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Music and Other Audio - CDs, Streaming, Downloads & Podcasts - UK - May 2017

“After price the factor that has the most influence on which subscription streaming service people choose is sound quality. Sound quality offers a clear way for streaming services to establish a premium tier option that capitalises on more invested music listeners. Improved data and broadband speeds as well as developments in terms of smartphones should further broaden the appeal of hi-res streaming tiers.”

Rebecca McGrath, Senior Media Analyst

This report looks at the following areas:

  • Differentiating subscription streaming services through price...
  • ...and through content
  • How to monetise podcasts

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Subscription streaming to drive music industry growth
              • Figure 1: UK music industry income from physical, digital and streaming, 2011-21
            • Vinyl disrupts physical decline
              • Improved internet speeds boost reliability of streaming
                • YouTube battle highlights continued controversy over artist pay
                  • Smart speakers create new opportunities for streaming service differentiation
                    • Key players
                      • Amazon launches Music Unlimited
                        • SoundCloud launches new mid-tier subscription service
                          • Spotify encourages premium switch through early content
                            • Tidal continues to prioritise music quality
                              • The consumer
                                • Over a third of internet users stream music
                                  • Figure 2: Use of music formats, December 2016
                                • YouTube is the primary way of streaming free music
                                  • Figure 3: Use of free streaming services, December 2016
                                • Spontaneous song selection is the main way people stream music
                                  • Figure 4: Listening habits on streaming services, December 2016
                                • Spotify Premium remains the most popular paid-for service
                                  • Figure 5: Use of paid-for streaming services, December 2016
                                • Price is the key factor influencing choice of paid service
                                  • Figure 6: Factors influencing choice of paid-for streaming service, December 2016
                                • Having a physical music collection is important to many
                                  • Figure 7: Purchasing habits for physical media, December 2016
                                • Many podcast listeners are willing to pay for content
                                  • Figure 8: Podcast listening habits, December 2016
                                • What we think
                                • Issues and Insights

                                  • Differentiating subscription streaming services through price…
                                    • The facts
                                      • The implications
                                        • …and through content
                                          • The facts
                                            • The implications
                                              • How to monetise podcasts
                                                • The facts
                                                  • The implications
                                                  • The Market – What You Need to Know

                                                    • Subscription streaming to drive music industry growth
                                                      • Vinyl disrupts physical decline
                                                        • Smart speakers create new opportunities for streaming service differentiation
                                                          • Improved internet speeds boost reliability of streaming
                                                            • YouTube battle highlights continued controversy over artist pay
                                                            • Market Size and Forecast

                                                              • Subscription streaming to drive music industry growth…
                                                                • …but it is cannibalising income from digital sales
                                                                  • Figure 9: UK music industry income from physical, digital and streaming, 2011-21
                                                                  • Figure 10: UK music industry income from physical, digital and streaming, 2011-21
                                                                • Segment forecasts
                                                                  • Figure 11: UK music industry income from physical formats, 2011-21
                                                                  • Figure 12: UK music industry income from digital sales, 2011-21
                                                                  • Figure 13: UK music industry income from streaming services, 2011-21
                                                                • The impact of Brexit on the music industry
                                                                  • Forecast methodology
                                                                  • Market Segmentation

                                                                    • Subscription streaming cancels out declines in other music formats
                                                                      • Figure 14: UK music industry income, 2011-15
                                                                    • Vinyl disrupts physical decline
                                                                      • Figure 15: Physical album sales, 2013-16
                                                                    • Digital sales also drop
                                                                      • Figure 16: Digital album sales, 2013-16
                                                                    • Audio streams increase by 67% in 2016
                                                                      • Figure 17: Volume of UK audio music streams, 2014-16
                                                                  • Market Drivers

                                                                    • Continued growth in mobile device ownership
                                                                      • Figure 18: Personal ownership of consumer technology products, November 2015 and September 2016
                                                                    • Smart speakers create new opportunities for streaming service differentiation
                                                                      • Figure 19: Ownership and interest in smart speakers, December 2016
                                                                    • Improved internet speeds boost reliability of streaming
                                                                        • Figure 20: Superfast (≥30 Mbps) fixed broadband connections, 2011-15
                                                                      • YouTube battle highlights continued controversy over artist pay
                                                                      • Key Players – What You Need to Know

                                                                        • YouTube is the most widely used source of streamed music
                                                                          • Amazon launches Music Unlimited
                                                                            • Amazon pushes voice control with Alexa
                                                                              • SoundCloud launches new mid-tier subscription service
                                                                                • Spotify creates more varied personalised playlists
                                                                                  • Spotify encourages premium switch through early content
                                                                                    • Tidal continues to prioritise music quality
                                                                                    • Streaming Music Services – Market Share

                                                                                      • YouTube is by far the most widely used free music service…
                                                                                        • Figure 21: Use of free streaming services, December 2016
                                                                                      • …while Spotify Premium leads the way in the paid-for market
                                                                                        • Figure 22: Use of paid-for streaming services, December 2016
                                                                                    • Launch Activity and Innovation

                                                                                      • Amazon launches Music Unlimited
                                                                                        • Amazon pushes voice control with Alexa
                                                                                          • SoundCloud launches new mid-tier subscription service
                                                                                            • Spotify creates more varied playlist options
                                                                                              • The Daily Mix
                                                                                                • Weather-based playlists
                                                                                                  • Potluck feature for parties
                                                                                                    • Spotify encourages premium upgrades through early access
                                                                                                      • Tidal continues to prioritise streaming quality
                                                                                                        • EE partners with Apple Music
                                                                                                          • Audible branches out into podcasts
                                                                                                            • Streaming services create original podcasts
                                                                                                            • Brand Research

