Music Streaming Platforms : Between Innovation and Competition

 

Innovative services recently launched by music streaming platforms

 

After almost 10 years of steady growth, music streaming platforms such as Spotify are dealing with growing competition by the infamous GAFA enterprises (Google, Apple, Facebook, and Amazon).

Despite the Coronavirus pandemic, the music streaming sector isn’t facing a crisis. Platforms such as Spotify or Apple Music have been able to adapt to this new situation by offering new content including informational resources, new thematic playlists, special podcasts to work, cook, practice sport with music or even to amuse children. These new provisions allowed an increase of subscribers during quarantine.

However, all of this undoubtedly come at a price. After all, technology investments to handle, store and pass large volumes of data and all the royalties given to the producers and music publishers clearly show an extremely expensive financial model.

As a result, music platforms are still vulnerable and threatened by the growing competition of GAFA which launched their own music platforms: Amazon Music, Apple Music, Google Play Music - they have a large panel of activity. Music streaming is not their main activity unlike the main platforms such as Spotify or Deezer. Consequently, it drives them to find new revenue sources and offer high-quality services to attract new and older customers with a higher purchasing power. These services could be, for example, specialized music categories, higher costs of subscriptions for hotels, restaurants, shops, audiobooks, live concerts, the production of exclusive podcasts and live streaming which was born during the last quarantine. This is really appreciated by subscribers and will be maintained even after the coronavirus epidemic.

To give you an idea about the music streaming market, there were about 386 million subscribers streaming to a music streaming platform in the world in 2019.Which represents a significant increase of 32% compared to the previous year. Spotify is still the world leader with 35% of paying subscribers even though Apple Music has already conquered 19% of paying subscribers and 24% of the overall turnover. When it comes to France, the famous national music streaming platform Deezer is still the leader, holding a 37.5% share of the market, followed by Spotify with 25.2%. Apple Music experienced the strongest growth even though it held only a 13.4% share of the market.

• Spotify’s main goal is to become the global market leader in audio platforms and CEO David Ek was very clear: The strategy now is to aggregate all the songs; produce its own contents and obviously reduce considerably the royalties they are paying to the right holders. People who use Spotify clearly noticed that this strategy focuses on podcasts whose catalogue already includes more than 700,000 podcasts and allows Spotify to make free users want to be premium users.

• The French music platform, Deezer also decided to extend and produce its content besides music with an offer of exclusive radios and thematic podcasts but its main goal is to expand internationally. By the way, Deezer has already entered US market and tried to make its own place.

• Furthermore, there is also a platform for the most demanding. A music platform not widely known named Qobuz and created in 2007. Qobuz decided to focus its services on high quality audio with an uncompressed audio sound quality .Consequently, its customers are big music lovers and audiophiles who are very demanding which means that they are ready to pay the price for that unbeatable audio quality. The French platform had to expand its original catalogue of classic and jazz music to new music styles such as rock and electro music to propose a new offering to compete with competitors’ prices with a cheaper offer but with a deteriorated quality. Moreover, Qobuz is integrated in famous high-fidelity audio devices brands such as Yamaha, Sonos or Harman Kardon.

Fayçal S

Sources :

https://www.forbes.com/sites/kristinwestcottgrant/2020/05/16/the-future-of-music-streaming-how-covid-19-has-amplified-emerging-forms-of-music-consumption/?sh=213584c4444a

https://www.numerama.com/pop-culture/146013-deezer-spotify-apple-google-tour-dhorizon-streaming-musical.html

https://www.lemonde.fr/economie/article/2018/04/03/streaming-musical-l-outsider-deezer-vise-l-international-pour-rattraper-son-retard_5279919_3234.html

https://blog.salesflare.com/spotify-iconic-product