The Future of Mobile

Ad Revenues for Music Streaming Services Will Exceed $1bn by 2017

Tim Maytom

Spotify app androidRevenues generated through ad-based music streaming is likely to exceed $1bn (£642m) by 2017, up from $782m in 2015, despite the declining number of services that offer free or 'freemium' streaming.

According to Juniper Research, many key players are opting to exclude full-features freemium services, with offerings often restricted to basic radio-style features, as with Apple Music and Amazon Prime Music.

Even Spotify, long the leader of the freemium model, has reportedly been considering stripping back the number of services offered to free, ad-receiving users and placing even more focus on signing up users to a subscription-based model.

Despite these trends, ad revenues are increasing as more and more people sign up for free streaming services. However, catalysed by the entrance of Apple Music, this level of ad-supported user will more than ever be considered a funnel for driving consumers to subscribe.

"With convenience, accessibility and curation having become the defining elements of the music landscape, the potential of the streaming industry will revolve around the levels of which providers can convert free customers to paying customers," said Joe Crabtree, author of the research.

Streaming has also caused the download market to reach a critical point. Long the pioneer of the digital transformation in how content was consumer, the music download market experienced its first decline in 2014, and is set to continue to drop as more customers turn to streaming services.

In the short term, the rise in streaming services provides mobile marketers with an engaging new channel to reach consumers through, but in the long term brands will have to work with streaming providers to find new ways to get their message to consumers, as more and more adopt ad-free subscriptions.