Music Streaming Hits an All-Time High as US Adoption Rate Surpasses 90%

Join us as we walk through the latest insights from the 2023 MusicWatch Annual Music Study, showcasing a positive industry outlook and new opportunities for artists to leverage their 'Superfans'.

The music listening landscape is in a constant state of flux. Artists and industry professionals need to stay ahead of the curve to understand how fans are consuming music. In this ever-changing environment, data is vital. MusicWatch's recently released 2023 U.S. Annual Music Study provides valuable insights into American music consumption habits, including where listeners are spending their money and how they're accessing music. One of the most notable findings from the study won't come as a surprise to most: streaming is, by far, the most popular method for listening to music. However, the full extent of streaming's reach might surprise even the most informed music professional.

How Streaming Took Over the Music Industry

Music streaming has become the dominant force in American music consumption. A staggering 91% of internet users aged 13 and over in the U.S. reported using a music streaming service in the past year, highlighting streaming's deep integration into American listening habits. This represents a major shift from just a decade ago, when only 58% of internet users relied on streaming services for their listening needs.

A few factors are responsible for streaming's meteoric rise in popularity. While the early days of the internet were dominated by sluggish dial-up connections, advancements in technology have brought about a revolution in home internet speeds and reliability. Latency and buffering have become a thing of the past, rendering locally stored music files obsolete.

Perhaps even more crucial is the explosion of mobile internet usage. With smartphones constantly connected, listeners now have on-demand access to vast music libraries—a key factor driving the widespread adoption of streaming services. This constant connectivity has fueled the ease and portability of music consumption.

Another key factor is the shift in consumer priorities. Newer adopters of paid streaming services, accustomed to smart speakers, Bluetooth headphones, and in-dash car entertainment systems, prioritize seamless listening experiences across various devices. Streaming services have responded by focusing on smooth transitions between devices, ensuring users can carry their music with them wherever they go and discover new music on the fly. This focus on accessibility, coupled with technological advancements, has cemented streaming as the dominant force in American music consumption.

The study also reveals another significant milestone: the number of paying music subscribers in the U.S. reached 109 million in 2023. This translates to over half of all internet users aged 13 and over now paying for services like Spotify, Apple Music, and Amazon Music Unlimited. When platforms like SiriusXM (a satellite radio service with an online component) and Amazon Prime Music (offered as a perk with Prime subscriptions) are included, the total number of music streaming users in the U.S. jumps to 136 million. This surge in paying subscribers fueled a 7% year-over-year increase in music spending, and this trend shows no signs of slowing down.

Unlocking Revenue Beyond Streaming

Here's another surprising stat from the study: a whopping 20% of US music fans consider themselves "superfans" of their favorite artists — roughly 50 million people! However, there seems to be a disconnect between devotion and dollars. Only 9% of these superfans are shelling out for VIP experiences or exclusive merch offered directly by artists.

But wait, there's a silver lining! The good news is that half (25 million) of these superfans are active spenders overall. They're still buying music (downloads, vinyl, CDs), merch, and attending live shows.

The challenge for artists lies in capitalizing on the devotion of their superfans. By offering exclusive experiences and products tailored to this dedicated fanbase, artists can cultivate a loyal and profitable segment within the market. And with streaming services paying artists a fraction of the revenue compared to traditional CD and vinyl sales, this strategy can help mitigate the impact of relatively lower streaming royalties.