Juniper: Spotify and Pandora under threat from Apple and Google in slow digital music sector

Digital music revenues are forecast to slow down over the coming five years due to the strength of the streaming model and the continued presence of piracy dogging the market.

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Juniper Research figures showed that revenue will increase from a projected $12.3 billion [£7.4 billion] in 2014 to just $13.9 billion [£8.36 billion] in 2019 with piracy still causing “major revenue leakage” in emerging markets across the world.

The report, which is entitled “Digital Music: Streaming Download & Legacy Services 2014-2019”, found that the strength of the streaming sector will continue to be offset by declining revenues from legacy services such as ringback tones and ringtones.

As a whole the market will be characterised by customers moving to cloud-based services though the legions of pureplay music providers, such as Spotify and Pandora, shouldn’t sit back in relax. Juniper expects a stiff test to materialise in the shape of personalised services from over-the-top [OTT] players, such as Apple and Google, and pureplay providers must adapt to combat this threat.

Piracy, meanwhile, still accounts for “major revenue leakage” in emerging markets such as China where a tiny percentage of content is acquired legally. Even with this being the case, there has been success in fighting piracy in some emerging markets, Juniper pointing to the example of Singapore where a bill allows the blocking of sites hosting pirated content.

The main challenges for streaming music companies will be expanding the subscriber base and increasing the ease of discovery to make it simpler for customers to find the content they want.

Unsurprisingly smartphones are expected to provide the highest level of growth in the digital music market yet the report points out that revenues are set to remain “robust” on PC/laptop platforms over the same period.

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Emerging markets will strengthen in terms of consumption due to a rise in disposable income levels and streaming companies choosing to expand into these regions.