Ways of Music Streaming App Monetization

Have you ever wondered what helped some music streaming apps become the leaders in the market segment, while so many others failed to survive the competition? It’s not only because they were pioneers in licensed music streaming like Spotify, or supported by a strong brand like Apple Music, but also because they figured out how to monetize a music application sooner than others.

In order to generate revenue in the music streaming business, one must have a solid monetization strategy. Without one, whatever great your app is, it is likely to fail. Keep reading to learn how to monetize a music streaming mobile application.

5 Main Strategies for Music Streaming App Monetization 

So, how does a music app make money? There are many different monetization strategies for a music app, including data monetization, paid subscriptions, advertising-based models, crowdfunding, in-app purchases, and a hybrid model. Before starting development, you should think through which monetization model will be best for your app, so you won’t scare away potential users and will have enough money for further scaling.

1. In-app ads

Video ads, banner ads, and other types of advertisements are among the most common music app monetization models, as it allows app developers to lure new users without charging them for subscriptions. Instead, they generate profit via a cost-per-click model by showing ads to the right target audiences. 

Music apps like Spotify and Pandora use in-app ads as a part of their freemium models. It is estimated that Spotify will make up to $2.4 billion by 2026 solely from advertising. 

Users who prefer to enjoy their favorite music ad-free usually have to commit to premium subscriptions. However, with modern native ads, which seamlessly blend into the content, most people won’t even realize they are listening to the ad.

2. Paid subscriptions

Music streaming apps generate revenue by making users pay for monthly/yearly subscriptions. They pay a fixed price for access to the app’s music library, while app owners get a steady stream of income.

Despite the obvious advantages of this monetization model, many people are not ready to commit to monthly payments right from the start. This is why the subscription approach often co-exists with a free alternative plan with usage limitations or in-app ads.

This revenue model is adopted by most giants in the mobile music streaming industry we know today. Paid subscriptions make up the biggest portion of Apple Music and Spotify’s revenue.

3. In-app purchases

Music streaming app developers have started to adopt the strategies used in mobile gaming, allowing users to purchase products or features. For example, users may pay to gain access to specific music albums or songs.

4. Crowdfunding

Crowdfunding music streaming apps provide musicians with a platform to share their music and raise money from fans around the world. Through these apps, fans are able to make direct donations or purchase exclusive content from artists they love, while app owners receive a 5-20% commission from every transaction.

5. Hybrid monetization

To ensure that every user benefits from using the app, many app developers opt for a hybrid monetization model. Essentially, this model includes a few (or all) of the above-mentioned strategies in some form of synthesis. By utilizing this strategy, music streaming services can accommodate users’ needs while boosting their profits. Not only it encourages more people to use their apps, but it also ensures that all parties benefit from using them.

Tips on How to Improve Music App Monetization

With the right music mobile app monetization strategies and tactics, any music app developer can increase revenue potential and gain more users. We have gathered the essential tips to help you improve your music app monetization strategy. 

1. Make it worth it

Whichever monetization strategy you use for your music streaming app, it is essential that your app delivers a great user experience. With that being said, give users a reason to pay for a subscription or watch ads when using your app by creating an innovative solution with powerful features. 

2. Make it worth it

As obvious as it may sound, you need to help people learn about your app and persuade them to upload it from Google Play Store or Apple App Store. Unfortunately, many app developers forget that without pouring money into user acquisition and advertising, any monetization strategy will be useless.

3. Use hybrid monetization

By adopting a combination of monetization models, you have greater chances to attract more users and earn money via several revenue streams. Spotify is a perfect example of a successful hybrid monetization.

4. Track key metrics

Analytics is one of the best assistants in maximizing your app’s potential to generate revenue. It is crucial to track and analyze key metrics, such as retention rate, lifetime value, and average revenue per user, to evaluate and adjust your monetization strategy.

How to Measure the Efficiency of a Mobile App Monetization Model

For any streaming music app to succeed, it is essential to measure the app’s performance and identify areas for improvement. By tracking usage metrics, app developers not only can determine which features need to be improved, but also identify and correct flaws in monetization strategy. Below are some of the most important metrics to track to monetize a music application effectively.

1. Retention rate

The proportion of users who continue to use your app over time is crucial, since the more devoted your customers are, the more adverts they will interact with, and the more likely they will make an in-app purchase.

2. Uninstall rate

Measuring the uninstall rate for your app can help you understand when users are uninstalling the app, so you can determine whether your app is doing well or if you need to make some improvements that will minimize the number of times users delete it.

3. Lifetime value

It demonstrates your app user’s value over the course of using an app. The data helps marketers decide how much they need to spend on advertising to bring in new clients while still making a profit.

4. Average revenue per user

ARPU helps you calculate the average revenue you receive from each user. It is calculated by dividing a company’s overall revenue by the number of customers over the same time frame.

5. Funnel conversion rates

It helps you identify the percentage of leads that convert within a given time period. Keeping an eye on the advertising/purchasing process and identifying where users lose interest enables you to optimize your strategy.

6. App stickiness

This metric shows how often app users come back to your app. You can measure app stickiness by dividing your daily active users by your monthly active users.

Our Cases of Mobile Music Streaming App Development

Yellow Brick Cinema is one of our success stories in the music streaming sector. This app is designed to help people unwind after a long day by providing them with relaxing music and sounds, such as nature sounds and binaural beats. It also gives users the ability to combine various sounds to make their own music tracks.

The app is efficiently using a paid subscription monetization model, enabling users to enjoy a wide range of benefits, such as unlimited access and storage of their favorite relaxing music, playlists, and more.

Consider Weelorum as Your Trusted Partner in Developing Mobile Apps

Weelorum is an app development company with deep expertise in creating custom music streaming apps. The company offers a range of services to its clients, including end-to-end application development services as well as mobile application support services.

Weelorum developers have created a number of successful music streaming apps. The expertise and experience in mobile music app development make Weelorum a reliable partner for creating stunning experiences for music lovers worldwide.

Final Thoughts

Music streaming apps have become increasingly popular in recent years. This is why it is no surprise that many app developers are looking for ways to create and monetize their music apps. There are several popular strategies for monetizing music streaming apps, including subscription models, ads, in-app purchases, and others.

Companies like Spotify and Pandora adopt a hybrid monetization strategy as it gives them the ability to generate more revenue. Hybrid monetization models may combine subscription-based access, in-app purchases, and advertising revenue streams to create a more sustainable income stream. 

With this approach, users have the option to pay a subscription fee to access premium features or content. Alternatively, they can take advantage of free content that they can access in ad-supported accounts. This business model allows app developers to capitalize on their user base while also providing better value for casual listeners who don’t want to pay a subscription fee.

If you are interested in developing a music app or want to know how to monetize a music streaming platform, contact Weelorum and we will help you build a profitable music solution.

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