Commentary

Entertainment Streaming Picked Up In 2015

“Ch-ch-ch-ch-changes

Turn and face the strange

Ch-ch-changes

Don’t tell them to grow up and out of it

Ch-ch-ch-ch-changes

Turn and face the strange

Ch-ch-changes

Where’s your shame

You’ve left us up to our necks in it

Time may change me

But you can’t trace time”

—“Changes” by David Bowie

David Bowie is one of my favorite artists. His lyrics, approach to media and entertainment encouraged me to think differently about music and media. I was fascinated at the multiple personas he seemed to effortlessly morph into as he adapted ahead of the landscape, constantly changing his music and media craft. He challenged existing norms over four decades.

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More than just a musician, Bowie was a chameleon, a master of continual reinvention. An innovator. A rule breaker. A challenger. Bowie’s traits resonated with me at an early age and his music has been an accompaniment to my journey into technology, marketing and entrepreneurship. I was particularly amazed by his ability to continually adapt his music and approach to fast media formats and his understanding of consumption. I believe his keen sense in these areas is one of the reasons his fan base spans generations. Of course, it also helped him sell an estimated 140 million records throughout his career. 

I started listening to Bowie back in the days of cassette tape (it wasn’t that long ago!), then CD and now via streaming and downloading – including his latest album, which was released last week. Just as the “long haired” David Jones morphed into David Bowie and then to Ziggy Stardust, the way we consume music is rapidly morphing before our eyes. According to Nielsen’s 2015 U.S. Music Year End Report, music streaming doubled in 2015. 

As I’ve written about in the past, the streaming space has heated up over the last 12 months and shows no signs of letting up. The battle among Amazon, Pandora, Songza, Spotify and last year’s newcomer, Apple, is still in the early innings of the music streaming game. Rdio and Grooveshark having already been eliminated. Although Apple is a latecomer, reports suggest they have already reached 20 million paid subscribers, that’s nearly half of Spotify’s paid subscribers. As Apple sells more iOS and tvOS devices, their share of paid subscribers will surely rise but that tide will also ride for other services as well. Amazon plunked down a lot of ad dollars during the holiday season, pitching their streaming services and streaming device, Echo. Amazon and Apple were joined by many others hawking their steaming devices and apps. All this points to more connected consumers streaming and buying music through their many connected devices. 

A sample set of streaming data from Christmas week showed that music streaming set an all-time weekly record of almost 7.5 billion streams. And Its not just millennials that are doing it. Data suggests that a lot of adults (and I know of several grandparents) were using streaming services to help set the festive holiday mood in their homes and at parties. Remember, all of this occurred before all the holiday gifts of new streaming devices were even opened. It’s a safe bet that we will see the 7.5 billion steams eclipsed by the next holiday season. What does all this steaming growth say about consumer behavior and music purchasing?

Music streaming is cannibalizing music purchases, and downloads of albums and individual songs continues to shrink. Nielsen reported that sales of song tracks dropped by 12.5%, declining from 2014’s 1.1 billion songs sold to 964 million sold last year. Digital album sales also declined but only by 3%. I recently saw an animated pie chart that tracked the transition of music formats, starting with vinyl records to cassette to CD to MP3. It was fascinating to see the speed at which CD overtook the “old” media, only to be overtaken faster by the MP3. It will be fascinating to see the streaming vs. download comparison over the next 18 months. If Milli Vanilli were around today, they would say “Blame it on the cloud.”

Marketers should use this streaming data as one more proxy about the evolving consumer behavior. It’s no longer good enough to have 1,000 songs in your pocket. Now you can have millions! As streaming consumption grows, there will be more opportunities for marketers to find ways to surround consumers in this environment. Take note that you can’t skip commercial pods in any of the music streaming services. I highly encourage readers to check out the Nielsen report; there are several insights that provide ideas for how to reach a wide and deep swath of diverse demographics in an ever-changing music streaming river.

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