Faaez Samadi
Nov 15, 2016

Opportunity knocks in SEA music streaming: McKinsey

Local services shine in a booming market, but advertisers must innovate to seize the streaming opportunity.

Opportunity knocks in SEA music streaming: McKinsey

The rise of music streaming in Asia could be a goldmine for brands and advertisers that can find innovative new revenue models, according to a new report from McKinsey.

With the digital music industry in Southeast Asia in particular growing at more than 20 times the global average between 2011 and 2015, the opportunities for brands are significant.

Although Asia only accounts for 14 percent of global digital music revenue, McKinsey said the region had 44 percent of all internet users in 2015, and 25 percent of global GDP in 2013.

Improved connectivity thanks to huge investment throughout Asia, a generation of Asian digital natives expected to grow by 15 percent annually, and increasing smartphone penetration are all key factors in the region’s music-streaming potential.

While global players such as Spotify and Apple Music are enjoying some success, the report says it is regional players in Asia that have really taken off, such as Tencent-owned Joox, KKBox and Yonder. This is mainly due to their localised content, playlists and user experience.

However, problems persist in monetising the music streaming industry. Barriers include limited disposable income, a prevalence of low-end smartphones that cannot handle music streaming, and a general unwillingness to pay for streaming subscriptions.

To address this, McKinsey said more brands should launch advertising partnerships with music streaming services, such as Coca-Cola’s World Music Day sponsorship with Joox.

Music streaming should also be viewed as an advertising platform, given how many young consumers it reaches, the report said. The rise of data-driven targeting and tailoring of advertising will help brands get more for their ad dollars.

Other revenue opportunities include co-branded promotion of exclusive content or music events, allowing more offline listening options, or bundling promotions with music streaming platforms.

“Players in the Asian market could be trailblazers in the development of innovative music streaming business models,” the report says. “Their success could redefine how music is consumed and monetised the world over.”

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