Competition is set to increase between radio and online streaming as major players seek to perfect the total audio experience – but no-one has yet fully marred music with the spoken word

We expect digital audio adjacencies to grow to A$924m by 2020 as non-radio platforms capture listener share. This market will be dominated by paid subscriptions, representing A$570m of the total.

Key takeaways

Online streaming is shifting towards subscriptions and is now dominated by the global majors. Although a majority of listeners use ad-funded services, the bulk of streaming revenue is generated by paid subscriptions. Apple Music, together with Spotify and Pandora, dominates listener preferences, especially among younger users, crowding out local entrants.

Digital radio is growing, but will lose market share to streaming. We expect digital radio to grow, bolstered by increasing vehicle penetration. However, streaming is a higher growth platform.

Podcasts are punching above their weight, but the market will remain small unless the business model changes. Podcast revenues are expected to grow quickly in a fragmented market. However, without a shift towards greater monetisation, particularly of premium paid content, the market is only expected to reach A$12m by 2020.

There is strong evidence that radio will be threatened. In the US, streaming is now as important a source of music discovery for young people as radio and Podcast users substituting half half their radio time for Podcasts.

No one has yet married music with the spoken word successfully. There have been early efforts to aggregate all audio content, much as Netflix has done for video. But to date there is no clear winner, with iTunes, Pandora and Spotify all taking different approaches. The opportunity remains, therefore, to perfect the ‘total audio experience.’