The streaming market could double in the next four years – but only if new services and innovations target different music fans.
According to ERA-commissioned research by consultants OC&C, streaming could be worth £1.6 billion by 2023. Increasing streaming penetration from a range of services targeting differing customers would be key.
OC&C forecasts that left as it is, the UK music streaming market would still grow from £829 million in 2018to £1bn to £1.1bn in 2023, a compound annual growth rate of 5% to 7%.
OC&C’s 80-page report is based on their analysis of current market data and builds on the consultancy’s expertise advising on subscription models in sectors as varied as mobile telephony, gyms and hotels.
OC&C partner Pedro Sanches said: “Our study indicates the UK music industry has a significant opportunity to increase the size of the market beyond even the most bullish expectations. It is clear that if the industry can come up with tailored offers which deliver value to specific groups of consumers then there’s a major prize at stake.”
The UK music industry has a significant opportunity to increase the size of the market
ERA CEO Kim Bayley said: “We commissioned this report to get an independent sense-check on the growth prospects for streaming. It’s fair to say even we were surprised just how positive the results are. This is a significant piece of work showing how music can embrace the learnings of related leisure markets.
“Rewind 10 years when the music industry was on its knees, few would have believed possible the miracle turnaround streaming services have now achieved. OC&C indicates that further opening the door to innovation is key to music reaching its full potential.”
OC&C provides detailed analysis of the progress of streaming in different demographics. It accounts for 69% of listening time for 16-19 year olds but only 16% of listening time for 45-54 year olds.
The report details how businesses in other sectors, ranging from mobile phone operators to gyms and video subscription services like Netflix, have driven growth by creating a range of services for customer groups with different needs.
At present, all-you-can-eat music streaming services remain the default option for most users, though Amazon has made inroads with its Prime membership offer and this week expanded its free version.
“The current model dates back to 2008,” said Sanches. “It has enjoyed enormous success in part because of its simplicity but further innovation will deliver more growth.”
OC&C calculates that more innovation in services could result in a potential £500m boost to the market. These range from creating new premium tiers and new entry points to paid streaming, to offering the ability to access streaming services without taking out a subscription.