Music Streaming Might Have Peaked, And The Reason Might Not Be What You Think
The recorded music industry is feeling pretty good these days, with revenue increasing to nearly what it was during the CD era. Almost all of this success is a result of music streaming, which despite years of double digit growth, appears to be flattening out. That could turn those boardroom smiles into frowns by this time next year if things don’t turn around soon.
Most industry executives predicted that streaming numbers would soar during the pandemic, but the opposite happened. In the early days of the lockdown in March, streaming actually fell by 13%. After a few months, it rebounded again with a growth of 15%. The problem is that the numbers have stalled at around 17.5 billion streams per week since early June.
The silver lining is that there are now 11 million more subscribers in the U.S. over that time period, which means a higher payout per stream. The bad news is that they’re listening less.
Reasons Not To Listen
There are actually a lot of reasons why people are streaming less. One reason is that since more people are working from home, they’re not listening during their commute to work. Another reason is the U.S. election cycle, which sucked the air out of most entertainment consumption during that time period. Still, we’re past that now and the weekly streaming numbers remain the same.
An off-the-radar reason is the increase of podcast listening, which music streaming platforms bought into big-time starting in 2019. It’s been estimated that there are over 100 million podcast listeners in the U.S. alone, with the average listener subscribing to 6 podcasts and consuming 7 per week.
With the average podcast at approximately 43 minutes long and the average song length around 3:30, that means that a normal podcast is taking the place of 12 songs that might have been consumed otherwise. Multiply that by 7 and that makes 84 songs per week not streamed. Multiply that by 100 million and you have 8.4 billion songs, about half of what’s being streamed already.
To make it even worse, it’s predicted that another 20 million people will become podcast listeners in 2021. That means another 1.8 billion streams per week.
Now lest you think that podcast listeners are predominately beyond the age where their lives revolve around music (roughly 13 to 27), 48% of podcast listeners in the U.S. are between 12 and 34!
Obviously, one is not exclusive of the other. Just because you stream music doesn’t mean that you don’t listen to podcasts and vice versa. What it does mean that since there’s only so much time in the day where you can consume audio, one of those formats are going to suffer.
Understand the point here. I’m not saying that streaming numbers are going to fall because of more people listening to podcasts. I’m saying that streaming music’s growth is going to be stifled. Those days of double digit growth are behind us.
Both employees and employers are finding that remote working can not only be efficient, but present cost savings as well. While it’s estimated that 60% of office workers will return to work in 2021, that still means that a lot of people won’t be doing that same commute, and won’t be consuming music as a result. People will increasingly discover podcasts, which in turn takes away from their music listening time. With only moderate streaming growth and a new content source available to streaming services, it might be tougher for a record label to beat the current licensing deal when it comes up for renewal.
The recorded music business is doing well at the current streaming levels, but music execs may be increasingly on the hot seat soon as they’re forced to look for new revenue streams to sustain accelerated growth.