The International Music Streaming Market has been valued at $29,563 billion in 2021 and is expected to reach $100,734 million in 2030, with a CAGR of 14.6% from 2022 to 2030. The market for music streaming has potential for growth as a result of the emergence of OTT services or platforms, the popularity of audio streaming applications, and the expansion of digitalization.

Are you planning to buy Spotify stock? The market is changing as cloud computing and smartphones are being adopted more widely. The market will continue to expand due to the rising popularity of both the video streaming and music streaming content categories. 

A combination of the existence of multiple subscription alternatives and the rising number of service operators is positively influencing market growth. Additionally, Amazon Music,  Apple Music, and Spotify are three of the most popular music streaming services on the market. The US music stocks have seen an annual increase in revenue. It  has expanded on average at a rate of 43.9% since 2014, and it now serves as the main source of income for the majority of music labels.

Music streaming market share

Around a third among all music streaming users globally use Spotify, with Apple Music coming in second. Despite Apple Music and Spotify not being prohibited in China, Tencent and Netease remain the two most important platforms there.

Music streaming subscribers by app

Peer-to-peer file sharing is where the concept of music streaming first emerged. While they only seemed to last a few years before being shut down for unauthorized utilization of copyright material, Napster, Limewire, and BitTorrent were on the forefront of altering how people thought about music. This pushed the industry in the direction of new forms of accessibility, even though they were only around for a short time.The success of Apple‘s iTunes store and iPod, which were introduced in 2001, was considered as a potential improvement over Napster, something that had been forced shut down the previous year; despite this, the web was still flooded with sites that allowed users to download music for free.

By the middle of the 2000s, Spotify and Pandora had both been established and were attempting to alter the price of music. Instead of paying for the music, Spotify and Pandora would give the record company a significantly lesser sum for each stream. Before Apple introduced its own platform, Spotify had more than 50 million subscribers as one of the earliest music streaming services. 

Despite market share having decreased as other services have launched, it has maintained its position. In the US, music streaming has become the most popular format, accounting for 83% of all revenue, thus making the US music stocks attractive. In spite of lower percentages in Asia and Europe, streaming is becoming more and more popular as a key method of music consumption worldwide.

Music Streaming ARPU and Penetration rate to improve – Makes a case for investing in Apple, Amazon and Spotify

The extent to which technical development has impacted the (electronic) music market is astounding when compared to music consumption trends from just ten years ago. In addition to winning the war against illicit distribution, streaming music services like Spotify and Apple Music also destroyed all barriers and made it easier than ever to access all genres of music. However, several services are now beginning to buck this trend in an effort to stand out by investing in exclusivity, such as pre-releasing new music or providing distinctive material like concerts or podcasts.

Planning to buy Spotify stock? Consider earnings performance in Q2 2022

Here are the details of the Spotify earnings report of Q2 2022:

• As a result of Spotify’s sustained investment in advertising, ad-supported revenue increased 31% year over year reaching 360 million euros, achieving a record-high 13% of the company’s overall revenue for said quarter.
• In the second quarter, Spotify recorded 433 monthly active users, up 19% year over year and 5 million more than expected.
• Paid subscriber growth increased 14% year over year to 188 million, exceeding forecast by a million users.
• The EPS of Spotify is at a loss of 85 cents per share as opposed to analysts’ expected loss of 63 cents per share, according to Refinitiv.
• As per Refinitiv, the revenue of Spotify is at 2.86 billion euros versus the 2.81 billion analysts had predicted.

Spotify announced 433 million active monthly users in the second quarter, up 19% year over year and 5 million more than forecast, despite the termination of its Russian business. Gen Z strength in Latin America, account reactivations in Europe, and strong marketing initiatives, according to the business, are all contributing factors to this rise. 

According to the firm, Spotify plans to attract over 17 million additional active monthly users within the third quarter, pushing its tally to 450 million. It anticipates recording 194 million paid members in the quarter, representing a 6 million gain. The business expects its sales to reach 3 billion euros, further attracting investors to buy Spotify stock.

Spotify posts robust growth in MAU and Premium Users despite competition from Apple Music, Amazon Music and Youtube

You may want to consider these statistics before investing in Apple or Amazon. Total MAUs increased by 19% year over year to 433 million, rising from 422 million in the previous quarter and 5 million more than expected. Excluding the effects of our exit from Russia and the benefit from the service interruption recorded in March (marking a combined 8 million Q1 MAU), the quarter saw the biggest quarter-over-quarter addition of MAUs (19 million). From 182 million in the previous quarter, Premium Subscribers increased 14% year over year to 188 million.

Podcasting: Competing with Apple

There were 4.4 million podcasts upon its platform at the end of Q2. The proportion of MAUs that listened to podcasts increased by a sizable double-digit percentage year over year, and per-user podcast consumption rates also increased. In Q2, Spotify internationally published 100 new Exclusive and Original podcasts, with Batman Unburied debuting at the top of the charts in numerous important areas. Additionally, producers in 11 areas can now access video podcasts through Anchor.

 Recent Acquisitions

It has been secretly revealed by Spotify that it is shelling out a total of €291 million or $295 million for four among its recent acquisitions: Findaway, Podsights, Chartable, and Sonantic. The audio-streaming company stated that it would pay €117 million cash to a digital audiobook distributor, Findaway, it first disclosed plans to acquire back in November 2021, in an updated SEC document filed following its official results report. 

Separately, Spotify disclosed that it is shelling out €83 million in cash to acquire Chartable and Podsights, two businesses it had previously said it was acquiring to boost its podcast analytics and measurement capabilities.

However, Spotify also disclosed that more financial payments totaling €21 million may be made in the future, subject to “certain workers'” ongoing employment. Sonantic, an AI speech platform that was utilized to replicate Val Kilmer’s voice in the most recent Top Gun film, was purchased by Spotify in June, according to a statement made at the time. Spotify will pay €91 million for that agreement.

It’s important to note that Spotify has recently acquired a number of other companies, such as the Worldle-inspired song guessing game Heardle, but the price hasn’t yet been disclosed. This is likely because the deal wasn’t made public until after the latest accounting period, which ended in June. Whooshka, a provider of podcast technology, was also acquired by Spotify in December, however, it is unknown how much was paid in that transaction. 

Despite having previously invested tens of millions of dollars purchasing the technology and content to make Spotify the go-to service for music, podcasts, and — as its latest Findaway deal demonstrates — audiobooks, these varied acquisitions at least show that Spotify is exhibiting little sign of slowing down in its effort to be an all-singing, all-dancing audio powerhouse.

Takeaway

If you invest in Apple or invest in Amazon, it may offer you a share of their various businesses. But if you buy Spotify stock, it may be the answer if you’re trying to make a concentrated gamble and invest in the US music industry. 

Today, most activities at home are tied to services provided on the internet – video streaming or music streaming. Music streaming services work everywhere where there is internet access and Spotify has a long-term opportunity to gain during the pandemic and increase the subscriber base by developing new content for customers like podcasts, music videos or lyrics. 

Spotify’s strong brand presence, attractive offerings, and presence in more than 90 countries along with continuous product innovation and the company’s focus on podcasts have helped the company retain its No. 1 position among its contemporaries in the music streaming industry. Spotify’s big push into podcasts along with multiple acquisitions and exclusive deals with hosts like Joe Rogan and Alex Cooper is likely what sets apart the company from its competitors. Stockal is a platform that enables you to invest in Spotify directly without any hassles. Read more on investing in foreign stocks.