Spotify and music listening 10 years from now

July marks ten years since Spotify’s US launch. Although the tendency among some is to consider this ‘year zero’ for streaming (thus ignoring everything that had happened in prior years both within and outside of the US) it does present a useful opportunity to reflect on what the next decade might hold for Spotify. 

Rather than focus on the business outlook, I am going to explore how Spotify and other streaming services, could change the way in which music is consumed ten years from now. But first, three quick future business scenarios for Spotify:

  1. It continues to be the global leader but with reduced market share due to the rise of regional competitors in emerging markets
  2. It loses market momentum, stock price tumbles and is acquired by another entity 
  3. It morphs into a true multi-sided entertainment and creation platform, doing for entertainment what Amazon now does for retail but with more tools and services

So, on to the future of music consumption.

To map the future, you need to know the past. These are (some of) the key ways streaming has transformed how we engage with music:

  • We listen to a larger number of artists but spend less time with individual artists
  • We listen to tracks and playlists more, and albums less
  • Music is programmed (by ourselves and by streaming services) to act as a soundtrack for our daily lives and routines
  • Genre divisions are becoming less meaningful
  • Artist brands are becoming less visible
  • Music fandom is becoming less pronounced

Music is more like the soundtrack to daytime TV than blockbuster movies

In 2015 Spotify’s Daniel Ek said that he wanted Spotify to ‘be the soundtrack of your life’. Undoubtedly, Spotify and other streaming services are achieving that but the utopian vision is more prosaic in practice. Less ‘that was the best day of the summer’ and more ‘put on some tunes while I cook’. It is a soundtrack, but less the soundtrack to a blockbuster movie and instead more like the soundtrack to daytime TV. Music has become sonic wallpaper that is a constant backdrop to our daily mundanity. (Though the pandemic, the climate crisis and stagnant labour markets can make even the mundane look aspirational for many).

Like it or loathe it, this sound tracking dynamic is likely to play a key role in what the future of music consumption looks like. But it is not all sonic dystopias; personalisation, algorithms, user data and programming also have the potential to reinvigorate music passion. Here are two key ways in which Spotify and other streaming services could transform music listening ten years from now:

  • Dynamic and biometric personalisation: The current recommendation arms race works from a comparatively small dataset, focused on users’ music preferences and behaviour. The next battle front will be the listener’s entire life. Any individual user can appear to be a dramatically different music listener depending on the context of their listening. Even the same time of day can have very different permutations; for example, looking for chilled sounds at 7pm after a manic Monday but banging beats at the same time on a Friday. If streaming services could harvest data from personal devices and the social graph, elements such as heart rate, location, activity, facial expression and sentiment could all be used to create a music feed that dynamically responds to the individual. Instead of having to actively seek out a workout or study playlist, the music feed would automatically tweak the music to the listener’s behaviour and habits. The faster the run, the more up-tempo the music; the later in the evening, the more chilled (unless it’s 9pm and you’re getting ready for a big night out). Selecting mood and activity-based playlists will look incredibly mechanical in this world. Think of it like the change from manual gear change to automatic in cars.

  • Music catalogue reimagined: Just as activity and mood-based listening will become more push and less pull, so can music catalogue. Traditionally catalogue consumption is driven by a combination of user behaviour (‘I haven’t listened to that band in a while’) and marketing pushes by labels, publishers and now music funds’ ‘song management’. But it needn’t be that way anymore. Over the years, streaming services have collected a wealth of user data. Just as Facebook introduced memories for users’ posts, so streaming services could deliver music memories, showing users what they were listening to on this day ten years ago, or what the soundtrack to your summer was way back in 2021. Clearly Spotify is already making steps in this direction with Wrapped but this would be much bigger step, routinely delivering nostalgia nuggets throughout a day, week, month, year. In many respects the result would be a democratisation of catalogue consumption. It wouldn’t simply be the rights holders with the biggest marketing budgets and smartest campaigns on TikTok (or whatever has replaced TikTok ten years from now) that get the biggest catalogue bumps. Instead, catalogue consumption across the board would boom. This could make the current 66% of all listening look like small fry in comparison. What that means for frontline releases finding space is another question entirely.

These are of course just two well-educated guesses, and their weaknesses are that they are based on what has happened so far rather than what currently unforeseen consumption shifts may happen in the future. Indeed, streaming itself may have been surpassed ten years from now. But tomorrow’s technology often looks more like today than it does tomorrow. Henry Ford’s model T Ford looked more like a horse and trap than it did the swept wing aerodynamics of 1950s cars. Change takes time. But ten years is a long time in the world of technology, so even if neither of the above come to pass, you can be sure that music listening is going to look a whole lot different than it does now.


