Opinion

Don’t let Pandora and SoundCloud fool you: music streaming is alive and well in Australia

The US music streaming giants are jumping off the good ship Australia, but don’t take that as a sign streaming music is struggling, argues Steve Hughes.

Pandora and SoundCloud have now shut up shop in Australia. Both offerings had a number of local high-profile staff and the services seemed to be doing well from the outside.

Last year Pandora even launched its first warehouse event, and this year announced the opening of genre sponsorships. The announcement of the departure of both is very unfortunate, but not completely surprising. Despite this, the streaming music market is still in great shape.

Of the Australian streaming music market, well, it’s in rude health. According to MIDiAs State of the Streaming Nation 2017 report, music streaming revenue in Australia grew a staggering 90.5% in 2016, and now makes up 38.5% of the overall market by revenue.

Pandora exits the stage

Streaming has grown by over $100 million in value since 2014, and was worth $135.5 million in 2016. At the time, MIDiA’s senior industry analyst Mark Mulligan said: “Streaming was the lynchpin of 2016’s growth and will be even more important in 2017.”

In other words, the interest and take up is there, and revenue is strong.

So if the streaming music market is doing well in Australia, why has this year seen multiple business closures on our shores? SoundCloud closed its Australian offices last week (although the service is still available for Australian listeners) and Pandora will exit stage left today. Guvera lost its battle earlier in the year, with public stoushes between senior executives surfacing in the media.

The thing about Australia is that it’s still a small nation. We are a fantastic test bed for products and services about to head to European and US markets, and we are also a great expansion opportunity when products and services have been bedded into those markets. But our market can only take so many.

Streaming TV is a great example. Remember Quickflix or Tivo? Quickflix quickly discovered it couldn’t compete in an increasingly saturated market while the might of Tivo, which included a partnership with the Seven Network, couldn’t breakthrough and gain momentum early in the piece. That was a big surprise for such a mighty global player kicking massive goals in the US. It’s similar to Pandora and SoundCloud.

This isn’t new news, though. Think back to the introduction of videogame consoles. Where are Atari and Sega now? If Nintendo isn’t careful, it looks like it may head the same way.

Back to Pandora and streaming music services, it is somewhat unsurprising that the Australian market couldn’t support all of them, particularly because, unlike other examples, the vast majority of streaming music services are great quality products.

Spotify remains a big player in the Australian market

The current set in Australia, led by YouTube with 25% of  weekly active users (WAU), followed by Spotify at 16.3%, Amazon Prime Music on 10.7%, then Apple Music on 8.5% are quite settled. These are strong companies with long histories, making it hard for new brands to breakthrough, or established brands to take hold in new markets.

So, who will be affected by the departures, Pandora in particular, which had deep commercial tie-ups, and where does this leave music streaming services in Australia?

The answer to the first part of that question is that there shouldn’t be any detrimental effects. Consumers who bought cars with Pandora buttons will have a dead button until an update comes along, and businesses that used Pandora Radio to stream music into stores are using the provider that had been powering the music stream all along. In other words, it doesn’t seem like there are many losers here.

I was closer to Pandora than most in the industry. Mood Media Australia was the behind-the-scenes partner for the Pandora for Business offering for many years and our US operation still has strong ties to them. We still believe it’s a great service.

Hughes: Not surprised the Australian market couldn’t support all the streaming services

While I’m not surprised that the streaming music operators are shrinking in Australia, Pandora’s pull out this year turned heads, no doubt. But it won’t leave any lasting damage and it wasn’t because the product was bad.

While it is sad to see Pandora and SoundCloud vanish from our shores, Australia still has plenty of quality streaming options in a buoyant market. Consumers will use other services and businesses will engage other options, including the growing trend for on-demand customisable playlists that change to suit different times of the day.

Steve Hughes is MD of Mood Media Australia

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