With advancements in technology, streaming has completely transformed and taken over the music industry. Over 100 million users are paying for streaming services including music streaming.
The amount of money coming from the streaming world is a hot topic of discussion for a long time and that is why a lot of businesses are investing in the industry to make money using live streaming apps.
If you have quality audio content but still unable to secure a profitable revenue from your music streaming platform, building an audio sharing website is a great option to enter the race and the heights of popular streaming services like Pandora or Spotify. It sounds exciting, doesn’t it?
In this blog, we will discuss the ins and outs of how to make an app like Spotify and how to earn an impressive income from the same. To start with, let’s see how the most famous music streaming service Spotify works and what makes it special. Learning from the giants in the market will help you to pave the right path in the competitive music streaming industry.
How Spotify Works
Spotify takes a new approach to music streaming by offering a library of millions of songs and podcasts to users. In addition to accessing songs, it also facilitates the purchase of tracks and creating playlists and a lot more on desktop and smartphones. Spotify is a legal way to stream music online and listen to podcasts.
The company licenses music tracks from both major and minor record labels to include in its vast music library and pay the right holders an amount based on the number of plays for each track. Users can listen to music albums on Spotify in addition to playlists curated by Spotify, artists, and other users.
Listening to music on Spotify is free, but all users have to go through banner ads and audio ads between songs. However, to remove ads, users can pay for Spotify premium, its paid membership plan that removes ads from the app and enables song downloading for offline listening as well. This is a great idea to make money using a live streaming app for music.
Spotify Business Model
The business model of Spotify is simple and works just like other freemium services such as YouTube. Premium subscriptions are the major revenue source where the ads and download limits are removed and a high song bit rate of 320 kbps is offered to the users.
There are four different types of Spotify plans.
This is the most basic Spotify plan where users can access all the content with certain limitations like advertisements, lack of offline listening option, shuffle only access, and more.
The premium version of Spotify is priced at $9.99 per month. It is free from all the limitations of the free version and offers more features to users.
Spotify offers a family plan of $14.99/ month with perks like ad-free music listening, offline playing, on-demand playback, etc.
It offers a special price of $4.99 for eligible students in the university with benefits like offline playing, ad-free music, and on-demand playback.
Spotify Free vs Premium
Using the free version of Spotify is a legitimate option for most people who enjoy streaming music and don’t mind the occasional interruption of ads between songs. Whereas, Spotify premium has some additional benefits that may appeal to a certain set of users and are as follows.
Better Audio Quality
While free streaming plays songs at 160kbit/s, Spotify premium offers an improve quality playback at 320kbit/s.
Spotify premium completely removes both banner and audio ads from the listening experience.
The premium plan unlocks the ability to download songs and facilitates offline listening.
All Spotify premium users are offered a free ad-supported Hulu subscription
Users who sign up for the Spotify premium students plan to gain access to the ShowTime cable channel and streaming apps.
How Audio Sharing Websites Like Spotify Makes money
Before getting to know how to create a music app like Spotify, let first understand how audio sharing website like Spotify makes money. We will focus on Spotify itself. As discussed already, Spotify runs on a freemium model and most of the revenue it earns comes from subscription and advertisements.
Over 91% of its revenue comes from subscriptions and ads make up the remaining 9%. Out of the total revenue it generates, Spotify keeps 30% and divides the remaining between, paying to artists, music deals and licensing. It spends over 70% of its revenue on royalties.
Spotify offers on-demand access to their music library, but this offer isn’t available on mobile devices. This along with the interruption of ads in both platforms drives users towards subscribing for its premium plan. Additionally, users can also cut down the cost by subscribing to a family plan for a minimum of 25%-75% cost reduction. In this way, Spotify makes it obvious to free users to convert into premium members.
Spotify earned around $2billion last year and they have over 200 million total subscribers and 110 million paid subscribers worldwide. Another interesting thing they do is using their own ad inventory. One of the most commonly promoted products in Spotify is Spotify itself. Users are urged to upgrade and get rid of interrupting ads.
So the following are the two main sources of income for Spotify.
Spotify premium comes for $9.99 per month and premium for student’s plan costs around $4.99 per month. Spotify also offers premium families pack for $14.99/month. This subscription plan gives premium access to up to six people who live at the same address. The free version offers unlimited ad-supported music streaming, access to videos and podcasts, shuffle-only playback of songs on mobile. The web version has access to on-demand streaming as well.
While ads are only a small part of Spotify’s revenue share, advertisements of Spotify are quite impressive and include different types and custom solutions for large publishers.