Creator tools: The music industry’s new top of funnel

For most of 2020, MIDiA has been working on a major piece of work around the fast-growing creator tools space. The themes we had already started working on became rocket propelled with the onset of the pandemic, with an unprecedented volume of artists starting to engage with music production tools, services and hardware. Even before COVID-19, the creator tools space was set to transform the entire music business; now that future has become the present. This landmark report ‘Creator Tools – The Music Industry’s New Top of Funnel’ is immediately available to MIDiA Research clients here (more details of the report can be found at the bottom of this post).

Music production used to be a siloed segment of the music industry that revolved around studios, hardware and packaged software – at best a cost centre for labels. Now that is all changing. A new wave of creator tools companies are meeting the needs of a new generation of artists with innovative and intuitive music production solutions. Adding to an already vibrant marketplace, this new breed of production tools and services, often subscription-based, are reinventing the creative process and will reshape the long-term view of what a music company is. 

This is set to be the most dramatic product strategy shift the music industry has experienced in decades catalysed by the COVID-19 pandemic. 68% of independent artists reported making more music and 36% doing more online collaborations during lockdowns.

There are 14.6 million digital music creators globally, of which 4.7 million are self-releasing ‘artists direct’, up 31% from 3.6 million in 2019.

The emergence of a subscription economy

In the same year, music software, sounds and services generated $884 million, with plugins and VSTs the largest single segment at 43%. Building on this ‘COVID bounce’ total revenues will reach $1.86 billion by 2027. Though music software is the most widely-adopted creator tools category among independent artists, sounds and services will be the two largest drivers of future growth. 

Subscriptions models will also be key, with new models, more self-sufficient tools and the rise of SAAS services making the market majority subscription by 2026, with subscription services reaching $870 million by 2027, up 477% from $151 million in 2019. The shift from software sales to SAAS models means these companies are collecting crucial creator data before they even get to the distribution or release stage, giving these companies the ability to identify the likely hits before they even get into streaming services. This is the music industry’s new top of funnel. Meanwhile at the other end of the funnel, Apple (Garage Band, Logic) and Spotify (SoundBetter, Soundtrap) are well placed to push up the funnel, with the foundations of what tomorrow’s record label will be. Sony Music’s move to invest in creation app Tully is the start of what will rapidly become a creator tools arms race. Expect Splice and LANDR to become sought after by both labels and streaming services. 

Creative feedback loops

The new breed of creator tools is also fostering creative feedback loops between other creators and in some cases with audiences—a dynamic MIDiA expects to become a mainstay of the future production landscape as digitally-native Gen Z and younger millennials mature in their production capabilities. The creator tools that build around such creative feedback loops will be those that resonate most with the young generation who will be the creators and fans of tomorrow’s music business. 

Snap’s acquisition of collaboration app Voisey illustrates how this is so much more than just a music tech play. We are on the cusp of a consumer revolution also. Just like TikTok made amateur video making a mainstream consumer activity as Instagram did photography, so this new generation of apps and games are aiming to do the same with music. Warner Music’s Tones and I making a soundpack available for fans to create music with inside Roblox’s Splash is an early indication of how music making is about to go mainstream.

Just as samplers and DAWs transformed music making, so this new approach to production will change the future of how music is made and in turn, how it sounds. Music production product strategy is at a pivot point, where a new breed of user experience-led propositions will rise to prominence. The smart services that have already empowered their users to go from zero to 100 more quickly than ever before, will grow their offerings in line with their user base’s growing capabilities. The business of music has always shaped the culture of music, but perhaps never more so than how the creator tools revolution will reshape the future of what it means to be a fan, an artist and a music company.

If you are not yet a MIDiA client and would like to learn more about how to get access to the ‘Creator Tools – The Music Industry’s New Top of Funnel’ then email [email protected]

Report details

Pages: 48

Figures: 15

Words: 7,500

Vendor profiles: 12

Products tracked: c.2,000

Excel includes:

Music Software, Sounds and Services Revenue

Creator Tools Value Chain

Software Tracker Summary

Software Tracker – Plugins

Software Tracker – VSTs

Software Tracker DAWs

Software Tracker – Rent-to-own

Software Tracker – Platforms

Software Tracker – DJ Tools

Creator Tools Company Directory

Methodology Statement

How YouTube can be a music industry growth driver

In the coming weeks MIDiA will be presenting the third edition of its biannual YouTube music report, State of the YouTube Music Economy 3.0: End of the Beginning. This is a major report that presents the definitive traits of the YouTube music economy, including revenues, royalty payments, streams, subscribers, user behaviour and user demographics. One of the key themes in this report is how the music industry, or at least the Western music industry, is failing to capitalise on the revenue potential of YouTube. Royalty rates play a part, and Europe’s Article 17 will have some role (exactly what is yet to be determined) in changing this. However, music rightsholders can also get more out of YouTube by better utilising the dynamics of the YouTube economy. As subscription growth slows in developed markets, YouTube has the potential to be a major revenue growth driver.

