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  4. > Internet Music Programmers 2015 - 2018:  A Stakeholder’s Guide to IP Radio

Seaside, CA Cross-device flexibility of the in-stream audio avail, improving blended CPMs, plus simplified or reduced pricing tiers associated with subscription/hybrid digital music programming have spurred a services revenue jump of 28.6% in 2015, against listening hour increases coming in at 17%, according to an industry analysis by AccuStream Research.

This industry trade resource, Internet Music Programmers 2015 - 2018: A Stakeholder’s Guide to IP Radio, offers music services, brands/buyers, adtech vendors, agencies, rep firms, bandwidth, media player and software platform providers, CE manufacturers, as well as investors, a deep volume of audience and monetization analysis to inform media planning, capacity provisioning and requisite investment decision making.

Revenue analytics and vital performance benchmarks include monthly hours by programmer/service, subscriber totals (domestic and international), inventory by avail format (audio, video, display), sellout rates, CPMs, gross media spend, revenue per thousand hours of programming (RPM) and expected total royalty rate fees paid across the industry at 47%.

Each 1,000 hours of listening across the spectrum of digital music services (excluding online song stores) is tracking at $58.97, and forecast to improve steadily through 2018.
Mobile continues to be a growth engine for programmers. Pandora now delivers 83% of listening through non-desktop devices, while audio inventory loads and blended CPMs have also increased; the company has grown RPM by 30% over the past year.

Listening hours are on a trajectory to register 45 billion hours of audience engagement time across all devices connecting to broadcast streaming, track-play, subscription and ad supported music play libraries. Ad-supported listening hours made up 76% of total hours in 2014, and forecast at 78% in 2015, growing at a 30.5% rate.
Programmers remain focused on balancing listening hour growth against increased allocation and exploitation of audio inventory, with sellout estimated at 68% in 2015. In-stream audio units (including gateway ads and in-stream placements) are projected at 285 billion units in 2015, an increase of 16.9% over 2014.
Advertising is projected to make up the majority of sector revenue going forward, estimated at 62.4% in 2015, and expected to deliver an increasing share of monetization efforts through 2018.

Subscription service revenue is forecast to improve by 25.5% in 2015 (including Rhapsody’s global business, SiriusXM’s MySXM and Spotify’s U.S. operations) to $1 billion. We expect to see reduced monthly subscription pricing tiers (down an average of 20.l% in 2015) exhibit significant elasticity of demand, increasing total subs by 57.2% to 15.9 million, based on current CAGR performance indicators.

Table Of Contents

Internet Music Programmers 2015 - 2018:  A Stakeholder’s Guide to IP Radio
TABLE of CONTENTS

TERMINOLOGY AND DEFINITIONS 1

SECTION ONE 3
INTERNET MUSIC RADIO AND TRACK PLAY AUDIENCES SCALE ACROSS MULTIPLE DEVICES AND DAYPARTS 3

State of the internet music radio sector 2015 - 2018: Listening hour growth, ad format/monetization strategies, subscribers and benchmarking industry fundamentals 3
Macro Market Trends: More listener choice, larger song libraries, reduced/simplified subscription pricing tiers, more devices and more ad formats in 2015 4
Market Maturity and Monetization 2015 - 2018: Rise of the audio avail, CPMs and pitching a broadcast media buy at scale 6
INTERNET MUSIC RADIO AND TRACK PLAY LISTENING HOURS FORECAST AT 45 BILLION HOURS IN 2015 9
PERFORMANCE AT THE MARGINS: MANAGING AND MONETIZING 3.7 BILLION LISTENING HOURS PER MONTH IN 2015 11
INVENTORY EXPANSION AND SELLOUT RATES: AD SUPPORTED HOURS TO GROW BY 21.8% IN 2015, LEAD MARKET GROWTH THROUGH 2018 14
SUBSCRIPTION HOURS FORECAST TO GROW BY 10.6% IN 2015; SINGLE-DIGITS THROUGH 2018 17
INTERNET MUSIC RADIO LISTENING HOURS BY MONTH: FULL YEAR 2014 19

SECTION TWO 34
INTERNET MUSIC RADIO MONETIZATION: PROGRAMMING SERVICES REVENUE EXPANSION AT 28.6% IN 2015; DOUBLE-DIGIT GROWTH FORECAST THROUGH 2018 34

MONETIZATION PER 1,000 HOURS OF LISTENING (RPM) AVERAGING $58.97 IN 2015, INCLUDING PAY/SUBSCRIPTION SERVICES 39
INTERNET MUSIC PROGRAMMER ROYALTY PAYMENTS ESTIMATED AT $1.2 BILLION IN 2015 41
PRICING ELASTICITY OF DEMAND: FEES DROP 20.1% IN 2015, INTERNET MUSIC RADIO PROGRAMMER SUBS FORECAST TO INCREASE BY 57.2% IN 2015; 28% IN 2016 42
SUBSCRIPTION-BASED INTERNET MUSIC RADIO PROGRAMMER/SONG-PLAY REVENUE ANALYSIS: 2003 - 2015 44
$ 1.6 BILLION MARKET: STRONG DOUBLE-DIGIT GROWTH RATES FOR AD-SUPPORTED SERVICES FORECAST THROUGH 2018 49
IN-STREAM AUDIO CAPTURING 60.5% OF NATIONAL/LOCAL MEDIA SPEND IN 2015 52
INTERNET MUSIC RADIO/CURATED STATION/TRACK AND SONG PLAY AD SPEND BY FORMAT: 2003 - 2018 53
AUDIO INVENTORY SELLOUT FORECAST AT 68.5% IN 2015; INVENTORY ON TRACK TO INCREASE 16.8% 54
MEDIA SPEND: INTERNET MUSIC RADIO MONETIZATION: AUDIO 2003 - 2018 58
MEDIA SPEND: INTERNET MUSIC RADIO MONETIZATION: VIDEO 2003 - 2018 60
INTERNET MUSIC RADIO: TOTAL AUDIO/VIDEO AND DISPLAY PAID MEDIA SPEND AND TRACK PLAY SERVICES 2005 - 2018 62

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