different types of audio content are being used to power ahead in different markets and regions. There has been a lot of talk about streaming services not having a “one-size-fits-all” content and marketing strategy as they go global and this is perhaps the most explicit example of it in effect.
Spotify is also moving to establish itself in Japan where streaming is still in its early stages compared to Western countries. The Spotify Presents Early Noise Special concert at the end of last month was designed to promote emerging acts in the second-largest music market globally market and also position Spotify as being crucial to the rise of the next generation of Japanese artists who are breaking through streaming.
In both mature and emerging markets (what the IFPI now terms “high-potential markets”), discounting is also a technique that services will return to again and again. But this, of course, comes at a risk as margins get squeezed and losses mount in the short term in that hope that it will shunt rivals into the ditch in the long term. Apple Music has cut its subscription prices in India just as Spotify and YouTube Music enter there. The Indian Express is reporting that Apple Music, after four years in the Indian market, is slashing its prices. A single subscription used to cost Rs 120 ($1.72) a month for individuals and Rs 190 ($2.73) for families; this has now dropped to Rs 99 ($1.42) for individuals and Rs 149 ($2.14) for families. This is against Rs 119 ($1.71) for Spotify Premium and Rs 129 ($1.85) for YouTube Music. The Indian Express calls India a “crucial market for any streaming service aiming to grow its numbers” and notes how the country’s cheap mobile data costs have been critical in driving the move into streaming.
Amazon is also joining the price war by offering consumers three months’ access to Amazon Music Unlimited for free (if they have not signed up to a free trial before). A free three-month trial was how Apple Music debuted in the market back in 2015.
Price wars, tussles for dominance in mature markets, doubling down on highly populous markets where streaming is starting to take off and using other audio formats to build audiences and brand recognition are all part of the multi-pronged approaches services are having to develop in a fast-moving and complex global market. The battle lines are many and varied here. Streaming services are learning fast how to operate as marketing polyglots – properly understanding the nuances in different markets and developing strategies accordingly.