{"id":102452,"date":"2024-12-31T13:36:57","date_gmt":"2024-12-31T13:36:57","guid":{"rendered":"https:\/\/routenote.com\/blog\/?p=102452"},"modified":"2024-12-31T13:37:00","modified_gmt":"2024-12-31T13:37:00","slug":"ad-supported-video-streaming-on-the-rise-what-could-this-mean-for-the-music-industry","status":"publish","type":"post","link":"https:\/\/routenote.com\/blog\/ad-supported-video-streaming-on-the-rise-what-could-this-mean-for-the-music-industry\/","title":{"rendered":"Ad-supported video streaming on the rise: What could this mean for the music industry?"},"content":{"rendered":"\n

Image credit: Jakub \u017berdzicki<\/a><\/em><\/p>\n\n\n\n

Ad-supported video streaming subscriptions are booming, could music streaming see a similar shift? Here\u2019s how it might affect artists and their revenue.\n<\/span><\/h2>\n\n\n\n

Ad-supported video streaming: A growing trend<\/h3>\n\n\n\n

Ad-supported video-on-demand (VOD) streaming has continued to surge in 2024. According to Antenna\u2019s Q3 report<\/a>, 43% of all subscriptions to services offering ad-free tiers were ad-supported in the US. The growth is significant as ad-supported tiers grew by nearly 50%, while ad-free subscriptions dropped by 5%.<\/p>\n\n\n\n

Netflix\u2019s ad-supported subscriptions accounted for 44% of new subscribers since Q3 in 2023, with this figure remaining high for both HBO Max (39%) and Disney+ (62%). Across the board, ad-supported VOD subscribers increased by 11% over the past year and 15% since 2022. Between Q2 and Q3 in 2024 alone, the proportion of ad-supported subscribers jumped from 39% to 43%.<\/p>\n\n\n\n

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Image credit: Antenna<\/a><\/em><\/figcaption><\/figure><\/div>\n\n\n\n

While causes of this shift are hard to pinpoint, likely factors are<\/a>: rising subscription prices, tightened consumer wallets due to the cost of living crisis, and Netflix\u2019s crackdown on account sharing. Increased TV piracy<\/a> and competition from short-form video content are likely to have also played a role in driving consumers away from paid subscriptions.<\/p>\n\n\n\n

Could this trend influence music streaming?<\/h3>\n\n\n\n

The music streaming market has also shown signs of change, with slowing subscription growth among major platforms. Sony Music\u2019s CEO has even called for charges<\/a> on ad-supported listening in well-established markets to address the slower premium subscriber growth, and in order to reach their longer-term subscription revenue targets. Notably, one report<\/a> suggests Spotify<\/a> has experienced a decline in premium subscribers in the US, the world\u2019s largest music market.<\/p>\n\n\n\n

However, Spotify\u2019s ad-supported tier is thriving. By Q3 2024, Spotify\u2019s ad-supported monthly active users (MAUs) hit a record 402 million<\/a>, an 11% increase from the previous year. While this maintains Spotify\u2019s consistent growth, it could signify current challenges to monetise its ad-supported users. Highlighting this, Spotify\u2019s premium average revenue per user (ARPU) has been declining since 2017, sitting at \u20ac4.39 in 2023.<\/p>\n\n\n\n

Why this matters for artists<\/h3>\n\n\n\n

Ad-supported streaming\u2019s growth impacts not only streaming platforms, but also the revenue that artists earn. While estimating streaming revenues is no easy feat<\/a>, ad-supported listening typically generates less revenue per stream compared to premium subscriptions. For artists, this means fewer royalties if more listeners are opting for ad-supported tiers.<\/p>\n\n\n\n

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How much music streaming services pay per stream in 2023<\/a><\/blockquote>