RAIN 11/9: Gartner expects fivefold growth in what consumers spend for on-demand and premium Net radio by 2015

Paul Maloney
November 9, 2011 - 12:55pm

Gartner logoA new study indicates that consumers worldwide are becoming more willing to spend money for premium online music content -- including subscription-based and (to a lesser degree) ad-supported Internet radio (which Gartner lumps in with subscription-based services in their study).  

As consumer spending on CDs and LPs is expected to slide from $15 billion to about $10 billion 2010-2015, Gartner forecasts end-user revenue for online music sales and services will grow more than 31% over that same time span: from $5.9 billion in 2010 to $7.7 billion in 2015. Subscription services (e.g. Spotify, MOG, Rdio, Pandora) alone will take in $532.1 million this year, growing to $808 million next year. 
Gartner chart
While the more mature "a la carte" download market will still drive the bulk of overall online music revenue (a projected $3.62 billion will be spent on downloaded music this year) through 2015, music subscription services are expected be the main growth sector in this market. Gartner says the music subscripton segment itself will show fivefold growth from 2010 to 2015, accounting for nearly one-third (29%) of end-user online music spending by 2015.

"We expect that their (a la carte music download) growth will slow down as more consumers begin to turn to subscription services that are leveraging the popularity of consumer smartphones, media tablets and, in the future, devices such as TVs with Internet connectivity built in," reads a "top line assumption" from the Gartner report. "We include advertising-supported Internet radio services with this class of offerings — for example, Pandora, which offers advertising-supported and monthly subscription options (although our focus is on the end-user spending, rather than on the advertising revenue)."

Read Gartner's press release here; and the report findings here (.pdf file).

Michael Schmitt
November 9, 2011 - 12:55pm

Facebook announces its music partnerships at f8 in SeptemberMusic services -- including webcaster Slacker -- have seen a large boost in use since partnering with Facebook, according to the popular social network.

On September 22 during its F8 conference, Facebook unveiled new features that would allow users to share music content from services like Spotify, Rdio, Slacker and others directly to Facebook. Other users could then click-through to listen to that music on the respective service. (Find more coverage here.)

In the month following f8, Slacker reportedly “saw a more than 11x increase in monthly active users in the month following F8," according to Facebook. (More on this in our RAIN Analysis below.) 

Additionally, Spotify has seen 4 million new sign-ups, MOG experienced 246% growth and Rdio says Facebook has increased their new user registrations 30-fold.

You can find out more from the New York Times here and Mashable here.

RAIN AnalysisRAIN ANALYSIS: Slacker increasing its active monthly user count by 11 times is surprising and a little hard to believe. Slacker told the the L.A. Times in September that it had 6 million monthly active users (RAIN coverage here). By comparison, Pandora said in May 2011 that it had 34 million active users (here). 

That would mean Slacker has nearly 18% of Pandora's active user count (just comparing the 6 million and 34 million figures). But Slacker's AQH is less than 4% that of Pandora's (according to Triton Digital's Webcast Metrics from September 2011; Domestic 6am-12m Mon-Sun Daypart). It's hard to reconcile the two  -- even without an 11-fold increase in Slacker's active user count -- unless it's a lot of short-listening span visits.

Slacker's shared link on FacebookAnd that may be exactly what Facebook encourages. Our experience with Slacker and Facebook found that when a user shares a song from Slacker, it ends up on the user's Facebook wall with a big play button attached to it (see photo at right). Another user may click it, expecting to listen to the shared song. Instead they end up on Slacker listening to a new web radio station based around that song (but almost certainly not the target song itself). It's possible that the new user, not finding what he or she expected, leaves soon after.

Another possibility is that the 11-fold increase refers only to users arriving via Facebook. Indeed, in Facebook's blog post on the matter the two stats preceding Slacker (regarding MOG and Rdio) are about Facebook-related traffic and sign-ups only. 

In any case, Triton Digital's coming October Webcast Metrics should answer some of these questions. -- KH, PM, MS

Michael Schmitt
November 9, 2011 - 12:55pm

Ed SchafferLive365 has named Ed Schaffer as its new CEO. Schaffer has served at companies like Monster Worldwide, oDesk and Intuit. He has 20 years of senior management experience.

“I am excited to join a true pioneer in digital media and help lead the charge for Live365,” he said. That charge will include expanding the company's "listener and broadcaster base with new mobile applications, distribution channels, and growth initiatives."

Live365's previous CEO was Mark Lam. You can find Live365's press release here.

Michael Schmitt
November 9, 2011 - 12:55pm

ArbitronArbitron hopes to launch a Total Audience Measurement service next year, which will include web radio listening via server-side data (more RAIN coverage here and here).

Today Inside Radio reports that "server-side data will only be a short-term scenario, necessitated by limitations PPM panels run into when measuring small slivers of how people consume content."

“As digital consumption increases, the panel that we have in place becomes a more effective tool in measuring [streaming],” said Arbitron EVP/COO Sean Creamer.

You can read more by subscribing to Inside Radio here.