Spotify is now the world’s first publicly listed on-demand music streaming service. Its global footprint generated €4 billion in 2017 from over 70 million paying subscribers and 90 million ad-funded users across 65 countries

As it expands, the service is steadily but surely moving ever closer to profitability, with a 2019 operating profit a very real prospect

So far and for the near future, Spotify’s global pre-eminence versus competition from Apple, Amazon and Google proves remarkably resilient. Plans to build upon its differentiating features will become ever more decisive as the tech titans will continue to wield their resources and ecosystems against the comparatively undiversified company

Our latest forecasts predict traditional broadcasters will account for 72% of all video viewing in 2027, down from an estimated 82% in 2017, reflecting the continuing adoption of online video services across all UK age groups.

Additional viewing of online short-form content such as YouTube will keep pushing overall volumes higher, with SVOD services serving more as a substitution for linear TV.

The extent will be greater among younger age groups, for whom the shift has already been significant. We predict that in 10 years just 42% of 16-34s’ total viewing will be to conventional broadcasters versus 91% for the over-55s.

Linear TV's decline continued into 2018, with an overall drop of 3% across the first 12 weeks YOY. However, overall TV set usage remained flat at 4 hours/day, as time spent on unmatched activities—which includes Netflix, Amazon and YouTube—continues to rise.

Within the ever-shrinking pie of consolidated viewing to the TV set, share of viewing (SOV) to the ten largest channels remains broadly flat. Across the whole of 2017 and the start of 2018 the best performer has been ITV (main channel).

Several big-name digital channels are showing surprising signs of recent decline, including UKTV’s Drama and Viacom’s 5USA. It is too early to tell if these declines are a blip or a trend. However, they reflect stalling growth from the long tail of digital channels in aggregate. 

We forecast UK display adspend to grow by 3.1% in 2018 (<1% in nominal terms), with TV roughly steady, newspaper decline slowing and digital growth slowing a little

Households are facing an income squeeze and the ability of debt and credit to carry them over is reaching its sensible limit. Brexit-related uncertainties remain the single strongest drag on business investment, dampening ad spend

TV spend is the £5bn question. While live viewing continues to decline, TV delivers against different marketing objectives from precisely targeted online inventory, and rapid broadcaster VOD growth will help hold TV spend steady

A strong UK labour market, with record low unemployment but historically high vacancies, has supported growth in the recruitment industry, though trends may be peaking as we reach unknown territory. These trends play out in the recruitment market before they become apparent in the labour market

Despite the fragmentation of the online recruitment listings marketplace, Indeed is well-placed to dominate this space due to its increased scale and aggressive investment strategy

Both Google and Facebook have announced their intention to move into the recruitment listings sphere, which may have consequences not only for classified expenditure but further up the value chain with the agency model. However, both giants have attempted to move into online classifieds before, with little demonstrable success

The slowing UK economy since Q3 2016 has had a knock-on effect on the property and autos marketplaces underlying UK classified advertising revenues, with house prices slowing, transactions stabilising (instead of rising), and new car registrations down sharply in 2017 to date. Recruitment activity by agencies and employers has instead been dynamic as the UK nears full employment

Advertisers in these verticals continue to switch expenditure from print classifieds to internet portals and search, which offer superior lead generation, analytics, and user experience. Only in property do local newspapers still fulfill an important estate agency branding function for the local area, although declining readership is blunting this value to advertisers

Portal dominance comes at a price to advertisers in property, where Rightmove has resisted agent efforts to lessen dependence by listing on other brands, as well as in used autos, where Auto Trader has long reigned supreme. Recruitment is a more contested market for portals, reflecting the diverse and fragmented nature of the jobs market, but Indeed has a strong grip on the low-end, while LinkedIn remains unchallenged in social recruitment advertising

Even though Facebook is not a producer of news, 6.5 million UK internet users claim to mainly source their news from the platform. Posts and shares by friends in the user's network, in the context of Facebook's algorithm, determine the order of stories in the personalised News Feed, removing the control of the news agenda that publishers have for their websites

Premium publishers operating a paywall (The Times, The Financial Times) have a lower key approach to Facebook than publishers generating advertising revenue from referral traffic to their websites or from on-platform consumption of Instant Articles. The latter will seek to stimulate social media engagement, optimising stories through attention-grabbing headlines, and installing Facebook’s share and like buttons on their websites

Case studies of the news stories that were prominent on Facebook (measured by likes, comments and shares) in the periods leading up to the Brexit Referendum and General Election 2017 votes respectively demonstrate that newspaper brands (the Express for Brexit, and The Guardian for the General Election) achieved the highest reach on Facebook during these periods, despite being ranked below other news brands (BBC in particular) in terms of traffic to their websites

For the second consecutive year, the global recorded music industry body IFPI reported rising trade revenues, growing 5.9% to reach $15.6 billion in 2016

Our forecasts supplement IFPI’s trade revenue data with richer national-level consumer expenditure data from local bodies in core markets, and project CAGR of 2.3% to 2021, tapering off as streaming approaches maturity

This fairly modest topline growth for global recorded music streaming trade revenues is the product of our judgement that the marketplace remains awash with free music. Streaming trade revenue growth could be higher still if the industry finds a solution to piracy through technological or regulatory means, obviating the need for the ad-funded compromise

Accelerating print advertising declines in 2016 are placing pressure on local newspaper publishers to deliver faster online growth

However, digital growth is being supported yet compressed by Google and Facebook; we estimate SME expenditure on Google is roughly 2x the local press, and we expect SME spend with Facebook to match local newspaper advertising revenues in two to three years

Publishers need to grow consumer registrations and subscriptions, digital display and also digital marketing services, in partnerships with the tech giants – but first they have to convince consumers they have relevant use-cases that global platforms cannot replicate

The “fair return” to US music publishers and songwriters for rights used by interactive streaming services will be decided in 2017 by the Copyright Royalty Board (CRB)

Rights owners want to switch to a fixed per-stream or per-user rate on all tiers, arguing music has an inherent value. Apple is asking for a much lower per-stream rate

Amazon, Google, Spotify and Pandora warn of disruption to free and ad-supported tiers if the revenue-share tariff is not rolled over, and the CRB could side with them