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Music streaming is booming without boomers


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Music streaming is booming without boomers

Opinions expressed in this piece are solely those of the author and do not represent the views of SNL Kagan.

Music streaming has been trending up without the support of its once most core base: baby boomers. But I can't figure out who's ignoring who?

Less than 2% of U.S. music consumers aged 46 and older paid for an on-demand music service last year compared to 11% of the 18-24 age bracket and 8% of 25-34 year olds. The findings are from a survey by research firm MusicWatch Inc. recently cited in a story from The Wall Street Journal about "getting 50-somethings to pay for streaming music."

I too do not subscribe to a premium service such as Apple Inc.'s Apple Music or Spotify Ltd.'s Spotify Premium. I do subscribe to Inc.'s Amazon Prime but that's because I like Amazon's premium e-commerce shipping service. The music service is an afterthought.

I have no plans currently to pay for a new premium service being readied by Pandora Media Inc. or another one from radio broadcast streamer iHeartMedia Inc. But they could be intriguing, so I never say never.

Granted, I am somewhere between a value consumer and a cheapskate. I have not paid for a music subscription because so much great music is still free on FM radio and has been mostly free online. I think the latter, however, is rapidly shifting to a subscription model based on my read of the Recording Industry Association of America's 2016 midyear report.

Paid music subscriptions in the U.S. doubled in the first half of 2016 to 18.3 million from 9.1 million in the first half of 2015 and 7.9 million in the first half of 2014. The retail value of paid subscription services jumped 112% to a little over $1.0 billion from $479 million in the first half of 2015 and soared 172% from $373 million in the same period in 2014.

Globally, paid subscription services are also doing well. Apple Music has now topped 20 million subscribers, as widely reported, up 18% from 17 million in September and 54% ahead of its 13 million base in April. Apple Music launched only 18 months ago. Still, Apple Music has half the subscribers of Spotify whose paid service has been evolving since 2011.

I also behave like an aging boomer. I still buy CDs and vinyl, especially at used music shops and classic warehouses like Amoeba Music in San Francisco, Berkley and Hollywood, Calif. Amoeba even has listening rooms -- a throwback to a 1960s record store where many a teen learned how to flirt while also falling in love with music.

And I still download music. I'm not alone. According to RIAA, downloads contributed 31% to the total $3.4 billion of total U.S. retail music revenue in the first half of 2016, while streaming -- paid and ad supported -- contributed 47%. Physical product accounted for about 20%.

I suspect the big recording music companies would like to milk higher-margin physical product sales and downloads a while longer before lower-margin streaming becomes more dominant.

A few decades ago, as trend setting youth, we drove the music business. So why are we not participating now? I don't believe it is because we are now at the back end of life's bell curve. We are still a rambunctious lot with a robust reputation for consumption.

True, some of us may have turned into our parents by becoming a bit stuck in our ways. But maybe the music services are not doing enough to create compelling content to make us want to pay up.

Music providers may want to pay attention to how podcasters have been wooing boomers with targeted content. Podcast consumption has been trending up among the age 55-plus demographic, to 11% in 2016 from 7% in 2013, of all podcast consumers age 12-plus, according to Edison Research's The Podcast Consumer 2016 report.

Awareness could help bridge the boomer gap between music consumers and providers. That is the mission of a new sponsored-content site, Music Aficionado. It brings advertisers and music fans together with highlighted playlists, articles and features about artists and music, all organized by genre.

I think the site's intent also underscores the power of personalization that digital music streaming services could achieve way beyond just a slick algorithm that only suggests music or an artist you might like. The magic of digital content and distribution is its ability to create community on a very personal level. You know, putting the me in MEdia and the you in mUsic.

Maybe this new generation of paid music services will crack that code. It could even give a music provider an edge in the looming battle for the dashboard of our increasingly connected cars.