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.
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.
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.
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
Atari is bringing out a new console and Nintendo is currently killing it with the new Switch console that they can’t even keep up with demand in Japan. Maybe you should buy a ticket to PAX and educate yourself.
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Thanks for the piece Steve.
On your comment that “…music streaming revenue in Australia grew a staggering 90.5% in 2016, and now makes up 38.5% of the overall market by revenue.”.. what is the overall market to which you refer? Total streaming across all types, platforms and genres?
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This article is a little misleading, Soundcloud only closed it’s “office” here in Australia, both Soundcloud and Soundcloud Go are still operating as normal and accessible to Australians as before nothing has changed for the music listener, same to for Quickflix still operating.
For some reason journalist conflate and office closure to total closure of service as they done with Deezer, once again only a physical office closed not the service.
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I would be interested to understand the Google Play numbers. $11 per month, it’s pretty darn good. (Are you including that in YouTube numbers…?) Or has GPlay been missed?
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I don’t know that Amazon Prime Music is open to Australians yet. Prime Video is. Are you trying to say that more people subscribe to Amazon Prime Music with a VPN or something like it than subscribe to Apple Music when it is fully available and promoted in Australia? Where is Google Play Music or even Tidal?
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Amazon Prime is one of the biggest rip offs available as the $99 US a year subscription offers very little for Australians. As a trial prime member, shipping was no faster than a non member and in most cases you will still pay if shipped from 3rd parties despite saying free shipping.90% of Prime Video is geo locked to the US. Sure, i could attempt an additional cost VPN,but since they already know im from Australia will this actually work? I presume the music works but was put off even further at the get go when they demanded my credit card numbers before even proceeding. Anyone that signed up for a free trial be sure to cancel before the month is up or you find 99 US disappear from from bank/credit card.
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Probably the closet alternative to Pandora I can find is iHeartRadio.
It’s a fine little product- I’m surprised it hasn’t had much take up here in Australia- cause it’s massive in the US
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Another glass of Kool-Aid anyone?
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We have spotify family and it’s been a huge success with the family all enjoying what they like to listen to.
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And the musicians still probably earn next to nothing despite the significant revenue increase.
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Nintendo stock price has almost tripled since June last year, what a disaster!
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I started tuning into IHeartRadio when Pandora stopped last week. I’m happy with it.
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Amazon Music doesn’t launch in Aus until 2018.. ?
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Americans are afraid of foreigners accessing their services, that’s why everything is geolocked.
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That’s run by a radio stations, no chance to choose your own playlist or get an ad free service.
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The streaming services take too much from them.
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