In 2015, we saw two major music streamers launch in Tidal and Apple Music, and one fold in Rdio, which was bought by Pandora. Going forward, though, Warner Music’s CEO expects the latter trend of mergers to prevail in the streaming music industry — despite a growth trend in the sector.
“As the contest for consumer time and money heats up, we would expect to see industry consolidation,” CEO Stephen Cooper said on Warner Music’s earnings call, according to Bloomberg. Further, he said that mergers in the streaming music biz will lead to “better marketing, faster innovation and a greater demand for music.”
Cooper and other music business executives are pinning future music industry success on a healthy streaming music market. Revenues from streaming music firms like Spotify, Pandora, YouTube and others, are the one major growth sector in a flatlining industry. In the first half of the year, one-third of all recorded music revenue came from music streamers. Moreover, revenue from streaming services surpassed CD sales in 2014, and continues to rise above the waning physical format.
Warner Music, home of Ed Sheeran, Coldplay, and David Guetta, has seen a similar trend occur this year. “2015 was our first fiscal year in which our recorded music streaming revenue exceeded download revenue, and it did so by a significant amount,” said Cooper in the same call (according to Financial Times). “Streaming continues on a trajectory to become our largest revenue source.”
The record exec didn’t publicly state his projections on which music streamers will stay, and which will be eaten up by others. Spotify currently leads the pack of music streamers with over 75 million users (and about 20 million paid subscribers), but Apple Music — which launched in June — has quickly gathered 6.5 million paying subscribers (and as many as 8.5 million using a free trial of the service). Internet radio service, Pandora, which had no on-demand music option until its recent acquisition of music streamer Rdio, boasts 78.1 million users.
Just who will go, who will stay, and who will join forces in this ever-changing new market remains to be seen.