NPD Survey: iTunes In Cloud Worth $1B In First Year
interviews predicts that between 7 and 8 million iTunes users in the U.S. have a strong interest in paid music subscription options. Those surveyed indicated a willingness to pay a minimum monthly fee of $10, either for streaming music or access to their personal music libraries on multiple devices. There are an estimated 50 million iTunes users in the U.S. and according to NPD’s research, a model that offers iTunes users free access to their own music libraries would attract 13 to 15 million subscribers.
A $1 Billion Opportunity
The numbers are all based on a limited survey but the future of streaming music looks promising. “After the service’s launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music,” said Russ Crupnick, VP and senior entertainment analyst for NPD. “The market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per-download model.”
“We don’t yet know what, if any, effect these services might have on the traditional pay-per-download music model, or whether consumers will ultimately spend more on digital music overall, if or when any of these options eventually rolls out,” Crupnick added.
Funny how these sites and companies like Apple and Spotify just don’t get the fact that no artist will survive on less than a penny per month for unlimited listens to their music. From a $9.99 subscription plan, Apple will keep 40% and $6 a month per user will be left to compensate upwards of 7-8 million artists (or singles) a month.
Streaming services will be as successful as artists allow them to be.
It makes sense for major labels because everyone knows they’ll be nothing more than a website used to license back catalog. But new artists, the ones creating 99% of the content these days will eventually dump all over streaming and it’s pathetic pay scale.
You’re assuming that all the artists get paid equally from the subscription service. If they’re paid per-play (which they likely are), the ones being listened to more often stand to be compensated a lot more than something obscure that is rarely touched.
Is anyone seriously going to attempt to survive SOLELY on payments from streaming services? It’s just one stream of income, even if its really small.
I’m with Christopher on this. This is only one revenue stream of many possible options.
Personally I think that streaming sites/services can fall under the promotional/advertising section of an indie artist’s marketing plan. Think of it as your own advertising that you get paid for, paid very very little for.
The bottom line, folks, is ARPU (Average Revenue Per User)
The music services are not to “blame” — they are not taking any more percentage than the old distribution system did. The consumer’s demand for cheaper and cheaper music is the fundamental reality at play here. Who’s prepared to spend $60 / month on music? Anyone? Why not? You did it when you bought albums for $15 each once a week and you got far less for your money (i.e. 40 songs, vs the entire universe).
Top 50 songs will get 95% of the revenue, just as they do with radio and other distribution. The problem is that the pie is getting smaller and will continue to do so as long as the buyer continues to undervalue the content (and perhaps spend all their cash on going to the concert). Acts that are not headlines will continue to scrape together gigs, merch and everything else.
The more things change the more they stay the same, as they say.