Yesterday, we explored the numbers behind Spotify’s tremendous growth in subscription and advertising revenue counterbalanced by its shrinking gross margins. Today, we will discuss where all of that money is going.
Spotify recently released data showing that it had surpassed $2 billion in revenue with an 8.7% net loss. However, these were far from the most interesting data points that became public. The near doubling of advertising revenue, the fall in effective monthly revenue per user and the contracting margins are noteworthy.
Internet radio audience has grown quickly. The industry commands somewhere between 600 – 900 million monthly listeners globally depending on which analysis you choose to cite. In the U.S., 57% of the population listens monthly and 50% weekly. The growth will allow Internet radio and streaming music services to capture an increasing share of the $42 billion in mobile advertising forecasted for 2016.
In a contributed Adotas article, XAPPmedia’s Bret Kinsella reviews the data confirming why audio advertising is a lucrative opportunity for marketers. Rapidly growing audiences for internet radio, music streaming, podcasts and radio simulcasts are delivering monetization for broadcasters and unmatched mobile conversion rates for advertisers.
In a MediaPost column published today, XAPPmedia CEO Pat Higbie comments on the projected broadcast radio advertising spend for 2016. The forecast? Flat. Even in anticipation of lucrative election ad spend.
The number one digital advertising topic of 2016 is shaping up to be ad-blocking. It should be noted that most music streaming services rely primarily on audio ads which avoid the viewability problem of ad-blocking altogether. So if the audio is streamed, impressions are delivered. As a result, audio ads are less likely to be victims of ad-blocking technology.
The simultaneous release of Serial's second season on Pandora and iTunes gave consumers a choice between downloading or streaming. This choice has existed on a number of platforms previously, but most podcasters seem to default to iTunes even though its technology constrains long-term success. Today we published a white paper that explores why the download model that gave podcasts their initial success now hinders their growth.
One word can be used to sum up Internet radio in 2015. Growth. Higher numbers for listenership and advertising drove competition between labels and publishers. And, if you look at the top XAPP blog posts of 2015, you’ll notice it all comes down to money.
The Internet Radio Ad Load Report for Q3 2015 showed a small growth in advertisers, but a reduction in the frequency of the top advertisers. The spots are getting spread around among more advertisers. In Q3, Retail and the combined Media, Entertainment & Gaming (MEG) group were again the top two industries represented in Internet radio ads.