2014 was a big year for streaming. 2015 is going to be bigger. But most of the big questions of 2014 remain unanswered and the disruption will intensify. A comprehensive reassessment is required of what role streaming should play, of how to balance out the marketing and revenue capabilities of the rapidly growing marketplace. But with the discovery end game now often another stream instead of a sale, new monetization opportunities and pricing models need to be explored. In this presentation give during the Streaming By The Numbers session at Music Biz 2015 in Nashville on May 13, MIDiA analyst Mark Mulligan presented a vision for a next generation of streaming business models and how streaming can best be harnessed to drive growth across music’s value chains.

1. MIDiA
Research
Mark
Mulligan
May
2015
Where
Does
The
Streaming
Road
Lead?

2. MIDiA Research is a unique music industry focussed
syndicated research and analysis service. Our reports
leverage proprietary consumer data, market forecasts
and indices.
Mark Mulligan is a music industry analyst and
consultant of 15 years standing, previously held senior
positions at Jupiter and Forrester Research, now
heads up MIDiA Research.
MIDiA Research clients pay a one-off annual fee to
get online access to our research reports and data to
better understand how to respond to tomorrow’s
disruption.

3. Where
Does
The
Streaming
Road
Lead?
1. Change
Is
Difficult
2. Not
All
Audiences
Are
The
Same
3. Pricing
&
360°
Music
Products
4. Conclusions

4. Where
Does
The
Streaming
Road
Lead?
1. Change
Is
Difficult
2. Not
All
Audiences
Are
The
Same
3. Pricing
&
360°
Music
Products
4. Conclusions

5. 20
10
(millio
ns)
“I live in a strictly rural community, and people
here speak of 'The Radio' in the large sense, with
an over-meaning. When they say 'The Radio'
they don’t mean a cabinet, an electrical
phenomenon, or a man in a studio; they refer to
a pervading and somewhat godlike presence
which has come into their lives and homes.”
E. B. White, 1933

6. “It is with a feeling of
humbleness that I come to this
moment of announcing the
birth of a new art so important
in its implications that it is
bound to affect all society . . .
an art which shines like a torch
in a troubled world . . . a
creative force we must learn to
utilize for the benefit of all
mankind.”
David Sarnoff, 1939

7. “ “Spo@fy
is
the
last
desperate
fart
of
a
dying
corpse.
Thom
Yorke
2013

8. Cnut

9. • Artists and fans are closer than ever
• Paying for music has become a lifestyle
choice
• New label models are gaining traction
• Ownership is evolving
• Streaming models are growing
• Free dominates
• On demand dominates
A
LOT
HAS
AREADY
CHANGED

10. US
adult
populaPon
–
280m
YouTube
–
134m
Stream
for
free
–
113m
Buy
CDs
–
98m
Buy
downloads
–
82m
Subscribe
–
8m
SubscripPons
May
Be
The
Future
But
They’re
Only
Just
Ge[ng
Going
Source:
MIDiA
Research
Consumer
Survey
12/14
(US)
and
RIAA

11. 1.6
2.8
1.5
5.3
6.4
5.7
-­‐
2.0
4.0
6.0
8.0
2012
2013
2014
Net
New
Music
Subscribers
Net
New
Neclix
Subscribers
The
MaturaPon
Effect:
Digital
SubscripPons
Have
An
Inherent
AdopPon
Ceiling
Net
New
AddiPonal
US
Subscribers
For
Neclix
And
For
Music
Subscribers
Net
New
Subscribers
Sources:
Neclix
annual
reports
and
RIAA
(millions)

12. Where
Does
The
Streaming
Road
Lead?
1. Change
Is
Difficult
2. Not
All
Audiences
Are
The
Same
3. Pricing
&
360°
Music
Products
4. Conclusions

14. $0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
0 50 100 150
Revenue
AND
Audience:
Another
Way
Of
Looking
At
Music
Services
(millions)
Revenue
Paid
downloads
Premium
subscripPons
InteracPve
radio
Music
video
Free
subscripPons
Audience
Source:
MIDiA
Research
9/14

15. Behavioural
Music
SegmentaPon
DistribuPon
Of
Key
Music
Consumer
Segments
Source:
MIDiA
Research
Consumer
Survey
7/14
(US,
UK,
Brazil)
n=3,000
Aficionados
17%
Collectors
6%
Passive
Majority
47%
Forgooen
Fan
30%
Money
Spent
On
Music
Time
Spent
On
Music
Line
signifies
averages

