How Music Streaming Makes Money
The global music market experienced its fourth consecutive year of growth in 2018, generating over $19 billion in revenue. Music streaming now accounts for almost half of that revenue, with 255 million paid users worldwide.
Today’s infographic from Global Web Index compares the popularity of streaming services, exploring how streaming behavior differs by age group and region.
While listeners can now gain access to an abundance of streaming options—is the success of the industry good news for everyone?
The Age of Streaming
Streaming platforms are web-based services that allow users to listen to high-definition music without having to download and store large files.
The foundations of music streaming were laid by peer-to-peer file sharing system Napster when it was created in 2001, followed by Apple’s iTunes a couple of years later. Spotify, in an attempt to combat music piracy, was founded in 2006 by Swedish duo Daniel Ek and Martin Lorentzon.
Today, 68% of adults use a music streaming service of some kind. According to Global Web Index, Gen Z leads the way with the highest average streaming times, accessing their favorite tracks across multiple platforms.
How Streaming Platforms Make Money
There are currently 33 active streaming platforms available, with a range of different features and characteristics available. Spotify and Apple Music, the largest of the streaming giants, rely on almost identical models to generate revenue:
- Paid Subscriptions: Advertising drives free users towards monthly subscription packages, which include a premium offering for $10 a month and a family offering for $15 a month.
- Advertising: Advertisers pay for exposure, with ads played every 15 minutes for 30 seconds, and can also include sponsored playlists, and homepage takeovers.
With 217 million active users, and revenues of almost $6 billion in 2018, Spotify is the global leader in music streaming.
For Spotify, 91% of the company’s revenue comes from its 100 million paid subscriptions—double that of Apple Music—while the other 9% comes from advertising.
Apple’s streaming service commands a larger user-base than Spotify in the Asia Pacific and the Middle East and Africa regions.
While Apple Music has not been a profitable move for the company, the streaming platform bolsters Apple’s ecosystem of services—encouraging a more loyal consumer base.
How Artists Make Money
For both Spotify and Apple Music, 70% of the revenue generated from paid subscriptions and advertising goes towards paying music labels and artists.
Both platforms use the pro-rata model, which pays based on the total share of streams each artist has. For example, if $100 million is generated in revenue, and an artist accounts for 1% of all streams, then they would receive $1 million in royalties.
However, artists advocate for a fairer, more user-centric model that would pay artists based on who each user listens to the most, using their subscription fee. Smaller platforms like Deezer are moving towards a user-centric model and pressuring more established platforms to do the same.
The Future of Streaming
Over the next decade, the music streaming industry will continue to transform, with new innovations presenting significant opportunities and challenges for both streaming platforms and consumers alike.
- Personalization: Streaming platforms are using technology to fully understand a user’s listening habits and to tailor music recommendations directly to them.
- Original Content: Spurred on by the growth of streaming services like Netflix and YouTube, Spotify’s purchase of Gimlet Media for over $200 million signals the beginning of streaming platforms investing in original content.
- Premium Prices: Artists and music labels are demanding more for music, forcing streaming platforms to hike their subscription rates in an attempt to make up for lost revenue.
- Live Streaming: With live streaming rising in popularity, artists can offer audiences an intimate connection and more authentic version of their music.
Currently, artists can increase their chances of being featured on more playlists and ultimately earn more money by altering their music based on streaming platform algorithms. For example, artists only get paid if their song is listened to for 30 seconds, which results in much shorter songs that open with the chorus to keep the listener’s attention.
While streaming platforms continue to provide more avenues for artists to get in front of the right ears, many industry critics argue that music is no longer about creating something for pure enjoyment, but rather about using a formulaic approach to make more money.
Is the future of music safe in the hands of tech giants?
The Pandemic Economy: What are Shoppers Buying Online During COVID-19?
We visualize the ecommerce categories that have experienced the fastest growth, and the categories that are in decline during the COVID-19 pandemic.
The Fastest Growing and Declining E-Commerce Categories
The COVID-19 pandemic is having a significant impact on every aspect of life, including how people shop for their necessities, and their not-so-necessities.
With online retail sales estimated to reach an eye-watering $6.5 trillion by 2023, the ecommerce sector was already booming. But since the outbreak, online shopping has been catapulted into complete overdrive. Even the largest retailers on the planet are struggling to keep up with the unprecedented consumer demand—but what exactly are people buying?
To answer this question, retail intelligence firm Stackline analyzed ecommerce sales across the U.S. and compiled a list of the fastest growing and declining ecommerce categories (March 2020 vs. March 2019) with surprising results.
