Amazon Music on course to overtake Pandora as the second largest streaming service in the USA by 2023

 

By Emmanuel Legrand

Pandora, which had lost its position as the leading US music streaming service in 2019 to Spotify, is expected to be surpassed by Amazon Music as the second largest streaming service in the USA by 2023, according to estimates from eMarketer.

  Amazon Music should count 45.8 million monthly listenership at the end of this year, an 18.5% increase compared to a year ago. The service will represent 21.3% of digital audio listeners, according to eMarketer.

  eMarketer said Pandora, once the dominant streaming platform in the US, has losing listeners over the years to platforms like Amazon and Spotify, which continue to attract listeners to their paid and ad-supported platforms.

Apple Music comes fourth

  "We’ve revised our estimates for Pandora listeners after the service reported that monthly listenership declined for yet another quarter in Q2," said eMarketer. "Our latest forecast adjusts the number of Pandora listeners down by 2.6 million this year, to 58.2 million by the end of 2020. To put it into perspective, that’s a decline of roughly five million listeners from 2019 to 2020." 

  Spotify is expected to finish the year with 78.5 million listeners in the US by year-end, and should get close to 100 million listeners by 2023. Apple Music, has been experiencing steady growth, comes fourth with 35.1 million listeners by the end of 2020. It must be noted that unlike the other services, Apple does not offer a free tier financed by advertising.


  Amazon has been on an accelerated growth path during the past few years, jumping from 30.4 million users to 45.8 million users between 2018 and 2020. One of the drivers of growth for Amazon is the smart speakers market with the range of Alexa devices. "Conveniently, Amazon Music is the default streaming service on Amazon’s smart speakers," noted eMarketer.

Amazon's steady growth

  "Amazon will be the second-fastest-growing digital audio company we track, right after Spotify,” said Peter Vahle, eMarketer forecasting analyst at Insider Intelligence. “Over the past couple years, Amazon has quickly become one of the major players in digital audio. By offering a wide range of free and paid streaming services, Amazon is hoping that more options will lead to more regular listeners across the board."

  Pandora has been diversifying its offer, in particular by launching a subscription-based premium tier, but most of its revenues continue to come from advertising on its free tier. “Back in 2018, Pandora had more listeners than any other digital audio service,” Vahle said. “But that changed in 2019, as on-demand listening grew in popularity and Pandora lost listeners to competitors with robust subscription offerings. Today, a hybrid revenue strategy that draws on both subscription and ad revenues is table stakes for on-demand streaming services. Differentiation through content and user experience will be the benchmarks for future success.”