Wednesday, April 15, 2015

Digital Music Streaming Past Physical Sales

Last year, global digital streams and music downloads caught up to physical CD and vinyl sales.  Clutter be gone, consumers are preferring to listen to their music without having to open up a jewel case or LP cover.  Call it simplicity, convenience or simple ease of use, digital is poised to overtake physical sales this year. 

And in the digital realm, subscription services are more desirable than downloadable sales.  According to today's NY Times, "Subscription services like Spotify and Deezer accounted for $1.6 billion in trade revenue in 2014, up 39 percent from the year before, and have 41 million paying users around the world, up from 28 million in 2013. At the same time, downloads — not long ago the most important growth format in the business — were down 8 percent."  That could be spell a big opportunity for Apple's Beats subscription service and Jay Z's Tidal music service. 

Consider us moving into a rent vs buy situation where consumers like to have rental access to a full library of music choices for a monthly subscription fee rather than complete ownership of content.  Last year, notable exceptions included the Frozen album as well as Taylor Swift's 1989 album where consumers chose to buy.  Could any album this year deliver similar results or will we watch more consumers choose to subscribe to a music service or two?  Given the trends in music delivery, subscription seems the likely winner.

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