                                                                                                                • Brand map
                                                                                                                  • Figure 23: Attitudes towards and usage of selected brands, February 2017
                                                                                                                • Key brand metrics
                                                                                                                  • Figure 24: Key metrics for selected brands, February 2017
                                                                                                                • Brand attitudes: Apple Music and Spotify have established loyalty
                                                                                                                  • Figure 25: Attitudes, by brand, February 2017
                                                                                                                • Brand personality: Spotify and Amazon Music associated with “fun”
                                                                                                                  • Figure 26: Brand personality – Macro image, February 2017
                                                                                                                • Spotify most closely associated with being cool
                                                                                                                  • Figure 27: Brand personality – Micro image, February 2017
                                                                                                                • Brand analysis
                                                                                                                  • Spotify has cultivated a very positive brand impression
                                                                                                                    • Figure 28: User profile of Spotify, February 2017
                                                                                                                  • Amazon Prime Music has low awareness
                                                                                                                    • Figure 29: User profile of Amazon Prime Music, February 2017
                                                                                                                  • Apple Music has positive image but is viewed as less accessible
                                                                                                                    • Figure 30: User profile of Apple Music, February 2017
                                                                                                                  • Google Play Music needs a stronger brand image
                                                                                                                    • Figure 31: User profile of Google Play Music, February 2017
                                                                                                                • The Consumer – What You Need to Know

                                                                                                                  • Over a third of people stream music
                                                                                                                    • Spotify Premium remains the most popular paid-for service
                                                                                                                      • Playlists have become a popular way to stream music
                                                                                                                        • Price is the key factor influencing choice
                                                                                                                          • Having a physical music collection is important to many
                                                                                                                            • Many podcast listeners are willing to pay for content
                                                                                                                              • Seven in 10 are skipping past podcast adverts
                                                                                                                              • Use of Music Formats

                                                                                                                                • Over a third of people stream music
                                                                                                                                  • Figure 32: Use of music formats, December 2016
                                                                                                                                • Physical formats hold fairly consistent appeal across age groups
                                                                                                                                  • Figure 33: Use of music formats, by age, December 2016
                                                                                                                                • Income skew suggests possibilities for tiered streaming options
                                                                                                                                  • Figure 34: Use of paid-for streaming services, by household income, December 2016
                                                                                                                                • ‘Hardcore’ music fans are purchasing physical discs
                                                                                                                                • Use of Streaming Services

                                                                                                                                  • YouTube is the primary way of streaming free music
                                                                                                                                    • Freemium model could be phased out in favour of tie-ups and introductory offers
                                                                                                                                      • Figure 35: Use of free streaming services, December 2016
                                                                                                                                    • Spotify Premium remains the most popular paid-for service
                                                                                                                                      • Figure 36: Use of paid-for streaming services, December 2016
                                                                                                                                    • Two in five use more than one paid-for service
                                                                                                                                      • Figure 37: Repertoire of paid-for streaming services, December 2016
                                                                                                                                  • Listening Habits on Streaming Services

                                                                                                                                    • Spontaneous song selection is the main way people stream music
                                                                                                                                      • Amazon Echo and Google Home evolve song selection
                                                                                                                                        • Figure 38: Listening habits on streaming services, December 2016
                                                                                                                                      • Playlists are used by many paid-for streamers
                                                                                                                                        • Helping users create their own playlists
                                                                                                                                          • Figure 39: Streaming service listening habits, by use of streaming service, December 2016
                                                                                                                                      • Factors Influencing Choice of Paid-for Streaming Service

                                                                                                                                        • Price is the key factor influencing choice
                                                                                                                                          • Figure 40: Factors influencing choice of paid-for streaming service, December 2016
                                                                                                                                        • Sound quality would influence choice of two in five subscription streamers
                                                                                                                                          • One in three are influenced by exclusive music
                                                                                                                                            • Spotify prioritises playlists and recommendations
                                                                                                                                              • Over a fifth prioritise artist pay
                                                                                                                                              • Purchasing Habits for Physical Media

                                                                                                                                                • Having a physical music collection is important to many
                                                                                                                                                  • Vinyl subscription services create exclusivity
                                                                                                                                                    • Figure 41: Purchasing habits for physical media, December 2016
                                                                                                                                                  • Parents of under-18s are more likely to buy physical media as gifts
                                                                                                                                                  • Podcast Listening Habits

                                                                                                                                                    • Most podcast listeners are frequent users
                                                                                                                                                      • Many podcast listeners are willing to pay for content
                                                                                                                                                        • Figure 42: Podcast listening habits, December 2016
                                                                                                                                                      • Seven in 10 are skipping past podcast adverts
                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                          • Abbreviations
                                                                                                                                                            • Consumer research methodology
                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                              • Forecasts
                                                                                                                                                                • Figure 43: UK music industry income from physical, digital and streaming, 2016-21
                                                                                                                                                                • Figure 44: UK music industry income from digital sales, 2016-21
                                                                                                                                                                • Figure 45: UK music industry income from physical formats, 2016-21
                                                                                                                                                                • Figure 46: UK music industry income from streaming, 2016-21
                                                                                                                                                              • Forecast methodology

                                                                                                                                                              Music and Other Audio - CDs, Streaming, Downloads & Podcasts - UK - May 2017

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