This past month, digital marketing research firm eMarketer issued its new forecast on music streaming activities in the United States. What it shows is that Pandora, which has dominated the market ever since the category was created in 2000, will likely fall to the #2 position, overtaken by Spotify.
Based on a calculation of internet users of any age who listen to music streaming on any device at least once per month, Pandora jas occupied a narrow band of between 72 million and 77 million listeners since 2015.
During that same period, Spotify users have increased dramatically, from ~24 million to ~65 million Americans. And eMarketer projects that Spotify will overtake Pandora by 2021. The chart below shows the trajectory:
Actually, the trend had been building since even before 2015. In 2012, Pandora had ~67 million users compared to Spotify’s paltry ~5 million. But Pandora has been shedding users in recent years. As the chart above illustrates, by 2023 Pandora will have lost nearly 10% of its users since 2014.
To be sure, Pandora still holds a robust ~35% of audio listener penetration in the United States as of this year. But Spotify is nipping at its heels with a ~32% share. Amazon Music (~18%) and Apple Music (~16%) are further back, but with still-significant chunks of the marketing. (It should be noted that there is overlap, as some listeners may engage with more than one music streaming service during the month.)
What has caused the change in fortunes? Christ Bendtsen, an eMarketer forecasting analyst, says this:
“Pandora lost users last year because of tough competition from other services attracting people to switch. Apple Music has been successful in converting its iPhone user base. Amazon Music has grown with smart speaker adoption, and Spotify’s partnerships have expanded its presence across all devices.”
Speaking in particular about Spotify’s rapid surge, Bendtsen notes:
“Spotify’s initial growth was driven by its unique combination of music discovery, playlists and on-demand features. But now that all music streaming services [possess] the same features, Spotify’s future success will rely on partnerships with other companies. It has teamed up with Samsung, Amazon, Google and Hulu to be on all devices and provide bundled offerings. We expect more partnerships to come, leveraging multiple brands, devices and services to drive user growth.”
As for Apple Music, there’s a reason it lags behind other music streaming services in the rankings. That service operates on a subscription-only model and doesn’t offer any form of advertiser-supported free usage. Forecasters expect it to remain in the #4 position with its “premium-only” business model.
More information about the eMarketer music streaming forecast is available here.
What are your own music streaming listening habits? Have they changed in recent years, and if so, how and why? Please share your thoughts with other readers.