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.
With a new year upon us, Radio World interviewed CEO Pat Higbie on the future of Internet radio in 2016. As the Internet radio audience continues to grow, so will the interest of national advertisers. With a large amount of consumer attention and advertising revenue at stake, Higbie predicts competition will be fierce for both.
Music industry revenue has fallen consistently since peaking in 1999. Some would like to claim that streaming music services are a cause of the decline even though they arrived well after the downward trend was established. However, there is ample evidence to suggest the industry revenue would have declined in the absence of streaming music services.
A report issued by the National Bureau of Economic Research last month concludes that, “interactive streaming appears to be revenue-neutral for the recorded music industry.” The summary conclusions by the report authors, Luis Aguiar and Joel Waldfogel, don’t fit the industry trends prior to the study period or the math behind the data.
If you attended Advertising Week this year you couldn’t avoid sessions devoted to millennials, mobile and … audio. Yes, it’s true. Audio is back and hip enough to get attention at the advertising industry’s largest gathering.
RAIN News reported last week on an EDMbiz presentation by Nielsen Vice President Tatiana Simonian showing further confirmation of the listener migration to online listening. It also confirmed that ad-supported listening is the dominant choice of consumers.
Apple Music launched this morning with an ad-supported listening service. Yes, there is the subscription service as well. Apple execs never said there wouldn’t be ads. They just didn’t mention it, so the media assumed the company was walking away from the 21-month ad-supported iTunes Radio experiment. We now know this is not the case.