Brands can choose a moment they associate and with and users get a 30 mint of uninterrupted music playback session for playing your videos.
Sponsored sessions work in a similar way like branded moments. Users have to watch a video to activate the 30-minute ad-free listening session.
Users can listen to playlists with the brand logo as the cover picture and the ads will only be displayed from the same brand for the entire duration of the playlist.
Homepage Take Over
The homepage of users will be taken over by full-width banner ads.
Viewers have to listen to full focus video ads.
Audio ads give the brand a 100% share of voice followed by a clickable display unit.
Ads that are displayed at the bottom of the Spotify client. It displays clickable images for 30 seconds. The most successful advertisers on Spotify are brands that include the platform in a bigger campaign it is around specific artists or playlist, for example, an album launch of a music show.
For example, Rebook introduced a custom Spotify app where music and exercise with the help of different playlists for different types of activities like running, cross-fit, yoga, dancing, etc. curated by their sponsored athletes.
Royalties of Spotify are a bit complicated as they vary with each artist, label, and country. Spotify pays an average of $0.006-$0.0084 per stream to artists. The amount differs with the type of users. For example, the royalties of premium subscribers will be more as they are considered high-quality music listeners.
How Spotify Tackles Piracy Issues?
According to surveys, Spotify has helped to alleviate the illegal downloading of music. We all know many people download music illegally from sites like the Old Napster as it comes free of cost. However, with Spotify joining legal music sites and popular artists, illegal downloading seems to become less popular. With the availability of great streaming quality and authentic music free or for a reasonable price have significantly reduced the tendency of illegal downloading among people. To stop illegal downloads in almost every country Spotify focuses more on localizing content to the taste of people based on the country they belong to.
What Makes Spotify Stand Among Others?
With its presence in 59 countries, Spotify is one of the first of its kind to offer users access to a large catalog of music in just a few clicks.
People prefer paying a small amount of money for ease of use and good service even if there are plenty of free alternatives in the market. Spotify is a brilliant cross-platform music streaming product that comes with an enormous library of titles and offers users with always accessible, high-quality audio streaming service. Having a great product to sell, always works.
The Popularity of Music Streaming Service
According to data, over 55% of the entire US population is online radio users. On average, user’s under 25 years consume 15% more data than people aged between 25-45. The number of people subscribing to music streaming services is also on the rise.
Improved Internet Connective For Uninterrupted Streaming
With mobile network operators investing more on the infrastructure to offer high-speed internet services, accessing seamless music online is actually possible for millions of users. The hike in the number of internet users is also giving rise to music on-demand services like Spotify.
Compared to other music streaming services, Spotify offers a vast library of approximately 40 million songs and a massive number of playlists created by Spotify’s own algorithm system and users. You will find a variety of specially created musical content. Spotify also has invested in the podcast industry and is looking to become the one-stop-shop for all the music streaming needs of users.
Discovery Through Data
Spotify has set itself apart from other competitors by leveraging mobile app data for customizing the overall user experience of discovering and listening to new music. From its mobile machine learning, AI, and data shifting technology, Spotify analyzes the listening habits of users and suggest personalized recommendations like music suggestions, playlists based on the genre and artists they listen to regularly. They have a very useful feature called “Discover Weekly” playlist, which is refreshed every Monday with new songs.
Make Money Using Audio Streaming Software
Music streaming websites allows users to stream music, podcasts, and videos online through a web platform or a mobile app. The success of such businesses greatly depends on how well they can match the preferences of music fans by offering their favorite tracks. With the rise of platforms like Spotify, entrepreneurs are trying to build similar apps. If you want to build an app like Spotify, it is essential to understand how to make money using audio streaming platforms.
A freemium model is the basic business model to start with to build a good relationship with your audience. It is designed to offer a free service to your users while reserving exclusive content for a premium price, alter. For example, Spotify offers its freemium service to over 50 million free tracks to its users but with the support of ads. Therefore, users get access to the songs but they will are interrupted with ads between the tracks.
While a freemium model will be free to your users, you get a lump sum amount of money from brands that sponsor you to promote their business. Incorporating a free business model will bring in more people to your audio platform as they can be streaming multiple tracks with no costs. As your user base increases, it appeals to brands as your platform has the great potential to reach millions of people. The more free subscribers your platform has, the more sponsors will be interested in collaborating with you. Additionally, your chance of acquiring more paid subscribers also increase, which will increase the total revenue again.
Incorporating ads in your music-streaming platform can open up a completely new way to gain revenue. There are two major ways to do this- by placing in content ads and display ads. In in-content ads streaming, short audio ads play during an ad break between songs. If you have more freemium subscribers on your music-streaming platform, the frequency of playing ads will automatically rise. The more impressions you create; the more money you get from advertisers.
