UK's streaming market to double to £1.6 billion by 2023
Britain’s music streaming market has breathed new life into the nation’s music industry, according to a new report. The study found that firms like Spotify and Apple Music could still do more to generate new revenues, however, recommending a raft of new premium services to better cash in on dedicated music fans.
In interview with the BBC published in November, there was "total and utter panic" across the entire record industry when illegal music file sharing took off. Jeremy Lascelles, the UK music industry veteran who co-founded Blue Raincoat Music, stated that some people even went as far as to say “it was the end of record labels,” who would need to sue “absolutely everyone who was illegally downloading music” to avoid being bypassed by the new medium.
Almost two decades after that explosion of illegal downloading that so terrified record labels in 2000, however, the digital revolution is now believed to have breathed new life into the music industry. According to a report from the Entertainment Retailers Association – carried out by consultants from OC&C Strategy – streaming (playing music via a device transmitting data through the internet) has revived the fortunes of music labels, having surpassed CD, vinyl and download as the most popular method of accessing music in the last two years.
A total of 91 billion songs were played on Spotify, Apple Music and their competitors last year – equivalent to 1,300 songs for every person in the UK – and streaming now accounts for 63.6% of all music consumption in the UK. Left to its own devices, the UK streaming market would continue to expand by 5-7% every year, reaching £1.1 billion in 2023. However, if streaming sites were to innovate their delivery model – which dates back more than 10 years – this could be drastically increased.
ERA CEO Kim Bayley said, “We commissioned this report to get an independent sense-check on the growth prospects for streaming. It’s fair to say even we were surprised just how positive the results are… Rewind 10 years when the music industry was on its knees, few would have believed possible the miracle turnaround streaming services have now achieved. OC&C indicates that further opening the door to innovation is key to music reaching its full potential.”
Based on analysis of current market data, OC&C’s 80-page report builds on the consultancy’s expertise advising on subscription models in sectors as varied as mobile telephony, gyms and hotels. As a result, the dossier goes on to calculate that altering services could result in a potential £500 million boost to the firms, as well as the broader music market. These range from creating new premium tiers and new entry points to paid streaming to offering the ability to access streaming services without taking out a subscription.
By targeting hardcore music fans by offering super-premium and add-on services, as well as finding ways to tempt current non-subscribers away from free-to-use aspects of platforms like Spotify, the market could grow as large as £1.6bn, a compound annual growth rate of 18%. The study also pointed to businesses in other sectors – such as video subscription services like Netflix – which have driven growth by similarly creating a range of services for customer groups with different needs who may also value features differently.
OC&C partner Pedro Sanches commented, “Our study indicates the UK music industry has a significant opportunity to increase the size of the market beyond even the most bullish expectations. It is clear that if the industry can come up with tailored offers which deliver value to specific groups of consumers then there’s a major prize at stake. The current model dates back to 2008. It has enjoyed enormous success in part because of its simplicity but further innovation will deliver more growth.”
