EXCLUSIVE: SNL Kagan publishes mobile music forecast, predicting subscription and revenue growth

snlkagan EMM pic 01Financial intelligence company SNL Kagan has given RAIN News an advance copy of Economics of Mobile Music, 2015 edition. The detailed report projects subscriber growth rates and revenue for the top nine music subscription services.

SNL Kagan estimates that by the end of this year, top services will have grown their subscriber base 51% in aggregate, to a cumulative total of 46.7-million consumers paying for music access. The revenue side of that picture could total $2.76-billion in 2015 alone, according to the report.

“The segment’s economics are weak, however,” the document warns, noting that high licensing fees and equity cuts given to music labels predict a challenging business going forward. The report’s authors speculate that music service could evolve to resemble record labels, producing original content in the Netflix model, which would raise margins and “removing the record-label middleman.”

Most of the cohort of nine services are interactive music-access platforms, but market-leading online radio brand Pandora is also included. Pandora is mostly in the advertising business, but also operates a subscription tier that removes commercials from its non-interactive streams.

snlkagan EMM pic 02Relying on RIAA data for revenues of the record industry, Economics of Mobile Music emphasizes major trendlines: download sales (the major revenue contributor in 2014), physical sales (falling hard), and streaming (growing fast). The report gets more granular with charts which details number of subscribers, revenue, and revenue per subscriber, for each of the nine measured services in 2013, 2014, and 2015 (estimated). A particularly interesting note: Apple Music is in there, with an estimated 4.5-million subscribers by end of 2015, which, if correct, would make the new service the third largest in less than a half year of operation.

“Mobile devices remain the dominant platform for accessing digital music,” the report asserts. One chart details which mobile platforms are supported by each of the services. Pandora, Rhapsody, Slacker, and Spotify are the most fully mobile brands.

Venture funding is covered, and in that section SNL Kagan extends beyond the core group of nine services, covering the fundraising results of over 30 services.

An executive summary of SNL Kagain’s Economics of Mobile Music 2015 is here.

Brad Hill