How to Make a Music App: Strategy, Features, and Monetization

If you ever thought about building a music app, you’re reading the right article. We’ll discuss how the music app works and makes money, and how to build one. But first, let’s step back and analyze how we got here.

The Internet revolutionized our lives in many ways, including how we now listen to music. Can you believe that 20 years ago we all had MP3 and CD players, but now can subscribe to music streaming apps and have all the music ever produced at our fingertips? No matter your music taste and location, you’ll have your music library with you as soon as your subscription is active. 

As of 2022, Spotify and SoundCloud's net worth is nearly $820 million, and the global music streaming market size is only expected to grow. Let’s look at some of the interesting stats.  

Music Streaming Apps Market Overview

The image of the music industry is often surrounded by the atmosphere of endless parties, spectacular concerts, outfits, and interviews with the world's stars. Or vice versa, it could be pictured as an art for those who really understand it. The truth is that today this is also a multi-billion-dollar industry, changing the way studios make and distribute music and how people listen to it. The number speak for themselves:

• In 2021, global recorded music revenue reached $16,9 billion, the highest ever recorded and four times higher in comparison to 2015 (Statista).

• The global music streaming market size was valued at $29.45 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 14.7% from 2022 to 2030 (Grand View Research).

• The average revenue per user is around $25 in 2022 (Statista).

• In March 2022, Spotify had 422 million monthly active users, including 182 million premium subscribers (Musically).

• Since 2014, revenue from music streaming has become the primary revenue source for most music labels (Business of Apps).

Where do those impressive figures come from? The pandemic played a huge role in the music streaming industry growth. Well, honestly, you can’t find any industry that wouldn’t have been affected by it. People were obliged to obey to COVID-restrictions and spend more time at home, basically working remotely, watching Netflix, ordering food, and listening to music. 

This is how the music streaming app industry looks in 2022:

• Spotify with a 36% market share 

• Apple Music with 19% 

• Amazon Music with 12% 

• Deezer, Pandora, Tencent Music, MelOn, and other apps account for 33% of market share 

Spotify was founded in Sweden in 2006 and launched 2 years later in 2008 and is now the leader in this industry with 422 million monthly active users. The founders surely know how to build a music streaming app, don’t you agree? Much of Spotify's success is due to increasingly sophisticated data collection and recommendation algorithms. 

Source: Spotify

Apple Music is number two in the list of most popular music streaming apps. It was launched by Apple in 2015 and has 88 million subscribers, an increase of 16 million from the previous year (Business of Apps). 

Source: Apple Music

Amazon Music ranked third on our list with 12% of market share. The first public beta was released in 2007, and now it offers access to 90 million songs. In 2021, the service had around 68,1 million users and more than 48 million of them are US listeners (Headphonesaddict).

Source: Amazon Music

What’s common among them? What else, besides access to music, do these apps have to offer?

• Affordability–it’s much easier to afford a subscription than to buy songs and albums. 

• Unlimited storage–users don’t have to download music to their devices unless they want to listen to it offline.  

• Social engagement–music does help with social interaction and finding like-minded people. 

Types of Music Streaming Apps

Although these apps are all about offering music, there are three different types of music streaming apps. Let’s find out:

Music Media Libraries

Apps in this category store music in server-based libraries and give access to it to subscribers. 

Examples: YouTube Music, SoundCloud, Pandora, Apple Music, Spotify, Amazon Music HD. 

Cloud Storage

As the name suggests, these apps offer cloud storage to users to store, organize and manage their music. For example, pCloud offers 10GB free online storage, and enables users to play media files online.

Examples: pCloud, CloudPlayer, Beat, AudioBox.

Radio Stations

These apps provide users with various online radio stations arranged by specific themes such as genres, artist-centric playlists, decades, moods, and more.