The Frenzy of Buyer Behavior
As people come to terms with their new living situations, their buying behavior has adapted to suit their needs. While panic buying may have slowed in some countries, consumers continue to stock up on supplies, or “pandemic pantry products”.
Many consumers are also using their newfound time to focus on their health, with 85% of consumers taking up some kind of exercise while in social isolation, and 40% of them saying they intend to keep it up when restrictions are lifted.
These changing behaviors have resulted in a number of product categories experiencing a surge in demand — and although a lot of them are practical, others are wonderfully weird.
The Fastest Growing Categories
While the below list features several shelf-stable items, it seems as though consumers are taking matters into their own hands, with bread making machines sitting in second place and retailers selling out of their top models.
It’s clear from the list that consumers are considering positive changes to their lifestyle while in isolation, as fitness, smoking cessation, and respiratory categories are all experiencing growth.
Explore the 100 fastest growing product categories below:
|Rank||Category||% Change in March (2020 vs. 2019)|
|#3||Cough & Cold||535%|
|#5||Dried Grains & Rice||386%|
|#9||Milk & Cream||279%|
|#12||Hand Soap & Sanitizer||262%|
|#23||Soap & Body Wash||194%|
|#25||Jerky & Dried Meats||187%|
|#26||Chips & Pretzels||186%|
|#33||Nut & Seed Butters||163%|
|#36||Baby Care Products||162%|
|#46||Digestion & Nausea||144%|
|#51||Incontinence & Tummy||129%|
|#54||Training Pads and Trays||125%|
|#57||Dried Fruit & Raisins||120%|
|#58||Salt & Pepper Seasoning||118%|
|#59||Craft Kits & Projects||117%|
|#62||Nuts & Seeds||116%|
|#64||Sauce & Gravy||115%|
|#67||Breads & Bakery||114%|
|#76||Jams, Jellies & Spreads||102%|
|#78||Spices & Seasoning||100%|
|#83||Granola & Nutrition Bars||97%|
|#84||Pudding & Gelatin||97%|
|#85||Toy Clay & Dough||95%|
|#87||Bird Food & Treats||91%|
|#88||Lab & Science Products||90%|
|#89||Eczema & Psoriasis||90%|
|#96||Potty Training Supplies||82%|
|#97||Herbs, Spices & Seasonings||82%|
|#98||Keyboard & Mice||80%|
Interestingly, toilet paper has seen more growth than baby care products, and cured meats have seen more growth than water. But while some categories are experiencing a drastic increase in demand, others are slumping in the pandemic economy.
The Fastest Declining Categories
An unprecedented wave of event and vacation cancellations is having a huge impact on the products people consume. For instance, luggage and suitcases, cameras, and men’s swimwear have all seen a dip in sales.
See the full list of 100 fastest declining categories below:
|Rank||Category||% Change in March (2020 vs. 2019)|
|#1||Luggage & Suitcases||-77%|
|#6||Men's Formal Wear||-62%|
|#9||Boy’s Athletic Shoes||-59%|
|#15||Event & Party Supplies||-55%|
|#16||Motorcycle Protective Gear||-55%|
|#17||Camera Bags & Cases||-54%|
|#18||Women’s Suits & Dresses||-53%|
|#23||Boy's Active Clothing||-50%|
|#25||Store Fixtures & Displays||-50%|
|#28||Watches & Accessories||-49%|
|#29||Cargo Bed Covers||-48%|
|#30||Track & Field Equipment||-48%|
|#33||Girl’s Coats and Jackets||-47%|
|#34||Women’s Hats & Caps||-47%|
|#37||Wheels & Tires||-46%|
|#40||Shocks & Struts||-44%|
|#41||Transmission & Parts||-44%|
|#42||Girl’s Athletic Shoes||-44%|
|#45||Sunglasses & Eyeglasses||-43%|
|#48||Men’s Athletic Shoes||-40%|
|#54||Baby Girl’s Shoes||-39%|
|#61||Tool Storage & Organizers||-38%|
|#64||Men’s Hats & Caps||-37%|
|#70||Bar & Wine Tools||-35%|
|#71||Glassware & Drinkware||-35%|
|#74||Home Bar Furniture||-34%|
|#75||Office Storage Supplies||-34%|
|#76||Girl's Active Clothing||-34%|
|#78||Braces, Splints & Supports||-34%|
|#81||Blankets & Quilts||-33%|
|#82||Women's Athletic Shoes||-33%|
|#86||GPS & Navigation||-32%|
|#97||Sanders & Grinders||-30%|
|#99||Living Room Furniture||-29%|
|#100||Climbing & Hiking Bags||-28%|
Regardless of which list a product falls under, it is clear that the pandemic has impacted retailers of every kind in both positive and negative ways.
