Streaming music subscriptions are exploding in regions like North America and Western Europe. But why doesn’t the same thing happen in music strongholds like Latin America?
According to the latest research, the number of paid streaming music subscribers will reach 235 million by the end of this year. However, most of these gains are occurring in countries like the United States and higher-income European countries.
So what about less prosperous countries like Argentina, Chile, Colombia and Brazil? Altogether, Latin America has a population of around 640 million, and a very large percentage have smartphones and mobile data plans. But according to Deezer CEO Americas Oscar Castellano, about 4 to 5 percent of those people pay for streaming services.
Castellano outlined the number on our latest podcast (see below). ““The market penetration (of premium subscribers) in Latin America is probably in the four to five percent range,” Castellano told us, pointing to a range of closer to 1 to 2 percent in the Middle East and North Africa.
To be honest, the figure of 4 to 5 percent sounds a bit high. But the problem is obviously not a lack of interest in music. Latin Americans are notoriously music obsessed and known for creating entirely new genres such as reggaeton, dancehall reggae and champeta. This is quickly spreading to other regions of the world, with hits like “Despacito” providing ample proof.
Unfortunately, from a business perspective, a disproportionate number of Latin Americans listen to music primarily through YouTube or radio.
Part of this is due to poverty, although Castellano highlighted some tricky issues related to prepaid cell phone plans and even currency fluctuations. For example, massive currency devaluations in Argentina are making streaming music services difficult to actually scale, and artists are bearing the brunt of low monthly payments.
Regardless, Castellano told us that Argentina’s streaming subscription base more than doubled year over year. Of course, Deezer wants a big part of it, and solving seemingly unsolvable problems is the way to achieve that.
May the most creative and experimental streaming service win…