Likewise, display ads are the ones that you can place on your home page of your music streaming website or app. When your users click on display ads or take a valid action through them, you get paid. Again, the more people visiting your platform, the more are your chances to make money. While this strategy may seem like very basic, many audio streaming services like Spotify are earning revenue with ads alone.
Hence, you can build your audio streaming platform with a good Ad-supported audio-streaming server software and deliver different types of ads to your users based on their streaming preferences to make money.
Once you have a large user base through the freemium model, it is time to get into the real business. Convert your free subscribers to paid using premium plans. Convince your free users to upgrade to the premium ad-free plan for minimal costs, say $9.99 per month. There are millions of music lovers who do not mind paying for uninterrupted listening experiences.
In the premium plan itself, come up with three or four varieties to target different audience like- students, families, etc. just like how Spotify does. Incorporate attractive features in your paid plan like high-quality streaming, shuffle play, unlimited skips, no ads, track downloads, etc. so that customers would be happy to enter your paid plan. You will be surprised to know the success of your audio streaming service will be mainly from paid subscriptions.
Offer Cross-Platform Support
While this exactly is not a monetization model, being present in multiple platforms will actually help with increasing the number of users. Be it desktops, smart TV, gaming console, or mobile devices, ensure that you are present on all the available platforms to reach out to maximum users. The more people start discovering your service on their preferred platforms, the more likely they are to subscribe to your audience. More subscription equals more revenue.
There are many audio streaming services in the industry that are accessible only on the web, which makes it difficult to target people who are dedicated users of smartphones or smart TVs. Take the example of Spotify. Why it is so popular? We have already discussed it in one of the above sections. One reason is definitely it’s available on all devices like smartphones, desktop, tablets, gaming consoles, Smart TV, and speakers running across iOS, Android, and Windows devices.
Build An App Like Spotify
If you want to learn how to create a music app like Spotify, you need to understand the basic things required to build an intelligent app with the same features and functionalities. Let’s dive deep into this to give you better insights.
Consider The Essential Features of Spotify
An audio streaming app like Spotify must include features like registration, login, user management, music search, push notifications, social sharing, and music library and other basic features.
Choose License Type
If you take Spotify, it has two types of license including the musical composition license agreement and sound recording license agreement.
Develop An Audio Streaming App With Great UI/UX
Once you have made a well-researched plan, you are ready to build your audio streaming app. You can hire a team to build the app for you, but it involves a time consuming and expensive process. Instead, you can actually build your music-streaming platform using a white label audio live streaming software. With such solutions, you can easily develop an audio streaming platform with the same quality UI/UX design as that of Spotify and customized it according to your requirements and goals.
Offering accurate music recommendations and suggestions can actually help users to find new music easily. This is an essential feature of an audio streaming app. Spotify also has an intuitive recommendation engine with the help of which the majority of users consume their daily dosage of music. At the same time, a lot of Apple music users are not very happy with its recommendations that can cause users to switch to other audio streaming services as there is no scarcity for new players.
To offer an intuitive recommendation, your audio streaming service must have strong technical support. For example, Spotify relies heavily on machine learning algorithms to make the best musical suggestion and matches. Leveraging a professional audio streaming software will help you to incorporate his particular feature into your music app. To understand the patterns, you have to analyze and collect data about the musical preferences of your target audience.
You can ask users to choose genres and artists they like after registration. Alternatively, you can also conduct surveys to learn more about the local music tastes of people. Spotify also makes use of collaborative filtering where it focuses on finding users with similar musical preferences. For example, if two regular users listen to similar songs, they can recommend songs to each other.
A value proposition is very important; you must clearly communicate the value of your service to stand out from the competitors. If you take the example of Spotify, one of its value propositions lies in the number of personalized playlists it automatically generates including discover weekly and release radar. You now know how to make an app like Spotify; it’s time now to enter the audio streaming entry. Offer unique features for both artists and users to compel them to use your services regularly for the best experience.
Everyone loves music and there is no enough time to go through an entire list of music tracks and purchase or download the ones you like. Fortunately, audio streaming websites have changed the way we listen to music. With modern technologies, we get effortless listening experience and receive music in a matter of clicks. The popularity of smartphones and the availability of high-speed Internet connection will only complement this trend in the coming years.
If you want to learn more about creating an audio streaming software, get in touch with us, now. We would love to help you with building a fully customized music-streaming platform like Spotify, monetization strategies, and other technicalities of the same.