The New Normal?
Officially the world’s largest retailer, Amazon has announced it can no longer keep up with consumer demand. As a result, it will be delaying the delivery of non-essential items, or in some cases not taking orders for non-essentials at all.
This presents a double-edged sword, as the new dynamic that is bringing some retailers unprecedented demand could also bring about an untimely end for others.
Meanwhile, the question remains: will this drastic change in consumer behavior stabilize once we flatten the curve, or is this our new normal?
The Anatomy of the $2 Trillion COVID-19 Stimulus Bill
A visual breakdown of the CARES Act, the $2 trillion package to provide COVID-19 economic relief. It’s the largest stimulus bill in modern history.
The Anatomy of the $2 Trillion COVID-19 Stimulus Bill
The unprecedented response to the COVID-19 pandemic has prioritized keeping people apart to slow the spread of the virus. While measures such as business closures and travel restrictions are effective at fighting a pandemic, they also have a dramatic impact on the economy.
To help right the ship, the Coronavirus Aid, Relief, and Economic Security Act — also known as the CARES Act — was passed by U.S. lawmakers last week with little fanfare. The act became the largest economic stimulus bill in modern history, more than doubling the stimulus act passed in 2009 during the Financial Crisis.
Today’s Sankey diagram is a visual representation of where the $2 trillion will be spent. Broadly speaking, there are five components to the COVID-19 stimulus bill:
|Category||Total Amount||Share of the Package|
|Individuals / Families||$603.7 billion||30%|
|Big Business||$500.0 billion||25%|
|Small Business||$377.0 billion||19%|
|State and Local Government||$340.0 billion||17%|
|Public Services||$179.5 billion||9%|
Although the COVID-19 stimulus bill is incredibly complex, here are some of the most important parts to be aware of.
Funds for Individuals
Amount: $603.7 billion – 30% of total CARES Act
In order to stimulate the sputtering economy quickly, the U.S. government will deploy “helicopter money” — direct cash payments to individuals and families.
The centerpiece of this plan is a $1,200 direct payment for those earning up to $75,000 per year. For higher earners, payment amounts will phase out, ending altogether at the $99,000 income level. Families will also receive $500 per child.
There are three other key things to know about this portion of the stimulus funds:
- There will be a temporary suspension for any student loan held by the federal government. This means no payments required and no interest accrued until the end of September, 2020.
- Borrowers with federally backed loans can request forbearance on mortgage payments for up to six months.
- There will be an expansion of unemployment benefits, including a four-month enhancement of benefits. This plan includes freelancers, workers in the gig economy, and furloughed employees.
Amount: $500.0 billion – 25% of total CARES Act
This component of the package is aimed at stabilizing big businesses in hard-hit sectors.
The most obvious industry to receive support will be the airlines. About $58 billion has been earmarked for commercial and cargo airlines, as well as airline contractors. Perhaps in response to recent criticism of the industry, companies receiving stimulus money will be barred from engaging in stock buybacks for the term of the loan plus one year.
One interesting pathway highlighted by today’s Sankey diagram is the $17 billion allocated to “maintaining national security”. While this provision doesn’t mention any specific company by name, the primary recipient is believed to be Boeing.
The bill also indicates that an inspector general will oversee the recovery process, along with a special committee.
Amount: $377.0 billion – 19% of total CARES Act
To ease the strain on businesses around the country, the Small Business Administration (SBA) will be given $350 billion to provide loans of up to $10 million to qualifying organizations. These funds can be used for mission critical activities, such as paying rent or keeping employees on the payroll during COVID-19 closures.
As well, the bill sets aside $10 billion in grants for small businesses that need help covering short-term operating costs.
State and Local Governments
Amount: $340.0 billion – 17% of total CARES Act
The biggest portion of funds going to local and state governments is the $274 billion allocated towards direct COVID-19 response. The rest of the funds in this component will go to schools and child care services.
Public and Health Services
Amount: $179.5 billion – 9% of total CARES Act
The biggest slice of this pie goes to healthcare providers, who will receive $100 billion in grants to help fight COVID-19. This was a major ask from groups representing the healthcare industry, as they look to make up the lost revenue caused by focusing on the outbreak — as opposed to performing elective surgeries and other procedures. There will also be a 20% increase in Medicare payments for treating patients with the virus.
Money is also set aside for initiatives such as increasing the availability of ventilators and masks for the Strategic National Stockpile, as well as providing additional funding for the Center for Disease Control and expanding the reach of virtual doctors.
Finally, beyond the healthcare-related funding, the CARES Act also addresses food security programs and a long list of educational and arts initiatives.
Hat tip to Reddit user SevenandForty for inspiring this graphic.
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