Music does not naturally fit YouTube’s channel template. YouTube’s ‘channels’ are better considered talent and content feeds; they perform the same role as following a creator on TikTok or Instagram, ensuring that the subscriber gets immediate access to all the latest content without having to go looking for it. Most artist channels on YouTube deliver content infrequently and, crucially, only sporadically. YouTube audiences expect more from YouTube channels. This approach implicitly treats YouTube channels as fan clubs rather than the content feeds that they are designed to be. 

Treat channel subscribers like you would friends

It does not need to be this way. In fact, an emerging breed of non-Anglo music channels are finding success by doing things differently. Across the top 10 most subscribed music channels on YouTube, one is Brazilian, two Indian and one Korean. Unlike the Anglo artists that make up the remainder of the top 10, these four channels deliver a frequent, regular flow of content. The contrast between the two approaches to content is clearly visible. The top three non-Anglo channels had uploaded more than one video a day for the first 10 days of October. Of the Anglo artists, however, only Marshmello had uploaded a new video recently, while most of the others had not uploaded in months. Ed Sheeran was the worst culprit, with nine months having passed since his last video, his ‘BRB’ logo notwithstanding. Taking nine-plus months off and then simply expecting the audience to still be there, waiting, is little short of arrogant. YouTube subscriber bases need treating like friends. How would you feel if a good friend went dark for nine months and then got back in touch and asked you for something? A similar dynamic is at play here.

Label-led curation and programming

A unifying factor of these top performing non-Anglo music channels is that they are ‘label’ led rather than artist led. Artist-led YouTube strategy is a natural extension of label marketing strategy but it falls short on YouTube because most artists deliver far too little content. Of course, a label-led approach flies against how music fandom has worked for decades (niche afficionado labels excepted) but a genre or label approach alongside artist channels can be a way of driving subscriber engagement and pushing up ad revenues. Yes, Indian music companies are dramatically different entities to Western labels, but the principles can still be translated – and KondZilla (the second-most subscribed music channel) is Brazilian.

Innovating the format 

Then there is the issue of format innovation. MIDiA has been arguing for years that labels should be considering longer formats to complement the core music videos. One way is stitching together curated collections of tracks with chapter markers between each one to create more video ad inventory opportunities. This is something the non-Anglo channels are already doing. For example, in the 10-day sample period, Zee Music Company posted an extended video the ‘Best of Amitabh Bachchan’ that featured ten separate music videos spliced together with chapter breaks.

Despite being so well established, YouTube is growing fast in terms of revenue, audience and views. Yet, music monetization is not growing at the same (watch out for the report for exactly what this divergence looks like). Now is the time to start experimenting with new formats and content strategy. Done right, YouTube monetization can grow strongly for music rightsholders, regardless of what happens with Article 17.

How YouTube can be a music industry growth driver

In the coming weeks MIDiA will be presenting the third edition of its biannual YouTube music report, State of the YouTube Music Economy 3.0: End of the Beginning. This is a major report that presents the definitive traits of the YouTube music economy, including revenues, royalty payments, streams, subscribers, user behaviour and user demographics. One of the key themes in this report is how the music industry, or at least the Western music industry, is failing to capitalise on the revenue potential of YouTube. Royalty rates play a part, and Europe’s Article 17 will have some role (exactly what is yet to be determined) in changing this. However, music rightsholders can also get more out of YouTube by better utilising the dynamics of the YouTube economy. As subscription growth slows in developed markets, YouTube has the potential to be a major revenue growth driver.

Music does not naturally fit YouTube’s channel template. YouTube’s ‘channels’ are better considered talent and content feeds; they perform the same role as following a creator on TikTok or Instagram, ensuring that the subscriber gets immediate access to all the latest content without having to go looking for it. Most artist channels on YouTube deliver content infrequently and, crucially, only sporadically. YouTube audiences expect more from YouTube channels. This approach implicitly treats YouTube channels as fan clubs rather than the content feeds that they are designed to be. 

Treat channel subscribers like you would friends

It does not need to be this way. In fact, an emerging breed of non-Anglo music channels are finding success by doing things differently. Across the top 10 most subscribed music channels on YouTube, one is Brazilian, two Indian and one Korean. Unlike the Anglo artists that make up the remainder of the top 10, these four channels deliver a frequent, regular flow of content. The contrast between the two approaches to content is clearly visible. The top three non-Anglo channels had uploaded more than one video a day for the first 10 days of October. Of the Anglo artists, however, only Marshmello had uploaded a new video recently, while most of the others had not uploaded in months. Ed Sheeran was the worst culprit, with nine months having passed since his last video, his ‘BRB’ logo notwithstanding. Taking nine-plus months off and then simply expecting the audience to still be there, waiting, is little short of arrogant. YouTube subscriber bases need treating like friends. How would you feel if a good friend went dark for nine months and then got back in touch and asked you for something? A similar dynamic is at play here.

