Revenues from audio streaming subscriptions soon overtake radio advertising market
In Germany, subscription revenue from Spotify and other streaming services is expected to exceed the net advertising revenue of the German radio market for the first time in 2020. This is the forecast made by Goldmedia in a study.
Streaming is gaining an increasing share of the overall audio market in Germany and is about to overtake sales in the traditional radio advertising market. According to forecasts by the consulting and research group Goldmedia, subscription revenues from audio streaming services such as Spotify, Apple Music, Amazon Music, Deezer & Co. will be higher than the net advertising revenues of all German radio stations by 2020.
In 2017, net advertising revenue in the radio market amounted to EUR 784 million (according to ZAW) and was therefore almost a third higher than the revenue generated with streaming subscriptions (EUR 549 million, according to BVMI). By the end of 2018, however, Spotify & Co. will continue to catch up and, at EUR 656 million, will already generate more than 80 percent of the revenues of the radio net advertising market. The "tipping point" will then be reached at the beginning of 2020: streaming revenues will overtake the traditional radio advertising market.
The fact that audio streaming advertising revenues are not even included in this analysis shows the scale of the disruptive changes in the audio market.
Digital turnaround in audio usage
"Although traditional radio and subscription streaming services are separate markets and feed on different sources of revenue, they often compete for the same commodity - the attention of listeners," emphasizes Goldmedia Managing Director Klaus Goldhammer. "Radio offers free music and moderation, local information and the "best mix of the greatest hits". Audio streaming services have millions of tracks on demand, offer their own playlists, personalized recommendations of new tracks, more and more podcasts and spoken word contributions and - with a subscription - are also ad-free."
Apparently, this is why more and more users are opting for a subscription. Younger people in particular are ordering a music streaming service for a fee.
Forecast 2022: Radio market growing moderately, streaming rapidly
The Goldmedia forecast assumes that sales in the German radio market will continue to grow moderately over the next few years - assuming the economic situation remains stable: by the end of 2022 by just under EUR 10 million annually to around EUR 833 million. In contrast, subscription revenues from streaming services will continue to grow rapidly and reach a volume of EUR 1.33 billion by the end of 2022 (see chart).
The growing popularity of music streaming services is also demonstrated by the current ARD/ZDF online study. According to the survey, 27% of all adults aged 14 and over and as many as 69% of 14 to 29-year-olds use music streaming services at least once a week. The best-known streaming providers with premium subscription offers in Germany are Amazon Music, Apple Music, Deezer, Google Play Music, Napster and Soundcloud, Spotify and Tidal.
Methodology
The forecasts are the result of a trend extrapolation carried out by Goldmedia on the basis of historical data from the Bundesverband Musikindustrie e.V. (BVMI) on the development of digital music sales and on the basis of industry data from the Zentralverband der deutschen Werbewirtschaft e.V. (ZAW) on the development of net advertising sales in radio in Germany. Goldmedia has been working intensively on the development of the audio market for many years and regularly publishes studies and forecasts.
