Universal Music Group, the world’s largest music label, has publicly acknowledged for the first time that growth at streaming services like Apple Music is slowing. While UMG believes the slowdown is temporary, some in the industry fear a more lasting change that could impact the entire music ecosystem.
Apple Music: Growth running out of steam
It’s been several years since Apple last communicated on the number of Apple Music subscribers. The last official figure dates back to 2019 with 60 million users. Since then, the Cupertino firm seems to be marking time, like its competitors Spotify and Amazon Music.
Although Apple has recently improved its service with lossless audio or spatial sound, this does not seem to be enough to get the machine going again. The price and feature war between the different platforms is no longer able to convince new subscribers. The market seems to have reached a glass ceiling that is difficult to break. If Spotify is trying to move towards podcasts or audiobooks, it is not for nothing; the company is looking for opportunities where music no longer offers them.
The music industry is worried
Universal Music, which had previously avoided the subject, had to acknowledge this slowdown following disappointing results. Its CFO pointed the finger at “large partners who have been less successful in stimulating global adoption”. In less corporate language, this means that Apple and Amazon are no longer able to recruit many new subscribers. Enough to worry investors, with UMG’s stock having fallen by 30%.
If the label wants to believe in a hiccup, many believe that music streaming has entered a new era of more moderate growth after years of boom. The levers seem limited for labels. New pricing formulas could help, but initiatives like Spotify’s Hi-Fi are slow to come.
The good news is that streaming is not about to collapse like cable TV. But the golden age seems to be behind us. The music industry will have to find new sources of growth beyond streaming to continue to thrive. Apple Music remains a pillar of Apple’s services with its $24 billion in revenue, but the company will also have to reinvent itself. For example, Apple Music Classical is an initiative that aims to free itself from the usual logic of music streaming while adding a value proposition for subscribers. All the players are thinking about reinventing themselves to avoid a recession that could also occur in this sector.