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Cents and Sounds: How Music Streaming Makes Money

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Music Streaming Infographic

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.

music streaming revenue

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.

Spotify

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 Music

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?

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Mapped: The Top Podcasts on Spotify Across Countries

Podcasting is now a billion dollar industry, attracting big names and audiences to match. Here’s a global look at the top podcasts on Spotify.

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The Top Spotify Podcast Across Countries

We are amidst the breakout era of podcasts. Since the beginning of the smartphone revolution, the digital audio format has picked up serious traction with audiences all over. In the U.S. alone, it’s estimated that there will be 132 million podcast listeners by 2022.

Today, there are 850,000 active podcasts available in 100 languages, with over 30 million episodes to tap into—perfect if you have an afternoon to yourself.

Worldwide Podcast Chart-Toppers

The data in this infographic comes from Spotify, the top global streaming service in the industry by paid users. How do the top podcasts fare on a per country basis?

CountryTop PodcastHonorable Mention (Second Highest)
CanadaThe Joe Rogan ExperienceCall Her Daddy
FranceChoses a SavoirMythes et Legendes
UKThe Michelle Obama PodcastThe Joe Rogan Experience
GermanyGemischtes HackFest & Flauschig
ItalyBlu Notte - Fisteri ItalianiMushio Selvaggio
U.S.The Michelle Obama PodcastCall Her Daddy
Japankemioの耳そうじクラブHapa英会話 Podcast
AustraliaFrom The NewsroomThe Joe Rogan Experience
IndiaThe Michelle Obama PodcastPurijagannadh
IrelandThe Joe Rogan ExperienceThe 2 Johnnies Podcast
MexicoLeyendas LegendariasLa Cotorrisa
New ZealandThe Joe Rogan ExperienceCall Her Daddy
ArgentinaConcha PodcastEntiende Tu Mente
AustriaVerbrechenFest & Flauschig
BrazilNerdCastCafé da Manha
ChileTomas Va A MorirMatriarcalmente Hablando
ColombiaDianaUribe.fmDani 3Palacios Podcast
DenmarkMorkelandHer Gar Det Godt
FinlandPOKSJaliila
IndonesiaRintik SeduPODKESMAS
NorwayFriminutt med Herman og MikkelG-punktet
PhilippinesSleeping Pill with InkaAdulting With Joyce Pring
PolandKryminatoriumJa I moje przyjaciółki idiotki
SpainNadie Sabe NadaEntiende Tu Mente
SwedenP3 DokumentarSommar & Vinter i P1
NetherlandsZelfspodcastMan man man, de podcast

Many of the top shows around the world follow a familiar interview or conversational format, but there are trends that deviate from that formula. In particular, there are a number of podcasts focused on health and wellness as well as current events.

The early beginnings of podcasting were dominated by upstart content creators, but as the market has matured, big media outlets and A-list personalities have been vying for listeners’ attention in an increasingly crowded field. As it stands now, two podcasts from America carry a large presence in foreign markets, and the two big personalities—Michelle Obama and Joe Rogan—stand a notch above the rest.

The Rogan-Obama tug of war in the podcast realm has had its back and forths. Obama pulled ahead in many countries in August, but in September the pendulum swung in favor of Rogan.

Follow The Money

In 2015, ad revenue in the podcast industry was a minuscule $69 million across the board. It’s expected to reach over $1 billion by 2021, and to grow further from there.

podcast industry revenue

The podcast boom is powered by younger generations, and both millennials and Gen Z represent a sizable portion of the total podcast audience globally. In particular, demographic listenership numbers experience a big drop after the 35-54 age bracket.

podcast audience by age group

Flexibility and variety are key features that are helping fuel the growth of the medium. One can keep up with serious world affairs or listen to Call Her Daddy—a podcast on sex and relationships by Barstool Sports, another podcast that frequently tops the charts.

Top Podcast Publishers by U.S. Audience

When it comes to key participants in the industry, National Public Radio (NPR) sits on the top spot with over 26 million unique monthly audience members. In close second, iHeartRadio holds a whopping 494 shows.

