Streaming 2.0: What the future of music streaming means for fans, artists, and the industry. Here’s everything you need to know.
According to the article published on the RouteNote website, Streaming 2.0 is a concept introduced by Universal Music Group (UMG) in September 2024 to reshape the music streaming industry by focusing on customer value, new market expansion, and artist-centric principles.
UMG anticipates over one billion paying subscribers by 2028, signaling a significant shift in the streaming landscape.
Key Components of Streaming 2.0:
- Customer Growth vs. Customer Value:
- The traditional model emphasized widespread subscriber growth through a uniform offering of vast music libraries.
- Streaming 2.0 introduces differentiated premium tiers and exclusive experiences aimed at superfans, increasing Average Revenue Per User (ARPU) through merchandise, branded experiences, and exclusive content.
- Market Expansion:
- A focus on untapped, fast-growing regions like China, Brazil, and Mexico, where streaming adoption is surging due to improving infrastructure.
- In established markets, strategies include appealing to audiobook and satellite radio subscribers to increase revenue.
- Artist-Centric Principles:
- Combatting stream fraud and discouraging automated plays of AI-generated tracks.
- A controversial measure includes prioritizing revenue for established artists over small-scale creators, which may reduce earnings for emerging musicians.
Early Initiatives and Partnerships:
UMG has begun implementing Streaming 2.0 through collaborations:
- Amazon Music Partnership: Enhances fan engagement with exclusive content, live streams, and audiobook offerings while strengthening protection against unauthorized AI-generated content.
- Advocacy for higher royalties and fairer compensation through campaigns like the Human Artistry Campaign and pressuring platforms such as TikTok to increase payouts.
Spotify and Deezer have also shown early signs of adopting Streaming 2.0 strategies through premium tiers and artist-centric payout models.
Criticisms and Economic Justifications:
Critics view Streaming 2.0 as a potential money grab, yet UMG argues that streaming remains under-monetized. The spending on music per capita is still only half of what it was in 1999. The new model aims to monetize superfans who are willing to pay more for enhanced experiences, benefiting artists and labels financially.
Future Outlook:
UMG projects a 7% annual sales growth over the next five years through these initiatives. However, the success of Streaming 2.0 depends on industry-wide collaboration and consumer acceptance. While the strategy hints at an evolution in music consumption, its long-term impact on artists and listeners remains uncertain.
