Midia Research: The Streaming Effect — streaming growth and the “hierarchy of free”

midia the streaming effect front page long 200wMidia Research released a report called The Streaming Effect, which gathers some penetration and consumer behavior metrics into a cogent state-of-the-industry message, with a future forecast. Midia founder Mark Mulligan sent us a copy of the subscription report.

“Streaming has arrived and is here to stay.” 

Report co-author and Midia founder Mark Mulligan lays out the inevitability of streaming music within a historical perspective:

“When the download transition started in earnest in 2003 with the launch of Apple’s iTunes Music Store, artists and labels were concerned that CD sales would suffer and that albums would be sidestepped in favour of single tracks. Both fears proved to be well founded but there are few labels or artists now who would consider their iTunes revenue as anything other than crucial.”

And Mulligan predicts that streaming’s disruptive influence will have a similar curve that downloading did:

“Today’s anxieties revolve around streaming cents replacing download dollars. As was the case with the download transition there will be collateral damage and some fears will come to pass. But just as the first shift to digital revenue was a case of the music industry running to catch up with consumer behaviour, so the move to streaming is an inevitable paradigm shift that can be no more resisted than an incoming tide.”

That inevitability is reflected in the report’s revenue projections. The general prediction, as with other projections, is for streaming (music access) to displace purchasing (music ownership) to some extent, though Mulligan veers away from “buying music is dead” simplifications. by 2019, according to Midia’s research, streaming and subscriptions combined will represent some 70% of digital music revenue.

The view of marketplace migration from legacy music products to streaming is informed by global realities. For example, in assessing the “downloads are dead” meme, Midia argues that downloads are a natural entry point to digital music in markets where online bandwidth doesn’t support robust streaming.


One of the most interesting constructions of The Streaming Effect is the “Hierarchy of Free” — an analysis of how the increasing value-adds to free streaming platforms keep consumers happy in the non-subscription realm. In the Hierarchy of Free, YouTube reigns over other free-listening options both in usage and features, followed by Internet radio music streaming, which has pushed back file-sharing piracy to some extent. YouTube’s value proposition is hugely influential, according to Mulligan: “YouTube quite simply sucks too much of the oxygen out of the competitive marketplace for premium services to compete effectively.”

In facing the future, Mulligan cautions legacy stakeholders to meet cyclical change head-on, citing the music industry’s sluggish response to Napster file-sharing in the 1990s. “Streaming undoubtedly has huge potential to be disruptive but the lessons of the first transition phase must be actioned.”

Brad Hill