Podcast PublisherU.S. Unique Monthly AudienceGlobal Downloads & StreamsActive Shows
NPR26,933,000219,716,00049
iHeartRadio26,182,000234,417,000494
New York Times13,102,000145,961,00015
Barstool Sports10,228,00067,569,00043
PRX9,035,00082,245,00087
Wondery8,794,00057,261,00098
ESPN/ABC8,472,00066,685,00096
NBC News6,751,00044,219,00026
Cumulus Media/Westwood One6,473,00040,912,000115
Warner Media6,350,00033,503,000113
This American Life/Serial5,924,00022,722,0002
Kast Media5,319,00030,353,00046
Daily Wire5,212,000
43,342,0005
WNYC Studios5,209,00035,381,00052
All Things Comedy4,890,00028,770,00058
TED3,739,00051,696,00010
American Public Media3,362,00017,997,00050
Fox News Radio2,518,00013,633,00034
Slate1,951,00013,812,00097
WBUR1,105,0006,758,00018

If you’re bullish on podcasts, many in the top 20 are publicly traded entities who either stand alone, or are part of a larger corporation. Notable stocks include the New York Times, ESPN as part of Disney, and Warner Media as part of AT&T.

Spotify Today and Tomorrow

Spotify’s direct listing IPO was initially met with a lack of confidence, due to Big Tech’s entry in the space, as well as the profitability and monetization concerns that typically plague the music industry as a whole. However, the company has done well in abating those concerns, especially if you consider Spotify’s stock price, which has doubled in the last year. An impressive 21% of Spotify’s monthly active users engage with podcast content.

In addition, a wealth of personalities have entered the podcasting space. These big names suggest that the competition is dialing up.

In recent months, an exclusive deal between Spotify and Joe Rogan, valued at over $100 million took the podcasting world by storm. This is quite a monumental step for the podcast timeline, and one that suggests more deals could follow as Spotify looks to lock people into their platform with exclusivity deals.

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Here’s What Happens Every Minute on the Internet in 2020

A lot can happen in an internet minute. This graphic looks at the enormous numbers behind the online services billions use every day.

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What Happens Every Minute on the Internet in 2020

In 2020, an unfathomable amount of digital activity is occurring at any given moment. This ongoing explosion in activity is the aggregate output of 4.5 billion internet users today, a number that’s projected to increase even further in coming years.

This powerful visual from Domo helps capture what happens each minute in today’s hyper-connected internet era, and it’s actually the eighth edition produced since the year 2012.

What can we learn from the evolution of what happens in an internet minute?

How Times Have Changed

Over its relatively short history, the internet has been a catalyst for both the rise and demise of new companies and platforms.

By looking at which brands have appeared in the graphic in earlier years, we can roughly chart the prominence of certain tech segments, as well as observe brands with the most staying power.

data never sleeps wheel over time

As you can see above, platforms like Tumblr, Flickr, and Foursquare showed some promise, but eventually got omitted from the graphic as they dropped off in relevance.

Meanwhile, tech companies like Facebook, Amazon, and Google have had impressive staying power, evolving to become some of the biggest companies in the world. In the process, they’ve caught up to longer-standing titans like Apple and Microsoft at the top of the food chain.

The New “New Thing”

Not surprisingly, much of the internet landscape looks different in 2020. Here are a few of the digital hot spots today.

Cash Transfers
Nearly $240,000 worth of transactions occur on Venmo per minute. This has served as a catalyst for parent company PayPal, which evolved along successfully with fintech trends. PayPal’s stock now trades at near all-time highs.

E-Commerce
Even before COVID-19 resulted in shuttered storefronts and surging online orders, e-commerce was a booming industry. It’s now estimated that $1 million is now spent per minute online. Amazon ships an astounding 6,659 packages every minute to keep up with this demand.

Collaboration Tools
In a predominantly remote-working environment, tools like Zoom and Microsoft Teams host 208,333 and 52,083 users each minute respectively. Particularly in the pandemic era, it seems that this trend is here to stay.

Accelerated Turnover

The accelerated world we are in today means that many companies do not sustain a competitive advantage for as long. Social media companies have dwindled as observed above, and this is similarly reflected in the average lifespan of an S&P 500 company.

A typical company’s tenure on the S&P 500 is expected to shrink rapidly in the next few years:

  • 1964: 33 years
  • 2016: 24 years
  • 2027E: 12 years

Companies are shaving anywhere between 15-20 years off those highs, with estimates of further declines. This metric symbolizes the rapid evolution of the business landscape.

What Lies Ahead

It’s seemingly easy to forget mankind is still very early in the developments when it comes to the internet. But in this short period, its rise to prominence and the broad digitization of the world has left us with a very eventful timeline.

If the last decade serves as a reference point, one can expect further and intensifying competition among tech companies. After all, the reward—winning in today’s digital economy—reaps much greater value.

All signs point to internet activity advancing to further heights, if not because of 5G and its associated breakthroughs, then perhaps due to the steady rise in people gaining internet access.

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