Latest New Music Seminar Session Tackles Streaming, Car Audio & Smart Speakers

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Tom Silverman of TommY BoY/New Music Seminar kicks off July 26’s NMSession “Where Does Ad-Supported Music Fit in the New Music Industry Ecosystem?”

By Bill Greenwood

Last night (July 26), Jaybird was in the house for the New Music Seminar’s latest NMSessions event, “Where Does Ad-Supported Music Fit in the New Music Industry Ecosystem?” While the biggest story to come out of the session was Lyor Cohen of YouTube’s confirmation that plans are in place to combine YouTube Red and Google Play Music into a single subscription service (see The Verge for more), the opening presentations from Tom Silverman of TommY BoY/New Music Seminar and Russ Crupnick of Music Watch were far more illuminating on the state of the industry.

Silverman began by explaining the concept of ARPU, or average revenue per user. Following the rise of subscription services, the music industry has adopted ARPU as a new standard for gauging music sales, and the resulting figures paint a clear picture of the industry as a whole. To wit, subscription-based services dominate when it comes to ARPU, with SiriusXM bringing in $164.50 per user and Pandora’s subscription service bringing in $56.80. The numbers then drop off precipitously once you get to ad-supported services like YouTube ($16.60 per user) and Pandora’s ad-supported tier ($14.40). Meanwhile, terrestrial radio maintains a healthy ARPU of $65.40, though its’s less than half that of its subscription-based sister SiriusXM.

Terrestrial radio also does not provide any revenue to the music industry due to laws that exempt it from paying royalties for the use of master recordings. On the other hand, subscription services brought in an ARPU of $68.10 for the industry, nearly triple that of digital sales (next in line at $25.60), while ad-supported streaming came in dead last with an ARPU of $4.10. All in all, it seems clear that subscriptions are the future of music.

Crupnick then took a moment to explain the reason why CDs still account for 8% of all weekly time spent listening to music — cars. Of those surveyed in Q1 2017, 66% said they listened to music most often while driving, and the average car is over a decade old. Since these vehicles are set up to accommodate the music formats of their era, it’s simply easier to listen to CDs or the radio rather than bending over backwards trying to get a streaming service to work. Furthermore, Crupnick found that those who use primarily free streaming services are more likely to have an older car, and they spend only 25% of their in-car listening time with streaming. Compare that to those who use primarily paid streaming services, who often have newer cars, account for 50% more music hours, and spend 48% of their in-car listening time with streaming. The trend seems to indicate that once cars created in the modern era become the new average, streaming could conquer this last bastion of old-school listenership.

Finally, while Crupnick stated that “If I hear another thing about Alexa, I’m just gonna hang myself,” he did acquiesce to the audience’s wishes and share some info about smart speakers and voice-activated music. Music streaming is clearly the top activity on these devices, with 67% of respondents saying they used smart speakers for this purpose. According to Crupnick, those that do often discover more new artists, listen to more playlists, and spend more overall time with music, all positive signs for the future. Ole Obermann of Warner Music then brought things full circle during the event’s panel discussion, saying he is most intrigued by voice-activated audio’s potential impact on in-car listening.

We left the event thrilled to have been part of such a high-level discussion of the industry and its future. Keep an eye on the New Music Seminar homepage for updates on upcoming NMSessions, and if something strikes your fancy, we highly recommend you sign up!

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