According to a new report from analysts Generator Research, music subscription services such as Spotify will never be able to make a profit in their current state — and that’s largely because of the hefty royalty fees they have to pay out to artists, the labels that represent them and rights management groups.
The music subscription market includes online services which are either available for free (normally ad-supported) or via a premium monthly subscription. Users can stream music to a number of companion devices and can benefit from a range of value-added features, such as music recommendation functions, playlist publishing & sharing and download and synch between multiple devices. If we look at the period from 2013 to 2017, then the total revenue earned by all record companies worldwide will increase from USD 16,749 million to USD 17,286 million, or by 3.2%. Revenues from physical formats will fall by USD 2,090 million and revenues from digital download sales will fall by USD 663 million.
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