As music streaming reaches maturity, subscriber number growth has slowed down. This has forced platforms and major labels to rethink revenue generation strategies.
For example, labels now focus on attracting new users to extract more value from existing ones. They’re doing this via innovation to ensure long-term sustainability.
Key tactics—such as scaling back family subscription benefits and introducing "superfan" apps—have become the main tactics.
These tactics show a broader industry trend rooted in the principle of sustaining innovation, a concept widely discussed in MIDiA Research’s analysis of the music business.
In this article, we’ll break down the impact of the streaming plateau on the music industry and what to expect in the coming years:
The Growth Plateau in Streaming
In the past decade, digital streaming completely transformed the music industry. It has also driven global revenues and re-established a thriving music economy.
However, as adoption rates peak—particularly in developed markets—the growth has stilted.
The Recording Industry Association of America (RIAA) reported that U.S. streaming growth was only 2.7% in the first half of 2024, with 2.5 million new subscribers added during this period. This marks a significant decrease from 6.6 million in the same period in 2023.
For platforms like Spotify, Apple Music, and Amazon Music, the challenge has shifted from acquisition to retention and maximizing revenue per user.
Strategies like offering family subscriptions to entice groups of users at discounted rates—while successful initially—are increasingly being reconsidered.
However, platforms are now tightening restrictions on these subscriptions. They are using measures like geolocation checks to curb abuse and encourage individual sign-ups.
Superfan Apps and Niche Engagement
Another emerging trend is the development of apps tailored to superfans—highly engaged listeners willing to pay a premium for exclusive access.
These apps cater to niche audiences by offering curated content—such as live streams, behind-the-scenes footage, and exclusive merchandise.
In addition, apps like BTS's Weverse or the genre-specific Qwest TV for jazz illustrate how targeted experiences can deepen fan engagement.
For superfans, the value proposition is clear: a closer connection to their favorite artists and communities, with benefits beyond the generic offerings of mainstream platforms.
Sustaining Innovation in the Music Industry
The concept of sustaining innovation plays a crucial role in shaping strategies for the music industry.
Unlike disruptive innovation, which transforms entire markets, sustaining innovation focuses on incremental improvements to existing products and services. The goal is to enhance value for current customers while maintaining relevance and profitability.
As the streaming landscape matures, the industry must adapt to slower growth. MIDiA Research, a key voice in the music business, highlights the importance of optimizing the system rather than overhauling it. This can include:
- Refining pricing models
- Developing hyper-targeted features
- Creating superfans who contribute significantly more than the average listener.
A clear example of sustaining innovation is the introduction of tiered pricing. Higher-paying subscribers could enjoy added perks like better audio quality, ad-free streaming, or exclusive content.
These upgrades provide more value to dedicated listeners while supporting long-term profitability for the platform.
Challenges and Opportunities
Opportunities
- Higher Revenue Potential
Superfans are willing to pay more for exclusive content and experiences, creating opportunities for platforms to unlock significant revenue streams. - Stronger Artist Loyalty
Providing exclusive tools for artists to connect with superfans helps build long-term loyalty, ensuring creators continue to partner with the platform. - Increased Engagement Rates
Superfans tend to be more engaged, participating actively in events, purchasing merchandise, and spending time on the platform, boosting overall user activity metrics. - Brand Differentiation
Catering to superfans allows platforms to stand out in a crowded market by establishing a unique value proposition that attracts dedicated users. - Opportunities for Innovation
Developing features like direct artist-fan communication and personalized experiences encourages innovation, which enhances the platform's appeal and usability.
Challenges
- Exclusion of Casual Users
Focusing on superfans may alienate casual listeners by reducing the platform’s overall reach and risking a loss of potential subscribers. - Scalability Issues
Superfans represent a smaller audience by limiting the growth potential compared to strategies aimed at broader user bases. - High Content Creation Costs
Producing high-quality exclusive content for superfans often requires substantial investment, which may not be sustainable for all platforms. - Market Saturation Risk
As more platforms target superfans, the competition for this niche audience intensifies, making it harder to retain users and differentiate offerings. - Balancing Broad Appeal and Niche Focus
Striking the right balance between catering to superfans and maintaining services for casual users is challenging, which risks dissatisfaction from both groups.
Conclusion
The era of unlimited streaming growth may be over, but the music industry is finding new ways to innovate and sustain its success. As such, streaming platforms are embracing strategies that align with sustaining innovation.
As these approaches evolve, they will likely redefine how audiences interact with music by offering more personalized and immersive experiences.
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