Midia Research reports that the streaming music industry is at a pace to generate over $1 billion in revenue this year.
While digital music sales are certainly keeping music labels happy, they’re still trying to figure out how to get more out of ad-supported free streaming music sites, like Pandora, YouTube and SoundCloud. Ads on those sites produce about 10 percent of the revenue per user that subscription businesses do.
Obviously, when a user is able to listen to whatever song he wants to on a streaming site, that person is less inclined to buy music.
Midia also reports that since just 25 percent of consumers pay more than $10 for music over the course of three months, it’s hard to imagine people paying $10 a month for unlimited music. That’s the goal of many of these sites, including YouTube, who recently announced they’ll be offering a music subscription service.