I read an interesting fact today. The film and TV streaming service Netflix has 62million users and of that number 97% pay for the service.

The market leading music streaming service Spotify also has around 62million users, but by contrast only around 25% of those pay for the premium service. In fact, add up all the premium subscribers of all the music-streaming services out there (Deezer, Google Play, Rhapsody, Tidal, etc) and it only comes to 41million. That’s nearly 20million less than Netflix on its own. Check out this music business worldwide article for more insight into all this.

I’m really struggling to work out why this is, so I thought I would open it out to the floor.

Here are some more facts:
• Netflix only gives users access to a fraction of the total film and TV content out there, whereas the music streaming equivalents (especially Spotify) pride themselves on offering close to all music ever released.
• Netflix does not offer the free ad-funded option that the music streamers do.
• Netflix does not offer a ‘watch offline’ option.
• Netflix creates its own content whereas the music streaming services are yet to break into this side of the market. There is talk of future exclusive deals with artists for their content though.
• Netflix does cost less that the music equivalent (£5.99 vs £9.99)

So on paper Netflix offers a less robust service with many more restrictions on the content and its availability yet is seemingly a much more successful business (last year Netflix made a net profit of $267million whereas Spotify is yet to post a worldwide profit since it started in 2008).

Is this purely down to the fact that the service is cheaper? It can’t be, surely. If Spotify were to do away with their free version what percentage of those users would convert into paying customers? Is this still due to the piracy problems that the music industry has had to deal with these past 15 years (I would say that the film industry has had to deal with similar issues itself). Is it due to how we interact with the media being offered? What is so different about music and film/tv to make all these figures so far apart from one another?

To me (a subscriber to both Netflix and Spotify) I really can’t answer these questions. Both provide great services in my opinion at price points that I believe represent good value for money. The differences outlined above genuinely do not add up for me and the figures don’t paint a great picture for the music business.

What do you think?