Examples: AccuRadio, iHeartRadio, SiriusXM

Features to Focus on When You Develop a Music App

What makes a music streaming app? Its features! Here’s the list of must-haves:

Navigation

Discovering new songs and finding favorite ones must be easy and intuitive for users. This is the area where you can come up with a new user flow and provide users with an enhanced customer experience because the ease of discovering new songs and artists is the first step towards creating a playlist and using the app regularly.

Registration and profile

Registered users can enjoy personalized music suggestions. The process should be as short and easy as possible, otherwise, users just close the app. How to simplify the registration? Make sure they can log in with Gmail, Apple, Facebook, and other social media pages.

Share music

Give people an opportunity to share their favorite tracks with their loved ones in just a few steps. This feature has a double value for entrepreneurs. Social sharing is a great tool that helps spread brand awareness in an unobtrusive way.

Push notifications

They help users stay updated about songs and albums released.

Playlists

48% of respondents in the Statista research indicated the ease and convenience of making a playlist as one the most important features of a music streaming app. Playlists are actually what users come for. Can you imagine that the app you create could assist in people’s most memorable life events, like parties or warm evenings around friends? The playlists are an important part of those.

Music player

Obviously, a music streaming app has a music player that allows users to play, pause tracks, control volume, etc. Moreover, the player screen also shows the album cover and information on the artist or album.

Payments

Payment integrations make it easy for users to subscribe to the app without leaving it.

Advertisement

If users can’t afford a subscription, they can still enjoy their favorite music but with ads after a certain number of tracks.

Offline mode

While developing an app, you should always think of your users and use cases. What if they have a party in the middle of nowhere where the Internet won’t work but they need music so badly? An offline mode is a way out and a strong foundation for customer loyalty.

Artist & album profiles

As the name suggests, this part contains information about artists and their most popular albums and tracks and is easy for users to navigate through.

Recommendations

Hold on here. Recommendation algorithms are one of the most important components of Spotify’s success, and take center stage in the music discovery landscape overall. We don’t know much about how it works, but we do know that it works a lot like TikTok’s FYP recommendation algorithms. The user’s feedback, such as library saves, playlist adds, shares, skips, click-through to artist/album page, the artist follows, "downstream" plays, and repeat listens gives the system a cue about what other similar tracks users might like and helps the app provide them with a personalized experience.

This is so important, that, according to Instapage, 74% of customers claim that they get frustrated if the app content is not personalized.

How to Build a Music Streaming App: 10 Steps to Follow

Below we describe ten steps toward creating the next big player in the music streaming apps market. Though some of them may appear obvious, all of these steps are important, and, we’d say, interdependent. Missing one will affect the whole process. So, let’s have a look.

1. Idea

It all starts with this. You may be inspired by the most popular apps and have a genuine idea of how your custom music streaming app could stand out from the crowd and provide a better experience to your potential users. Note everything down, you’ll be using this information a lot in the further stages.

2. Market research

Even with a genuine idea in mind, market research should never be ignored. Analyzing your competitors, their actions, what works for them, and what doesn’t is a must-do for building a successful app.

Also, market research allows you to better know your target audience and learn about their behavioral patterns, music preferences, age, location, and other relevant information. 

3. Licensing to stream 

Music streaming industry has specific regulations and rules to obey, just like, for example. healthcare or fintech does. As an app owner, you provide your users an opportunity to listen to music without purchasing. However, you need to get the right to use music content. For this, you need to get Public Performance Rights, a type of agreement between the music app owner and the copyright holder. In the USA, there are two agencies that you can refer to: 

1. The American Society of Composers, Authors and Publishers (ASCAP)

2. Broadcast Music, Inc (BMI)

Getting a license is mandatory. Those companies that don’t get the license and stream music, can be fined up to $150,000 per song played. Better to spend this money on custom music app development or marketing and PR campaigns. 

4. Plan features 

Why did we say that the idea and market research are of crucial importance? Because of the information that you get at this stage.

