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A Foolish Take: The Top 4 Music-Streaming Services in the US

By Leo Sun – Apr 1, 2019 at 6:00AM

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Pandora, Spotify, Amazon, and Apple dominate this nascent market.

The global music-streaming market could grow from $6.4 billion in 2017 to $33.5 billion by 2026, according to Persistence Market Research, as data costs drop and internet speeds improve. eMarketer reports that four companies dominate the U.S. market: Sirius XM's (SIRI 4.43%) Pandora, Spotify (SPOT -2.10%), Amazon (AMZN -0.59%), and Apple (AAPL 0.83%).

Chart showing market share of U.S. Music streaming platforms

Data source: eMarketer. Chart by author. Includes overlapping users.

eMarketer estimates that Pandora will have 72.4 million listeners this year, compared to 65.3 million Spotify users. Amazon doesn't disclose its number of listeners, but Apple recently declared that Apple Music had "over 50 million paid subscribers."

eMarketer expects Spotify to overtake Pandora in total U.S. listeners by 2021, and eventually reach 78.2 million listeners by 2023. Pandora's user base could shrink to 72 million by then.

Spotify and Pandora have contrasting business models -- the former generates most of its revenue from subscriptions, and the latter makes most of its revenue from ads. Apple only offers paid subscriptions, and Amazon bundles a basic streaming plan with Prime and offers premium ad-free tiers.

It's still too early to declare a winner in this nascent market, but investors should follow it closely as consumers grow accustomed to streaming their songs instead of downloading them.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, and Sirius XM Radio. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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