Edison Research recently published a fascinating tidbit from our Share of Ear® series: The portion of the American population that is paying for an audio subscription of some kind has doubled since 2015, and is now almost half of everyone (47%).
There is a lot that is contributing to this growth. First, it’s important to emphasize this is not a measure of subscriptions, it is a measure of people. If two people share a log-in or an account, that’s one subscription but two people who would say “yes” to subscribing.
The biggest factor is almost assuredly the transfer of monies that once went to purchasing physical music product (think CDs) that now goes to paid music subscriptions to Spotify, Apple Music and others.
Nearly as crucial to the rise is the ever-growing factor of SiriusXM. By far the largest single subscription audio product in the U.S., every year it just keeps adding to its base as new cars roll off the lot.
Even smaller niche products like Audible add to the picture, and the coming wave of podcast subscription products may tempt even more people to start paying for an audio product. The number will almost surely pass 50% of Americans paying something for audio in the next year or two.
Here are some things one might want to ponder:
It’s not that many years ago that this number would have been essentially zero. Satellite Radio really pioneered the space, and it didn’t exist in the 20th Century.
Audio joins the long list of products that once were ‘free’ (at least for the cost of a transistor radio or the car that surrounded it, or for the internet connection one was already paying for), which people now choose to pay for. Just like bottled water. And of course first cable and satellite television and then streaming video.
Even when competing with “free”, as always these products come down to value. If you really wanted your MTV, you paid for cable. If you really want on-demand music or products without commercials or just more choice or convenience, these subscriptions are really not so expensive as to inhibit purchase for a lot of people. And it’s likely that the incredible growth of Netflix and other video products have trained consumers to pay a few bucks a month for things they like.
One of broadcast radio’s primary sales arguments has long been that it is free. And while this remains true, it is clearly a diminishing selling point. The at-times extreme level of commercial content that many American radio stations run has probably helped change the value proposition around commercial-free products.
Bauer Media, one of the main broadcast radio companies in the U.K., is now offering a subscription service of their own. For a small monthly fee, a consumer can now stream all the Bauer stations with no commercials plus access other exclusive content. This seems an ingenious strategy that American commercial radio companies should at least be considering.
One of the biggest mistakes in business (a mistake I have made myself) is assuming that under no circumstances will people pay for something they already get for free. In a rather short period of time, almost 90% of American households went from only getting television from “rabbit ears” to signing up for cable or satellite, because the value was there.
Think about the audio space. Between illegal downloads of digital music and broadcast radio, there has long been tons of ‘free’ content available. And yet, people pay. Endless billions of dollars — as long as they continue to provide value.