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Why streaming services play a vital role in building a new music economy

When The Beatles arrived on Deezer and all other major streaming services at the end of 2015, it was a watershed moment for the music industry and for streaming - as it marked the coming-of-age of music consumption. The Beatles finally recognised the future of music is streaming, and the important role streaming services play.

A few weeks ago, the recent British Phonographic Industry (BPI) released data that showed streams have increased significantly and that the UK market for recorded music grew four per cent to £1.1bn. Streaming has not only become more mainstream around the world, but its rise has shown that it may actually help bolster the staggering music industry.

In the UK alone, major labels expect sales in the coming year to represent at least 40 per cent of their revenue. This would put the UK at the forefront of one of the largest markets in Europe for the adoption of streaming as a means of listening to music. This is also good news for advertisers as new users who sign up for a music streaming service, typically try out a “freemium” model that includes ads.

According to our data, UK listeners typically spend on average 13 hours per month streaming music which gives advertisers greater chance for visibility to engage with a connected audience. And advertisement isn’t limited to just freemium users, as we’ve done incredible partnerships working with Telco networks, mobile providers and TV networks to reach a greater population of audio listeners and music enthusiasts.

What’s interesting about the BPI data is the steady popularity of UK artists around the world. The BPI reports that seven out of the top 10 selling albums were British acts.

Why does this all matter?

For one, the global streaming data is indicative of how our listening habits and behaviours have changed as consumers. What used to be the gold standard for the number of physical sales has shifted now with the music industry recognising that consumers are spending their time online. That’s why when the Beatles released their entire catalogue, it mattered for the industry and the public, which songs were streamed the most.

The rise of streaming is at a curious intersection with the sale of CD and vinyl. As the BPI research has shown, similar to what we’ve seen with the arrival of over the top (OTT) and video on demand (VOD) in the film and TV world, music is in many ways not so different, at least when it comes to CDs as the BPI shows sales fell by 4.4 per cent.

This drop is reflective of how our listening habits continue to evolve, especially as a mobile first generation. There’s a certain limitation when it comes to CDs that users are aware of that can’t compete with streaming.

What is perhaps the most surprising from the BPI study is the renewed popularity in vinyl. BPI data shows that vinyl sales have increased by 56 per cent. It may seem like contradictory results alongside the rise of streaming, but it’s not as strange as it may seem. As BPI chief Geoff Taylor proclaimed, “millions of fans continue to build treasured collections.” And that’s the appeal of vinyl and even to some extent, CDs.

Music is a personal choice that suits our mood, captures a certain moment in our time, or simply provides the best distraction that we need. We, as consumers and music fans may form a personal attachment to physical formats like CDs and vinyl, but are also willing to adopt new technology and turn to new models like streaming to meet our music needs that match our ever-changing lifestyle.

As our usage of discovery features on streaming platforms grows alongside our purchasing habits of our very favourite vinyl, it is clear to me they are both linked, serving important and different needs, and like the Beatles, “I Feel Fine” about that.

Christian Harris is managing director UK & Ireland at Deezer

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Christian Harris

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