Advertising is how everyone gets the word out about their product or service to the intended audience. In this age of the tech, advertisers are always on the lookout for avenues that have the potential to reach the largest number of their target audience. On the other hand, different platforms that offer products such as streaming services have discovered a way to bridge the gap between advertisers and their target audiences.
Since there are many people already consuming the digital products such as music and podcasts, the online streaming platforms allow advertisers to slot in their Ads at a fee between the streams and in this way every party benefits. The music platform gets revenue from the Advertiser, the end client gets information that they probably didn’t know they needed about new products and the advertiser is able to pass their information to a large audience in the most convenient and customized way. Amazing, right?
While this whole chain makes sense on the surface, different dynamics are always at play below the surface, key among them being the fact that not all music listeners appreciate the interruption of their playlists by some random advert. Some listeners pay a premium to avoid Ad interruptions at all costs. On this realization, different music platforms offer a way around through various means such as offering different pay packages as well as doing away with Ads all together with the tradeoff being that the client pays a higher premium.
Let’s take a look at Apple’s music platform and see how they handle their customers’ needs as well as the advertisers’ need to tap into that huge database of current and potential customers.
Does Apple Music have an Advertising Platform?
Apple music has had to make several considerations on whether to make a provision for Ads on their platform or not;
- Based on their values on the issue of privacy, the streaming platform does not favor the placing of Ads in between their streaming. Most of the customers that are on the Apple’s platform are loyal because they can count on having uninterrupted streaming of music.
- The platform subscribers are willing to pay higher monthly premiums for the privilege of Ads free content which translates to higher revenues.
- The tradeoff between free streaming for Ad space and the premium packaging for their entire client base is not really worth it in a financial sense. The amounts of revenues that would be generated from the Ads are really not that high to allow them to make free streaming an option. Every company aims to be a going concern and we shouldn’t expect Apple to be any different.
So, the simple answer to the question is no, Apple music does not have an advertising platform and providing Ads-free listening is their main selling point.
How is Apple Music’s Advertising Platform different from Spotify?
While Apple Music and Spotify are in the same operating space and offering similar core products, there are several differences that make each one stand out and probably offer a competitive advantage over the other.
The Apple Music Platform operates on a premium subscription only, while Spotify’s platform has both the free Spotify option and the Spotify premium subscription. The free Spotify subscription allows for Ads streaming in between playlists. Premium subscribers on both platforms do not encounter any Ad interruptions and this means there is no point at which Apple users will ever listen to an Ad.
What is Apple Music’s Current Market Share?
By the end of the 1st Quarter of 2021, the total number of streaming clients was 523.9Million. The largest players in this space are Spotify, Apple Music, Amazon, Tencent and YouTube, who take up around 70% of the total market share. All the other smaller players take up the remaining 30%.
Apple Music, which is the second largest online streaming platform commands a market share of 15%, behind the Spotify platform which a market share of 31%. This means that Apple music has almost 80 million subscribers based on the Q1 2021 data.
Although Apple Music does not release official data as frequently as Spotify, this independent analysis gives one a feel of how the platform is performing generally considering their Ads free approach to streaming.
Future of Ad Supported Music Streaming
Throughout this discussion, it is evident that there are many stakeholders affected by the decision to allow or prohibit adverts in the streaming platforms. The advertiser, the music artists, the end consumer of streamed content and the streaming platform, all have different sentiments around this issue.
- For the advertisers, Ad supported music streaming is an ideal situation. They get to have an access to a very wide target market that is easily customized based on different criteria. Additionally, they are able to work within their target budget whether they are a small company or a huge multinational and so basically everyone is accommodated.
- For the end consumer of the streamed content, their main goal is to be entertained. Some may not mind the Ad interruptions in between but a majority may not appreciate it and would rather pay a premium to avoid the disruptions.
- For the artists, premium subscriptions mean a higher return per stream compared to free streaming.
- For the Music streaming platform, the main goal is to provide entertainment and information to clients while also maintaining the going concern interests of its shareholders.
While in the short run Ad supported music streaming may not look beneficial to a majority of the stakeholders, there is a huge opportunity for a win-win situation. If music platforms and artists look at it in a higher paid radio context, there will be a future for Ads. Additionally, there is a higher conversion rate from free subscriptions to premiums than from new direct premium subscriptions.
In conclusion, considering that it is easier to retain an existing client than acquiring a new one, we can expect a growth in Ad supported music streaming.