Guest Post by Jon Maples on
Last year was a banner year for music subscription in
the US. The RIAA reported big time growth, primarily
driven by Spotify’s gains in paying subscribers.
But at the same time, the market stalled a bit in terms of
actual subscribers. The RIAA in its midyear report had paid
subscribers at 7.8 million, but by the time we got to the end
of the year, it was only 7.7, a loss of 100k subs. So what
Well, we had another year of consolidation.
Two big players came off the market. The biggest driver of
losses is Muve Music, which at its peak, reportedly had two
million subscribers. Granted those subs weren’t generating much
in revenue for the industry, but it was a big number. AT&T
acquired Muve’s parent Cricket Wireless and then treated it
like a redheaded stepchild.
Conventional wisdom is that Muve delivered a big number of
subs, but it was primarily a sleeper service, where most of the
users were inactive. There was a ton of media flaunting how
great Muve was for the industry, which in retrospect, now seems
absurd. AT&T shuttled off Muve’s subscribers to Deezer
in January. However, these kinds of deals generally mean
retaining 50 percent of subscribers at
best. I’ve seen acquisitions deliver less than 30
percent of subscribers to the new service.
After a big marketing blitz, Beats turned off their acquisition
channels once Apple purchased the company, which adversely
affected its numbers.
Just totaling up subscribers isn’t the best way to
judge success of subscriber. The key number to get the
total picture is revenue plus subs. In the
first half of this year, streaming subs increased to $371.4
million, and increased even more in the second half to total
$799 million for the year.
Perhaps the old adage about lies, damn lies and statistics
applies here. It’s easy to fall into the trap of writing
provocative headlines based on precursory numbers. But it
requires digging a level deeper to understand what the numbers
actually mean. Spotify had a great year in 2014. In some
respects the company, along with the massive increase of
internet radio revenue, kept the industry afloat
through another transition.
There’s no need to bemoan the loss of garbage
subscribers. We need to focus on revenue and
subscribers to get a true sense of what streaming subscribers
is delivering to the industry—and where the real growth will