Latin America: an important piece in the business of music streaming platforms

Companies like Spotify and Deezer have become one of the main sources of income for the music industry and Latin America is one of its most important markets

Latin America: an important piece in the business of music streaming platforms

Leer en español: Latinoamérica: una ficha importante en el negocio de las plataformas de streaming de música

During the last years there has been talk about the future of music in physical format (CDs and vinyl records) in view of the growing popularity of streaming platforms. According to Christopher Vollmer, PricewaterhouseCoopers' lead consultant on entertainment and media issues, the model of streaming services "has become the preferred business model and user experience for most consumers". This is reflected in the growing popularity of platforms such as Spotify.

According to IFPI, during 2017, streaming services accounted for 38% of the total revenues of the recording industry globally, in contrast to the 30% represented by sales gains in physical format.

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What role does Latin America play in the industry of streaming platforms?

In its 2018 report on the annual state of the music industry, IFPI analyzes the growth of this industry at a continental level. There, it is mentioned that during 2017 the music business grew by 17.7%, surpassing the 8.5% growth that occurred during 2016. This significant increase in music sales, the highest in the world, was achieved thanks to the impressive growth of 48.9% of the revenues of the streaming platforms, the second largest of this type of services worldwide, only behind that of North America (49.9%). For a better understanding of this, it is worth reviewing specific cases.

Spotify and Deezer, the most popular in Latin America

According to Chris Beer, analyst at Global Web Index, two of the most popular streaming platforms in Latin America are Spotify (46% of total Latin American users of streaming services) and Deezer (12%), which stand out for their seniority in the industry: Spotify was founded in 2006, while Deezer in 2007.

According to Andy Walker, editor of Meme Burn, of the 170 million active users Spotify reports having after the first quarter of 2018, 21% (25.7 million) are Latin American. On his own, given the great difference with his competition, Hans-Holger Albrecht, executive director of Deezer, who claim to have 14 million active users, has stated that the company aims to lead in some Latin American markets such as Colombia, Bolivia, and Paraguay, where Spotify is not as big as in other countries.

What these figures and affirmations show is the importance of Latin America for the streaming services industry. The Economist, based on an assertion by Rocío Guerrero, Head of Global Cultures of Spotify, who describes the Latino audience as a "relaxed" audience, affirms that Latin American music fans are perfectly adjusted to the proliferation of music streaming services, due to belonging to a culture a little alien to the purchase of CD players and iPods, which dominated in North America and Europe.

Thus, the approach of these platforms in the Latin American audience is to be expected, promoting lists dedicated exclusively to Latin genres such as reggaetón, which in turn has helped to make known artists from Latin American countries at a global level.

LatinAmerican Post | Juan Diego Bogotá

Translated from "Latinoamérica: una ficha importante en el negocio de las plataformas de streaming de música"