Music Consumption on Mobile
By: Craig Watson
Tags: Mobile, Music, Analytics

In our last blog post, we discussed some of the reasons why people are churning on music services. We also talked about how added choice for consumers impacts retention.

In this post, we’re going to cover music consumption patterns on mobile. We’re going to talk about the good, the bad and a less ugly future for the mobile music ecosystem. We’re also going to make some suggestions based on the following observations:-

Mobile is Still the Wild West — there are 2.6 billion annual smartphone subscriptions and over one million apps in both the App Store and Play Store. Retention is a tough nut to crack given the amount of competition. This is just as true for music apps as it is for any other mobile consumer offering. Mobile Music Consumption Patterns and the App Graph — we look at consumption patterns on mobile and how the app graph is a good proxy for the fragmentation of mobile music services. On-boarding and Customer Success Tips — given the issues identified around retention on mobile, we discuss what steps can be taken to increase customer success. We also discuss some new technology that we’ve developed called ‘Shine’ which helps profile a user’s given music persona on mobile.

“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages” — Henry Ford

Mobile is Still the Wild West

It’s no secret that on mobile, getting and keeping users is really hard. The talented team at Quettra have released some fascinating insights into what the average retention rates are across Android. As Andrew Chen, advisor to Quettra discusses, the key to success is getting users hooked during the first 3–7 day period.

Image courtesy of Pablo, quote by @andrewchen

To put that in context, the average cost per install (CPI) for mobile advertising on Facebook is currently just over $4.00. So let’s take ABC Streaming Ltd which is looking to increase its user-base in a new territory and is willing to pay Facebook for this privilege. A campaign of 10,000 installs wouldn’t be unrealistic to test what the uptake might be like in that location. Let’s say that ABC Streaming Ltd spends $40,000 on the acquisition of these 10,000 users. One month later, they’ll be lucky to have about 1000 users actively using the service. Three months later, that figure will drop to 500 active users.

Now this is slightly oversimplified as not all users are mobile first. ABC Streaming Ltd could also use free trials and other incentives to keep people engaged. Still this example gives a general indication of how expensive it is to get and keep users on mobile. $40,000 for 500 users. That’s an eye watering $80 acquisition cost per active user (before any licensing costs or other operational costs needed to support that user).

The reality is that it makes very little business sense for the majority of app developers to spend marketing dollars on paid acquisition. If mobile is the wild west, the cost of excavating that gold is only increasing as the land grab continues.

Mobile Music Consumption Patterns

The ease of access to content is accompanied by an ever increasing number of options for the music consumer. As Next Big Sound reported recently on their first six months of data in 2015, services like SoundCloud have seen nearly 100% growth year-on-year between May 2014 and June 2015. With this growth in digital consumption comes further fragmentation. This means a bigger pie made up of more slices.

To illustrate, we have highlighted the top 7 mobile music services tracked on our app when it was featured in the Google Play Store earlier in the year. Soundwave allows people to track the music that they’re listening to on mobile so we’re well placed to provide some analysis on this.

What surprised us was that a whopping 71% of listeners during week 1 and 68% during week 2 listened to music natively* on their mobile devices. Spotify came in second making up 14% of plays in week 1 and 17% of plays in week 2. YouTube made up 10% of the plays captured during this period. The sample size is not insignificant over the two weeks (1.6m and 2.1m plays tracked by our app).

*Native music plays means song plays of mp3 files stored locally on the device and played through the pre-installed or native music app on the phone.

Breakdown of mobile sources for songs tracked on Soundwave for week 1 of the feature

These figures might be skewed towards Android given it was a Google Play feature. Also, these listenership statistics predate the release of Apple Music and there was a bug with SoundCloud tracking over that period so these service haven’t been accounted for. Nonetheless, this study shows a lot of native consumption. These users have been referred to as the ‘Passive Majority’ by our advisor Mark Mulligan who reckons that 47% of consumers fit into this category. Our data would seem to backup this analysis. As Mark points out:

“But the for all the evolution, today’s digital music marketplace is an unbalanced one. We have more than 500 music services across the globe but too many of them are chasing after the same customers with weakly differentiated offerings. This wouldn’t matter so much is if the competition was focused on where the consumer scale is, but this is anything but the case.”

Breakdown of mobile sources for songs tracked on Soundwave for week 2 of the feature

The key takeaway for us is that native music consumption on mobile is far from dead. This has been a blind spot for the industry as it’s difficult to track globally. For our user-base anyway, it’s clear that there’s a large percentage of users who still consume most of their music natively on the device and not through streaming services.

This is also supported by our previous qualitative research into Teenage Mobile Behaviours around Music. During this research we found that the majority of cash starved teenagers were more likely to use native MP3s or free music consumption alternatives (such as illegal YouTube wrapper apps) to consume music on mobile.

Despite this current landscape, the ‘Passive Majority’ represent the biggest opportunity for streaming services. As mentioned in the last post, it’s much harder to ‘win-back’ new subscribers who are already using an existing streaming service than it is to convert first time streamers into loyal and sticky users.

The App Graph

Our VP of Engineering, Dave Lynch, and I spent some time analysing the app graph to see how this fragmentation correlates in terms of music apps installed on the mobile device. By app graph, we mean that we’ve used our consumer app Soundwave, to look at what other music apps have been installed on our user’s devices. We do this on an anonymised aggregated basis.

We removed YouTube from the study because it’s preinstalled on the majority of Android devices. Google Play Music does come bundled with some devices but not to the same extent. The sample size analysed was just over 7,000 devices.

Looking at all the major music streaming services, we found that the mean number of music apps installed was 2.5. Where at least 1 app exists, the mean number of music apps installed increased to 3. That’s quite a lot of choice for the average mobile music consumer. Just under 10% of the devices had 5 or more music apps installed.