By 2019, streaming will account for 70% of digital music revenue

Mulligan’s MIDia Research took a closer look at the evolving role streaming is playing for the music industry in a new report titled The Streaming Effect, which shows streaming services are clearly eating into digital download sales. 
MIDia Research writes:
The streaming space is hotting up.  This week the IFPI announced thatstreaming revenue accounted for 63% of music sales in Denmark during the first half of the year while on the other side of the globe Taiwanese music service KKBOX raised $104 million from the Singapore Sovereign Wealth Fund (following on from earlier investments from HTC and Japanese telco KDDI).  With the total number of global music subscribers now at around 32 million it is clear that the shape of the digital music landscape is changing, but the nature of its impact on the broader music market is not straight forward.
Streaming Consumers Are Buying Fewer Albums
30 percent of consumers are music streamers and a fifth of these consumers pay to stream.*  Streaming has driven new market growth in countries such as Sweden but in larger markets such as the US it is denting digital music buying.  The first wave of subscribers was harvested directly from the most valuable download buyers, denting download sales in the process.  23% of music streamers used to buy more than one album a month but no longer do so. Download sales are affected most and will continue to feel the pinch with 45% of all music downloaders also music streamers.
Thus although streaming and subscriptions will grow by 238% on 2013 levels to reach $8 billion in 2019, download revenue will decline by 39% – only five percent less than the rate at which CD revenues will fall – leaving streaming and subscriptions representing 70% of all digital revenue.
Potential For More Growth
There is significant subscription growth potential: only 15% of all music streamers have yet tried a subscription trial and 22% say they would pay for a $9.99 service.  The next wave of adopters will be more mainstream than the first.  These will be consumers that spend less on music and so the cannibalistic impact on download sales should be less.  However the fact they are lower spending means lower priced subscriptions will be key to converting them.  Apple’s next move will be key.  The acquisition of Beats and its streaming service was a statement of intent and a strategic shift of gears.  Whatever Apple does could reshape the entire streaming market.
 
The Next Music Industry
Going digital was the first phase of the digitization of the music industry.  Moving from ownership to access is the next.  It won’t be an easy journey and many labels, artists and even music services will feel things get worse before thy get better.  But make no mistake, we are on the cusp of a new era for the music industry, indeed we are on the cusp of a new industry.  The disruptive transformations that have taken place since the late 1990’s were the shifting of the sands.  Consumer behaviours changed, perceptions of value of music monetarily and culturally changed, technology changed.
 
We now have new foundation stones upon which the next music industry can be built.  For artists, labels, publishers, tech companies and others that have come into being in the last five years, this is the only world they know.  They are learning how to make sense of streaming, of what it means to move from ownership to access. These are the people that shape the future of music and of the music industry.  Streaming is changing forever how consumers interact with music.  Now the task is to define the industry in which these changes can make sense.