Music Subscription Services Go Mainstream

While revisiting some older articles here,  I came across a prediction I made almost exactly a year ago, after Facebook’s announcement of integration with several music subscription services at its f8 conference.  I claimed that this would have a “tidal wave” effect on such services:

I predict that by this time next year, total paid memberships of subscription music services will reach 10 million and free memberships will cross the 50 million barrier.

So, how did I do?  Not bad, as it turns out.

The biggest subscription music services worldwide are Spotify and Deezer.  Let’s look at them first.

Spotify hasn’t published subscribership data recently, but music analyst Mark Mulligan measured its monthly membership at 20 million back in May of this year.  Judging by the trajectory of Mulligan’s numbers, it ought to be about 24 million now.  In fact, Mulligan shows that Spotify’s growth trajectory is about equal to Pandora’s.  Furthermore, that’s only for users whose plays are reported to Facebook.  A redoubt of users — such as yours truly– refuse to broadcast their plays that way (despite constant pleas from Spotify), so make it at least 25 million.

Deezer, based in France, is Spotify’s number one competitor outside of the US.  A month ago, PaidContent.org put Deezer’s numbers at 20 million total but only 1.5 million paid, and added that Spotify’s paid subscribership is at 4 million.

Rhapsody is the number two subscription service in the US market.  Unlike Spotify and Deezer, Rhapsody has not embraced the “freemium” trend and has stuck to its paid-only model.  Rhapsody passed the 1 million subscriber milestone last December.

The next tier of subscription services includes MOG, Rdio, and MuveMusic (where the monthly fee is bundled in with wireless service) in the US; regional players including WIMP, simfy, and Juke (Europe); Galaxie (Canada); various others in the Asia-Pacific market; and Omnifone’s recently launched multi-geography rara.com.  These should all be good for a few hundred thousand subscribers each.

So among all these services, 50 million looks pretty safe for the number of total subscribers..  As for the number of paid subscribers, IFPI put it at 13.4 million for 2011 in its 2012 Digital Music Report, published in January.  Given that this represents a 63% increase over 2010, we can be confident in saying that the figure now is more like 17-18 million, but I’d back it off somewhat because IFPI probably counts services that I would not categorize as subscription (such as premium Internet radio).  So let’s say 13-15 million paid – way past my prediction of 10 million.

It’s also worth noting that if these figures are correct, the percentage of paid subscribership is in the 26-30% range.  That’s in line with the 20-30% that readers predicted here when I  ran a poll on this a year ago — the most optimistic of the poll answer choices.

To put this in perspective, 50 million still falls far short of the audiences for paid downloads, Internet radio, and even YouTube, which are all well above 100 million worldwide.  But it proves that the public is catching on to the value of subscription services, and they are no longer a niche product for “grazers.”

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