According to a recent forecast by ABI Research, by the end of 2013, consumers paying for on-demand music streaming services will total 29 million worldwide. Accounting for 32% of the premium subscribers, Spotify is expected to close the year as the leader, trailed by Deezer, SK Telecom’s MelOn, and rounded out by Rhapsody and Sony. The subscriber base is forecasted to reach 191 million by end-2018.
Commenting on the insights, Senior analyst Aapo Markkanen comments, “The past two years have seen a remarkable international expansion of streaming as a distribution model, but in terms of its long-term potential we’re still only scratching the surface.” He further added,”That’s also something to stress when discussing streaming’s role as a source of artist income. At end-2013 the cumulative revenue from premium subscriptions will amount to less than $5 billion, yet we expect this all-time pot to exceed $46 billion in the next five years. Some two-thirds of it will be going to the rightholders; although how they will split it is then a whole another matter.”
As regards the streaming providers’ competitive landscape, ABI Research anticipates some level of consolidation to take place once the current land grab stage starts slowing down. Streaming is a high-volume, low-margin industry, so to become and stay profitable the providers need scale. Further competitive pressure will come from the consumer technology giants investing in cloud music.