TAM: Anyone who has access to the internet/technology and can listen to or produce recorded music digitally. Music isn’t available for everyone, which can be a limiting factor. In some regions, internet or technology access means the only music options are live music or physical records or CDs.
- Estimated the global population at 8 billion.
- Assumed a smartphone penetration rate of 67.5%.
- Calculated the number of global smartphone users as 5.5 billion.
- Estimated the price of your music streaming platform to be 50% of the cost of a usual smartphone, which is $1000.
- Assumed an average lifetime of 5 years for your platform.
- Calculated TAM as follows
- (5.5 billion users * $500 per year) = $2.75 trillion over 5 years, or $550 billion annually.
For SAM, a possible expansion would be users who already stream music digitally. We could potentially appeal to fandoms of specific artists and offer unique playlists or events from those artists to bring them to the platform. Potentially expanding into music education and music production classes, where people can use MusicStreamCo to share songs for class and curate and comment on music together. We can also target a specific segment of underserved artists by the incumbent tech companies such as Spotify and AppleMusic.
Considering the users who already stream music digitally, as well as additional segments such as music education, underserved artists, and users:
- Digital Music Streamers: Assuming there are approximately 500 million active digital music streamers globally.
- Music Education: Estimating 100 million potential users interested in taking music classes online.
- Underserved Artists: This segment may include thousands to millions of individuals, depending on your target market.
- Sum the sizes of these segments to determine your SAM:
- SAM = Digital Music Streamers (500 million) + Music Education (100 million) + Underserved Artists (Assume 1 million) = 601 million potential users globally.
For SOM, thinking about what could be a strong small business, we think appealing to musicians, music curators, and those who really focus on music exchange is realistic. For those who already are expressing their music tastes online such as on music rating websites or other interest based sites like Reddit or musicians who spend a lot of time sharing music tastes, being able to make MusicStreamCo well integrated into existing platforms could be crucial and doable. It could be helpful to begin in music hotspots like Los Angeles so that the product becomes integrated into the music community there. This would likely begin with those who are already perpetually online and familiar with technology, so largely Gen Z and Millennials.
We would expect to capture 1% of the SAM in our first year:
- SOM = 1% of Digital Music Streamers (1% of 500 million) + 1% of Music Education (1% of 100 million) + 1% of Underserved Artists (1% of 1 million) = 5 million users in the first year.
