The trend in music is a decline, rapid decline, in music sales and an upswing in music being streamed. As streaming becomes cheaper for the consumer and bandwidth also becomes cheaper, then this trend will only accelerate. Proof of the inevitability of this acceleration is Billboard magazine’s recent introduction of measures from the music streaming services such as Spotify, Rdio and MOG. Billboard only measures the on demand services excluding the randomizing services like Pandora and Last.fm. Social networks are also increasingly aligned with these streaming services. All of this is very important for the social media agency because these services rely on advertising to help subsidize the costs and in some cases provide free services for users.

Increasingly these services are looking to advertisements for financial support. In 2011, these services took in $293 million from advertisers and only $171 million from user subscriptions. Spotify had limited its free trial period to 6 months, but after lower than expected conversions to its premium service, it opened up the free service to an indefinite extension. Accustream predicts the market will grow 78% in 2012.

Users want free music streaming and advertising is necessary for that. It is also useful for the advertisers because for a brief moment there is an almost undistracted listener and silent display ads can play almost continuously on mobile devices or on desktop clients of the music service. The other added benefit for advertisers is the accumulated data about user demographics as well as preferences and how those preferences might change depending on contexts. While still nascent, streaming music is and will continue to be a lucrative outlet for the social media agency looking to associate brands in users minds.

New Music Advertising