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Business

18 October 2016

Music's Fall & Rise 

After 15 years of steadily declining revenues, the music business is now enjoying a second straight year of growth. That’s mostly thanks to the rise of streaming services, which provide a combination of choice and convenience at an acceptable price point.

Subscription-based services such as Spotify, Apple Music and Pandora allow users to either access a free version (which comes with ads and doesn’t allow as much freedom of use), or they can pay an average monthly subscription fee of €10 for full access to millions of songs.

The latter market for digital music is growing rapidly: reaching 100 million paying subscribers in September, up more than 50% year to date.

Overall, streaming has breathed new life into the market, sparking a 3.2% rise in global industry revenues, which reached $15 billion last year.

As with on-demand video platforms such as Netflix and Hulu, subscription-based music streaming providers have gifted the industry something they have long needed: competition to piracy. Data proves that consumers appreciate having access to professionally curated, high-quality content, even if they have to pay a premium for it.

And competition abounds.

Amazon recently announced the debut of its new streaming service – Amazon Music Unlimited – which will run on a €10-per-month subscription model like Spotify and Apple Music. To pull away from the incumbents, Amazon is offering steep discounts to Prime subscribers and users of its Echo device.

With the big players fighting for market share, such competition will lead to even more expansive libraries, as well as playlists even better tailored to individual consumer habits.

While the total market remains significantly smaller than at its peak in the early 2000s – and piracy continues to be a particular drag – positive signs are at least blowin’ in the wind, as Nobel prize-winner Bob Dylan first crooned back in 1963, two decades before the Internet was even invented.