Label-led curation and programming

A unifying factor of these top performing non-Anglo music channels is that they are ‘label’ led rather than artist led. Artist-led YouTube strategy is a natural extension of label marketing strategy but it falls short on YouTube because most artists deliver far too little content. Of course, a label-led approach flies against how music fandom has worked for decades (niche afficionado labels excepted) but a genre or label approach alongside artist channels can be a way of driving subscriber engagement and pushing up ad revenues. Yes, Indian music companies are dramatically different entities to Western labels, but the principles can still be translated – and KondZilla (the second-most subscribed music channel) is Brazilian.

Innovating the format 

Then there is the issue of format innovation. MIDiA has been arguing for years that labels should be considering longer formats to complement the core music videos. One way is stitching together curated collections of tracks with chapter markers between each one to create more video ad inventory opportunities. This is something the non-Anglo channels are already doing. For example, in the 10-day sample period, Zee Music Company posted an extended video the ‘Best of Amitabh Bachchan’ that featured ten separate music videos spliced together with chapter breaks.

Despite being so well established, YouTube is growing fast in terms of revenue, audience and views. Yet, music monetization is not growing at the same (watch out for the report for exactly what this divergence looks like). Now is the time to start experimenting with new formats and content strategy. Done right, YouTube monetization can grow strongly for music rightsholders, regardless of what happens with Article 17.

How the DNA of a hit has changed over 20 years

Recorded music has always evolved to fit the dominant format of the era, from three-minute songs to fit on 7-inch vinyl, through eight-song albums to fit on LPs, through to 16+ song albums to fill CDs. Format-driven change is nothing new, but streaming’s impact on the making of music itself is arguably more revolutionary than that of previous formats because it is both the consumption and discovery format rolled into one.

In the heyday of the album, the focus would be both on what makes a great album and what tracks would work on radio, and later MTV. Now all the considerations are rolled into the song itself, the central currency of the streaming era.

20 years of dna of hits

To illustrate just how significant this change is, we have taken a snapshot of the Billboard Top 10, now and 20 years ago. The caveats here are that this is just that: a snapshot in time, rather than a comprehensive data analysis – and it is a view of just the very top of the pile, the megahits of the day. Nonetheless, it provides some clear illustration of how the DNA of a hit has changed over the course of 20 years:

  • Shorter, snappier songs: The average length of the top 10 hits has fallen by 16% to 221.5 seconds (three minutes and 42 seconds, down from four minutes and 22 seconds). Meanwhile, intros have fallen from 13.1 seconds to 7.4 seconds. In the streaming economy where release schedules are weaponised with increased volume and velocity of releases, there is often just one chance to catch the attention of the listener. With ever fewer younger music fans listening to radio, there is little opportunity for the listener to hear the track again if they skip it in their streaming playlist.
  • Hip Hop’s apogee: The July 2000 top 10 was evenly split between pop, rock and RnB, with the latter two having the edge. In today’s top 10 Hip Hop reigns supreme, accounting for six of the top 10 tracks. Starting with the rise of EDM and now continued with Hip Hop, the hits business has become more focused, doubling down on one leading genre and in turn making it even more dominant.
  • The industrialisation of songwriting: As the buy side of the song equation, record labels are reshaping songwriting by pulling together teams of songwriters to create genetically modified hits. The more top-class songwriters, so the logic goes, the greater the chance of a hit. The average number of songwriters increased from 2.4 per track in 2000 to 4 in 2020. The upside for songwriters is more work, the downside is having to share already small streaming royalties with a larger number of people. Interestingly, the average age of songwriters increased from just under 27 to just over 31. It points to longer careers for songwriters but it does beg the question whether this means songwriters’ life experiences are that little bit more distant from those of young music fans.
  • The rise of the featured artist: Adding super star collaborators onto tracks has become a go-to strategy for streaming-era hits. In the July 2000 top 10, none of the tracks had a featured artist, by July 2020 that share had jumped to 60%.

The dominant theme underpinning these changes in the DNA of hits is reducing risk. More songwriters, more collaborations, shorter songs, shorter intros, fewer genres all point to honing a formula, following a blueprint for success. This evolution will continue to gather pace until the next format shift rewrites the rules. Until then, record labels, songwriters and artists need to ask themselves whether they are striking the right balance between business and creativity. If they are not getting it right, then the inevitability is that (at the hit end of the market) pop will eat itself. And if it does, expect an audience shift away from the increasingly homogenised head, down to the more diverse tail.