Saturday, May 25, 2013

Digital Music Industry- The Game Changers

Thank you all so much for taking the time to vote on my poll! I was surprised that quite a few people thought that Spotify has generated the most revenue for the digital music industry over the last 15 years because Spotify has only been around for about 3 years.

Apple's iTunes store has generated the most revenue over the last 15 years. Even though iTunes has only existed since January 2001, The iTunes store typically generates $600 million dollars Annually, a whopping $500,000 a week. So over the last 15 years we can estimate that iTunes has generated close $9 Billion dollars for the digital music industry. Apple Inc. is actually the worlds second-largest information technology company by revenue, second to Samsung.

Let's take a look at the stats of the other digital music providers I included in the poll:

Spotify was developed in 2006 by a team of developers located in Sweeden. Over the last 5 years Spotfiy has really taken off as one of the leading music streaming services. They currently have a whopping 6 million paying subscribers and 24 million total active users. Based on the current subscriber rates Spotify is bringing in somewhere between $360 million and $720 million a year from subscribers alone. The company is making a few hundred million from adds as well so we can estimate that Spotify brings in close to a billion dollars a year in revenue! If we look at the last 15 years iTunes still takes the cake because of their consistency and the fact that they've been around 5+ years longer than Spotify.

Pandora Radio Savage Beast Technologies was the first name of the company until it was renamed in 2005 to Pandora Media. I enjoy the name Savage Beast Technologies but the Greek meaning behind Pandora is also pretty cool. Pandora has actually been losing revenue over the last 5 years. Mainly from paying their artists to much and losing money from stock. The highest recorded revenue in 2012 was $75 million dollars thanks to loyal subscribers and ads. In my opinion Pandora needs to start coming out with fresh ideas and products that will generate them more revenue and popularity or they might become a thing of the past very shortly.

Napster started off as a peer-to-peer file sharing company until they ran into legal difficulties over copyright infringement. It was acquired by Rhapsody in 2011. Napster actually only operated between June 199 and July 2001. At its peak the Napster service had about 80 million registered users which is a lot more than Spotify and Pandora put together.  Metallica was actually the first band to file lawsuit against Napster when they found out their demo song "I Disappear" had been available before it was even released. Napster was not intended to be a revenue generating business, they where focused on making any song or album easily accessible by the average music connoisseur. It's hard to put a finger on how much annual revenue Napster generated when the company was still around.

Overall the biggest Game Changers in the last 15 years has definitely  been Apple's iTunes and Spotify.

Thank you so much for reading! Comment and let me know what you think!

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1 comment:

  1. Very interesting read! I was shocked to see how much money Spotify has made over the last few years.