Report: YouTube Top Music Source For Millennials

After a decade of decline, the U.S. music industry is expected to see a compound annual growth rate of 4% from 2016 through 2021, led by rising adoption of streaming services, according to a report from Cowen & Company.

Investors.com reports revenue from on-demand music services will double by 2021 and will rise from 18% of industry revenue this year to 40% by 2021, Cowen predicted.

U.S. music sales are predicted to rise nearly 25% from about $7 billion this year to $8.7 billion in 2021. On-demand streaming music is seen more than doubling, from $1.7 billion in 2016 to $3.5 billion in 2021, Cowen said.

Spotify is likely to remain the leading paid on-demand music service, but Apple Music, Pandora's upcoming on-demand offering and Amazon's upcoming stand-alone music service "could disrupt competitive dynamics," Cowen analyst John Blackledge said in the research report.

Spotify has 30 million global subscribers, followed by Apple's 15 million.

In the U.S., Spotify has an estimated 8 million paid users, compared with about 4 million for Apple Music, Cowen said.

Based on its monthly survey of 2,500 U.S. consumers, Cowen estimates that 12 million U.S. households pay for at least one music streaming service. The number of streaming music subscriptions is about 16 million when accounting for consumers who subscribe to multiple services.

Cowen forecasts 18 million paid on-demand streaming music subscribers in the U.S. in 2016, rising to about 31 million in 2021.

Cowen's May survey found that terrestrial radio is the top music listening platform. Some 74% of respondents listen to terrestrial radio, followed by YouTube (59%), Pandora ad-supported music (37%), Sirius XM (SIRI) satellite radio (22%) and Spotify ad-supported music (19%).

While YouTube trails terrestrial radio among all respondents, YouTube is the leading source of music for millennials, Cowen said.