Where is the profitability of streaming music

Streaming revenues increase - "Owning music becomes superfluous"

New figures show that music streaming services are growing significantly. A Cologne company is also involved, but is not yet profitable. The industry is not lacking in self-confidence.

Revenues from music streaming services are increasing. Compared to the first half of 2011, they rose by 41.6 percent, announced the Federal Association of the Music Industry (BVMI) on Tuesday. While CD sales are declining, the digital market grew by a total of 31.8 percent to 143 million euros. 18 million of them now use the music streaming services. “Music streaming is currently one of the fastest growing usage trends in the music world,” explained BVMI Managing Director Florian Drücke.

The new market is fiercely competitive. After the industry was able to agree on tariffs with GEMA at the end of 2011, nothing stands in the way of streaming offers. There are now 12 legal providers available in Germany. On Wednesday Nokia announced that it would start a free streaming service (Nokia Music) in the USA, but left the introduction open in this country.

The providers finance themselves through advertising and subscriptions. The user pays between 5 and 10 euros per month for unlimited access. The selection of songs varies. For example, the music streaming service Deezer advertises with 18 million music tracks. The user can play the music from the network anytime and anywhere, for example on the smartphone or tablet. The services are potentially also taking over the car via mobile devices.

"Nobody is hoarding music files anymore"

CDs and downloads still dominate the music business. Streaming providers such as the Cologne-based company Simfy, however, see a kind of revolution in progress. “The 'ownership' of music becomes superfluous because permanent availability is more and more secured through access to cloud-based services,” Simfy spokesman Marcus von Husen told iRights.info on Wednesday. "Nobody is hoarding music files when they can use a huge repertoire anytime, anywhere, anytime."

A survey by the IT industry association BITKOM (July 2012) confirms the trend towards music streaming. According to this, around 4.5 million Germans regularly use services such as Spotify, Napster or Musicload Nonstop.

Race for the markets

It remains to be seen which companies will be left at the end of the streaming hype. Simfy revised a forecast for business development to iRights.info. In March, the Cologne-based company announced that it would be profitable in the second quarter. The goal was missed, however. The spokesman explains: “There is still no updated information on how to achieve profitability.” Von Husen cites the expansion course as the reason. For example, “Simfy Africa” started in August. "This development has changed the schedule a little," said the spokesman. The Swedish competitor Spotify is also making losses so far. According to media reports, the Swedes are also initially focusing on growth and expanding to Canada, Asia and South America.

Music market stable

The figures from the Federal Association of the Music Industry also show that, contrary to what some discussions about the consequences of Internet piracy might suggest, the music industry is not on the brink. Compared to the first half of 2011, the total volume of the music market rose slightly by 0.2 percent to 644 million euros. The digital market (downloads + streaming) contributes around 143 million euros, or around a quarter. The USA may show where the journey is headed. In 2011 the labels sold more music there digitally than on CD.

On the topic at iRights.info

On the subject on the Internet

What do you think?