Rockin’ in the Freemium World

Revenue from ad-based ‘Freemium’ music streaming is set to exceed $1bn by 2017 according to a new report.

Despite what is described as “a declining number of freemium services”, ad revenue is predicted to grow as customers generally migrate en masse to the not so brave new world of streaming over the next few years.

The Juniper Research report, which can be downloaded in full here notes a shift in which free versions of streaming sites are becoming restricted to basic radio style services. This follows a report from Digital Music News that Spotify is set to move towards a more gated business model in which some content will only be available to premium subscribers. This is an approach that Spotify has historically resisted but according to “sources” it is being reconsidered with a view to driving up paid subscriptions and going best foot forward into major label renewals later in the year.

Research author Joe Crabtree states: “With convenience, accessibility and curation having become the defining elements of the music landscape, the potential of the streaming industry will revolve around the levels of which providers can convert free customers to paying customers”.

Apple Music has attracted 11 million trial users in its first five weeks- a promising start, though Apple seems unlikely to hit its target of 100m paying subscribers by year-end, with a beta Android version of Apple Music due in the Autumn and the launch of five additional new Beats Radio stations.

With a marketing push, Apple will most likely end the year and its first six months as the second largest streaming service in the world in terms of trials and paying subscribers. Will Apple be satisfied with playing Pepsi to Spotify’s Coke and does the tech giant actually have its sights set on winning the hardware war as opposed to the music streaming battle?

In related news, according to this report from Recode, the European Commission has found no evidence that Apple colluded with major labels to damage competition and attempt to stamp out free streaming services- though the fact that Spotify are reconsidering their approach demonstrates that Apple are definitely changing the conversation.