Premium music streaming subscriptions to hit 20 million in 2014

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The service offers lossless 16-bit tracks, HD music videos and editorial content.
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The service offers lossless 16-bit tracks, HD music videos and editorial content.

It turns out that despite access to a host of free alternatives, paid-for subscriptions to streaming services such as Spotify are starting to catch on in the US and Europe.

In fact, according to Futuresource Consulting, revenues from these subscribers are expected to hit $3 billion this year. The firm's data suggests that over the past 24 months, premium subscriber numbers in those territories have doubled.

"Global consumer spend on streaming services in the US and Western Europe -- excluding personalised radio services -- reached almost $1.9 billion in 2013, with 59% growth expected this year to reach an estimated $3 billion, with most users using service provider apps on smartphones or tablets to access and play out music," says David Sidebottom, Senior Market Analyst at Futuresource Consulting.

But as big a jump as it may seem, $3 billion represents just a tiny share of the global music industry's revenues -- in 2012, global music sales amounted to some $50 billion, $15 billion of which was earned in the US alone.

Nevertheless, streaming is clearly catching on in mature markets, where until now physical sales and legal or illegal downloads have been the norm and competition for music lovers' attention is growing rapidly. As well as established companies like Spofity and Deezer, Beats Audio and Amazon have both launched rival music streaming services this year and YouTube is preparing to roll out its own service that will offer users access to both music and music videos for a monthly fee.

According to CNBC, there are also suggestions that even McDonald's is contemplating breaking into the music streaming market as a way of rewarding customer loyalty.

One of the driving forces behind the growing popularity of music streaming is, of course, the near ubiquity of the smartphone -- as Sidebottom notes, the majority of these premium services are being accessed on mobile devices -- but another piece of technology is also helping to drive more people to premium from freemium: namely, wireless speaker systems.

"Wireless audio hardware is in the driving seat, with devices like wireless speakers key to the development of streaming music subscription services, providing an additional layer to the user experience beyond a personal listening experience via headphones or a standard docking station," says Sidebottom.

And, like the services they stream around the home, the choice and competition in the market has never been greater. For years, the only premium brand in the market was Sonos. Its wonderfully high-end individual speakers and whole of house systems were without equal until 2013. But in recent months, Samsung, Bose and Denon have all launched their own systems that can connect to a smartphone or computer via Bluetooth or Apple's AirPlay, connect to the home network over wi-fi and offer in-built support for a host of streaming services.

And the latest company to attempt to offer an alternative to Sonos is LG. It announced its system, called LG Music Flow, on Wednesday. The range of four different types of speaker (including a television soundbar) can be controlled via a smartphone app and even includes a mood feature for offering playlists to suit how you're feeling.

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