Music listening apps dominate the mobile music market, accounting for over 70% of downloads and revenue from top apps. Streaming services are growing in popularity as improvements to mobile networks and cloud storage allow people to access large music libraries without using local storage. Music creation apps are also growing as people can use them to simulate instruments, record and share music easily on their mobile devices.

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2. Table of Contents
• The Technology Behind the Index
• Key Highlights
• Music Listening Apps Account for More than 70% of Top 10
Downloads and Revenue
• Network infrastructure and Cloud Storage Fuel Mobile Music
• Publishers Ramp Up Subscriptions and Mobile Ad Targeting to
Boost Revenue
• Music Giants Tap Into Your Location, Weather and Mood
• Proprietary Apps + Exclusive Artist Content = Hype Machine
• Music Creation Apps Are an Overlooked Gold Mine

3. 1. The Technology
Behind the Index
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2. Key Highlights
Music Listening Apps Account for More Than 70% of Top 10
Downloads and Revenue

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Key Highlights
• In 2013, digital music generated $5.9 billion, or 39% of the recording
industry’s global revenue.
• The United States is currently the largest digital music market, with 60%
of industry revenue coming from digital formats.
• Music downloads continue to bring in the largest share of revenue, but ad-
supported and subscription-based streaming are on the rise.
• User engagement with music apps has grown rapidly in recent years. From
August 2013 to August 2014, time spent in music apps grew 79%, resulting
in an increase of 64 minutes per month. This was higher than the increase
for other popular categories like Social Networking and Entertainment, and
more than triple the 21% increase across all categories.

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Key Highlights
• To gain deeper insights into the dynamic music category, App Annie
identified four subcategories of music apps within the iOS App Store
and Google Play: Music Listening, Music Creation, Artists and
Information & Other.
• In this Index we investigate industry trends around the larger
subcategories of Music Listening and Music Creation while
highlighting the top ranking apps.
• In September, Music Listening apps dominated the overall
category’s charts and held 8 of the 10 apps by downloads and 7 of
the top 10 apps by revenue.

7. Network Infrastructure and Cloud
Storage Fuel Mobile Music
• Improvements in carrier network
infrastructure and 4G coverage have
dramatically advanced the quality and
portability of mobile music.
• High quality connections to the cloud
allow consumers to access vast libraries
of music without exhausting limited
storage space. Cloud-based access also
enables users to enjoy seamless listening
experiences across devices.

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Network Infrastructure and Cloud Storage
Fuel Mobile Music
• Carriers have begun targeting music lovers by designing specific data plans
to better meet their needs. For example, T-Mobile’s “Music Freedom” plan,
introduced in June 2014, gives customers unlimited access to 13 popular
music streaming services without incurring data charges. Their customers
now stream 5 million more songs per day. As mobile infrastructure
continues to improve, particularly in developing markets, we expect the shift
from music ownership to access to become more prominent across the
globe.
• T-Mobile appeals to users by offering music
streaming with no overages or data caps. Music
services currently included are Pandora,
iHeartRadio, iTunes Radio, and many more.

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Music Giants Tap Into Your Location,
Weather and Mood
• Top music streaming platforms boast over 30 million tracks, with
tens of thousands being added every day.
• Artists, especially those that are up-and-coming or outside the
mainstream, also benefit from curation as it helps them get
discovered by a larger audience.
• Music platforms employ a sophisticated combination of algorithms
and human curation to personalize playlists and recommend
relevant music.

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Music Giants Tap Into Your Location,
Weather and Mood
• With enhanced music intelligence, these platforms
will be able to deliver more relevant music
experiences taking cues from the weather, time of
day and daily activities.
• Location-based information will open up
opportunities to introduce music based on upcoming
performances in the area. Even connected devices
are beginning to utilize contextual data.
• For example, music learning gadget Prizm plugs
into speakers and adjusts music according to
environmental cues, including the number and
preferences of other people in the room.

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Proprietary Apps + Exclusive Artist
Content = Hype Machine
• Artists are constantly seeking unique ways to reach their fans and maximize
publicity, buzz and sales.
• Beyonce’s phenomenal success on iTunes with her spontaneously
dropped self-titled album has encouraged other artists like Coldplay to do
the same.
• Thom Yorke, lead singer of Radiohead, generated 1 million downloads in
six days after releasing his solo album Tomorrow’s Modern Boxes on
BitTorrent. BitTorrent Bundles allows artists to publish and sell music
content themselves, and has the potential to empower artists to generate
significant revenue separately from record labels. Whether for artistic,
monetary or philosophical reasons, musicians are becoming more creative
and independent in the way they share music with listeners.

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• Users explore the mysterious, expressionistic
world of Polyfauna while listening to music
from Radiohead.
• An emerging trend is for artists to release exclusive
content through proprietary apps. For example, in
September, Radiohead released its first new music
in three years through the band’s own
app, PolyFauna. Grammy nominated singer-
songwriter Imogen Heap used Run-Time, a yet-
unreleased app she helped design, to compose her
most recent single of the same name. The app
creates unique, personalized tracks for runners by
mixing in sounds from footsteps, breathing patterns
and environmental noises. It also adjusts music
tempo and intensity to match running speed.
Proprietary Apps + Exclusive Artist
Content = Hype Machine

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Music Creation Apps Are an
Overlooked Gold Mine
• Mobile apps are an increasingly popular format for creating music.

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Music Creation Apps Are an
Overlooked Gold Mine
• The majority of top Music Creation apps are
virtual instruments, karaoke-style singing
apps, and digital workstations that mix and
edit tracks.
• These apps provide users an easy and
inexpensive way to simulate high-end
instruments and recording equipment that
might otherwise be inaccessible. The low
price point may also encourage users to
experiment with a variety of instruments and
techniques. Furthermore, the mobile format
lends itself well to easy recording and sharing
of music, especially while on-the-go.
Popular DJ apps like edjing pull in content
from streaming services such as
SoundCloud and Deezer to provide a library
of more than 50 million tracks for users to
mix, crossfade and scratch.

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Music Creation Apps Are an
Overlooked Gold Mine
• Smule is the leading publisher in the Music Creation subcategory, with four of its
apps Magic Piano, AutoRap, Sing! Karaoke and Guitar! topping the download and
revenue charts in September.
• Smule has focused on publishing simple and intuitive apps that enable users to make
music easily and share their experiences in an active community of music creators.
Smule’s strong relationships with recording companies have ensured access to a
large and up-to-date library of songs. The apps feature different instruments and
integrate seamlessly with each other. For example, users can import their recordings
from Sing! Karaoke and strum the accompaniment within the Guitar! App.
• Smule’s in-app purchases offer weekly, monthly or yearly subscriptions that unlock
access to the full song catalog. Smule’s CEO Jeff Smith mentioned in an interview
that the company expects to earn more than $40 million in revenue this year, up
from $20.6 million in 2013. This strong performance demonstrates that Music
Creation apps have potential to generate significant revenue.

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