Mobile Cloud-Based Music Streaming Services Will Be Mainstream by 2016

Oyster Bay, New York - 17 Mar 2011

Mass consumption of recorded music continues to evolve, as ownership continues to diminish in importance. A new study from ABI Research forecasts that by 2016 streaming (cloud-based) services will become a more important form of access to music than owning albums, songs or tracks. This shift will primarily be driven by the growing use of mobile handsets, especially smartphones, as listening devices.

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“The number of subscribers to mobile music streaming services is expected to approach 5.9 million by the end of this year,” says industry analyst Aapo Markkanen. “ABI Research believes that number will exceed 161 million subscribers in 2016, meaning a compound annual growth rate of nearly 95%. Sometime in 2012 the Asia-Pacific area will become the largest regional market for mobile music streaming.”

The biggest winners from these developments are likely to be consumers, and the vendors and the service providers enabling these new models, such as Rhapsody, Melon and Spotify. Record labels, producers and other middlemen whose businesses have been shaken by content piracy also stand to gain from streaming services as they have an opportunity to monetize a lot of consumption that would otherwise take place outside their revenue base. For musical artists, there are both positives and negatives: it will be more difficult to make a living by selling recorded music, but the barriers to wide product distribution are falling fast.

Retail prices for music-in-the-cloud are expected to show a gradual decline as these services reach mass markets, although according to practice director Neil Strother, “Forecasts of declining prices are based on the assumption that the rights-holders will lower their royalty demands. Record labels and collecting societies should not overplay their hands when it comes to royalty issues. If consumers do not have convenient and affordable legal alternatives, they will simply enjoy their music by other means.”

Mobile Cloud Music Services examines cloud music services specifically from the mobile perspective. It includes descriptions of available services, analyses of market drivers and inhibitors, and an overview of the main technology issues. It also provides forecasts of revenues, customer bases and price points for mobile music streaming subscriptions through 2016, and analysis of consumer trends.

It forms part of the firm’s “The Mobile Consumer” Research Service.

ABI Research provides in-depth analysis and quantitative forecasting of trends in global connectivity and other emerging technologies. From offices in North America, Europe and Asia, ABI Research’s worldwide team of experts advises thousands of decision makers through 30+ research and advisory services. Est. 1990. For more information visit www.abiresearch.com, or call +1.516.624.2500.

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