Music industry: a pioneer in the transition to access models
The first sector to be hit by digitisation, the music industry had become the poster child for new consumer habits over the past 15 years. Today, when it comes to cultural goods, ownership of the physical or digital product is no longer the norm, as the access model has been steadily taking hold instead. Physical sales continue to decline, in both value and volume, despite the revival of vinyl in every Western market. But the phenomenon here is not just digital media replacing physical ones, but also a major shift in cultural behaviour. Downloads of both singles and albums have been on a steady downward slope worldwide since 2015.
Streaming is carrying growth singlehandedly
The success of streaming platforms has nonetheless been enough to revive the sector and sustain a new momentum, with annual growth coming in at an average 60% since 2014, and fuelling hopes that the music industry’s woes are a thing of the past. Industry watchers see two main encouraging signs in the current state of affairs: consumers’ unflagging love of music, and especially their ability and willingness to pay to access a music service.
Heightened competition is stimulating consumption
While Sweden’s Spotify, which launched back in 2006, seemed to have pulled well ahead of what appeared to be its chief rival – the French Deezer – back in 2015, and became the market’s leader, the selection of available services has expanded considerably since then with the successive arrival of Americans Google, Apple and Amazon, to name but the biggest among them. This has changed the game completely. While Spotify is still top dog, with 38 million subscribers in March 2018, i.e. two and a half years after launching, and Amazon is reporting tens of millions of active subscribers after only a year in business, Deezer still lingers below the 10 million paid users mark.
Will rankings be upended by voice recognition?
Growth prospects for streaming services are still largely positive for the years ahead, but two uncertainties remain: first, the music industry’s ability to translate the time users spend on streaming sites into revenue and, second, the way in which voice recognition systems – starting with those of Amazon (Alexa) and Google (Google Home) – will stimulate the use of their associated streaming services. Something that could see Spotify quickly overtaken by its North American rivals.