16. 184b
n
48%
23%
17%
52%
61%
59%
21%
23%
Of
all
consumers
Of
total
music
spending
Buy
downloads
(66%
buy
CDs)
Go
to
gigs
and
concerts
regularly
Stream
music
Spend
less
on
downloads
than
they
used
to
Used
to
buy
more
than
an
album
a
month
but
no
longer
do
so
Have
a
music
subscripPon
The
Music
Aficionado
Is
Every
ArPst
And
Label’s
Most
Valuable
Asset
Key
Aoributes
Of
Music
Aficionados

17. $
133.4
$
40.6
$189.9
$247.3
$0
$100
$200
$300
$400
Lost
Physical
Music
Spend
Lost
Music
Download
Spend
Aficionado
Lost
Spend
Remainder
Lost
Spend
The
Changing
Spending
Paoerns
Of
Aficionados
Shaped
Music
Revenues
In
2014
Total
‘Lost’
Music
Revenue
in
2014
That
Was
Music
Aficionado
‘Lost’
Spend
‘Lost’
Music
Revenue
Data
refers
to
UK,
US,
France,
Italy,
Australia,
Sweden,
Norway
Source:
MIDiA
Research
Aficionado
Spend
Model
1/15
86%
of
total
59%
of
total
(millions)
Aficionados
were
responsible
for
of
all
‘lost’
spending
in
2014
72%

18. 584.0
9.0
26.0
0
100
200
300
400
500
600
700
Free
<$5
>$5
Mind
The
Pricing
Gap:
No
One
Has
Yet
Made
The
Pricing
Middle
Ground
Work
DistribuPon
Of
Music
Service
Price
Points
And
Users
(Global,
2014)
Pricing
models
Company
reports
and
MIDiA
esPmates
Users

19. MonePzaPon
Is
Polarized
Between
High
Value
Premium
And
Low
Value
Scale
–
It
Doesn’t
Need
To
be
Free
Users
Low
ARPU
High
scale
Premium
Users
High
ARPU
Low
scale
Mid
Tier
Users
Solid
ARPU
Solid
scale
• Cheaper
price
Pers
• Genre
based
services
• Paid
radio
• Pay
As
You
Go
/
Micro
Billing

20. Behavioural
Music
SegmentaPon
DistribuPon
Of
Key
Music
Consumer
Segments
Source:
MIDiA
Research
Consumer
Survey
7/14
(US,
UK,
Brazil)
n=3,000
Aficionados
17%
Collectors
6%
Passive
Majority
47%
Forgooen
Fan
30%
Money
Spent
On
Music
Time
Spent
On
Music
Line
signifies
averages

21. A[tudinal
Music
SegmentaPon
DistribuPon
Of
Key
Music
Consumer
Segments
Source:
MIDiA
Research
Consumer
Survey
7/14
(US,
UK,
Brazil)
n=3,000
Passive
Buyers
2%
Aficionados
39%
Passives
17%
Disinterested
11%
Forgooen
Fan
30%
Consider
music
worth
paying
for
Consider
music
important
in
life
Line
signifies
averages

22. Where
Does
The
Streaming
Road
Lead?
1. Change
Is
Difficult
2. Not
All
Audiences
Are
The
Same
3. Pricing
&
360°
Music
Products
4. Conclusions

23. Premium
e.g.
SpoPfy
Mid
e.g.
iTunes,
Pandora
One
Free
e.g.
YouTube,
Soundcloud
Revenue
Scale
The
Music
MonePzaPon
Pyramid

24. 10%
12%
17%
0%
10%
20%
30%
40%
50%
Standard
price
(e.g.
$9.99)
Low
price
(e.g.
$1
a
week
/
$5
a
month)
PAYG/Top
Up
Out
Of
A
Band
Bunch
Pay
As
You
Go
/
Micro
Billing
Represents
The
Largest
Opportunity
Average
Interest
Levels
In
Music
Service
Pricing
%
of
Consumers
Source:
Various
MIDiA
Surveys
PAYG
is
the
payment
opPon
with
strongest
and
widest
appeal

