New metric ranks YouTube above Spotify in key streaming report

A shift in the methodology for a key streaming service research report has seen YouTube overtake Spotify as the leading platform across four markets.

The move may help to bolster YouTube’s argument that the platform is a legitimate streaming option, even as IFPI and the major labels pursue its goal of getting the video giant to pass on a fairer chunk of the profits from ad revenue sold against music content.

A preview of research company MIDiA’s annual State Of The Streaming Nation 2017 report – in which Australia is one of four countries whose data is used – shows that the research company has a new way of ranking who the major streaming players are.

A change in how active users are counted has led to a reshuffle of the accepted ranking of major streaming services based on subscribers.

According to the report, the leading service is YouTube, with 25% of WAU penetration, followed by Spotify at 16.3%.

Amazon Prime Music is third with a 10.7% penetration, followed by Apple Music (8.5%), SoundCloud (6.1%), Google Play Music (5.5%), Tidal (2.7%) and Deezer (2.3%).

Aside from Australia, MIDiA’s data for the report only comes from the United States, Canada and the United Kingdom.Obviously if the terms of reference were wider and more global, Apple Music and Deezer would have ranked higher.

MIDiA’s senior industry analyst Mark Mulligan says, “Streaming was the lynchpin of 2016’s growth and will be even more important in 2017.”

“Subscriber numbers only tell part of the streaming story. They are solid indicators of commercial success, but can often obscure how well a service is doing in terms of engaging its user base.”

“That’s why we track the main music services’ active user bases every quarter.”

But rather than tracking Monthly Active Users (MAUs), MIDiA says it is more relevant to use Weekly Active Users (WAUs).

Mulligan explains, “The MAU metric is past its sell by date. In today’s always on, increasingly mobile digital landscape, doing something just once a month more resembles inactivity rather than activity.

“The bar needs raising higher. Companies like Snapchat, Facebook and Supercell measure their active user bases in terms of Weekly Active Users and Daily Active Users (DAUs).

“It is time for streaming services to step up to the plate and employ WAU as the benchmark.”

The State Of The Streaming Nation 2017 notes that streaming will become more of a saviour for record labels in 2017 than ever before.

Last year, streaming’s 6% growth from 2015 set its revenue up by $0.9 billion. For the first time, with streaming revenue for record labels hitting $1.6 billion, the new phenomenon offset the declining revenue from CDs and downloads.

In the first quarter of 2017, streaming revenue grew by 35% to $1.1 billion. In comparison, the total was $0.8 billion in Q1 2016. The growth rate was slightly slower in than the equivalent period last year.

Its share of major label revenue is now 42%, compared to 33% through 2016.

Streaming is also important for the independent label sector. In the 12 months to April 2017, licensing body Merlin paid out $300 million to its label members. This was an 800% jump from the $36 million it paid out in 2012.

“The streaming business is no longer simply about the likes of Spotify and Apple Music, it is the future of the labels too,” Mulligan says.

The full The State Of The Streaming Nation 2017 report will include data on streaming behaviour, YouTube, therole of trials and family plans, playlist trends, average tracks streamed, subscriber numbers, revenue forecasts and user forecasts.

Also provided will be data for more than 20 countries across the Americas, Europe and Asia and forecasts to 2025.