Report: Streaming has 51 million paying customers in U.S.

Report: Streaming has 51 million paying customers in U.S.

By William Glanz

The size of the U.S. streaming audience has always been tough to quantify. Few companies publicly identify the number of customers.

In a new report, music industry research firm MusicWatch estimates 51 million people pay a monthly subscription fee for a music streaming service.

The data, based on surveys conducted by MusicWatch, shows a massive increase in subscribers of paid services. In 2016, MusicWatch conducted research showing there were 26 million subscribers to paid services. In March 2018, the Recording Industry Association of America (RIAA) reported that streaming services had 35.3 million paid subscribers at the end of 2017.

“I actually was surprised (at the growth),” Russ Crupnick, managing partner of MusicWatch and a respected music industry analyst, told SoundExchange. “We’ve crossed an important milestone as an industry.”

The MusicWatch study was first reported by Billboard.

What Does It Mean?

Not only does the MusicWatch data confirm the rampant growth of music streaming, it reaffirms the significance of streaming revenue to labels. Labels earned $5.8 billion in revenue from streaming in 2017.

“That part of the streaming market – paid streaming – has been the big revenue driver,” said Joshua Friedlander, Senior Vice President, Strategic Data Analysis, at the RIAA.

Continuing to increase revenue from streaming will depend on an even larger group of consumers. MusicWatch identified another 157 million consumers who use free, non-interactive streaming services, and 29 million who stream music through free trials or bundled services that include music streaming.

The number of consumers who use streaming services is unlikely to grow much more, Crupnick said, so streaming services are likely to focus on transitioning consumers to paid services.

Who’s in Front?

The MusicWatch report doesn’t identify the number of subscribers that each music streaming service has.

Industry data has helped clarify that Apple Music and Spotify are the top two digital music services (but it’s not clear which is first, and which is second). When Apple Inc. reported its third quarter financials on July 31, the company said Apple Music’s paid service and free trials had 50 million users combined.

Spotify said in July that it had 83 million paid subscribers globally, but the company hasn’t disclosed how many U.S. subscribers it has.

When Pandora reported its second quarter financials on July 31, the company said it had “approximately 6 million” Pandora Plus and Pandora Premium subscribers and 71.4 million active users (which includes users of free, non-interactive users) at the end of June 2018.

“For me, the story is how much more will the overall pie grow and how many slices will there be,” Crupnick said.

Neither Pandora nor Apple Music nor Spotify responded to requests for an interview.