Pando

The music industry is flatlining, but music apps are bigger than ever

By David Holmes , written on October 29, 2014

From The News Desk

Between 1999 and 2009, US music industry revenues were cut in half, thanks to the demise of overpriced CDs, the advent of cheap, song-by-song downloads, and piracy. Since that time, the bleeding has stopped, but the industry has yet to bounce back to its heady late-90s heights.

But that doesn't mean people aren't legally listening to music. According to a new report from App Annie, music listening apps like Pandora and Spotify make up more than 70 percent of the top ten apps on iOS and Google Play. That's both in terms of revenue and number of downloads.

This comes just a month after a report from Localytics revealed that time spent in music apps is up 79 percent over the past year. What's more, users spend an average of 8.9 minutes per session and launch music apps 16.3 times per month. That amounts to 145 minutes per month, which outpaces all other categories -- even social networking which clocks in at 63 minutes per month.

So which music apps come out on top? Unsurprisingly, Pandora and Spotify took the top two spots in both downloads and revenue. SoundCloud-related apps take the third and fifth spots in terms of downloads, while IHeartRadio's free app clocks in at number four. Meanwhile, Apple's Beats Music, while only ranked ninth in downloads, came in third in revenue -- which makes sense considering Beats only offers a paid version.

Rdio, on the other hand, while a favorite of audiophiles and design junkies, didn't even crack the top ten in downloads, and only hit number seven in terms of revenue. Rdio uses a freemium model wherein its radio feature is free, but on-demand Spotify-style listening costs $9.99 a month. Despite its hipster cachet and its comparatively long history in the market, it hasn't been able, in either category, to match Beats Music -- a service that was so in need of a facelift that it's about to undergo a total rebranding. Granted, Rdio did just completely revamp its app, and perhaps needs time to acquire users. Nevertheless, this report does not reflect well on the service.

Despite the flatlining music industry and the precipitous fall of digital download revenue, one of the biggest areas where music streaming services have made huge monetary gains is in mobile revenue, doubling between the first quarters of 2013 and 2014 to $86.7 million. This past quarter, mobile revenue for the industry surpassed $100 million for the first time ever. Furthermore, mobile revenue growth will only accelerate as 4G availability spreads around the world.

Many in the music platform space agree that the mobile and global expansion of streaming services will hold the key to meaningful revenue growth for the entire industry, and this report bears that out. It also shows that, despite Apple basically abandoning the brand, Beats Music was able to beat out everyone but Spotify and Pandora in terms of revenue, proving that whatever streaming service Apple eventually launches will be a serious contender. But more than anything else, it shows consumers love music more than ever -- now let's just figure out a way to get these creators a fair shake.

[illustration by Brad Jonas]