5. Selecting the technology stack

The technology stack depends on the list of features that you want to develop. However, there are technologies common to all music streaming apps. Here is the list of programming tools and technologies that can be used in custom music app development:

6. Hiring developers (and designers, and QA engineers, and a project manager)

These people will be responsible for designing the app, writing the bug-free code, and turning your idea and market insights into an up-and-running music streaming app. The team absolutely must be competent and, more importantly, be as interested in your product's success as you. 

We at Yellow have been making all sorts of apps for startups, medium-sized and Fortune 500 businesses for 7 years, and would be glad to help you turn your idea into an up-and-running mobile app. Contact us to discuss your idea, it’s free and has no obligations.  

7. MVP

MVP stands for Minimal Viable Product and we’ll always be advocates of that development approach until there is a better way to come up with a product without spending thousands of dollars on development, testing, and feature adding. The credo of MVP development is Start small, scale later, and this is the perfect way for a new product to test business hypotheses fast, collect feedback from early adopters and make adjustments when needed. 

We covered all aspects of MVP development in our in-depth guide. Check it out! 

8. Build an app

When all of this is done, you can scale your app, add new features and improve existing ones. 

9. Testing

Even bug-free code needs testing to ensure that the app runs smoothly and as expected. Once the music streaming app is tested, and all bugs are fixed, it’s ready to meet listeners.

10. Updates & support

We have some news for you at this stage. The first is that hard work almost always pays off, and a well-designed app with clean code, thought-thought user flow, and an efficient recommendation system will be popular among listeners and music lovers. 

The second is that this is only the beginning of the path. From this point, you’ll attract users, develop new features, and be constantly working on improving your music streaming app. We’d be happy to assist you with that and provide our expertise. 

Now that you have an idea about custom music streaming app development, let’s talk about how these apps make money. 

Music App Monetization: How Does a Music Streaming App Make Money?

There are various ways of monetizing a music app. The most common of them include:

Freemium is a business model that offers users basic, limited, ad-supported functionality for free, and advanced features for subscribed users. You can charge weekly, monthly, quarterly, or annually after offering a free trial. Main industry players like Spotify and AppleMusic have adopted this strategy. 

Moreover, music streaming apps can come up with different subscription plans for various segments of the audience. Here’s how Spotify developed their pricing strategy:

• Premium Individual for individual users

• Premium Student that offers 50% off the usual price for 4 years

• Premium Duo for two people living together and sharing one account

• Premium Family for a group of up to six people owning a Premium account for one discount price

What’s more interesting is that the price for a Premium account varies between countries. Pretty fair, isn’t it? 

Advertisement is a great and actually the most basic way to make money on music streaming apps. You can play ads after 3 or 5 tracks. And it works! Advertising accounted for 13% of Spotify's total revenue in Q3 2022 (Bloomberg).

Paid app is the rarest form of monetization because you make your app available for those who bought it without even trying or with a short trial period. 

Music Streaming App Development Cost 

We should say that there’s no final price. Bespoke music app development cost depends on many factors, including the feature list and the location of the development team. 

Speaking about team composition, here’s the list of specialists that you’ll need to create a music app:

• Business analyst

• Project manager

• UI/UX designer

• One or two Android engineers

• One or two iOS engineers

• Backend engineer

• QA engineer

In previous chapters, we discussed common features and the tech stack needed for music application development. Based on that information, we provide you with an estimation of the MVP music streaming app development cost. 

Disclaimer: the estimation is based on the average developer’s hourly rate in Poland, which is $50. We provide you with the estimation for both platforms without including licensing fees.

As we may see, the cost of iOS and Android music app development is around $250,000. From our experience, iOS music app development takes a shorter time and is much easier to update. 

Wrapping Up

Creating a music streaming app in 2022 is an interesting and challenging task. While the market already has huge companies, like Apple Music, Spotify, or SoundCloud, there’s certainly an opportunity to build the next music streaming unicorn.

To get access to top engineering talents and top-notch expertise that will turn your idea into an up-and-running product, book a call with us to discuss your idea.