25. $0
$50
$100
$150
$200
$250
$300
0
5
10
15
20
25
30
35
40
45
50
HypothePcal
US
Monthly
Revenue
And
Customer
Base
Based
On
Consumer
Stated
Pricing
Interest
$9.99
Delivers
The
Revenue
But
Not
The
Scale
Revenue
Customer
Base
(millions)
PAYG
/
Top
Up
(Assumes
$2.50
monthly
spend)
$5
a
month
$9.99
a
month

26. Music
Aficionados
Want
More
Than
Just
The
Song
From
Their
Favourite
ArPsts
%
of
consumer
segment
7%
26%
18%
45%
0%
10%
20%
30%
40%
50%
Would
pay
for
an
interacPve
album
app
with
music,
video,
photos
and
interviews
For
me
music
is
more
than
just
the
song,
it
is
about
the
singer,
band
or
DJ
and
their
story
Music
Aficionados
All
consumers
QuesPon
asks:
Which
of
the
following
statements
apply
to
you?
Note:
Music
Aficionados
are
consumers
that
spend
above
average
money
and
Pme
with
music
Source:
MIDiA
Research
Consumer
Survey
06/14
(UK,
US,
Brazil)
n
=
3,000
PenetraPon
By
Age
Of
Super
Fans
And
Consumers
Interested
In
360°
Music
Products

27. Next
GeneraPon
Music
Products
Need
To
Be
Dynamic,
InteracPve,
Social,
Curated
D.I.S.C.
–
The
Music
Format
Bill
Of
Rights

28. Next
GeneraPon,
360°
Music
Products
Will
Add
Curated
Context
To
The
Music
360°
Music
Product
Concept

30. SubscripPon
Services
Are
Ready-­‐Made
Placorms
For
Delivering
360°
Products
To
Super
Fans
%
of
consumer
segment
16%
22%
30%
39%
31%
42%
44%
51%
0%
20%
40%
60%
80%
100%
Would
pledge
money
to
arPst
to
get
next
album
to
as
exclusive
app
2
weeks
ahead
of
main
release
Would
buy
merchandize
and
concert
Pckets
directly
from
arPsts
within
streaming
services
Subscribers
Aficionados
Streamers
All
consumers
QuesPon
asks:
Some
singers
and
bands
are
concerned
that
streaming
music
services
like
YouTube,
SpoPfy
and
Deezer
pay
too
liole
money
back
to
them
compared
to
selling
CDs
or
downloads,
thus
making
it
hard
for
many
of
them
to
make
a
living.
Considering
this
please
indicate
how
much
you
agree
with
each
of
the
following
statement
Source:
MIDiA
Research
Consumer
Survey
10/14
(UK
only)
n
=
1,000
Interest
In
AlternaPve
Forms
Of
Fan
MonePzaPon
By
Consumer
Segment

31. • $1 or $2 a month per artist, added onto main
subscription
• Super easy opt-in / opt-out
• Interactive experience with all artist’s music
plus others such as influences and
influenced playlists
• Live streams, concert footage, interviews,
acoustic sessions, video, images etc.
• Streaming artist subscriptions can monetize
the revenue no man’s land between ad
supported and subscriptions
ARTIST
SUBSCRIPTIONS

33. Where
Does
The
Streaming
Road
Lead?
1. Change
Is
Difficult
2. Not
All
Audiences
Are
The
Same
3. Pricing
&
360°
Music
Products
4. Conclusions

34. If
there’s
a
gold
rush
you
want
to
be
selling
shovels!
Samuel
Branan
Leland
Stanford
Levi
Strauss

35. So
What
Is
The
Shovel
Today?
The
Web
• InformaPon
• Services
• Tools
Tradi@onal
Music
Business
• Contacts
• MarkePng
• DistribuPon
Today’s
Music
Business
• ConnecPons
• CuraPon
• Engagement

37. Awakening
The
definiPve
account
of
the
music
industry’s
digital
journey
Available
from
Amazon,
iTunes
and
Google
Play
Store
now!

38. Contact:
Mark
Mulligan
Phone:
+44
(0)
780
11
66
712
Email:
mark@midiaresearch.com
Web:
hop://midiaresearch.com
Blog:
hop://musicindustryblog.wordpress.com
TwiTer:
@mark_mulligan